Thursday, March 11, 2004

County joins stadium suit

NFL, Bengals accused of squeezing taxpayers

By Cindi Andrews
and Dan Horn
The Cincinnati Enquirer

What's not to like about the deal?
Hamilton County will join a federal lawsuit that accuses the Cincinnati Bengals and the National Football League of squeezing $450 million from taxpayers to build a football stadium.

Commissioners Todd Portune and Phil Heimlich voted Wednesday to become a party to the taxpayer suit. Commissioner John Dowlin left before the vote.

The lawsuit claims the NFL uses the power of a monopoly over professional football to force communities into unfavorable stadium deals.

Joining the lawsuit acknowledges that the county's agreement to build Paul Brown Stadium was a mistake, but one that was made, the suit contends, only because the NFL and the Bengals broke federal antitrust laws during negotiations.

The case is believed to be the first of its kind in the country. Most communities who sue the NFL have done so after losing a team to another city, not after spending hundreds of millions of dollars to build a new stadium.

Paul Brown Stadium opened in 2000.

The commissioners hired Cincinnati lawyer Stan Chesley to try to recover as much as $200 million in damages.

"This lease is so one-sided that it shocks the conscience," Commissioner Phil Heimlich said. "We build the stadium and maintain it and yet they get 50 percent from soccer games, concerts and other events that have nothing to do with the Bengals."

County taxpayers approved a half-cent sales tax in 1996 to pay for Paul Brown Stadium and the Reds' Great American Ball Park.

NFL officials did not return phone calls Wednesday, but the Bengals and the NFL have said repeatedly that the lawsuit is without merit. Their position is that the team was fair during negotiations and, despite the Bengals' threats to leave town, no one forced county officials to sign the deal.

"There was a full hearing, a public vote and a decision was made to (build the stadium)," said Bengals attorney Stuart Dornette.

Sports economists and legal experts say the county's vote to join the lawsuit is interesting, especially if it means the Bengals and other NFL teams will have to disclose sensitive financial records during court proceedings.

But they say winning the case will be difficult because it's not enough for the county to prove the NFL is a monopoly. The county also must prove the league abused monopoly power, withheld important information and forced the county into a bad deal.

"That's a steep mountain to climb," said Roger Noll, an economics professor at Stanford University who has studied stadium deals nationwide. "Making a bad decision is not the same thing as being defrauded."

The case started as an individual taxpayer action by Portune in early 2003. He filed lawsuits in both federal and state courts after he couldn't get a second commissioner to back county litigation. Portune has since removed himself from the federal suit and dropped the state case.

Neither Portune nor Heimlich was a commissioner when the stadium deal was signed, but both have been critical of the stadium lease for years. Portune has made the stadium a political crusade, using it as a cornerstone of his campaign to oust Commissioner Bob Bedinghaus, a staunch supporter of the stadium deal.

Heimlich said he assumed the county was stuck with the lease until he read federal Judge Arthur Spiegel's Feb. 9 ruling that the lawsuit could move forward with county resident Carrie Davis as a plaintiff instead of Portune. The Bengals and the NFL wanted it dismissed.

Wrote Spiegel in his opinion: "(The suit) clearly alleges - in substantial detail with numerous supporting facts - that the defendants were able to coerce the construction of a new stadium and negotiate unjustifiably favorable lease terms solely because of the monopoly that they enjoy over professional football.''

The lawsuit claims the NFL violates antitrust laws because it restricts public ownership of teams, misleads communities about the economic condition of its franchises and uses the threat of relocating those franchises to win huge concessions from local officials.

The commissioners' decision to hire Chesley surprised the county prosecutor's office.

"I can't say the prosecutor's office can even take a position on this action because we learned about this literally minutes ago," Carl Stich, the head of the office's civil division, said after Wednesday's vote. "I have always been concerned about the county becoming embroiled in litigation that could be costly to the county."

Chesley and co-counsel Robert Furnier have agreed to charge the county no more than $100,000 for costs related to the lawsuit.

The prosecutor's office, which normally represents the county commissioners, was kept out of the loop because of an April 2003 opinion written by an assistant prosecutor that the office had a "potential conflict of interest," Heimlich said.

Portune said Wednesday he hoped for a settlement, saying a court fight was never his aim.

"I don't relish having to take this action," he said. "The parties should have been willing to meet with representatives of this community to ensure a fair deal."

But economists who follow stadium issues say county officials should not be shocked that the NFL and Bengals are not volunteering to rework the stadium lease.

They say the county faces a tough battle in court because there was plenty of information available about the NFL and monopolistic behavior when the stadium deal was signed eight years ago.

"I just don't know if you can do it after the fact," said Mark Rosentraub, author of Major League Losers, which examined the economics of professional sports. "It's an un-level playing field in terms of bargaining, but (the county) knew that going in."

Although the Hamilton County case is the first of its kind, others have made similar arguments in antitrust cases involving the NFL.

City officials in St. Louis tried and failed to recover the costs of moving the Rams to that city. And in 1986, the now-defunct rival USFL claimed it was driven out of business by the NFL's monopolistic practices.

A jury found the NFL was indeed a monopoly, but determined that the USFL's own business practices were to blame for its downfall. The jury awarded the USFL a mere $3 in damages.

Noll said Hamilton County faces the same challenge in its case. To succeed, he said, the county must show the NFL's monopoly allowed it to defraud the county.

Chesley said he's optimistic the county can do just that. The key, he said, is the process of pre-trial discovery that could allow the county to obtain financial records and other information from the Bengals and the NFL.

"We are entitled to it all," Chesley said. "I think we're going to find out an awful lot."

One county resident opposed to the stadium deal is eager to see the case play out in court.

"The taxpayers have been forced to pay for the stadium and now we're being forced to pay for every little repair," said Rick Gausling of Delhi Township. "I'm frustrated about the situation and how everything went down. ... "

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