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Tuesday, May 15, 2012 / 3:04 PM

The St. Louis Rams Move One Step Closer to Los Angeles

The St. Louis Rams Move One Step Closer to Los Angeles

The Rams officially have one foot out the door.

The team barely stopped short of erecting a giant, neon sign reading “SEE YOU LATER, FOLKS!” atop the Edward Jones Dome, in a document released today—despite the Rams’ objections—by Attorney General Chris Koster.

The document was the team’s official response to a St. Louis Convention and Visitors Commission proposal for upgrading the dome as a “first-tier” NFL facility. It had one purpose, and one purpose alone: to enable the Rams to walk away from their existing lease at the end of the 2014 football season.

It was no surprise that the Rams would want their freedom, but it was still a bit jarring to see it in black and white: The team essentially demanded that St. Louis build a new stadium within the existing stadium, going so far as to demand a state-of-the-art sporting Taj Mahal that could host Super Bowls and international soccer games.

If only the Rams offense could be this aggressive. The team’s vision of a “first-tier” stadium would entail knocking out the entire east side of the dome and construction of a partially retractable roof, giant new video screens, a powered telescopic seating system, and literally dozens of major upgrades to the current facility. Oh, and the elimination of part of a major downtown street.

Deputy Mayor Jeff Rainford says the Rams’ proposal would cost a staggering $700 million. A construction industry expert familiar with the Dome project told me that was low: “It would be at least $750 million, probably closer to $1 billion.”

It was expected that the Rams would advance a plan that was unattainable, but this one is three times unattainable. The team is well aware that St. Louis doesn’t have a fraction of the resources needed to fund this dream—and it has offered precisely zero dollars to help—so there is no negotiation taking place here.

Just an exit clause.

A little background is in order: When the Rams moved here in 1995, St. Louis interests, led by the business elites at Civic Progress, wanted the team to make a 30-year commitment in exchange for the hundreds of millions being thrown at it and the NFL for the privilege of having a team. The Rams, headstrong at being so shamelessly wooed, had the audacity to want escape clauses every 10 years.

Guess who won that argument? St. Louis entered into a lease so one-sided in the Rams’ favor as to be “unconscionable,” in the words of a brilliant analysis published in 2010 in the Marquette University Sports Law Review. The piece should be required reading in St. Louis this week.

In 2005, St. Louis had to pony up $29 million in improvements, even though the team had no thoughts of relocation. By 2015—with owner Stan Kroenke obviously enthralled with the once-in-a-business lifetime opportunity to double his franchise’s value by moving it to Los Angeles—the price of poker will get a bit higher.

Unless a billion dollars falls out of the sky in the next month, the CVC will reject the Rams’ counteroffer, sending the matter to arbitration by June 15. By the end of the year, an arbitrator will have navigated the waters of bringing definition to the nebulous “first-tier” stadium requirement, presenting it to the CVC for action.

In all likelihood, the result will be the one that Kroenke obviously seeks: St. Louis will be unable or unwilling to meet the “first-tier” standard, and the Rams will be free to find a new home, either in St. Louis or elsewhere.

When that happens, it will not be time to negotiate. It will be time for St. Louis to watch helplessly as events unfold in Los Angeles, where a strong movement is afoot—actually two competing ones—to bring a team or two back to town.

I’ve said it before and I’ll say it again: If Stan Kroenke can move his franchise to the nation’s second-largest market, probably doubling its value, he would be a fool not to do so.

Stan Kroenke is not a fool.

To his credit, Kroenke isn’t even pretending to want to stay in St. Louis. In the past four months, he took the unprecedented step of agreeing to move three home games over the next three years to London, a slap upside our civic head if there ever was one.

That prompted one of the rare occasions in which Kroenke showed his face in St. Louis, whereupon he steadfastly refused to make any public commitment to keeping the team here. To drive home the point, he defiantly—albeit comically—made his famous assertion that, “Contrary to a lot of reports, I haven’t taken a lot of ‘jack’ out of this market.”

Haven’t taken a lot of "jack" out of “this market?” Come on, Stan, stop with all of the gooey sentimentalism.

As if that weren’t enough, Kroenke also tried to buy the Los Angeles Dodgers and an accompanying TV sports network, an effort that, if successful, would have almost guaranteed a Rams move to L.A. (in the view of all observers not gobbling Post-Dispatch Kool-Aid). His bid failed, narrowly, but all the while Kroenke said not a word to discourage speculation in Los Angeles that he would be bringing the Rams home if he got the Dodgers.

All of this has taken place when, if truly committed to St. Louis, Kroenke could have been actively trying to drum up excitement for a team with a new coach and general manager, an overhauled roster, and a whole lot of seats to sell. And even if Kroenke was interested in staying in town, but still wanted to drive a hard line in stadium negotiations, his people could have been pushing for new stadium alternatives in this region as leverage. There hasn’t been a peep about that.

There’s a reason for this: Kroenke, being a businessman of sound mind, wants to move to Los Angeles. Were he able to field the Los Angles Rams in a $1 billion-plus new football palace, his franchise would literally reap $100 million or more in new annual revenues, likely doubling the net worth of a property ranked as the 30th most valuable of the NFL’s 32 teams by Forbes magazine.

For even the casual fan, it’s worth a visit to Forbesauthoritative website, because the dramatic gulf between the worth of franchises at the top, starting with the Dallas Cowboys, and at the bottom, almost ending with the Rams, provides a mini-MBA class on the economics of the NFL. The Cowboys, at $1.85 billion, are worth far more than double the Rams, at $775 million.

It’s no coincidence that Dallas plays in the ultimate football palace, the $1.15 billion Cowboys Stadium that helps the team annually rake in $178 million more than a low-revenue team like the Rams. It’s the perfect illustration of 21st-century NFL economics: The teams have learned to build stadiums far more proficient at mining millions in new corporate advertising and entertainment dollars. This, more than any other factor, is why formerly “state-of-the-art” facilities like the Edward Jones Dome have become obsolete so quickly.

In fairness, one could airlift the JerryDome to St. Louis and it wouldn’t work like it does in Dallas, because our town no longer has the corporate base to support such a facility. But Los Angeles does. And if gets a stadium, St. Louis simply can’t compete.

We might be finding out about that in the next year. The timing is not good for St. Louis.

Los Angeles is well on its way to rejoining the NFL fraternity, with one of its dueling $1 billion-plus stadium plans likely to come to fruition in the next year. The front-runner is still Kroenke’s close friend, fellow Denver billionaire and current business partner, Philip Anschutz, whose AEG Enterprises is the largest owner of sports teams and events in the world.

AEG rules the Los Angeles sports scene, owning the Staples Center and Home Depot Center, major sports franchises including the Kings, the Galaxy, part of the Lakers and Sparks, and more. It has cleared most of the formidable California political hurdles and has both city and state support for a downtown stadium. It has already sold naming rights to Farmer’s Field. Its CEO, St. Louis native Tim Leiweke, says it has already spent $27 million on the project and is confident it will strike a deal with an NFL owner or two.

The most underreported story ever is the Kroenke-Anschutz connection. Anschutz clearly needs to make a deal with an NFL team. Kroenke owns the team that played in Los Angeles for 49 years before being lured away by a few hundred million dollars. Kroenke owns the third-least valuable franchise in the NFL, one of the very few teams actually free to move. The two billionaires are not only friends, and not only both based in Denver, but as recently as three years ago, joined forces in a major joint venture called the Bloomfield Events Center outside their home city. Kroenke bought his first soccer franchise from Anschutz. Kroenke owns an estate in Malibu and served on the NFL committee looking to bring a team to Los Angles.

Do you suppose, just maybe, that these two friends are talking about the NFL and Los Angeles?

But is this a done deal? Of course not. One writer, citing anonymous sources, claimed the whole thing was in trouble just six weeks ago. The local sports press jumped on that gleefully.

The story prompted Leiweke to quickly issue a strong public denial: a story that while covered in the Los Angeles Times and other outlets, appears (to the best of my knowledge) to have been ignored by the same local media that covered the one with the anonymous sources.

So no one knows for sure what will transpire on the stadium front in Los Angeles. But whatever it is, St. Louis will be the last to know as long as the local media persists in simply trying to wish away the Los Angeles NFL stadium effort.

Less than a year ago, Leiweke publicly revealed that AEG had contacted five teams: the St. Louis Rams, Minnesota Vikings, San Diego Chargers, Oakland Raiders, and “not extensively” Jacksonville Jaguars.

Yesterday, Minnesota officially left the board, as Gov. Mark Dayton signed into law a $975 million football stadium plan, featuring roughly half a billion dollars in corporate welfare pretty much extracted at gunpoint by the Vikings and the NFL. The Rams are now the only NFC team on AEG’s public wishlist. Bad news.

NFL Commissioner Roger Goodell had done his best Godfather impression to help Minnesotans see the wisdom of not waking up with the proverbial horse’s head in its bed. But don’t expect a repeat performance here.

For one thing, despite Goodell’s pretensions—pretty much required by anti-trust law—that the NFL would hate to leave St. Louis, there’s no reason to believe that the league can or would try to keep Kroenke from moving. This is the same group of owners that voted 21-3  to block the late Georgia Frontiere from moving the Rams here in 1995 and wasn’t even unanimous in reversing that decision two months later in the face of lawsuits (and a payoff of $17 million from St. Louis).

The NFL owners haven’t forgotten that St. Louis sued over relocation fees. Arizona Cardinals owner Bill Bidwill, who voted against the Rams coming here even in the face of lawsuits, isn’t our pal. Even if Goodell really gives a hoot about St. Louis, which is highly unlikely, he couldn’t begin to stop Kroenke from moving to Los Angeles.

The St. Louis Rams hardly have the storied history or traditional fan support of the Minnesota Vikings. Oh, and by the way, we don’t have money.

The CVC sets aside just $4 million per year for a preservation fund intended to keep the Dome up to snuff, parking-meter change in the brave new world of $1 billion stadiums. The city of St. Louis is presently laying off police officers, has an unaccredited school district and, according to the mayor, faces pension liabilities that threaten its very solvency. St. Louis County has fiscal problems of its own. The surrounding counties would chuckle if contacted for help.

The state government is openly hostile to the city. Outstate lawmakers are as likely to offer help for a St. Louis stadium project as they are to fund a massive gay and lesbian wedding chapel and banquet center for non-sectarian nuptials.

There is no money, not even for such a worthy cause as to help a billionaire in distress. Indeed, the CVC’s generous offer to the Rams to provide $60 million or so as part of a $124 million upgrade project was likely to face some local resistance.

Goodell can save his time and money. St. Louis and Missouri can refuse any offer he might make.

Nearly two decades ago, I reluctantly supported the $280 million public expenditure to expand the Convention Center with a state-of-the-art football stadium that would double as a giant exhibit hall bringing giant conventions to town. My colleagues at The Riverfront Times were aghast (as were many others in the community), but I rationalized that at least $100 million could be allocated to convention business and that having an NFL team was important to the city’s national image, especially, I noted, with the “rich white guys who decide where to locate businesses.”

As for the Convention Center piece, they forgot to mention the little detail that, because of NFL scheduling needs, the CVC only gets to sell its “exhibit hall” one date per year during the football season, without Rams’ permission. From a convention-making perspective, St. Louis would be far better off if the Rams vacated the premises.

As to the economics, I was really wrong. As a football fan (and loyal PSL owner from Day One), I certainly enjoyed the Rams’ brief but exhilarating Super Bowl era, but no reasonable person can look at the region’s economic slide of the past 17 years and say that NFL football has put St. Louis on any map. It doesn’t even matter much to downtown businesses on game day, because the whole deal is about people spending inside the stadium, not outside of it.

In economic terms, Kroenke’s football company is no more or less important to St. Louis than other businesses of similar size. There is no rational case for this region, and this state, to fork over hundreds of millions in corporate welfare to this billionaire.

No matter what Minnesota did. No matter what Los Angeles might do. There is no case to be made. None. Nada. End of report.

And I say that as a guy that spoke up for this 20 years ago.

But in dismounting that soapbox, it should be noted that it really doesn’t matter what anyone in St. Louis thinks about public funding for the Rams or any other NFL team. Stan Kroenke is no longer Silent Stan when it comes to the prospect of keeping his team in town. He has made a stadium “offer” that he knows cannot be accepted. He will do everything in his power to force St. Louis into a position of defaulting on his current lease.

Stan Kroenke wants—and in all likelihood, will get—his freedom. And fans of the St. Louis Rams had better hope this story doesn’t have a Hollywood ending.

SLM co-owner Ray Hartmann is a panelist on KETC Channel 9’s Donnybrook, which airs Thursdays at 7 p.m.

When posting, please be respectful. Avoid profanity, offensive content, and/or sales pitches. Stlmag.com reserves the right to remove any comments or to contact you if necessary.

Old to new | New to old
May 16, 2012 10:36 am
 Posted by  Bryan A. Hollerbach

A trenchant analysis, Ray (although as a word guy, I'd quibble with "gobbling Post-Dispatch Kool-Aid"--"guzzling," methinks). California can have Kroenke and his plutocratic, extortionistic ilk!

Bry

May 16, 2012 05:38 pm
 Posted by  STL-Rams

This is the biggest joke piece I have read in awhile, with about a dozen misconceptions, unproven assertions, and half-truths throughout.

Look at all the layoffs in L.A. Ray. You fail to mention that CVC Chairman O' Loughlin are working on Union Station now and many other facts. You do, of course, post mindless speculation and hyperbole throughout your "report".

Who is tied for fifth in the U.S. in Fortune 500s? It is not L.A., Ray, it is St. Louis. Which state went bankrupt? That would be California.

Where are your reports of the layoffs in L.A., Ray? I guess you conveniently overlooked that info too, eh?

Who still has nothing more than drawings after 18 years? That would L.A., the city you slobber over with every chance you get.

You also fail to mention that an arbitrator could bring the price tag down significantly and if the CVC accepts, it is binding for the Rams. Why do you leave stuff like that out, Ray? That doesn't scare people into reading your lame columns I suppose.

And why again is this unattainable? You think Minnesota's economy is better than Missouri's? LOL. And they have just build a MLB and a major college stadium recently.

Oh, and your not extensively butchering included St. Louis is the "not extensively."

Your bogus AFC/NFC thing is meaningless. Ever heard of realignment. Perhaps L.A. should prove they will support one NFL team before bringing two back.

And you have a problem with international soccer, Super Bowls, etc?

Oh, and by the way, we don't have money? Compared to Minnesota who had to shut down their government?

Oh, and by the way, your article is full of holes and pathetic, Ray.

You make a lot of supposed factual statements re: Kroenke, Ray, to the point of being almost libel in some cases. You have facts to back any of that up? Heck no you don't.

May 16, 2012 05:55 pm
 Posted by  STL-Rams

And why are the Rams expanding their footprint to 8 Midwest/S. Plains states now if there eye is on moving? Please explain how that makes sense in any way, shape or form?

May 16, 2012 08:25 pm
 Posted by  Proverbs44

Unfortunately, even you have miss the most unreported story of this 'situation'. It's the LA stadiums.

AEG is spending 1+ billion on a stadium, will end up spending another 200-400m on relocation fees, and has expressed desire to partially own (significantly) any team that steps foot in Farmers' Field. It's their way of making back the profit of spending close to 2 billion for the stadium/eir repots and relocating a team. With that being said, do you think Kroenke is going to be ok with selling/giving up 30-49% of his team and getting a partial share of ticket revenue? Mind you that his NFL profits come from the shared NFL revenue (tv deals, marketing deals) which is ALREADY set by the NFL's renewed television deal and will now be split with AEG. He will also lose ticket sale revenue b/c that is being controlled by AEG who runs the stadium.

The AEG deal sounds 'ok' for an owner who is losing money (ie Oakland Raiders and Jacksonville Jags) but it doesn't fit the profile of Stan Kroenke who known to be buying more and expanding more. Has his history ever shown an example of selling a team or succumbing to another millionaire? I mean, he could have brought in another billionaire if he really wanted the dodgers right? Makes you think...

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