St. Louis Rams fans awoke today to the “exciting” news that the team has received the “honor” of having one of its home games moved to London for each of the next three seasons. This was to be formally announced later this morning.
These breathless tidings were relayed in an early morning email from Kevin Demoff, Rams’ executive vice president and chief operating officer. As part of the excitement, all season ticket-holders will be afforded the opportunity to buy tickets in Wembley Stadium in London, which is a short 10-hour commute each way by air.
That might seem inconvenient to some, but look at the bright side: There’s one less fall Sunday to be saddened at the Edward Jones Dome. Left unsaid is whether fans will be forced to buy the London “home game” tickets the way they are compelled to spend 20 percent of their season-ticket budget on meaningless exhibition games.
Could we now be spending 30 percent of our dollars on games that are meaningless (or inaccessible) to most fans? Or, perhaps, the London game will be just an option, and the team will only expect its prized season ticket-holders to purchase nine games.
In this scenario, the percentage spent on meaningless exhibition games would rise only from 20 to 22 percent.
This is a small price to pay for the Rams becoming football’s version of the Globetrotters. Check that. Since the opponent is the New England Patriots, the Rams might truly become the pigskin Washington Generals, the (now-renamed) legendary foil to the real Globetrotters from Harlem.
All of this comes on the heels of a rare press availability earlier this week by Rams owner Stan Kroenke, who alarmed the local sports community by ominously refraining from making any guarantee of a long-term commitment to keeping the team in St. Louis. Sportswriters wondered aloud why Silent Stan couldn’t simply throw our town a little bone by calming fears that the team is headed to Los Angeles.
There’s a simple reason for this:This team is headed to Los Angles (or perhaps London?) if there is a deal to be done for Kroenke.
St. Louis’ best hope for keeping the Rams here—really, it’s only hope—is if Kroenke isn't afforded the opportunity to move the franchise back to L.A. That remains a serious possibility: The NFL’s return to Los Angeles is by no means a done deal, and even if it were to happen, there is always the hope here that one or more other franchises somehow get ahead of Kroenke’s Rams in line. And there would have to be negotiations with fellow NFL owners, who undoubtedly will extract steep relocation fees from any owner getting to move to L.A.
This cannot be overstated: Getting to move to La-La-Land is a lucrative thing.
The reason there will be competition among NFL teams for the privilege of moving to L.A. is that a team playing in a $1 billion-plus stadium in the nation’s second-largest market stands to earn tens of millions more annually—and thus have a franchise value of hundreds of millions more—than a team located in St. Louis.
It’s all a function of the giant revenue streams presented by corporate luxury suites, advertising, and merchandising opportunities and local media deals, revenues which, unlike ticket sales, aren’t shared with visiting teams. These revenue streams are like giant tidal waves that occur 10 times a year for an NFL franchise.
That’s why in markets that are large enough—basically New York and L.A.—it makes sense for two teams to share one mega-stadium. Instead of 10 tidal waves of revenue per season, you get 20. That goes a long way toward paying for one of these monster facilities, and it’s precisely why the New York Giants and New York Jets play in the same new stadium.
It’s also why the Giants and Jets both rank in the top five NFL teams in value, even though neither owns its own stadium—with franchise values estimated by Forbes at $1.3 billion and $1.223 billion, respectively—and it explains the mystery of why Los Angeles NFL-franchise backers have the audacity to jump from zero franchises to two.
The Los Angeles Times has cited sources estimating the value of a new team there to be as high as $1.5 billion. For those of you keeping score at home, the Rams value is estimated by Forbes at $775 million, or barely more than half of that potential number in Los Angeles.
The Rams rank 30th among the 32 NFL teams in value, despite having one of the sweetest stadium leases in the league and an exceptionally loyal fan base. As we speak, an earnest effort is underway locally to present some sort of attractive proposal to the Rams on February 1 under the terms of their existing lease, which essentially expires in 2014.
I can offer this much inside information: There’s some pretty bright people working on this for St. Louis, and it wouldn’t be surprising for them to come up with a smart and creative offer in an attempt to entice the team to stay. But there’s no chance of clearing any sort of legal hurdle—the “top-tier” requirement in the current lease—that would force the team to stay another 10 years.
And nothing St. Louis might offer can change the grim financial reality of the situation: Moving to Los Angeles from St. Louis would be a no-brainer financially for Kroenke. Conversely, it would represent wildly generous civic philanthropy for him to forego hundreds of millions of dollars to stay in a city in which he doesn’t even live (and where he’s rarely seen in public).
Kroenke has said—and rightly so—that he has done more than his share for St. Louis and his home state of Missouri over the past 20 years. He was indeed a key part of the Rams’ move here two decades ago when—ironically enough—that deal made great business sense, thanks to hundreds of millions being heaped on the late owner Georgia Frontiere.
But much has changed since then. With the advent of stadiums eclipsing the billion-dollar mark, the currency of NFL teams has been reissued. The income potential for a team playing in one of these new super facilities simply dwarfs anything that existed in the 1990s. That’s why Forbes places the value of Jerry Jones’ Dallas Cowboys far ahead of any other franchise (at an astounding $1.85 billion).
You can add to these numbers one very significant fact—one that the St. Louis sports media simply refuses to recognize—which is that the leading mover-and-shaker behind a new franchise for Los Angeles happens to be Philip Anschutz, a business partner and reputed good friend of Kroenke (and one of the few people in the country wealthier than the Kroenkes).
Anschutz, a sports giant who already owns the Staples Center and several major teams in the market, is proposing to use his own money to build a $1 billion-plus facility adjacent to his other properties in downtown Los Angeles, and last year he cleared major legislative hurdles for the project.
Again, he has competition in the market, and it isn’t a done deal. But if he does emerge, as expected, as the owner of a newly relocated NFL team, this does not bode well for St. Louis.
Anschutz and Kroenke are known as fellow Denver billionaires. If you think this isn’t significant, if you think it’s just a throwaway detail that their companies share a major partnership in a large concert venue in Denver, if you think it’s insignificant that Kroenke purchased his first pro-soccer franchise from Anschutz, if you think tight personal relationships are irrelevant, well, you just don’t get it.
If, as his representatives have stated, Anschutz wants to own at least a substantial share of an NFL team—and assuming that Kroenke wants to continue owning all of the Rams (which we don’t really know for sure)—then if Anschutz is able to acquire all or part of a team like the San Diego Chargers, Oakland Raiders, or Buffalo Bills, the most likely second partner in a two-team package would have to be Kroenke, who might even throw in what he calls a little “jack” on the new stadium.
The bottom line: The new-stadium news that Rams’ fans need to follow has nothing to do with the Edward Jones Dome. Those of us who want the team to stay here would do well to root against Anschutz and his dream of Farmer’s Field.
In this crazy new world of NFL high finance, there isn’t much a market like St. Louis can do to compete with a mega-stadium in a market several times its size.
This is one David-versus-Goliath battle that David isn’t likely to win.
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
