National Football League

Rams Staying or Leaving? The Arguments for Both Sides

dave peacock featured-3

Last week provided quite a five days of news on the stadium front for the Rams. On Monday, we learned from the Los Angeles Times that Rams owner Stan Kroenke had partnered with Stockbridge Capital group to develop the land and build a stadium on the old Hollywood Park race track plot he purchased in Inglewood, California, about five miles from Los Angeles International Airport.

Then on Friday, Missouri Governor Jay Nixon’s task force of former Anheuser-Busch President David Peacock and local attorney Bob Blitz unveiled their plans for a new 64,000 seat stadium on the St. Louis riverfront. Both Rams fan bases, in L.A. and St. Louis, have reason to feel good about their chances to be driving to home games in 2016. Here are some of those reasons…

For Los Angeles:

Rams owner Stan Kroenke
Kroenke’s actions have made it clear he’s not interested in having his team in St. Louis.

-Kroenke’s actions over the course of the last year clearly showed a desire to move his franchise to L.A. Not talking to the customers who support his team in St. Louis, refusing to talk to anyone in a position to help him build a stadium in St. Louis, and initially purchasing the land at Hollywood Park were all clear indicators that he doesn’t want to run his business in St. Louis.

-The NFL clearly wants a team in the USA’s second largest market. Several owners have made it a point to tell people that the Rams were going to move. Commissioner Roger Goodell has frequently talked about getting the league back in L.A. The NFL has its television network based in L.A., and has made no secret of its desire to half a west coast wing of the Pro Football Hall of Fame.

-From a media standpoint, Fox Sports is based in Los Angeles, and ESPN has developed a major presence there. L.A. is the entertainment capital of the world, and provides media coverage for a franchise there that isn’t available in St. Louis.

-There are a lot of incredibly rich businesses and people in Los Angeles. When the NFL sent out a questionnaire to potential fans in the area, the league asked about their willingness to pay $50,000 for lower level club PSL’s, and $25,000 for upper level. Kroenke is planning an 80,000 seat stadium that will likely cost $1.5 billion. Combine that with a relocation fee of $500 million, and it’s a $2 billion move. An average PSL price of $25,000 for 80,000 seats would give Kroenke $2 billion, allowing him to pay off his stadium without affecting his personal fortune. As we all know, you don’t make $5.6 billion by spending wildly on what someone else will pay for.

-Visiting teams would realize a windfall if the Rams would charge a minimum of $100 per ticket, as was suggested in the NFL questionnaire. There’s a 60/40 split of non-premium ticket proceeds for each game. So the teams in the NFC West, from a financial perspective, would certainly prefer 40% of the take of 80,000 really expensive seats in L.A. to 40% of the 64,000 pretty expensive seats in St. Louis.

-That rich fan base is passionate about bringing the Rams back. The Rams welcomed those fans to a tailgate get together in San Diego when the Rams visited there in December. The passion for the Rams is greater in the Southland than their passion for the Chargers or the Raiders, teams that also could in theory relocate.

-It’s far from a guarantee that St. Louis and Missouri government leaders will approve an extension of the bonds that currently are applied to the Edward Jones Dome. Even if it is simply an extension of what people are already paying, there are people in our country, as we know, that don’t want the government to get or spend any additional dollars for any more time.

-The NFL has already bent their rules to accommodate Kroenke. They agreed to allow him to skirt their cross ownership rules by continuing to own the Denver Nuggets and Colorado Avalanche until December of 2014. When he decided he needed more than three and a half years to comply, they gave him a one year extension. If they’re going to allow Kroenke to skirt those rules, why not the relocation guidelines?

For St. Louis

-St. Louis has detailed plans for a new stadium. As Jay Nixon’s stadium task force, attorney Bob Blitz and former Anheuser-Busch President David Peacock unveiled details on Friday. They provided knowledge of where the facility will be, how it will fit, where parking will be, how it will be financed and what level of support taxpayers and fans will have to provide.

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Dave Peacock has been in close contact with the NFL regarding stadium plans for St. Louis.

-The NFL is aware of the St. Louis plan. Multiple reports suggested that the NFL was blindsided by Kroenke’s plan, but Peacock met with NFL Vice President-Stadium Development Eric Grubman, and has been in constant contact with the league about his plans.

-The franchise is already based in St. Louis, and the NFL’s own relocation guidelines say “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.” These guidelines, ironically, are a result of the Raiders moving to Los Angeles in 1982 without league approval to do so.

-St. Louis and Missouri have displayed enough alacrity in terms of providing the Rams a proposal, especially considering that Kroenke won’t communicate with them. Red McCombs purchased the Vikings in 1998 and approached new governor Jesse Ventura about a new stadium, and Ventura told him he wouldn’t even consider it.

Then McCombs met with new Minnesota governor Tim Pawlenty in 2003, and Pawlenty said he would provide no help. McCombs sold the team to the family of Zygi Wilf in 2005, and they worked with the state until reaching a stadium deal in 2012. The Vikings will start play in their new stadium in 2016, eighteen years after their first request. The 49ers wanted to build on the site of Candlestick Park starting in 2006 and were rebuffed. They worked out their deal with Santa Clara in 2010, and started play at their privately financed Levis Stadium in 2014, eight years after their first try. Jim Irsay of the Colts declared that he needed a new stadium in 2002, and reached agreement for the construction of Lucas Oil Stadium in August of 2005. The Colts moved into their new facility six years after their first request, in 2008. The Chargers first asked for a new stadium in San Diego in 2000, and are still trying, with their seventh mayor since their initial request. In Atlanta, Falcons owner Arthur Blank requested a new stadium in April of 2010, and reached agreement to fund most of the new facility more than three years later, in May of 2013. With Blank footing 70%-80% of the bill, that stadium will open in 2017, seven years after the initial request.

bob blitz
Bob Blitz, another member of Nixon’s task force, has indicated corporate support is strong for an NFL team in St. Louis.

So while the narrative from the Rams may be that the region didn’t act quickly enough for their liking, the fact is that the Rams beat the CVC in their arbitration on February 2 of 2013, not even two years ago. Until then, nobody knew if there would be a need for a new facility. Relative to the rest of the league, if the team’s owner doesn’t participate, how can a proposal within two years that would have the team in a new stadium eight seasons later be too little, too late?

-St. Louis, despite the departure of at least ten Fortune 500 companies since the franchise arrived in St. Louis, has enough corporate support to make an NFL team more than competitive. On Friday, Peacock said “I like to deal in fact and data. The facts are half of the NFL teams play in cities with less Fortune 1000 companies than St. Louis has. We have seven of the top 200 private companies in the country. From just an economic standpoint, about 13 teams play in cities with a smaller GDP, if you will, or economy, than St. Louis. So it’s hard for me to say we don’t have the business support or the capability of business support.” The Rams seem to think that those companies should spend money with them simply because they’re in the NFL. If the Rams compete on the field at a higher level, they’ll be able to utilize those companies for their financial gain.

-The financial consequences of trying to move a franchise without approval could be enormous. In August of 2010, Kroenke joined a club of 31 other owners and agreed to abide by their rules. Of course, that includes relocation guidelines. The league will determine any relocation fee. And in 1996 when Ken Behring moved the Seahawks to Anaheim for a week, the NFL threatened to fine him $500,000 a day for every day he was there. $500,000 a day would wipe out Kroenke’s fortune in less than three years.

-With a new TV contract that started this year and runs through 2021, the league won’t see much immediate financial impact from a move of any team to Los Angeles. Certainly that market will contribute more to NFL properties with merchandise sales, but having those eyes on televisions for a team in L.A. won’t benefit the league until the next TV deal. Financially, the only major beneficiary of a move in 2016 would be Kroenke, and as those pesky guidelines say, “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.” The Rams traditionally have been well supported in St. Louis, relative to their on-field success, and indeed had their highest attendance since 2008 this past season.

Ultimately, the owners own the L.A. market and will make this decision, and it may not please St. Louis fans when all is said and done. But after Friday’s announcement, it would seem as if St. Louis is able to pull this stadium proposal off, the NFL would have to throw its rules out the window to allow a Rams transfer back to Los Angeles.

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