Photography by Dilip Vishwanat/Getty Images
It’s déjà vu all over again.
St. Louis is right back where it started a quarter of a century ago, wrestling with the unseemly task of building a new football stadium suitable for a National Football League franchise. Again the city is faced with the confluence of sports, politics, and—most important, in this instance—grim economic reality.
The last time, in the late 1980s, St. Louis was unwilling to build an open-air, 70,000-seat palace for detested owner Bill Bidwill and his St. Louis football Cardinals, and he left for Phoenix. This time, the owner—multibillionaire Stan Kroenke—isn’t thought of so poorly, but the community might not even have the choice to get in the billion-dollar ballpark.
St. Louis doesn’t control its destiny this time. There’s a good chance that the St. Louis Rams will be playing in a different city, no matter what the region might come up with for the team.
Last month, Kroenke officially became a free agent, which means the price of poker just went up.
A panel of arbitrators gave him an expected victory over the St. Louis Convention & Visitors Commission with regard to what it would take to bring the Edward Jones Dome up to “first-tier” standards for an NFL team. The verdict: The CVC would have to spend at least $700 million to upgrade the dome to force the Rams to remain through 2024 under terms of the deal that brought the team here from Los Angeles for the 1995 season.
That’s a practical impossibility, so now it’s a certainty that the Rams will be playing in a new stadium somewhere in the foreseeable future. The big question is whether it will be located in the St. Louis area or somewhere else.
The Rams are locked into playing the next two years at the dome and would have no difficulty staying there as long as they’d want on a year-to-year basis, so Kroenke has neither a sense of urgency to make a new deal nor a commitment to continue the old one. He’s in the driver’s seat.
To borrow sports vernacular again, Kroenke can let the game come to him. Don’t expect any big news soon, because his logical next move is to do absolutely nothing except receive offers from wherever they might come.
Kroenke is a stoic, bottom-line businessman, and he has every reason (and right) to wind up in the place that’s best for the Rams in revenue and long-term franchise value. This might be a big problem for St. Louis.
Last year, Forbes magazine, the widely respected authority on professional-sports franchise values, ranked the Rams 31st out of the NFL’s 32 teams, with a total net worth of $780 million. That would be a whopping 30 percent off the league average of $1.1 billion.
These numbers weren’t pulled out of thin air. The Rams’ revenue of $231 million and the team’s operating income of $6.7 million placed it in the bottom four of NFL teams in both categories, according to Forbes. That’s the reason for the weak franchise-value rank.
For perspective, consider the corresponding totals for Missouri’s other NFL team, the Kansas City Chiefs. It had revenue of $259 million, operating income of $46.4 million, and a 20th-ranked franchise value of slightly more than $1 billion—28 percent more than the Rams.
The Chiefs were among 12 teams in markets smaller than St. Louis that substantially outranked the Rams in value (the others being Buffalo, Cincinnati, New Orleans, Cleveland, Tennessee, Carolina, Pittsburgh, Denver, Indianapolis, Baltimore, and Green Bay). Forget about the $2 billion Dallas Cowboys franchise; the St. Louis Rams haven’t even kept pace in value with the little guys.
Also, in 2012, the Rams ranked 30th among the 32 teams in attendance, with an average of 56,703 per game, representing a 13 percent decrease in the past six years, and just 87 percent of stadium capacity. That cannot be blamed on a weak record: The 7–8–1 Rams were outdrawn by nearly 12,000 per game by the 2–14 Chiefs and by more than 8,000 per game by the tiny-market, 2–14 Jacksonville Jaguars.
And ticket sales are but a small part of the problem. After 18 seasons in St. Louis, some of them glorious, the Rams lag far behind rivals in the revenue streams that make or break franchise values, including such proceeds as luxury-suite and club-seat sales; advertising (including stadium naming rights); parking; and concessions.
Those disadvantages cannot be cured simply by building a new stadium. If the Rams were playing in a packed 56,000-seat stadium today, then expanding to a 70,000-seat facility would logically provide new revenue. But when 56,000 people aren’t filling a 66,000-seat stadium, it’s a harder assumption to make that more seats are the answer.
And one can’t assume that construction of a stadium with more and fancier suites and boxes would increase the commitment level of the corporate community to the Rams enough to move the dial sufficiently for Kroenke’s revenue and franchise value. That’s especially true if he draws interest from rival cities that might have more resources and enthusiasm in their corporate ranks.
St. Louis’ corporate base has obviously declined in recent decades, and a once-great headquarters town is looking more like a much smaller outpost town. Even worse, from a sports-team perspective, today’s leaders exhibit far less interest in sports spending than did their predecessors a generation ago.
The titans of old—men like Chuck Knight and the late August Busch Jr. and Bob Hyland—considered sports teams a pillar of the community, and they made support of them the highest priority, often to the detriment of arguably more worthy concerns. It would be to the credit of their successors if priorities were better ordered, but that wouldn’t help the Rams’ bottom line.
If you’re Kroenke, you have to wonder whether St. Louis has the fan base and—perhaps most important—the corporate base to support an NFL team as well as another market might. If you think not and have a better option down the pike, there’s no cause to rush into a stadium solution here.
There’s an air of certainty among St. Louis Post-Dispatch sportswriters that a new stadium option will soon materialize for the Rams—the city’s Bottle District is said to be the preferred site—but there’s no evidence that public funding can be found and even less that Kroenke, a man who does things the Walmart way (meaning with public subsidies), would be inclined to write a large check.
You can expect to hear plenty about the most recent football fiscal cliff in Minneapolis, where last May, the state of Minnesota found $348 million and the city of Minneapolis found $150 million (via a hospitality tax) to help the Vikings get a $975 million stadium built. Right before it happened, it looked like it wouldn’t, and team owner Zygi Wilf made it crystal clear that he was willing to move the team to Los Angeles or some other city if he didn’t get his funding.
Contrary to the myth already perpetuated in St. Louis, the NFL showed that it is not at all committed to the principle that franchises shouldn’t desert their current cities. It did, however, fight for another big idea: that cities must fork over corporate welfare, where needed, if they want to keep their teams.
There’s no record to suggest that the NFL pressured Wilf to stay in Minneapolis, even without public funding. But NFL commissioner Roger Goodell did find the time to make like a mafioso chief, traveling to Minnesota with the message to wavering politicians that he’d hate to see something happen to their team.
St. Louis is ill-equipped to play this game. Unlike in Minnesota, there’s no chance of help from a cash-strapped state government dominated by politicians who are openly hostile to St. Louis. In Minnesota, there’s no second city like K.C. to be matched, and as the name suggests, there’s great statewide identity with the team. The two situations couldn’t be more different.
Locally, the city and county are essentially broke, struggling to keep parks open and pay adequately for police and fire protection, and sometimes unable to keep schools air-conditioned. The more prosperous St. Charles County isn’t likely to offer help anytime soon.
In the current economic climate, it’s hard to imagine that voters of any jurisdiction would—or should—vote to expend scarce tax dollars to assist with the bottom line or financing needs of a multibillionaire. So how is St. Louis to compete?
If he cannot obtain hundreds of millions of dollars in public assistance, it would be a no-brainer for Kroenke to persuade his fellow owners that he should be free to exercise his free agency by taking the team wherever he’d like. It would be especially easy to make the case for moving to L.A., where the Rams played for 49 years before playing here for 18 years.
The real impediment there is that the NFL owners aren’t inclined to allow Kroenke or anyone else to acquire the valuable L.A. franchise without first extracting a giant relocation fee. The owners reportedly have been asking for as much as $500 million, a real deal-killer that has pushed back franchise plans by at least a year.
But that deal isn’t dead. Sports giant AEG Enterprises still wants to build a $1 billion–plus downtown stadium, and it has cleared most of the state and local political hurdles. For Malibu resident Kroenke, it could basically come down to negotiating a better relocation figure.
I would love to be wrong about this. Maybe Kroenke will wake up tomorrow and announce that he’s had a revelation: He’s off corporate welfare forever, and he would be happy to build a new football palace for the Rams in the name of capitalism.
Oh, and that he loves St. Louis so much that he’s willing to stay here even if he could make hundreds of millions more, over time, by moving out of town.
That would be refreshing in this time of eerie déjà vu. At least we haven’t heard it all before.
SLM co-owner Ray Hartmann is a panelist on KETC Channel 9’s Donnybrook, which airs Thursdays at 7 p.m.
Commentary by Ray Hartmann
