By Daniel Wallach

A billion-dollar-plus jury award? A new NFL expansion franchise?

It’s amazing what a summary judgment denial will do.

It has transformed the once unthinkable into the now plausible.

Judge Christopher McGraugh’s denial of summary judgment on Sept. 13 meant that the City of St. Louis’s lawsuit against the NFL over the relocation of the Rams’ franchise would finally be going to trial before a St. Louis jury.

And that prospect has unleashed a tsunami of speculation over the recovery potential for St. Louis.

But so much of the high upside potential—such as a 10-figure damages award or the promise of a new NFL expansion franchise—is contingent on the NFL’s relocation policy being enforceable in court. That’s because the City’s claims for breach of contract and unjust enrichment—which seek the disgorgement of the $550 million relocation fee paid by the Rams to the NFL as well as the increased value of the Rams franchise resulting from its relocation to Los Angeles (an amount likely exceeding $1 billion), plus other damages (such as lost revenues)—are grounded on their contention that the NFL relocation policy is a binding, enforceable contract to which cities (such as St. Louis) are intended third-party beneficiaries.

The NFL has pushed back heavily against that theory, arguing, albeit, unsuccessfully so far, that the relocation policy is simply a “self-imposed" policy that was “unilaterally issued” by the NFL Commissioner and, because it is “subject to change at any time,” cannot constitute a binding contract under Missouri law. On the third-party beneficiary issue, the NFL represented in court filings that “there is no evidence that the Relocation Policy was made for the primary benefit of host cities.” To the contrary, the NFL argued, “the undisputed evidence shows that the NFL’s primary purpose in promulgating the Policy was to benefit the League and its member clubs.”

These statements, however, are at variance with representations that the league made to governmental authorities in the late 1990’s, when the relocation policy was last amended.

Archival documents obtained by Conduct Detrimental reveal that the NFL's amended relocation policy—the same one at issue in the St. Louis case—was the byproduct of a collaborative effort between the NFL and The United States Conference of Mayors (whose membership included the City of St. Louis) to create objective criteria that would govern franchise relocations. This led to the creation of a joint document entitled The United States Conference of Mayors and The National Football League Joint Statement of Principles (the “Joint Statement of Principles”), which sets out many of the same relocation criteria that are now part of the NFL’s amended relocation policy. In testimony before Congress in June 1999, then-NFL Commissioner Paul Tagliabue acknowledged that the NFL’s amended relocation policy “incorporated” the Joint Statement of Principles. Further, high-ranking NFL executives have stated—both in written correspondence with the U.S. Conference of Mayors and in testimony before Congress—that the NFL’s relocation guidelines were intended to protect cities (and not just the NFL and its member teams).

These stunning revelations—which are not mentioned in any of the unsealed court records in the St. Louis lawsuit—can be found in Congressional hearing materials that are publicly available online.

The NFL’s collaboration with the U.S. Conference of Mayors on new relocation guidelines

Several weeks ago, I began a quest to locate online records that could provide some historical context to the amended relocation guidelines in the hope that there would be some indication that the guidelines were intended to protect home markets, and not just the NFL and its 32 member teams. I hit the motherlode on Oct. 4 when I found 155 pages of hearing materials from a Senate Judiciary Committee hearing on S.952, a bill sponsored by Senator Arlen Spector entitled the “Stadium Financing and Franchise Relocation Act of 1999,” which would have given the NFL an antitrust exemption for franchise relocations and to require, as a condition of such exemption, that the NFL set aside 10% of their national broadcast revenues to finance up to 50% of new stadium construction.

S.952 was never enacted by Congress, but the hearing testimony and exhibits that are part of the congressional record—and to which a court could take judicial notice—offer a revealing look at the NFL’s interpretation of its own relocation policy, which perhaps not coincidentally, was amended just one week before the congressional hearings on S.952. (Hearing, at p. 85).

Commissioner Tagliabue was one of the witnesses at the June 22, 1999 hearing. His testimony highlights the central role that the U..S. Conference of Mayors played in the conception and development of the amended relocation guidelines. Tagliabue testified that the NFL had “worked for several years with the U.S. Conference of Mayors and [had] come to an understanding on issues of franchise movement.” (Hearing, at p. 78). He then asked the Committee Chair, Senator Spector, to insert into the hearing record an exchange of correspondence between the NFL and the U.S. Conference of Mayors that “reflects this working relationship.” (Id.). This exchange of correspondence—consisting of a June 11, 1999 letter from NFL Senior Vice President Joe Browne to New Orleans Mayor Marc Morial, and a June 21, 1999 letter from Mayor Morial to Commissioner Tagliabue—confirms that the two organizations had "worked closely" on the issue of franchise relocation and had reached an "understanding" on a new relocation framework that provided better protection for cities. The league's correspondence, in particular, contains some candid admissions that contradict its litigation position today.

In his June 11, 1999 letter, NFL Senior VP Browne acknowledged that the league and the U.S. Conference of Mayors “have worked for many months to develop an approach to address . . . common concerns” regarding franchise relocations, and noted that “[a] draft Statement of Principles was written to set forth our understanding.” (Hearing, at p. 78). Browne’s letter then states that “consistent with those discussions and grounded in sound business policies, the NFL has amended its franchise movement guidelines,” adding that the amended guidelines “bring to reality our mutual ideas on these issues, and are the direct result of our discussions.” (Id.).

Key here is the acknowledgement by Browne that the two organizations worked closely for many months to develop a joint approach to franchise relocations and had reached an “understanding” on the issue which culminated in the enactment of new relocation guidelines that were the “direct result’ of those discussions. Sound like a contract negotiation, doesn’t it? Two parties dealing at arms'-length with one another.

Now get ready for the money quote—the one where the NFL openly acknowledges that the amended relocation guidelines were intended to protect municipalities. In the opening sentence of the third paragraph of his June 11, 1999 letter, NFL Senior VP Browne represented to Mayor Morial that “[t]he amended guidelines balance and protect the interests of the cities, the League and individual teams.” (Hearing, at p. 78). He explained that the amended guidelines “establish an orderly process, ensuring municipal interests will be heard and addressed, and that franchise moves occur only after exhausting all reasonable options in a team’s existing home territory.” (Id.). Browne revealingly characterized the relationship between the NFL and the U.S. Conference of Mayors on the issue of franchise relocation as akin to a partnership, stating that “[t]he amended guidelines, and the cooperative discussions that preceded them, reflect the strengthened partnership between our two organizations.” (Id.).

Mayor Morial echoed Browne’s characterization of the parties’ collaborative efforts in crafting new relocation guidelines. His June 22, 1999 letter to Commissioner Tagliabue acknowledges that “[t]he United States Conference of Mayors has worked closely with the National Football League to develop mutual positions on matter such as franchise movement,” noting that “these discussions led to a draft Statement of Principles on these and related subjects.” (Id.). Mayor Morial conveyed to Commissioner Tagliabue that the U.S. Conference of Mayors was “pleased to receive the news that the League has amended its franchise movement guidelines in a fashion consistent with our discussions.” (Id.).

And just like his counterpart at the NFL, Mayor Morial believed that the league’s amended relocation guidelines were intended to protect home markets. In the last sentence of the second paragraph of his June 22, 1999 letter to Commissioner Tagliabue, Mayor Morial (speaking for the U.S. Conference of Mayors) stated that “[w]e believe these amendments improve upon past policies and should give city interests a greater measure of recognition and protection.” (Id.).

These statements bolster St. Louis's contention that the relocation guidelines were intended for its direct benefit and, therefore, create third-party beneficiary rights under Missouri law. See Saint Luke’s Hosp. of Kansas City v. Benefit Mgmt. Consultants, Inc., 626 S.W. 731, 751 (Mo. Ct. App. W.D. 2021) (“A party claiming third-party beneficiary rights has the burden of showing that provisions of the contract were intended for its direct benefit.").

The incorporation of the Joint Statement of Principles in the NFL’s new relocation guidelines

There is one other crucial piece to Commissioner Tagliabue’s witness appearance before the Senate Judiciary Committee on June 22, 1999.

In addition to providing in-person testimony and copies of the June 1999 correspondence between the NFL and New Orleans Mayor Marc Morial, Commissioner Tagliabue submitted a prepared statement to the Senate Judiciary Committee that, among other things, describes the interplay between the Joint Statement of Principles and the league's amended relocation policy.

In footnote number 4 of his prepared statement, Tagliabue acknowledged that the Joint Statement of Principles was developed "in conjunction with" the U.S. Conference of Mayors. (Hearing, at p. 85 n. 4). But it's the next sentence in Tagliabue's footnote that has significant legal consequences. In that critical sentence, Tagliabue discloses to the Senate Judiciary Committee that, in the week prior to his congressional testimony, he had "issued an updated set of relocation policies and procedures that incorporates the terms of [the Joint] Statement of Principles and reflects the procedural framework sought by the Conference of Mayors.” (Id.).

So, there it is: the NFL commissioner--an accomplished lawyer (and long-time partner at Covington & Burling) who previously served as the league's outside counsel for many years and presumably understands basic contract law--is stating unequivocally to Congress that the NFL’s amended relocation policy "incorporated" the terms of the Joint Statement of Principles between the NFL and the U.S. Conference of Mayors.[1]

Talk about burying the lede. A billion dollar-plus footnote (potentially).

Why is this revelation so important?

Several reasons.

First, it elevates the importance of the Joint Statement of Principles, and gets that document properly before the jury. Under basic contract law principles, when a contract expressly refers to and/or incorporates another document, that other document becomes constructively a part of the writing, and in that respect the two form a single instrument. The incorporated matter is to be interpreted as part of the writing. (See Saint Luke’s Hosp. of Kansas City v. Benefit Mgmt. Consultants, Inc., 626 S.W. 731, 747 (Mo. Ct. App. W.D. 2021)).

This interpretive principle--recognized by Missouri's appellate courts--will allow the jury to consider the Joint Statement of Principles as part and parcel of the NFL's amended relocation policy. This will be helpful to the St. Louis plaintiffs because the Joint Statement of Principles includes numerous statements that bolster their contention that they are intended third-party beneficiaries of the NFL’s amended relocation policy.

For one thing, the Joint Statement unequivocally shows that the cities (through the U.S. Conference of Mayors) played an active and influential role in crafting the amended relocation guidelines. Not only did the cities have a seat at the table, but they helped formulate the new relocation criteria that were incorporated into the NFL’s amended relocation policy.

As shown on page 2, the Joint Statement of Principles specifies ten (10) “objective criteria” that are to govern league decisions on requested franchise relocations. And almost all of these criteria were carried forward and included in the NFL’s amended relocation policy—nearly verbatim.

In other words, the cities (through the U.S. Conference of Mayors) jointly created the league’s new relocation criteria.

But it gets even better. The Joint Statement of Principles also puts the “public interest” regarding franchise relocation on equal footing with the league’s interest. It makes this clear in several places. In the Preamble, the Joint Statement recites that “’[c]ommunities, teams and the National Football League should work together and identify and resolve issues pertaining to team relocations . . .” (Joint Statement, at p. 1). Next, in the section entitled “Team Movement,” the Joint Statement specifies that “[c]ommunities, stadium authorities and team owners should deal with each other in equitable and fair ways.” (Id.). The section on "Team Movement" also includes two explicit references to the “public interest.” (Remember, the NFL is arguing that the relocation guidelines serve only to advance “the league’s interest” in the home market—a subtle, yet important, distinction). In the second paragraph of the section entitled “Team Movement,” the Joint Statement emphasizes that “[i]t is important that the League maintain rules and procedures to regulate the movement of teams consistent with this Statement of Principles. Such rules should recognize both the private interest of team owners to maintain a profitable business and public interest to enjoy the direct and indirect benefits of having a professional sports franchise.” (Id.).

And then to hammer the point home even more, the Joint Statement refers to the ten “objective criteria”—most of which are expressly incorporated in the NFL’s amended relocation policy— as “account[ing] for the interest of fans, communities, taxpayers and owners.” (Id.). Of the four constituencies mentioned, three are local interests.

Given that the NFL is the co-author of the Joint Statement of Principles, this is yet another admission by the league that its amended relocation guidelines advance the interests of cities (and not just those of the NFL and its 32 member teams)—to go along with the league’s June 11, 1999 representation to Mayor Morial that “[t]he amended guidelines balance and protect the interests of the cities, the League and individual teams.” (Hearing, at p. 78).[2]

The Rams relied on the Joint Statement of Principles in seeking league permission to relocate

The Joint Statement of Principles remains a living, breathing document. Besides being incorporated into the NFL’s amended relocation policy (as acknowledged by Commissioner Tagliabue), the continued vitality of the Joint Statement of Principles is also reflected in the fact that the St. Louis Rams franchise explicitly relied on that document to support its requested move to Los Angeles. In its “Statement of Reasons in Support of the Rams’ application to relocate to Los Angeles,” dated January 4, 2016, the Rams referred to the “guidelines for community engagement’ specified in the Joint Statement of Principles in arguing that it “exceeded any good faith requirement” to engage with the City of St. Louis and other governmental authorities in accordance with the NFL’s relocation guidelines, stating:

The Rams’ reliance on the Joint Statement of Principles to support their requested relocation to Los Angeles—coupled with the affirmative vote of three-fourths of the other member clubs and the NFL’s granting that request –is further evidence that the Joint Statement of Principles was incorporated within the NFL’s amended relocation policy and remains in effect, and that both documents are to be considered together in determining the intent of the relocation guidelines.

This could prove especially helpful to St. Louis on any appeal by the NFL following the trial, when a central issue will be whether the NFL relocation policy creates third-party beneficiary rights in cities. The inclusion of the Joint Statement of Principles-- a city co-authored document which ties the relocation guidelines to the "public interest" more explicitly than the NFL policy does----widens the lens by which an appellate court would assess whether the NFL and its member clubs intended to create third-party beneficiary rights in cities, and, in this author's view, would greatly enhance the City's prospects of surviving an appellate challenge on that issue.

Consider this unforced error a parting gift to St. Louis from Rams owner Stan Kroenke.

Daniel Wallach is the co-founder of Conduct Detrimental. He is a nationally-recognized gaming and sports betting attorney. You can follow him on Twitter at @WALLACHLEGAL.

[1] The NFL’s amended relocation policy expressly acknowledges that the Joint Statement of Principles is the source material for the league’s new relocation criteria, stating in a footnote that “[t]hese factors are also contained” in the Joint Statement of Principles. (Policy, at p. 3 n.1). [2] By the way, this isn’t the first time that the NFL admitted that its relocation guidelines were intended to protect cities. In 1985, NFL officials testified before the U.S. Senate Judiciary Committee as part of a hearing entitled “Professional Sports Antitrust Immunity,” which addressed the antitrust implications of relocating professional sports teams. At a February 6, 1985 hearing, NFL Executive Vice-President Jay Moyer testified that the NFL’s original relocation criteria—which supposedly provided less protection to cities than the amended criteria that were enacted in 1999—required that any club proposing to relocate must justify any relocation according to specified factors “bearing on League, club, fan and community interests.” (See Hearing at pp. 80-81; and here). Moyer explained that “Commissioner [Pete] Rozelle has bitten the bullet because we believe . . . that the current community’s interests are valid and essential considerations in any responsible league decision on a move.” (Id. at p. 62).