Joseph Pettinato
Staff Editor, Delaware Journal of Corporate Law, Volume 50
Introduction
In July 2022, the Philadelphia 76ers announced a $1.3 billion project to build a privately funded arena in Center City as a result of their current lease in the Wells Fargo Center, expiring in 2031.[1] However, the organization has abandoned their thoroughly assembled scheme, instead partnering with Comcast Spectacor, owner of the NHL’s Philadelphia Flyers and the Wells Fargo Center, to build a new arena in the South Philadelphia Sports Complex to be used by both the 76ers and the Flyers.[2] The proposed arena, known as 76 Place at Market East, went so far as to have been approved by the Philadelphia City Council, who granted final approval following several weeks of hearings and community feedback sessions.[3]
While the people of Philadelphia rejoice in the decision to keep their teams connected in the same plaza, it is difficult to ignore all the potential legal issues that could arise from such a major development. This could include corporate governance issues regarding the joint venture, as well as antitrust and competition issues.
Corporate Governance in the Arena Deal: Power Plays and Partnerships
The 76ers and Comcast Spectacor will form a joint venture to develop, own, and operate the new arena.[4] The venture will be a 50-50 partnership between the 76ers’ ownership group, Harris Blitzer Sports and Entertainment (HBSE), and Comcast Spectacor.[5] [RK1] An example of a successful professional sports franchise joint venture can be found just a few hours down I-95; MetLife Stadium, which was privately financed through a 50-50 joint venture between Jets Development LLC and Giant Stadium LLC.[6] There were no major legal challenges to that arrangement, and, if anything, it has been viewed as a model that avoided any public funding.
However, this new arena presents a unique twist in that Comcast is not just a co-owner of the arena, but, through their agreement, became a new minority owner of the 76ers franchise.[7] This deepens the alignment between the parties—Comcast is essentially both the 76ers business partners and one of its owners. From a corporate governance standpoint, this joint venture turns former adversaries into partners. The 76ers used to simply be tenants in a Comcast-controlled arena, eager to take control of a venue they can claim as their own. Now, both will jointly own a new state-of-the-art facility, sharing operational control and revenue streams.[8]
A. Walking the Tightrope: Fiduciary Duties and Conflicts of Interest
A complex web of fiduciary duties can arise as a result of creating a joint venture. “The duty of loyalty is especially tricky in joint ventures, as board directors who are employees of one shareholder are simultaneously a fiduciary to their employer and to all other shareholders.”[9] Because the joint venture’s board will include directors associated with each parent company, the 76ers and Comcast, conflicts of interest can almost certainly arise.[10] These board members often are faced with a dual loyalty problem: a requirement to act in the best interests of the joint venture company, but a possible influence by the interests of the parent company that nominated them.[11]
Here, consider a Comcast-appointed director on the board. That individual has an obligation to make choices that will benefit the arena project overall, even if those choices are less advantageous for Comcast’s individual businesses.[12] For instance, decisions about scheduling and revenue must be made in order to maximize the arena’s performance without unjustly giving preference to the 76ers or Comcast’s Flyers team. In anticipation of such conflicts, it would be wise that the joint venture agreement will include in-depth conflict resolution mechanisms.[13] As the the joint venture is a 50/50 split, deadlock risk can develop if the parties disagree. Pre-negotiating arbitration to handle such disagreements or even buyout rights may be possible solutions.[14]
Further, there is an interesting cross-ownership situation in which HBSE also own the New Jersey Devils NHL team.[15] This indicates the 76ers’ owners are now in a partnership with Comcast, who own the Devil’s rival, the Philadelphia Flyers.[16] While this isn’t necessarily “illegal,” it is a rare scenario that could pose indirect conflicts. To illustrate, there may be instances where arena decisions somehow affect the competitive balance or business of the Devils’ home arena in Newark. The NHL most likely reviewed and approved this venture given the Devil’s will remain a separate entity. However, it emphazises that individuals such as Josh Harris will be navigating multiple roles, NBA owner, NHL owner, and arena co-owner—each with potentially conflicting interests. Vigorous corporate governance policies will be required to manage all these overlaps: waivers, non-compete provisions, or conflict of interest protocols.[17]
A Monopoly on Philly’s Entertainment Scene? Antitrust and Completion Concerns
Another legal question is whether the new joint venture arena deal could draw antitrust scrutiny. By partnering, the 76ers and Comcast have essentially avoided a scenario of two competing indoor arenas in Philadelphia. Initially, the 76ers’ plan would have created a new, separately controlled 18,500-seat venue in Center City to act as a competitor to Comcast’s Wells Fargo Center for not only sporting events, but concerts and shows as well.[18] Now that the 76ers and Comcast will jointly run a single arena, along with the demolition of the Wells Fargo Center, that competition has been eliminated.[19]
Antitrust regulators could view this as a form of market concentration within the local live events market.[20] The relevant market might be defined as the market for large indoor arena venues in the Philadelphia area. The 76ers were essentially an up-and-coming player in that market prior to the deal; now, the only pertinent arena is still under common control. Whether this triggers any formal antitrust action is unclear.
Mergers and joint ventures are scrutinized if they purport to substantially lessen competition.[21] Here, the transaction could be viewed as two separate organizations, HBSE and Comcast Spectacor, collaborating on resources to prevent a new competitor arena from entering into the market. Antitrust regulators might consider whether the joint venture harms competition and consumers. One argument is that having only a single arena operator limits the options available to concert and event promoters for negotiating better rental rates. This potentially results in higher ticket prices or fewer event choices, which could be detrimental to consumers. On top of that, Comcast already has distasteful history regarding sports venues that may heighten such concerns.[22] This mirrors a common saying in antitrust circles: “If you can’t beat ‘em, join ‘em.”
On the other hand, pro-competitive defenses for the joint venture may exist.[23] “[T]he US federal courts and antitrust agencies typically apply a less restrictive standard called the ‘rule of reason’ when evaluating joint ventures.”[24] This test evaluates the pro-competitive benefits against the anticompetitive harms to determine overall market impact.[25] The construction of one state-of-the-art arena, instead of two competing ones, could be seen as enhancing efficiency and will be better overall for consumers—fans will get a superior facility and teams will share costs. Joint ventures that develop new products or increase efficiency are often permissible under antitrust law, provided that any competition restraints are deemed to be fairly reasonable.[26] For example, the joint venture can argue that such a partnership was essential to accomplish the “Battery Park” style mixed use development that neither could achieve alone.[27] Whether the partnership represents a legitimate, pro-competitive business plan, or if it significantly limits market choice and hurts consumers will be the key question for antitrust regulators.
Conclusion: A New Era or a Legal Battleground?
Although the 76ers’ arena relationship with Comcast Spectacor is a game-changer for Philadelphia sports, there are a number of legal issues surrounding it. The deal is complicated, ranging from potential antitrust issues over removing arena competition to corporate governance issues like managing conflicts of interest and shared control. Regulators may still examine the partnership’s effects on the market and consumers more closely, even though it might provide efficiency and a top-notch venue. The city’s sports and entertainment industry will ultimately be shaped by this endeavor for years to come, but the legal disputes might not be finished just yet.
About the Author
Joseph Pettinato is a second-year law student at Widener University Delaware Law School. He is currently a Staff Editor for Volume 50 of the Delaware Journal of Corporate Law and next in line to be the Bluebook Editor for Volume 51. Joseph graduated from St. Joseph’s University with a major in Finance, ultimately leading to his interest in corporate law. This summer, Joseph will be returning to Mericle Commercial Real Estate Services, working directly with their in-house legal department. Outside of law school, Joseph enjoys working out, golfing, playing video games, and listening to comedy podcasts. Joseph plans to practice law in Pennsylvania and eventually return to his hometown, Scranton, PA, to be close to his family.
[1] Tim Bontemps, Philadelphia 76ers’ $1.3 Billion Project Calls for Downtown Arena by 2031-32, ESPN (July 21, 2022, 05:56 AM), https://www.espn.com/nba/story/_/id/34274259/philadelphia-76ers-13-billion-project-calls-downtown-arena-2031-32.
[2] Chris O’Connell, Sixers Abandon Plans for Center City Arena: South Philly Residents React, Fox 29 Phila. (Jan. 13, 2025, 10:43 PM), https://www.fox29.com/news/sixers-abandon-plans-center-city-arena-south-philly-residents-react.
[3] Alexander Simon et al., Plans to Build 76ers Arena in Center City Fall Through, Team to Stay in South Philadelphia, Sources Say, CBS News (Jan. 13, 2025, 11:39 AM), https://www.cbsnews.com/philadelphia/news/sixers-arena-plans-fall-through-in-center-city-philadelphia/.
[4] O’Connell, supra note2; Crissman v. Dover Downs Entm’t, 289 F.3d 231, 250 (3d Cir. 2002) (defining a joint venture as any association of persons or corporations who by contract, express, or implied, agree to engage in a common enterprise for their mutual profit will be considered a joint venture).
[5] O’Connell, supra note 2.
[6] Alice McGillion, Jets and Giants Unveil New Stadium Design, Break Ground on Project, MetLife Stadium (Sept. 5, 2007), https://www.metlifestadium.com/news/2007/09/05/jets-and-giants-unveil-new-stadium-design-break-ground-on-project#:~:text=Jets%20and%20Giants%20Unveil%20New,is%20scheduled%20for%20completion.
[7] Harris Blitzer Sports & Entertainment and Comcast Spectacor Announce Joint Venture to Build World-Class Arena in South Philadelphia as well as Revitalize Market East, NBA (Jan. 13, 2025, 10:52 AM), https://www.nba.com/sixers/news/harris-blitzer-sports-and-entertainment-and-comcast-spectacor-announce-joint-venture-new-arena (stating that Comcast has also secured the naming rights for the new arena, replacing the current Wells Fargo Center name when the sponsorship ends in August 2025).
[8] 15 Pa. Cons. Stat. § 8441(a) (2023) (stating that each partner is entitled to share in distributions).
[9] Meghan McGovern et al., JV Directors Duty of Loyalty, Harv. L. F. Corp. Governance (Nov. 16, 2019), https://corpgov.law.harvard.edu/2019/11/16/jv-directors-duty-of-loyalty/.
[10] Id.
[11] Id.
[12] 15 Pa. Cons. Stat. § 8447(b)(2) (2017) (“[Partners must] refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a person having an interest adverse to the partnership.”).
[13] Philip Zanfagna, Decision Making in 50:50 Joint Ventures, Harv. L. F. Corp. Governance (Nov. 13, 2020), https://corpgov.law.harvard.edu/2020/11/13/decision-making-in-5050-joint-ventures/ (“[W]e found most agreements only contained boilerplate dispute resolution terms, implying that many 50:50 ventures are under-prepared for inevitable shareholder misalignment.”).
[14] Id.
[15] Managing And Limited Partners of NJ Devils, NHL, https://www.nhl.com/devils/team/managing-and-limited-partners-senior-leadership (last visited Mar. 6, 2025).
[16] O’Connell, supra note2.
[17] McGovern et al., supra note 9.
[18] Bret McCormick, More Winners than Losers in Arena Peace Deal Between 76ers, Comcast Spectacor, Sports Bus. J. (Jan. 20, 2025), https://www.sportsbusinessjournal.com/Articles/2025/01/20/Facilities/philly-arena-development-breakdown/ (“In the end, Spectacor and CEO Dan Hilferty adroitly managed a tricky PR situation with the Sixers and avoided the worst outcome—a competitor arena.”).
[19] Josh Wilson, Sixers Announce Plans for New Arena, WNBA Bid Day After Center City Arena Plans Nixed, Fox 59 (Jan. 13, 2025, 12:22 PM), https://fox59.com/sports/sports-illustrated/4182ff93/sixers-announce-plans-for-new-arena-wnba-bid-day-after-center-city-arena-plans-nixed/ (noting that Wells Fargo Center will be demolished following the construction of the new arena, resulting in one singular indoor arena).
[20]Joshua Shapiro et al., Striking the Balance in US Joint Ventures, Glob. Competition Rev. (Aug. 12, 2024), https://globalcompetitionreview.com/review/the-antitrust-review-of-the-americas/2025/article/striking-the-balance-in-us-joint-ventures#:~:text=The%20US%20antitrust%20laws%20do,they%20form%20a%20joint%20venture. (explaining how horizontal competitors with substantial market share or in concentrated markets are more likely to draw antitrust scrutiny when they form a joint venture).
[21] 15 U.S.C. § 18.
[22] In 2009, Comcast Spectacor gained a reputation for controlling venues, ticketing, and ownership of numerous teams, in order to strengthen its position in the entertainment industry. See Mark Cooper, Public Interest Groups Call on Justice Department to Block Ticketmaster/LiveNation/Comcast Merger, Consumer Fed’n Am. (Dec. 1, 2009), https://consumerfed.org/press_release/public-interest-groups-call-on-justice-department-to-block-ticketmasterlivenationcomcast-merger/#:~:text=As%20Bloomberg%20News%20recently%20reported%2C,program%20to%20Ticketmaster%20in%202007.
[23] Shapiro et al., supra note 20 (“[M]ost joint ventures will be lawful under the antitrust laws if structured with sufficient care to maximise pro-competitive benefits while minimising anticompetitive effects.”).
[24] Id.
[25] Id.
[26] Id.
[27] Shapiro et al., supra note 20 (noting that HBSE and Comcast Spectacor repeatedly cited the highly successful Battery mixed-use megaplex in Atlanta as inspiration); see also The Battery Atlanta, Wikipedia, https://en.wikipedia.org/wiki/The_Battery_Atlanta#:~:text=The%20Battery%20Atlanta%20is%20a,the%20area%20surrounding%20the%20ballpark.&text=400%2C000%20sq.,(approx.) (last visited Mar. 6, 2025) (“The complex is a mix of shops, dining, living and workspace in the area surrounding the [Atlanta Braves’] ballpark.”).
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