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In the forty-nine states not named California, workers’ compensation claims are centered on specific injuries, and a set amount of money is usually awarded or agreed to in a settlement. California, however, allows for “cumulative trauma” claims. Cumulative trauma encompasses all wear-and-tear injuries suffered from constant overuse on the job. Claims in the other states have been mostly manageable, because NFL clubs and their insurers have a fairly accurate idea of their average annual liability based on the most common and obvious specific injuries suffered by players.
With cumulative trauma cases, however, the potential liability is limitless, subject to the whim of California judges. Retired player benefits have already been calculated at more than $1 million per year. Further, this applies to any player who has ever played for a team based in California, regardless of whether the player was employed elsewhere before retiring. With ever-increasing health costs and the fact that benefits extend to the full life expectancy of the player, the potential liability of a team based in California is enormous.
With cumulative trauma cases, however, the potential liability is limitless, subject to the whim of California judges. Retired player benefits have already been calculated at more than $1 million per year. Further, this applies to any player who has ever played for a team based in California, regardless of whether the player was employed elsewhere before retiring. With ever-increasing health costs and the fact that benefits extend to the full life expectancy of the player, the potential liability of a team based in California is enormous.
Therefore, any team that voluntarily relocates into California must be willing to bear the severe workers’ compensation financial burden that is guaranteed to result.
In addition to the added workers’ compensation liability, any owner considering relocation into California must also bear in mind the state’s newly passed Proposition 30, which raises the state income tax rate on individuals earning more than $1 million from 10.3% to 13.3%, the highest rate in the country.
In order for such a move to be financially prudent, the relocating club must conduct a cost-benefit analysis to determine whether its profits will increase to such an extent as to cover all liability incurred by its increased workers’ compensation exposure and tax hike. In doing so, the club must not be short-sighted; it must be confident that once the shimmer of a new team in town fades, the club can maintain consistent profits for decades to come, despite the inevitable ebbs and flows of fan support and the team’s on-field performance. It must also remember that with every player it signs to a California contract comes the potential for a lifetime of medical coverage liability.
In addition to the added workers’ compensation liability, any owner considering relocation into California must also bear in mind the state’s newly passed Proposition 30, which raises the state income tax rate on individuals earning more than $1 million from 10.3% to 13.3%, the highest rate in the country.
In order for such a move to be financially prudent, the relocating club must conduct a cost-benefit analysis to determine whether its profits will increase to such an extent as to cover all liability incurred by its increased workers’ compensation exposure and tax hike. In doing so, the club must not be short-sighted; it must be confident that once the shimmer of a new team in town fades, the club can maintain consistent profits for decades to come, despite the inevitable ebbs and flows of fan support and the team’s on-field performance. It must also remember that with every player it signs to a California contract comes the potential for a lifetime of medical coverage liability.
What remains to be seen is how the league office will react when only one team applies for relocation to Los Angeles. The commissioner’s June memo makes it clear that the NFL wants two teams in the City of Angels, and it will be very interesting to see whether a single club is permitted to move there and inhabit Farmer’s Field without a co-tenant.
Due to the financial risks posed by a current NFL team relocating to Los Angeles, it appears unlikely that any franchise will make the move. As stated above, it appears that the most feasible means of NFL entry into the Los Angeles market is a league expansion to thirty-four teams. While a number of current clubs may prefer Los Angeles to their current homes, the logistics of relocation appear to render the move entirely inadvisable at this time.
Due to the financial risks posed by a current NFL team relocating to Los Angeles, it appears unlikely that any franchise will make the move. As stated above, it appears that the most feasible means of NFL entry into the Los Angeles market is a league expansion to thirty-four teams. While a number of current clubs may prefer Los Angeles to their current homes, the logistics of relocation appear to render the move entirely inadvisable at this time.
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