National Football League

NFL Relocation Rules Make Rams’ Picture Even Cloudier

Earlier this week, we had some fun reacting to an opinion piece regarding how the Rams “belong” in Los Angeles, responding with some facts and generally stirring it up with Los Angeles football fans who were kind enough to visit our St. Louis website.

Now, I’m going to take a look at the rules set in place by the league in regard to franchise relocation and give you my opinion about how those rules might be applied if indeed Stan Kroenke decides he wants to go through the process of moving.

From Page D14 Volume I, Administrative/Business Operations – General Administration/Policies of the NFL bylaws, let’s take a look at Article 4.3, section A:

“Because League policy favors stable team-community relations, clubs are obligated to work diligently and in good faith to obtain and to maintain suitable stadium facilities in their home territories, and to operate in a manner that maximizes fan support in their current home community…If, having diligently engaged in good faith efforts, a club concludes that it cannot obtain a satisfactory resolution of its stadium needs, it may inform the League Office and the stadium landlord or other relevant public authorities that it has reached a stalemate in those negotiations. Upon such a declaration, the League may elect to become directly involved in the negotiations.”

Commissioner Roger Goodell has made it clear that the NFL does not want to move franchises. The legal and government entanglements that result from such moves could conceivably cause the NFL to lose some of the power and influence it possesses on Capitol Hill. For example, look at how the anti-trust threats made against baseball during the steroid hearings scared them into actual steroid testing. Secondly, the Rams are seven months removed from the arbitrator’s decision that the Edward Jones Dome isn’t in the top 25 percent of stadiums. Negotiations in Minnesota took nearly a decade before they reached a deal, and it’s been that long in San Diego. The Rams are talking to the state, but we would seem to be a long way from the Rams being able to conclude that they can’t get a satisfactory resolution of their stadium needs. And when they do, Goodell can and most certainly will become involved.

Also from Article 4.3:

“No club has an “entitlement” to relocate simply because it perceives an opportunity for enhanced club revenues in another location. Indeed, League traditions disfavor relocations if a club has been well-supported and financially successful and is expected to remain so. Relocation pursuant to Article 4.3 may be available, however, if a club’s viability in its home territory is threatened by circumstances that cannot be remedied by diligent efforts of the club working, as appropriate, in conjunction with the League Office, or if compelling League interests warrant franchise relocation.”

There’s a school of thought, which I was a part of, that suggested that Kroenke or any other owner could move his team simply because he wanted to increase the value of his franchise and/or increase revenues. That is not necessarily the case. The Rams and Goodell have been consistent in publicly saying Rams fans have done a good job of supporting the franchise. They understand that in most markets, the lack of success similar to that suffered by the Rams is going to result in less attendance. The Rams do a great job with corporate sales in St. Louis, and rent on the Edward Jones Dome is $250,000 annually. While they are one of the lower-revenue teams in the league, they aren’t losing money. The combination of the league’s desire for franchises to make an effort to stay in their home territory, and the desire to prevent moves because of greed, would seem to work in St. Louis’ favor.  

This is from article C:

In considering a proposed relocation, the Member Clubs are making a business judgment concerning how best to advance their collective interests. Guidelines and factors such as those identified below are useful ways to organize data and to inform that business judgment. They are intended to assist the clubs in making a decision based on their judgment and experience, and taking into account those factors deemed relevant to and appropriate with regard to each proposed move. Those factors include: 

1.     The extent to which the club has satisfied, particularly in the last four years, its principal obligation of effectively representing the NFL and serving the fans in its current community; whether the club has previously relocated and the circumstances of such prior relocation;   

Since John Shaw left and Kevin Demoff arrived, the Rams have done a great job of serving St. Louis fans. That being said, they haven’t had a winning season in 10 years. It should be noted that the league frowns upon multiple moves of a franchise, and the Rams did move here from Los Angeles just 19 years ago.

2.     The extent to which fan loyalty to and support for the club has been demonstrated during the team’s tenure in the current community;   

As has been noted, the Rams and Goodell publicly say that fan loyalty and support in St. Louis is not a problem.

3.     The adequacy of the stadium in which the club played its home games in the previous season; the willingness of the stadium authority or the community to remedy any deficiencies in or to replace such facility, including whether there are legislative or referenda proposals pending to address these issues; and the characteristics of the stadium in the proposed new community; 

While the Edward Jones Dome isn’t state of the art, it is better than what Candlestick Park and the Metrodome have been for the last 10 years, and what Qualcomm Stadium in San Diego is now and has been for a while. And there aren’t any characteristics of a stadium in Los Angeles for the Rams. There are deficiencies to the Dome, but other communities have been given years to work out a stadium deal. For St. Louis and Missouri to only be given 19 months would certainly stray from the NFL’s previous behavior.

4.     The extent to which the club, directly or indirectly, received public financial support by means of any publicly financed playing facility, special tax treatment, or any other form of public financial support and the views of the stadium authority (if public) in the current community; 

This one is interesting in that the franchise was happy to take a 100 percent, publicly financed stadium that’s still being paid for by taxpayers 19 years ago. Sure, there is a different majority owner, but Kroenke bought the Rams on the condition that they be moved to St. Louis and signed off on the lease. I would be interested to see how the NFL would respond to this one. The lease provision requiring top-tier status lets him out of the lease, but taxpayers are funding a stadium he would have signed off on.

5.     The club’s financial performance, particularly whether the club has incurred net operating losses (on an accrual basis of accounting), exclusive of depreciation and amortization, sufficient to threaten the continued financial viability of the club, as well as the club’s financial prospects in its current community;    

From what I understand, with TV money and NFL properties, it’s nearly impossible to lose money if you own an NFL team. There’s a big difference between financial gluttony and financial viability.

6.     The degree to which the club has engaged in good faith negotiations (and enlisted the League office to assist in such negotiations) with appropriate persons concerning terms and conditions under which the club would remain in its current home territory and afforded that community a reasonable amount of time to address pertinent proposals; 

This one is self-explanatory.

7.     The degree to which the owners or managers of the club have contributed to circumstances which might demonstrate the need for such relocation;      

Kroenke has only addressed keeping the team in town once since he bought it, in an interview with Bernie Miklasz in 2010 in which he said, “I’ll do my damnedest,” to secure the Rams’ future in St. Louis. Demoff tries to quell fears. But if Kroenke doesn’t commit to St. Louis, many fans won’t commit to his team. His behavior clearly contributes to less support from the St. Louis market, although the behavior of everyone who works at Rams Park tells you the franchise wants to be here.

Finally this, from Article 4.3, section E:

The Commissioner may recommend a transfer fee to the membership and Finance Committee for consideration in connection with any proposed transfer that he recommends be approved. Among the factors to be considered in the recommendation of such fee will be:    

1.    The income streams available to the club in its new location and the likelihood that they will be realized (which may be affected by community or business guarantees or similar undertakings); 

2.    The income streams historically available to the club in its previous location, and the incremental income streams (if any) that could reasonably be expected to be made available to the club in its old location;   

3.     The effect of the proposed relocation on current or anticipated League-level revenue and expense streams.

We all know that MLB’s Los Angeles Dodgers were sold in 2012 for $2.1 billon. Forbes lists NFL franchises as 15 of the 17 most valuable American sports franchises, with the Yankees standing at No. 1 and the Dodgers at No. 4. NFL owners, with the No. 1 sport, must know that if the Dodgers can command $2.1 billion, they can command at least $2 billion apiece for two expansion franchises. A move would affect league revenue, and would affect franchise revenue streams. Goodell and NFL owners aren’t going to just let someone waltz into L.A. without charging them an exorbitant relocation fee. Peter King estimated on our Thursday show that a move for Kroenke would cost between $2 and $3 billion. A massive relocation fee and the cost of building a stadium himself would appear to be prohibitive.

Those are my opinions. I found Los Angeles Times NFL writer Sam Farmer’s take interesting, too. He said on King’s TheMMQB podcast, “I think St. Louis is going to step forward with a more competitive bid and is not going to take this lying down. I’m a cynic. I’ve covered this for eighteen years now, and I’m cynical about anything getting done in Los Angeles. I think it’s so complex, and I always revert to what one owner told me, talking about the competitiveness of L.A. and how you will get kneecapped if you try to get by another competitor. An owner told me that in L.A. you don’t root for your competition to fail, you root for your competition to die, so once one stadium proposal rises up, you’re going to have the others take it out in any way possible.” He went on to say, “It’s going to be very difficult. I think deals will get done in other cities and L.A. will be without a team in five years.”

Kroenke may want to go down the road to L.A. Farmer notes that Stan loves it out there. But if he decides to do it, NFL rules and the other folks in SoCal apparently are going to make it pretty bumpy.