BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 652|
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THIRD READING
Bill No: SB 652
Author: Steinberg (D), et al.
Amended: 5/3/11
Vote: 27 - Urgency
SENATE JUDICIARY COMMITTEE : 3-1, 4/26/11
AYES: Evans, Corbett, Leno
NOES: Harman
NO VOTE RECORDED: Blakeslee
SUBJECT : Professional sports teams: relocation
agreements
SOURCE : City of Sacramento
DIGEST : This bill provides that a professional sports
team that has previously entered into a financial agreement
with a "home public entity" shall not enter into a
relocation agreement unless it first gives the home public
entity a bond, undertaking, or deposit in an amount
adequate to ensure that all of its obligations under the
financial agreement will be satisfied. This bill also
prohibits a professional sports team from entering into a
relocation agreement if that team is in breach or default
of any financial agreement-or if entry into a relocation
agreement would cause a breach or default of any financial
agreement-unless and until the breach or default was cured.
This bill provides that a relocation agreement entered
into in violation of these provisions is contrary to public
policy and is unenforceable and would permit a home public
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entity or home community to seek and obtain injunctive
relief. These provisions would apply to any relocation
agreement entered into on or after January 1, 2011.
ANALYSIS : Existing law regulates contracts for
particular contracts, including contracts for dance studio
lessons, health studio services, and the lease or rental of
athletic facilities. (Civil Code Sections 1812.50 et seq.,
1812.80 et seq., 1812.97)
This bill provides that a professional sports team that has
previously entered into a financial agreement with a "home
public entity" shall not enter into a relocation agreement
unless it first gives the home public entity a bond,
undertaking, or deposit in an amount adequate to ensure
that all of its obligations under the financial agreement
will be satisfied.
This bill prohibits a professional sports team from
entering into a relocation agreement if that team is in
breach or default of any financial agreement-or if entry
into a relocation agreement would cause a breach or default
of any financial agreement-unless and until the breach or
default was cured.
This bill provides that a relocation agreement entered into
in violation of the above is contrary to public policy and
is unenforceable.
This bill permits a home public entity or home community to
seek, and the court shall grant, an injunction to enjoin
performance of any act under the relocation agreement that
is unenforceable under this bill.
This bill provides that if all of the financial obligations
the professional sports team owes to a home public entity
and home community under a financial agreement are
satisfied in full, then performance under the relocation
agreement entered into in violation of the above shall not
be enjoined. This bill specifies that the financial
obligations under a financial agreement are not satisfied
in full merely by providing the bond, undertaking, or
deposit required by this bill.
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This bill provides that any action or proceeding brought
pursuant to this bill shall be brought in a court of
competent jurisdiction in the county in which the home
public entity and home community are located.
This bill specifies that the remedies provided by this bill
are cumulative and not exclusive of any other remedy or
cause of action provided by law or equity including, but
not limited to, any joint and several liability that may
arise in contract or tort.
This bill provides that the provisions described above
would apply to any relocation agreement entered into on or
after January 1, 2011.
This bill provides that its provisions are severable and if
any provision of this bill or its application are held
invalid, that invalidity shall not affect other provisions
or applications that can be given effect without the
invalid provision or application.
This bill defines the following terms, as specified:
"breach or default," "current location or home community,"
"financial agreement," "home public entity," "new
community," "professional sports league," "professional
sports team," "public entity," and "relocation agreement."
This bill contains the following legislative findings and
declarations:
1. Professional sports teams provide a valuable source of
family-oriented entertainment.
2. These teams often help create a strong sense of
community pride and community identity.
3. Professional sports teams are big businesses. Modern
teams require an arena, team headquarters, team practice
facilities, and other infrastructure that cost tens of
millions, even hundreds of millions, of dollars to
construct, improve, and maintain.
4. Frequently, and increasingly, professional sports teams
call upon local governments to partner with them to
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share the costs of the improvements and the new
facilities they want.
5. In California, local governments have entered into
multimillion dollar agreements and financing
arrangements to provide public resources that
professional sports teams said they needed to either
come to the community or stay in the community.
6. Those teams have agreed to repay and compensate the home
communities for committing public dollars in a variety
of ways. In some cases, teams have promised that they
would pay off bonds, buy the arena, or otherwise pay
back particular government debt if the team decides to
move.
7. However, the mere promise of a professional sports team
to pay back public money is not enough if the team
disputes or delays in paying or performing its
obligations.
8. The dollar amounts of the financial commitments made by
professional sports teams to California local
governments are so large that any uncertainty about
whether or when the teams will pay back public money and
satisfy their financial obligations is critical.
9. If a professional sports team relocates to another
community and delays or challenges its obligation to
repay a local government tens of millions of dollars,
the home community will have to either make huge cuts in
its budgets and services or try to borrow money while it
attempts to collect from the team. California and
especially its larger cities and counties where
professional sports teams usually locate already face
unprecedented financial pressures that are forcing them
to eliminate crucial services and facilities that they
provide to residents and that serve their surrounding
regions. Police and fire stations and jobs are being
cut. Parks are being sold or closed. Streets are going
without needed maintenance. A community with a
professional sports team cannot afford to make
additional cuts if the team decides to relocate without
first paying its financial obligations to the community.
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10. If a professional sports team relocates and challenges
or delays the repayment of its financial obligations,
the home community may also be unable to borrow money
because financial markets may respond to the uncertainty
of the team's repayment by increasing interest rates the
community pays to borrow money, or even refusing to lend
money altogether.
11. Larger cities and counties and the regions that they
serve cannot absorb the additional substantial financial
pressure and cuts to essential services that would
result from a professional sports team relocating to
another community before first paying off its financial
obligations to the home community. Under current law,
there are no mechanisms in place to ensure that a
relocating team pays all of its financial obligations
before leaving, causing larger cities and counties and
the regions they serve to suffer the economic
uncertainties created by the team's relocation.
12. This bill recognizes that, under the commerce clause of
the United States Constitution, state law may not
indefinitely prohibit a professional sports team from
relocating either within California or to another state.
This bill is not intended to bar or in any way restrain
a team's ability to relocate consistent with its
applicable league rules or bylaws. The sole intent and
purpose of this bill is to require that, before a
professional sports team relocates, it must satisfy its
financial obligations to its home public entities and
home community.
13. This bill is an exercise of the sovereign right of the
state to protect the lives, health, morals, comfort, and
general welfare of the people of the state, and is
paramount to any rights under contracts between
individuals. The economic interests of the state
justify the exercise of its police power to protect the
fiscal integrity of public entities and home communities
whose ability to provide essential services to their
residents may be harmed by a professional sports team's
relocation without payment of its financial obligations
to the home public entities and home communities.
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14. This bill is intended to support professional sports
teams and leagues and encourage local governments to
partner with professional sports teams and leagues by
giving local governments greater certainty that the
public money they invest to attract and retain teams
will be repaid.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/3/11)
City of Sacramento (source)
ARGUMENTS IN SUPPORT : According to the author:
"Professional sports are big business. Modern teams
require an arena, team headquarters, team practice
facilities and other infrastructure that costs tens of
millions, even hundreds of millions of dollars, to
construct, improve and maintain. Frequently, and
increasingly professional sports teams call upon local
governments to partner with teams to share the costs of
the improvements and the new facilities they want. In
California, local governments have entered into
multi-million dollar agreements and financing
arrangements to provide public resources professional
sports teams requested to either come to the community or
stay in the community.
"The teams have agreed to repay and compensate the home
communities for committing public dollars in a variety of
ways. In some cases, teams have promised that they would
pay off bonds, buy the arena or otherwise pay back
particular government debt if the team decides to move.
But the mere promise of a professional sports team to pay
back the public money is not enough if the team disputes
or delays in paying its obligations. The amounts of the
financial commitments professional sports teams have made
to California local governments are so large that
certainty about whether and when the teams will pay back
the public money and satisfy their financial obligations
is critical.
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"If a team relocates to another community and delays or
challenges its obligation to repay a local government
tens of millions of dollars, the home community will have
to either make huge cuts in its budgets and services or
try to borrow money while it attempts to collect from the
team. If a team relocates and challenges or delays the
repayment of its obligations, the home community may also
be unable to borrow money because financial markets may
respond to the uncertainty of the team's repayment by
increasing interest rates the government pays to borrow
money or even refusing to lend money altogether."
RJG:kc 5/3/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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