The Trail Blazers’ $600 Million Shakedown Has a Legal Name — Two of Them: Sherman and RICO.
Somebody call a cop
Extortion is a crime, and the civic shakedown that new Blazer owner Tom Dundon is running arguably violates both anti-trust laws and the federal RICO—racketeering influenced corrupt organization—statute.
In simple terms, Dundon, backed up by the other owners of NBA franchises and the league itself has said, give us $600 million for improvements to the MODA center or we’ll take our franchise and leave town. The Governor and Legislature have folded like a candy store owner threatened by a bunch of muscled hoodlums, meekly standing aside and opening up the civic cash register.
What the Blazers and the NBA have done is more than just sharp dealing, they’re likely breaking at least two laws. The venerable Sherman anti-trust act, first passed in 1890, with the explicit aim of fighting Robber Barons—the people Teddy Roosevelt called the “malefactors of great wealth”–from using their power to exploit consumers. The Sherman Act bans conspiracies in restraint of trade. It’s very clear that the NBA is an effective conspiracy to restrict the supply of professional basketball entertainment in order to drive up profits for team owners.
New Blazer owner Tom Dundon is no stranger to playing fast and loose with the law to turn a quick buck. As Oregon Public Broadcasting and Pro Publica recently reported, Dundon’s firm, Santander Capital was charged with predatory lending and hauled into court for violating financial regulations. The firm’s auto-lending targeted financially weak borrowers, extending to them auto loans they didn’t have the means to repay. As with many well-heeled white collar criminals, Dundon’s firm negotiated a cash settlement in which they denied guilt. This malefactor is now using his great wealth to buy an NBA franchise, and weaponize it to build even more wealth. What he did to low income car buyers, he’s doing to Portland and Oregon.
Here’s the deal
Oregon, Portland and Multnomah County–all financially strapped–are on the verge of handing a Texas billionaire $600 million to underwrite the costs of upgrading the Moda Center to his liking. The state of Oregon — currently running a currently cutting services, currently telling school districts and human services agencies to expect less — has committed $365 million in state bonds. Still in the works are $120 million from a cash-strapped Portland city budget, and $88 million from Multnomah County (struggling to pay for homeless services), all to renovate a privately operated sports arena. The team’s new owner, Tom Dundon, the subprime auto lending billionaire from Texas, is contributing nothing. Zero dollars. From the billionaire. For what amounts to his arena.
It’s against the law
Two laws, long on the books, offer Portland recompense for this kind of extortion. The first is the Sherman Act itself, which allows “treble damages” for violations. Someone who violates the Sherman Act can be forced to pay compensation equal to three times the profits they reap from their illegal activity. The $600 million could translate into $1.8 billion in damages.
The second law is a bit more subtle, but is highly applicable, it is the federal “Racketeering Influenced and Corrupt Organizations” or RICO law. We generally think of this as a law targeted at organized crime selling drugs or infiltrating otherwise lawful businesses. But it has much wider applicability, and includes the same conduct when employed by white collar criminals.
“Nice basketball team you’ve got there, wouldn’t want anything to happen to it.” (Edward G. Robinson, Little Caesar, 1931).
The Grift: Artificial Scarcity as a Weapon Against Cities
The NBA has 30 franchises. Economic research consistently shows there are far more cities capable of supporting an NBA team than there are teams available. That gap — between the number of viable markets and the artificially limited supply of franchises — is not an accident. It is the product of a deliberate, coordinated restriction on league expansion that courts and scholars have identified as a textbook exercise of monopoly power.
When a league restricts franchise supply below market demand, it does so with conscious intent. It’s business strategy is to pit city against city in order to be able to extract subsidies which shift the costs of operation to the public sector and shift profits to team ownersThis is not competition. This is coercion dressed up as “team spirit.”
The economics of this were documented exhaustively by Stanford’s Roger Noll and Smith College’s Andrew Zimbalist in their widely regarded book Sports, Jobs, and Taxes. In a competitive franchise market, cities would never agree to deals like the one Oregon just accepted. Subsidies exist only because the market is not competitive. They are the price of monopoly, paid by taxpayers to private owners..
The Blazers claim that the team generates $670 million annually in economic impact, a wildly exaggerated claim that can’t be squared with indepedent peer reviewed research. As we’ve documented at City Observatory, the loss of NBA franchises in Seattle and Vancouver had no discernible impact on those region’s economies. If anything, these hagiographic impact studies have things exactly backwards: professional sports franchises don’t add economic wealth, they exist to extract it from fans and the host community. The economic impact numbers teams present to municipalities are consistently, systematically inflated. They are not projections; they are negotiating documents.
What the Public Records Show
OPB’s reporting on the months of private lobbying that preceded Senate Bill 1501 documents the shakedown, step-by-step. A Blazers lobbyist explicitly told city staff that “100% public financing is the only solution.” The team shared renovation cost estimates — $600 million — without explaining the methodology behind that figure. New owner Tom Dundon said nothing publicly about his intentions while his representatives implied, repeatedly, that relocation was on the table.
The implicit message, delivered through a “small army of lobbyists,” a parade of cheerleaders to the Capitol, and appearances by Blazers legends like Terry Porter, was consistent and unmistakable: “Nice basketball team you’ve got there, it would be a shame if it left town.”.
“This is a market rate deal,” said one senior official. It is precisely the opposite. In a market rate deal, the party providing 100% of the capital for someone else’s private asset would not simply be hoping for a 20-year lease in return. This is a giveaway of hundreds of millions of dollars of public funds to a private party.
The laws: Sherman and RICO
What just happened to Oregon is a crime that has two legal names: Sherman and RICO.
The first is antitrust violation. The Sherman Antitrust Act prohibits combinations and conspiracies in restraint of trade. The NBA’s artificial restriction of franchise supply — coordinated among 30 separately owned teams — is precisely the kind of horizontal market restriction the Sherman Act was designed to address. In American Needle v. NFL (2010), the Supreme Court unanimously held that sports league members are separate economic actors, not a single entity immune from antitrust scrutiny. In NCAA v. Alston (2021), the Court applied this same principle to amateur sports organizations,
The relevant market is not just entertainment. It is the market for men’s professional basketball franchises in which Oregon is a buyer. Oregon cannot buy from anyone but the NBA. The NBA has coordinated to limit what Oregon can buy. That coordination is what enables them to extracted $600 million from public treasury.
Legal scholars Stephen Ross and Gary Roberts have both argued that cities are identifiable victims of franchise limitation, and that antitrust enforcement, is needed to solve this problem. The Attorney General of Oregon has standing to investigate and potentially bring claims under federal antitrust law. The state’s damages, under antitrust trebling provisions, would be substantial.
The second is RICO. The Racketeer Influenced and Corrupt Organizations Act (RICO) is not, contrary to popular assumption, limited to organized crime. It applies to any enterprise engaged in a pattern of racketeering activity, including Hobbs Act extortion and mail and wire fraud.
Consider what occurred here. OPB’s public records document months of private communications in which Blazers representatives, operating as an enterprise with the NBA’s franchise scarcity as structural backdrop, used implicit threats of relocation — economic fear — to extract hundreds of millions of dollars in public funds from state and local government. The Blazers deployed dubious, and likely fraudulent economic impact projections, transmitted through lobbyist communications, mail, and wire, to government officials making public financing decisions.
Another federal law, the Hobbs Act defines extortion as obtaining property through “wrongful use of fear” — including economic fear. The fear here — lose the Blazers, suffer reputational damage — was not incidental to the negotiation. It was the negotiation. And the fear was manufactured by the league’s artificial restriction of franchise supply: a wrong the league itself created and then weaponized against Portland, as it does against cities around the nation.
G. Robert Blakey, the Notre Dame law professor who literally wrote RICO, has argued that the statute was designed to reach exactly this kind of systematic, organized extraction. The NBA is not the Gambino family. But the mechanism — artificial scarcity, credible threat, extraction of public resources, repeated across dozens of cities over decades — is a pattern of conduct that exactly fits RICO’s statutory framework.
What Oregon Should Do
The state and the city should seriously examine their legal options.
The Oregon Attorney General could undertake a formal antitrust analysis of the NBA’s franchise limitation policies and their effect on Oregon’s public finances. This analysis should examine whether the state has grounds for a civil antitrust claim and what damages, including trebling, would amount to given the $600 million in public commitments just made.
The City of Portland, which owns the Moda Center, should retain independent counsel to evaluate whether the implicit relocation threats documented in OPB’s reporting rise to the level of a violation of federal law.
All public officials should ask themselves whether they And the Oregon delegation in Congress should join the growing bipartisan chorus calling for a reexamination of professional sports leagues’ antitrust exemptions — particularly baseball’s explicit exemption and the de facto immunity other leagues enjoy through judicial deference.
The Deeper Problem
What happened in here is not unique Portland. It is the same story that has played out in Cleveland, Cincinnati, Minneapolis, Nashville, San Antonio, and dozens of other cities: a legislature facing manufactured urgency, arguably fraudulent economic projections, implicit relocation threats, and a fundamentally broken market in which there is only one seller and one buyer, and the buyer has no leverage because the seller and its partners have coordinated to ensure no alternatives exist.
The scholarly consensus on this — including more than three decades of research from Roger Noll to Dennis Coates to Brad Humphreys to Judith Grant Long — is unusually clear for any contested empirical question. Stadium subsidies do not produce the economic returns promised. The monopolistic structure of sports leagues is the mechanism that makes these one-sided, extortionate deals happen. Antitrust enforcement is the correct remedy.
Oregon just paid $600 million to learn what every other city that has done this already knows: in a rigged market, you don’t negotiate. You get told what you owe. The chief difference is that the current heavies don’t dress as nicely as Edward G. Robinson did.
The question now is whether Oregon will be the first state with the legal sophistication and political will to call it what it is.