Last week, the Boston Celtics and the Philadelphia 76ers squared off in a unique regular season matchup at London’s 02 Arena. The game was part of a growing trend among the major U.S. sports leagues to play games in other countries as a marketing tactic. Over the past several years, contests have been played in places such as Australia, Mexico, Puerto Rico, China and Japan.
London has been perhaps the most popular of the international destinations with the NFL playing at least one game in the United Kingdom every year since 2007.
The NFL recently announced plans to play three more regular season games in London in 2018 as well as a fourth international game at Estadio Azteca in Mexico City.
The NFL’s consistent, and increased presence in London, has left many wondering whether the league considers the city as a viable expansion or relocation destination for a franchise. Nearly every one of the NFL games played in the United Kingdom have been played before sellout crowds and metrics suggest that there may be enough fan interest to justify a permanent franchise abroad.
Assuming there is a viable market for the sport in the United Kingdom, there are still a number of practical and legal concerns to consider.
Immigration and visa issues would likely be the most pressing legal concern if a domestic league placed a team in London. Under the current structure in which no team is permanently located abroad, players are granted a temporary “sporting visitor” visa for games played in the U.K. If a team became a permanent fixture in the British capital, its employees would need to secure actual work visas.
While probably feasible, securing such visas could be problematic.
First, on a broad scale, laws require that a formally recognized governing body approve the working visas. Currently, the NFL has no official governing body in the United Kingdom.
While it would probably be possible for an established league such as the NFL to establish an approved governing body abroad (or negotiate via the existing British American Football Association), the process is not a fast one and could take time.
A second visa issue relates to players with criminal convictions. In the United Kingdom, a conviction carrying a sentence of less than one year would preclude entry on a work visa for five years from the end of the sentence with longer bans for more serious crimes.
This would be problematic for some players and would assuredly draw the ire of the NFL Players’ Association, who might view this as an unfair restriction on working rights of certain players.
The players’ association would likely want to negotiate other safeguards as well given changed working conditions exacerbated by increased travel and the potential impact on players’ wages.
To that end, the NFL would need to cope with differing tax laws in the United Kingdom, which could have a profound impact on players located there.
The highest tax rate in the United Kingdom is 45 percent, and the highest rate in the United States under the newly enacted Tax Cuts and Jobs Act is 37 percent. Further, under U.S. law, a person working abroad is only entitled to a foreign tax credit up to their U.S. rate, so players would not be able to obtain a credit for up to 8 percent of taxes paid based on the highest rates in the respective countries.
Currently, teams that play a single game in London are indeed subject to U.K. tax rates, but the impact is minimal because they spend less than a week there. If a player competes in at least eight regular season games, plus preseason and potentially playoff games abroad, the tax consequences are much greater. From a practical perspective, this could discourage free agents from signing with a London franchise.
The U.K. Treasury has granted tax exemptions in the past for athletic events such as the London Olympics and the UEFA Champions League final matches played in London. However, the granting of exemptions is not guaranteed and is inconsistent.
For example, the Treasury rejected an exemption for the ATP World Tour tennis finals played in the country. This is something that could certainly be addressed legislatively, but it remains an open question.
A league placing a permanent franchise abroad would also have to cope with laws related to competition and free movement. Competition laws related to issues similar to U.S. antitrust law.
Certain components of the NFL player compensation system, such as the draft and the salary cap, would ordinarily be antitrust violations but for the fact that these facets are collectively bargained between the league and the players’ association. From a U.K. completion law standpoint, it’s probable that the same exemption may apply, but a legal challenge on the issue is certainly a possibility.
The free movement issue was previously thought to be a major hurdle to a team relocating to London. When the European Union was formed, a key component of the treaty was the unimpeded free movement of workers.
Under EU laws, many viewed the draft and the restricted free agency system as prohibitions on free movement. This was particularly problematic since there are several EU born players on NFL rosters.
Interestingly, the Brexit referendum may have actually made it easier for the NFL to locate to the U.K., since now only U.K. labor laws are likely to apply.
Overall, the viability of a London based NFL franchise seems increasingly likely, though obvious legal hurdles remain. The league will need to work cooperatively with local governing authorities, as well as the players’ association, to meet all legal requirements while simultaneously ensuring that the team operates on a level playing field from a financial perspective.
If the league continues to garner sufficient fan interest overseas, expect the NFL to further probe the possibility of a permanent franchise in London