Could we see an NFL franchise in London? An MLB expansion team in Mexico City?
The recent approval of three NFL franchise relocations has re-sparked a conversation surrounding two of the United States’ most storied sports leagues. The NFL has sought to expand its product’s reach and drum up an international fanbase abroad by staging regular season contests in London, while the MLB Commissioner has made waves with his comments on the League’s Mexican experiment.
The NFL certainly sees an expansion into the United Kingdom as an extremely lucrative enterprise. Of the 14 NFL games played in London, all but one of them has sold out. Furthermore, The White Bronco reports the NFL reeled in upwards of $10 million in 2015 gate revenue over the course of the 2015 “International Series,” as well as expect to see an 80% uptick in English TV viewership from its 2015 campaign.
With Brexit slowly evolving into an impending reality, the NFL may be presented with a streamlined avenue for assimilating to the UK’s labor laws. Under the European Union’s free movement laws, a citizen of the European Union may move freely between European Union countries without obtaining a work permit or establishing permanent domicile in their destination country. The NFL’s free agency structure – built largely upon the principle of player movement restriction via restricted free agency and franchise tagging – as well as the NFL Draft’s rule binding a player to the team that drafts them (or risk withdrawing from the draft process) present a clear issue and potential violation with regards to the EU’s liberal labor provisions. Now that the Brexit process is currently underway, the NFL is poised to take advantage of a much more favorable body of laws governing player movement.
While Brexit surely removes some of the more obvious barriers to entry for the NFL in Britain, the league will likely be tasked with tackling the legislative dissonance between the U.S. and U.K. — most notably emanating from the divergence in tax, immigration, and labor laws. The NFL benefits from “sporting visitor” designations under U.K. temporary work visas that would otherwise require a separate classification as full-blown work visas to accommodate a full NFL home-and-away schedule. The NFL is a step ahead on this front, as their subsidiary of NFL Ventures, Inc., NFL International Limited, stands ready to make the necessary endorsements to the players’ applications for the appropriate work visas. The application for, and ultimate securing of, these visas could prove problematic. Morgan Slade of The White Bronco notes:
U.K. law states that a conviction that carries a sentence of less than a year would prevent the player from getting a working visa for five years from the end of his sentence. A sentence beyond one year, but less than four years, carries a ban of ten years on approval of a working visa. In the case of a player, coach, or team employee who has received a sentence of more than four years, a working visa could be ultimately refused.
Slade further outlines the legal ramifications of this disadvantage thrust on players with past criminal convictions, specifically how the NFLPA would perceive such an effect on players’ rights and working conditions with regards to the most-recently executed Collective Bargaining Agreement.
Furthermore, the NFL would have to take a more clear stance on sports gambling. Sports betting is legal in the U.K., and while the NFL has historically taken a hardline stance against such activity, the league has allowed Draft Kings and others to advertise in and around their international events. With the Raiders making the move to Vegas, the NFL may need to revisit its anti-betting policies to keep from further obfuscating its already murky contemporary stance on gambling.
From a tax standpoint, a London-based franchise would see its players taxed at a much higher rate than those players bound to contracts with the teams subject to the United States tax code. Kristi Dosh of ESPN reports:
. . . Salary, appearance fees and prize money earned while competing in the U.K. are taxed at a rate of up to 45 percent. The highest rate in the U.S. currently is 39.6 percent. Additionally, U.S. tax law only allows for a foreign tax credit at the U.S. tax rate, meaning a player wouldn’t be able to get a credit for up to 5.4 percent of the tax he paid to the U.K. if he were at the maximum rates for both countries.
The British Parliament, however, has already seen a push to amend its legislation to provide a more enticing tax structure for foreign athletes and sports franchises alike.
Major League Baseball, on the other hand, appears to have its sights set on an expansion south of the border. MLB Commissioner Rob Manfred made clear in an interview available on MLB.com that staging consequential contests in Mexico is a priority, stating:
We think it’s time to move past exhibition games and play real live ‘they-count’ games in Mexico . . . That is the kind of experiment that puts you in better position to make a judgement as to whether you have a market that could sustain an 81-game season and a Major League team.
The comments came as a byproduct of what Manfred perceived to be extremely passionate Mexican crowds turning out for the World Baseball Classic. Manfred further expounded on the idea, asserting:
We’re hopeful that what we see in Mexico will continue to encourage us that that’s a possibility [for expansion],” Manfred said. “We also had a good experience with the [World Baseball Classic] in Mexico. The venue was a good one. It sold well. We had good crowds — another positive in terms of more Major League-level baseball in Mexico.
Interestingly, NJ.com suggests that the Tampa Bay Rays’ “untenable stadium situation” may place the team at the top of the MLB’s relocation prioritization. This is an interesting assertion — and not one that hasn’t crossed my own mind in recent months — as the MLB seems to favor relocation over expansion with regards to Mexico. It is important to note, however, that the stadium situation in Oakland is just as dire, and played no small part in the Raiders’ decision to pack their bags for Sin City. We understand these franchises’ incentives to explore all possible relocation options, but why Mexico? When asked why the Commissioner considers Mexico the front-runner to serve as a relocation destination, Manfred replied that:
The reason I have been interested in talking about Mexico is that maybe, of all the possible expansion sites, it has the greatest opportunities for synergies in the rest of our business.
Manfred made sure to touch on the financial implications of embarking upon the M(LB)exican frontier. Notably, the Mexican television market presents a rather substantial untapped market through which the MLB may stir up additional revenue. While this surely has league executives and media partners chomping at the bit for an opportunity to deliver the MLB product on an international stage, the refined quality of said product seems to be just as high a priority for league officials. The massive influx of Latino players into the MLB in the last two decades is apparent, and their positive impact on the MLB on-field product is undeniable. Commissioner Manfred explained to ESPN’s Jayson Stark that a firm commitment to the Mexican experiment could further ease the transition of Mexican players to and through the MLB farm systems:
I think making a full-time commitment in Mexico would be very important. It would help us improve our relationship professionally. That would in turn help us improve the flow of Mexican players into Major League Baseball. The combination of those two factors, that is the media in Mexico and the flow of players, I believe would help us in the Hispanic market in the United States.
The pros are clearly there, but the sheer number of financial hurdles to overcome before reaping the benefits of such an arrangement is daunting. ESPN’s Thomas Neumann aptly outlines the obstacles the MLB would likely confront should the expansion materialize:
Baseball is popular in northern Mexico and along the Pacific and Gulf coasts, but those areas lack the population base that makes Mexico City a realistic expansion candidate . . . In a[n] area where economic disparity between classes is severe, it’s fair to wonder how many residents with discretionary income would spend money on MLB.
Beyond the seemingly insurmountable challenge of navigating a foreign political structure, legal system, and economy, the financing of a stadium requiring north of $500 million would prove quite the task. In addition, Mexico’s well-chronicled income disparity, coupled with a crippling crime rate, may prove the perfect storm for expansion obstruction. If those few fans that care to attend the game either (1) can’t afford to go or (2) feel it is unsafe to do so, a Mexico City-based franchise could be looking at an uphill battle to generate enough revenue to keep its doors open. That is, however, if you fail to factor in the massive Mexican media market (broadcasting/advertising) that would likely include most, if not all, of the country’s territory.
On the whole, it seems likely that an international relocation or expansion is years away for both the NFL and MLB. For every perceived ‘pro’ there appears to be a corresponding ‘con.’ While the realization of a gridiron gang in London or ball club in Mexico City may be distant fantasies, league officials appear to be open to change. I, for one, have never been in the business of doubting the legal and economic prowess of the NFL nor that of the MLB given the resources both leagues have at their disposal. Thus, I remain cautiously optimistic that the integration of international member teams may not be such a distant fantasy after all.
Shout out to Toronto and others for bearing with me here. Your membership in the MLB, NBA, and NHL is certainly appreciated.