Pro Soccer Appeal Nixed, Back to Bargaining Table Under Ohio Tax Law

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By Alex Ebert

It’s back to the bargaining table for Major League Soccer following a quickly denied appeal and an effort by the Columbus Crew to avoid receiving offers to sell the team under an Ohio tax law.

The Ohio Tenth District Court of Appeals June 21 ruled the team’s challenge was premature because the lower court’s order mandating court-guided negotiations for 90 days doesn’t constitute an appealable order under state law.

The ruling means that the team can’t sidestep the lower court’s groundbreaking order. For the first time in the U.S., a professional sports team has to consider offers mandated by a novel Ohio law (R.C. 9.67) that seeks to “restrict the sudden abandonment of Ohio markets and fan bases by teams that have benefited from tax subsidies or other public financial assistance,” the Court of Appeals said.

Although the court said the order for supervised negotiation wasn’t appealable, it said that specific discovery orders—such as whether the city can dig into the team’s financial documents under the statute—could be appealed.

Team Pitches Austin

League spokesperson Dan Courtemanche issued a June 21 statement saying the league is disappointed and disagrees with the decision, but “as we have publicly stated, Major League Soccer has been engaged in discussions during the ongoing lawsuit with potential local investors and business leaders about a plan to keep MLS in Columbus.” He added that the league will continue discussions to determine whether there is a viable plan for the league to be successful in Columbus.

The Crew has indicated for months that it is seeking to relocate the team, and its ownership is pitching a publicly supported stadium to the Austin, Texas, City Council. Team spokesperson Tim Miller told Bloomberg Tax in a June 21 email that it didn’t have anything further to add to the league’s statement.

The team and league argue that the statute giving local buyers a right of first refusal on a team looking to relocate violates the U.S. Constitution. The suit brought by Attorney General Mike DeWine (R) says that the team received at least $6.6 million from Columbus and Ohio, and the team took those funds after the statutory requirement was enacted.

“We hope that the defendants will not seek to engage in further delay, and that they will participate in the conversations here in Columbus directed by the trial court while working towards complying with the statute,” DeWine said in a June 21 statement.

The case is Ohio v. Precourt Sports Ventures LLC , Ohio Ct. App., No. 18-AP-342, appeal denied 6/21/18 .

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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