Ohio Sues to Keep Taxpayer-Aided Pro Soccer in Columbus

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By Alex Ebert

The Ohio Attorney General is suing Major League Soccer and the Columbus Crew to prevent the squad from abandoning Ohio for the warmer climes of Austin, Texas.

The suit, filed March 5, is the first brought under an obscure, untested Ohio law that mandates teams give right of first refusal to local buyers if a sports team takes “taxpayer support.” The team’s owners have benefited from a below-market rental of Ohio State Fair land and received $5 million in taxpayer support for improvements to local parking, the suit claims.

The team’s owner, Precourt Sports Ventures, and Major League Soccer issued a joint statement saying they are reviewing the complaint, which Attorney General Mike DeWine (R) has threatened for nearly three months.

“Loyal Crew fans in Columbus have invested their time and loyalty in this team, and they have allowed the Crew SC to capitalize from financial incentives paid for by their tax dollars,” DeWine said in a March 5 statement. “I am left with no other choice than to file this suit to ensure our laws are followed.”

Untested Solution to Old Problem

The tension has been building in Columbus to keep the Crew for about half a year. While reports and statements from the team’s ownership have pointed toward a likely move to Austin, Columbus officials and the team have been in unsuccessful negotiations for public financing for a new stadium.

Ohio is familiar with the heartbreak of losing a professional team. The law DeWine relies upon was enacted after the Cleveland Browns moved to Baltimore to become the NFL’s Ravens in the 1990s. That transfer was a prologue to the Houston Oilers moving to become the Tennessee Titans, and a preview to the St. Louis Rams’ recent move to Los Angeles or the Oakland Raiders’ move to Las Vegas.

However, Ohio thinks its law prevents teams from leaving at will due to state and city assistance, despite the team’s stadium being built with private funds. Columbus Mayor Andrew J. Ginther (D) released a statement calling the team’s state support and the city’s $1.3 million in tax-increment-financing taxpayer support sufficient to force a local sale. “State law provides us with this protection,” he said in a March 5 statement.

But the law has never been used before, and previous suits to prevent moves from taxpayer-funded stadiums haven’t succeeded. Dan Tierney, spokesperson for the Ohio Attorney General declined to comment on why the law shouldn’t be ruled by the court to be an unconstitutional taking, or an impermissible retroactive law, considering the team was created in 1994 and the law was enacted in 1996.

Additionally, the state may have to prove the team is “taxpayer supported.” The team is the only private entity that leases land on the Ohio State Fair grounds, and it pays the state money for use of a parking structure. Additionally, in 2005, the Ohio Tax Commissioner argued before the Board of Tax Appeals that the team wasn’t entitled to a personal property tax exemption because their stadium didn’t qualify as a publicly owned property. The BTA agreed in a decision that was later vacated when the parties mediated before the Ohio Supreme Court.

The case is Ohio v. Precourt Sports Ventures LLC , Ohio Ct. Com. Pl., No. 18 CV 1864, complaint filed 3/5/18 .

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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