April 6, 2016

Baseball, arbitration clauses, and publicly funded stadiums

By Caleb R. Trotter Attorney

Unless you live in Adelanto, California or closely follow Minor League Baseball, you’ve probably missed out on the brouhaha between the city of Adelanto and the owners of the High Desert Mavericks baseball team.

shutdowninning.com
shutdowninning.com

The trouble centers on the 2012 lease agreement between Adelanto and Main Street California, LLC–owners of the Mavericks, the High Class A affiliate of the Texas Rangers, who play home games in city-owned Heritage Field. In January, Adelanto’s city council voted to terminate the lease and evict the Mavericks from the stadium roughly two months before the start of the 2016 season.

The city makes three claims in its attempt to evict the team: 1) the team has failed to pay the city half of the parking revenue collected, as agreed; 2) the annual rent of $1, with the team responsible for certain stadium maintenance costs, violates the California Constitution’s requirement that government contracts serve a “public purpose” and not gift public funds; and 3) the city has subsidized the team over $1.8 million over the last three years.

Without getting into the merits of Adelanto’s claims, the lease agreement contains an arbitration clause that requires any dispute over terms to be brought before a neutral arbitrator. As I’m sure regular readers of Liberty Blog are aware, California courts are routinely hostile to arbitration agreements. However, last week the California Supreme Court upheld an arbitration agreement in an employment dispute in Baltazar v. Forever 21. As previously reported, the Court in Baltazar noted the need for clarity in cases involving contracts, and stated: “Commerce depends on the enforceability, in most instances, of a duly executed written contract.  A party cannot avoid a contractual obligation merely by complaining that the deal, in retrospect, was unfair or a bad bargain.”

In Adelanto, the city was happy with the deal originally, but now that it’s suffering through an economic depression, the city seems to want out of its commitments agreed to in the 2012 lease. In other words, Adelanto claims the lease agreement was a bad bargain for taxpayers and now wants the court to help it renegotiate.

Fortunately, after hearing arguments by the city and the team on Monday, Judge McCarville of the San Bernardino County Superior Court ruled to compel Adelanto to enter arbitration with the team, as agreed. We can put a run on the board in favor of freedom of contract.

This case provides yet another example of what can (frequently) go wrong when local governments use public funds to build or improve stadiums to entice or retain professional sports teams. If local governments really want to look out for taxpayer dollars and civic well-being, they’d be wise to more stringently analyze stadium deals and subsidies at the outset, rather than after a deal goes sour. In any event, courts should enforce lawful agreements. I’m happy to see that is what happened here, and in California no less.

H/t Scott Lucas, who provides excellent daily coverage of the Texas Rangers minor league affiliates and has kept Newberg Report readers informed of the situation in Adelanto.

What to read next