Kroenke’s gambit may force NFL to act

Stan Kroenke is an extremely wealthy guy. He is worth more than $6 billion on his own, combined with his Walmart heir wife they’re worth $13 billion combined. If Kroenke wanted to build a stadium on his own, he most certainly has the resources to do it. That doesn’t mean he will. But the potential is there.

So it was more than a little curious when Kroenke acquired 60 acres of parking lot between The Forum and the Hollywood Park racetrack in Inglewood. It’s an opening move that sets up numerous possibilities. He could move the Rams to LA against the other NFL owners’ wishes, a rogue move that would have to withstand legal battles. He could partner with the NFL and facilitate a two-team venue. He could stay in St. Louis by squeezing every last nickel out of the State of Missouri, which is planning to unveil new stadium plans on Friday. He could also stay put at the Edward Jones Dome, leaving the various threats hanging over many heads. Stan Kroenke has a first mover advantage, one that threatens to disrupt the NFL is myriad ways.

Thing is, despite Kroenke’s vast wealth and sports portfolio, he has only one new stadium opening under his belt, Dick’s Sporting Goods Park in the suburban Denver area. He has usually bought teams after their new venues were built. The Denver Nuggets and Colorado Avalanche were a package deal two years after the Pepsi Center opened. Kroenke was a minority partner in the Rams when Georgia Frontiere died, allowing him to buy the Rams in 2009. He bought English football club Arsenal after Emirates Stadium was completed.

Should Kroenke decide to move the Rams to the City of Champions development in Inglewood, he would forego the NFL’s G-4 loan program, which can hand out up to $200 million per team. The 80,000-seat retractable roof stadium would be the new West Coast Super Bowl rotation favorite. Or would it?

The NFL would prefer to have two teams in LA, to keep from any single owner profiting too heavily on the LA market. Any of the three teams (Rams, Raiders, Chargers) that moved to LA would conservatively double their franchise valuations once they arrived, with greater riches coming from new stadium revenue. Kroenke’s move is barely above squatting, since it would be in keeping with a 2016 timetable. Other than that, Kroenke’s move spells trouble for the NFL if their hope is to control the transition(s).

The NFL has staff working on potential relocations for all three teams, trying to work out ways that maximize value for the owners while minimizing short-term revenue damage in respective markets. The league would prefer to announce the teams and venues on its own schedule. It appears to be working on a deal with AEG for Farmers Field. Just as important, the NFL would like to control the LA Super Bowl venue. It could do that by partnering with AEG and bringing in a single team, providing competition for Inglewood.

Think about the impact of TWO large, indoor-outdoor NFL venues in LA. The NFL could punish Kroenke by never awarding the Super Bowl to Inglewood, which would hurt him in the wallet. There’s nothing he could do about it. Farmers Field would be in the Super Bowl rotation instead, every 5-6 years. Beyond that, AEG/NFL and Kroenke would be competing for Final Fours, college football playoff and bowl games, soccer and rugby matches, and mega-concerts for the Southland. They’d also compete for large corporate sponsors. A stadium bidding war, turned on its head.

Could LA properly support some $3 billion in mega-domes? There are already plenty of questions about the LA’s willingness (not ability per se) to support a single team. Two domes, with 300 luxury suites and 15,000 club seats to sell will be a strain, even in mighty LA. Having it all in one venue softens the blow. With two competing venues selling out is a must. It’s easy to see a sort of stadium arms race happening in LA, with the two competing stadia trying to leapfrog each other in terms of amenities, scoreboards, and perks. The NFL, which has spent decades successfully extorting other cities out of billions in stadium subsidies, would have to subsidize a money pit of its own. That’s not a war that the NFL wants to get into. It would rather work hand-in-hand with Kroenke or AEG, provide that regular Super Bowl carrot, move the NFL Network studios to that stadium, have two teams in the same building, and maximize revenue. Threatening to build a competing facility in LA takes away Kroenke’s first mover advantage, since the NFL has more cards to play than Kroenke. It also doesn’t hurt that AEG has a certified EIR for its stadium, whereas Kroenke hasn’t started one yet.

Since the Inglewood announcement, I’ve seen a lot of conjecture about what Kroenke’s gambit means for the other teams. Many in the media have said that the chances of the Raiders staying in Oakland become better. Sure, as long as it’s only the Rams moving there. If, as outlined in the previous paragraphs, the NFL decides to compete with Kroenke, Mark Davis will undoubtedly trample everyone in his path to be at the front of the line for a Raiders move south. After all, he’d get a stadium all to himself during the regular season, along with all the benefits of splitting the #2 market. He wouldn’t deserve the windfall, but it would work out perfectly with his M.O.: let the process play out while letting others spend the money and take the arrows.

34 thoughts on “Kroenke’s gambit may force NFL to act

  1. This whole situation is a classic clusterfuck.

  2. @ ML
    I guess your theory could happen; stranger things have for sure, and as we know stage bedfellows do happen. I find it difficult to believe, that if the NFL wanted to compete with Kroenke in LA they would use the Raiders to do it with, the Chargers sure the Raiders? Not so much, but anything is possible.

  3. One team in L.A., with the threat of a second team. That’s the NFL way.

  4. ML: What is the basis and source for your statement that franchise value for an NFL team would double in LA? Based on my understanding of the NFL’s economic structure, this isn’t at all obvious. With box office, TV and merchandise revenue all being shared the main differentiator would seem to be premium seat revenue. While LA has plenty of money, it also has a history of tepid support for NFL teams. While the premium seat potential in LA may well be higher than, say, Oakland, this is a small enough slice of the overall revenue picture that it wouldn’t seem to support a 100% increase in franchise value.

  5. I just don’t see LA as a viable two team market. History already showed us that LA cannot support two teams in a 50 mile radius of each other. Goodell is a village idiot if he thinks he can force two teams in LA.

    • What are you talking about? It supported two NFL teams fine for years. And it easily supports 2 teams in each of the other big leagues.

      • Actually it didn’t support 2 teams well when it had 2. Attendances were actually pretty dismal most of the Rams and Raiders joint stay.

      • And the A’s and Giants have both had terrible attendance levels during certain periods of their respective times in the Bay Area. Things ebb and flow, but LA would have basically no trouble supporting two NFL teams on paper.

      • Saying LA sucks as a 2-team football market is a lot like saying A’s attendance in Oakland is great based on rather small sample sizes. LA is an excellent college football market. The Bay Area is not. Yet no one indicts the Bay Area for coming up short there. Provide a decent environment for the NFL in LA and it will draw very well. The potential is enormous.

    • Mike2 is spot on about this: In the 90s, the Raiders averaged 35K per game at the LA Coliseum, the Rams did 25K per game at Anaheim – that sucks. Why Goodell insists that 2 NFL teams play in SoCal is nuts, the stats prove that LA can’t support two NFL teams. Kroenke will upgrade by moving from the 30th largest NFL fanbase to the 2nd, by moving to Inglewood.

      It’s doubtful that Davis or San Diego can really benefit by moving to SoCal though. Especially since the Raiders have already been there and done that.

      LA (and the NFL) will likely be better off with only one NFL team (the Rams) playing there rather than two.

  6. You forgot one other possibility. The NFL may saddle up to Kroenke and build his stadium and ditch AEG as a partner altogether. Yes, he has the funds to do it on his own, now he has the land to himself, no third party involvement. They could give him a sweetheart deal and take control of the site and stadium and no longer have to split potential revenue with someone outside the NFL.

    • Didn’t forget.

      “It would rather work hand-in-hand with Kroenke or AEG…”

    • @ dmoas
      You bring up a good point, but as ML suggest, they would rather work hand- in-hand with their partners. At the moment it appears Kroenke is working independently of the NFL, that may be something that gets soothed over paving the way for what you suggest, but it sure looks like he is telling them to hell with what you guys think.

  7. ESPN is reporting that Kroenke is not taking any calls from the city of Saint Louis. The same article notes the lack of appetite for a publicly funded stadium in Saint Louis and how the city will work directly with the NFL. Looks like Kroenke knows he’ll have to pay for his own stadium and wants to build it in the place that makes the most sense financially – in this case, LA. Why does this scenario all sound so familiar?

  8. Kroenke: I’m gonna move my team to LA. All on my own.

    NFL: No. We won’t allow it. You’ll have to go court to do it. We’ll muck up your effort for years, because we’ll side with the city of St. Louis, which is claiming that you aren’t even returning the mayor’s phone calls. We will agree with them that you didn’t make a good faith effort to build there. Even if you DO win in court after years of legal fees and bad attendance in St. Louis from a fan base that now knows you’re one foot out the door…we won’t give you $200M in G-4 money, we’ll never give you a Super Bowl. And we’ll build a second facility in LA as your competitor.

    Kroenke: Fine. You make a public statement that Rams have exhausted all possible efforts with St. Louis. I’ll partner with you (NFL) in LA if I get Super Bowls there every 4th year, and I get the $200M loan, and I get no second team joining me there, and I get to go there in 2015.

    NFL: No. The only way we open LA to you in 2015 is if you agree to have a second tenant follow you there a year or two later. You still get to the first one in though. The rest of what you want (LA, $200M, Super Bowls) is yours.

    Kroenke: Deal.

    (Or it could go on with a few more compromises. My point: We’ll never see two stadiums built there…but Kroenke has put himself in good position to have that conversation above and get 80-90% of what he wants).

  9. you a idiot for trying to say this the Raiders is working on a deal. Try to write a article that make sense. You hate Oakland

    • Learn to comprehend what I’m writing. Nowhere did I say that the Raiders are working on a deal. I said that if AEG and the NFL partnered up, Davis would be there in a minute. Has nothing to do with what Oakland’s doing.

  10. Marine Layer,

    I tuned in to KPIX this evening and heard the tail end of a Phil Matier story where it appeared that Oakland and ŠF were working on a deal to spend the 350 million for the intended pop up Olympic stadium on the Peninsula, and instead use it for the new Raiders stadium in Oakland. I haven’t been able to find a link to the full story. Have you heard anything about this? Thanks

    • There’s no story published yet. Probably after the 6 PM news is done. The gist is that Ed Lee and Libby Schaaf pushed the Olympics/Raiders stadium at the Coliseum at the last minute in hopes of swaying the USOC. Matier also said that the USOC may be leaning towards the two West Coast cities.

      • Fascinating- and the Olympic bid that Larry Baer is leading ultimately could force the A’s out of Oakland-

      • @GoA’s:
        Yeah, that hasn’t been directly mentioned yet. But Schaff said the stadium would more likely end up being meant for the Raiders afterwards, which pretty much means any potential A’s plan for Oakland is dead.

      • You mean the THREE West Coast cities. Good ole Matier displaying his bias against San Jose again… ( asshole!)

      • No, I was referring to SF and LA, not the SF + the rest of the Bay Area. Sheesh.

      • For the record RM, “asshole” reference was for Matier, not you. Thanks for clarification re West Coast cities.

  11. Interesting. Thank you.

  12. The venue map has ATT hosting beach volleyball…where will baseball be played if it returns? LA’s bid has Dodger stadium identified- also- EQ stadium not in th mix?

  13. so this new olympic stadium which i doubt ever happens would help the raiders get a new venue and leave the a’s without a place to play.

    all the crap the raiders have done since moving back in 95 besides about 3 “good years” and they get another handout for a football venue while the a’s get screwed.

    what a bunch of horse manure.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s