Shane Gray provides special Rams commentaries on 101sports.com. Follow him on Twitter: @ShaneGmoSTLRams.
As recently reported by the St. Louis Post-Dispatch, L.A. Business Journal and the Los Angeles Times and later confirmed via written statement by St. Louis Rams owner Stan Kroenke’s Columbia-based real-estate company, The Kroenke Group, the Missouri-born and bred real estate and sports mogul has purchased a 60-acre plot of land in Inglewood, Calif. – a plot of land that has been rumored as a potential NFL stadium site since the late 1990s.
The land that Kroenke secured is a parking lot situated between The Forum – the former home of the Los Angeles Lakers during their historic Showtime Era – and Hollywood Park.
In a very real sense, “Silent” Stan’s land acquisition quite loudly and very clearly proclaimed to the powers that be in St. Louis and the key figures within the state – without the use of a single word – that it’s “game time.”
It is important to note that while 60 acres is viewed by most as of marginal size for an NFL venue and surrounding footprint in the nation’s second-largest market, Sam Farmer of the aforementioned L.A. Times points out that there are over 200 adjacent acres surrounding the property that, although currently slated to be transformed from a defunct racetrack to a modern residential community, could at least theoretically be combined with Kroenke’s purchase to form a much larger consolidated area of development.
By purchasing the above mentioned land, the Rams’ owner quickly corrected those who strangely suggested that the team had nowhere to go beyond greater St. Louis. Quite simply, when you are the second-richest owner in the NFL and share a combined husband-wife wealth of $10 billion dollars (according to Forbes’ late 2013 update, up from $5 billion in March of 2011), you can grab the land you covet and go where you want to go – assuming you desire to move and clear numerous league hurdles to do so.
When you possess the kind of paper, the kind of power and the overall level of business acumen that Kroenke does, you don’t need someone else to build a stadium for you – such as AEG’s long-proposed concept of a would-be downtown L.A. venue to be called Farmer’s Field, for example. When you are Kroenke – a man who owns one of the nation’s largest ranches – you can hire your own ranch-hands, so to speak, and build the darn thing yourself.
All that said, Kroenke is one of the 10 largest landholders in the United States, so the news of him securing a plot of land in and of itself is about as noteworthy as the sun rising in the morning. As of 2012, landreport.com listed Kroenke as the nation’s 10th-largest land owner with a reported possession of 740,000 acres. By October of 2013, Kroenke was listed by the same outlet as the country’s eighth-largest land possessor via his ownership of nearly 850,000 acres. In just one year, Kroenke’s land holdings jumped by nearly 13 percent.
Of course, this new California-based lay of land isn’t just any piece of property in some random location. No, this plot of land is located in L.A., the Rams’ former home.
As expected, the news of this purchase caused much commotion in St. Louis and Missouri. This revelation would, understandably, cause much concern in any NFL city dealing with a perceived unstable stadium situation. But in the Gateway City, it has set off alarms.
Unlike most other cities that are/have gone through stadium sagas, this region suffered a painful divorce when losing a franchise (the Cardinals) just over a quarter-century ago. In general, fans here are understandably more insecure than those of other markets who have not previously lost a team. In addition, unlike what has occurred in many other cities where owners have been outspoken in continually stating a preference and expectation of working it out at home, Kroenke is further solidifying his moniker of “Silent” Stan by refusing to directly communicate with a fan base that desperately craves some reassurance on the stadium front. Furthermore, St. Louis fans are dealing with a troublesome dome lease that can be voided or set into a year-to-year status following the 2014 season. Finally, the inept on-field play has resulted in the Rams compiling the league’s worst record over the last nine seasons, something that, along with the team’s seeming uncertain future, has hurt attendance figures and created additional perceived instability in the minds of some.
So, with the fan base already on edge, why was the L.A. land bought at this time? Why would Kroenke – being of Wal-Mart blood and a key member of the conglomerate’s vaunted one percent – go through with the deal now?
Be confident of this: Kroenke could have seamlessly and quietly worked out an unofficial agreement to purchase this real estate following the 2014 season as the Rams’ lease expired in St. Louis. “Silent” Stan could have worked out the parameters of the deal while making nothing official until, oh, January of 2015.
If Kroenke wanted to attempt sneak out of town as quietly and smoothly as possible, he would have made this deal official after the 2014 campaign, not well before it.
Let us not forget that what Kroenke wants quiet stays quiet. Only what Kroenke wants announced, gets announced. In short, you can bet that this land wasn’t bought at the beginning of the offseason – right before the NFL’s biggest event (the Super Bowl) and right before the commissioner’s annual press conference – by accident.
Let’s remember that it was not that long ago that “Silent” Stan snuck in at the last moment without a peep and surprised almost everyone by grabbing majority ownership of the organization after Shad Khan – a former Rams season-ticket holder and the current owner of the Jacksonville Jaguars – had already reached an agreement to purchase a majority stake in the franchise.
So, again, why would Kroenke go through with this now?
Well, since the purchase, we have seen subsequent rumors abounding of potential NFL and/or MLS development in L.A. on his coveted new piece of property, including purely speculative rumors of a possible Rams relocation. That’s a win-win for Kroenke regarding stadium leverage here.
It should come as no surprise that, since the purchase, Rams vice president and chief operating officer Kevin Demoff has stated (on 101 ESPN’s “The Fast Lane”) that there has been more response and solution-driven chatter from unnamed sources regarding the St. Louis stadium situation than there had been in the last three years combined. That is another major win for “Silent” Stan.
Does anyone really believe that this is all happening by accident? Are people oblivious to the way the “L.A. games” are played? Does anyone think that the always shrewd and calculated Kroenke hasn’t taken note of what has occurred around him during the past 20 years as related to league venues and the L.A. angle?
Did people forget about Indianapolis Colts owner Jim Irsay parking a plane with the team logo on it in L.A. for several weeks during their stadium negotiations? How about the San Diego Chargers having training camp in L.A. County during multiple seasons? How about Atlanta Falcons owner Arthur Blank reportedly leaking information to state politicians that he was receiving interest about a move from the nation’s second-largest market? How about NFL commissioner Roger Goodell and other league executives all but telling Minnesota that the Vikings were practically out the door if they didn’t get a deal passed prior to the session that saw a venue bill approved? How about the subtle and not-so-subtle mentions of L.A. possibilities by countless other franchises (the Oakland Raiders, Buffalo Bills and the Miami Dolphins, just to name a few) over the last few years?
Kroenke made a brilliant play here: He not only secured prime real estate that he could personally utilize for any number of non-NFL/sports-related developments, he secured coveted ground that could either be sold for a future NFL/sports -related project or for a non-sports related development. Furthermore, and perhaps most importantly, he better positioned himself in both St. Louis and Los Angeles in relation to the NFL and/or MLS. He has upped the ante in the Lou while creating options – any and all options – in L.A.
Regardless of what eventually becomes of a parking lot 1,800 miles away from the Gateway City that has drawn more of the collective attention of St. Louisans than any other such space on the globe, Kroenke’s land buy will ultimately end up as yet another real estate win, in some shape, form or fashion. After all, the real estate game is where it all began, and he knows the real estate game – along with the NFL stadium game – as well as anyone, anywhere.
So, rather than to suggest this land grab was an obvious (too obvious) step toward leaving town, Kroenke’s history and that of the league’s suggests it makes much more sense to believe it was an astute action designed in part to speed up the pace of getting things done quicker in St. Louis. Keep in mind, Kroenke only bought into the franchise on the explicit precondition that the team move here after being lead investor for the city’s NFL expansion efforts in 1993.
Yes, while many see all of this as a signal that the Rams are quickly on the move, I see this as a sign that Kroenke wants to move quickly get things moving – in St. Louis.
Kroenke knows league stadium issues are highly complex and often take many years to iron out. The Vikings, for example, began their quest for a new venue in 1998 before reaching a deal in 2012. The San Francisco 49ers began working toward another stadium in the late 90s and will finally unveil a new venue this fall. Finally, the Chargers have been on a year-to-year lease for years and have been seeking a stadium resolution since 2002. The Chargers, by the way, have been in position to terminate their lease each year since 2007.
Thus, while it seems that Rams stadium negotiations have been going on forever, the whole process is really very fresh in relation to what other cities have gone through. Arbitration, after all, only began in 2012.
And while the whole L.A. land situation has the familiar scent of another NFL leverage move, it also is serving, intentionally or not, as MLS leverage – particularly after the tremendously successful exhibition matches in the city a year ago.
Speaking of leverage, one of the more laughable things spouted recently in local media is the idea that L.A. leverage is dead. This would make at least some sense if one then suggested a belief that there was not any possibility of the Rams moving, or that it was unlikely that any team relocates. However, this individual both suggested L.A. leverage was essentially a thing of the past but that the Rams were likely to move there.
Let me get this straight: if Rams defensive end Robert Quinn were a free agent this offseason and told the front office that he would stay for the league minimum and not entertain offers from other teams, would that create any pressure to pay up? On the other hand, would the pressure and leverage intensify if the team at least believed that Quinn were shopping around the league for the most lucrative payday possible and considering a move out of St. Louis?
In the business community, if a city possesses a corporation that it values to any degree and that corporation is seen as potentially eying another location as its home, the incentive goes up to ensure that the business does not leave town. That’s called leverage.
It’s no different in the NFL: When it gets down to crunch time and league owners desire stadium deals designed to increase revenue streams in their own cities, they subtly or not so subtly throw out some variation of the L.A. leverage card. It’s been played for nearly 20 years and – despite some baseless and ridiculous assertions otherwise – it will continue to be played until that market is filled.
It is impossible to accurately suggest that a move is likely and then simultaneously assert that such a prospective possibility would not induce leverage, unless one suggests that nobody wants to retain the former Super Bowl champions – and that is far from the case. Apparently, the intentional (yes) or unintentional (cough/laugh) utilization of L.A. as leverage mysteriously died in 2012 just after it was significant in Minnesota eventually solidifying a new stadium resolution and cementing the team’s headquarters in the Twin Cities.
L.A. leverage is alive and well. And while it is indeed alive and well, that does not mean that it is any more likely that a team is moving to L.A. now that it was five or 10 years ago.
In fact, the above mentioned Farmer of the L.A. Times recently told Peter King’s Monday Morning Quarterback Podcast that he does not anticipate a franchise being in L.A. within the next five years.
To some, this is hard to comprehend and makes no sense. But when studying the NFL closely and its unique economic model, one can see why Los Angeles remains without a team and likely will for the next several seasons.
For one, the league’s egalitarian model is one that shares the majority of revenues equally, thus making the differences in market size less important than what is seen in other sports. Please see the Green Bay Packers and Pittsburgh Steelers, for example.
Secondly, there are no separate TV deals available for NFL teams. This is a significant differentiation from the setup of MLB and the NBA, for instance.
Thirdly, nobody is going to take what amounts to a future money printing potential expansion spot from that league-controlled market – with emphasis on league-controlled – without paying what would equate to an expansion fee.
League owners aren’t about charity to other owners. They aren’t going to leave money on the table or let their most prized leverage spot go without someone paying up and paying up in full.
Last year, I suggested a $500 million-and-up relocation fee, but all signs point to that prospective fee ringing in at no less than $800 million and very likely in excess of a billion dollars.
In addition to a punitive relocation fee, NFL policy guidelines state that a relocation franchise would not qualify for the NFL’s G4 loan, a loan that effectively operates as a grant. Thus, a relocating organization would not qualify for up to $200 million in league money as any “…project must not involve any relocation of or change in an affected club’s home territory.”
Additionally, the chances of getting any meaningful public assistance for a venue in California, as most are now aware, is slim. In St. Louis, it is very likely that at least some public help (in various forms) would be likely. The St. Louis Convention and Visitors Commission was nearing a $200 million commitment by the finalization of arbitration, and an anonymous source close to negotiations believes they could have gone a little higher.
One can conservatively estimate that a new venue in L.A. would cost at least one billion dollars, without counting the construction of team practice facilities, higher business taxes and generally higher costs of doing business in that great state.
In short, a completed move to L.A. would almost assuredly cost well in excess of $2 billion dollars. And let me be clear: Anyone dreaming that the league would somehow bypass a huge payday by playing choir boy and waving a massive expansion-esque fee for a move is either uninformed or delusional. It’s not happening – not for the Rams or any other franchise.
When one understands Kroenke’s background, one knows that he has predominately built his empire by finding ways to pay less and turn as much profit as possible via cost-friendly deals. It is, after all, the Wal-Mart way. And you aren’t going to get the Wal-Mart way, as related to an NFL stadium, in California.
While on the topic of Kroenke, a recent report from outstanding St. Louis Post-Dispatch Rams beat writer Jim Thomas suggested that Kroenke was not returning Missouri governor Jay Nixon’s phone calls. Last week, Demoff neither confirmed nor denied that report in multiple radio interviews, including this one at 101 ESPN.
Be that as it may, the Rams have long stated that they wish to keep all stadium negotiations as private as possible, and the governor’s office has shared similar sentiments in the last year.
The bottom line is this: If it were eventually proven that Kroenke has not and does not eventually participate in negotiations and discussions with the governor, he would clearly be in violation of article 4.3 of the NFL bylaws, which plainly states that clubs must operate in “good faith” to find a stadium solution in its home territory. Clearly, it would not be considered that a club negotiated in “good faith” if it were proven that they refused to negotiate with their state’s highest authority and the individual designated for the lead role in this process.
As things stand now, the safe bet remains that the Rams work out the stadium issues in St. Louis via a three-way combination of NFL funds, Kroenke cash and some city/state public support.
Yet, anyone saying that a move is impossible is wrong. When you have Kroenke’s pockets and business wherewithal, such a move is certainly far from impossible.
I would suggest that all parties interested in ensuring that St. Louis continues to house an NFL franchise take the L.A. land purchase seriously and that they move forward proactively and handle business.
No, I don’t believe that the soon-to-be 67-year-old Kroenke wants to drag the Rams back across the country and pay what would even be a substantial part of his vast net worth to do so, while hurting business interests here in the state that still houses his greatest activity and is home of his real estate companies.
But to pretend that he isn’t capable of finding a way to eventually pull off a move would be foolish, too. The hoops to jump through would be very substantial, but Kroenke has proven time and again that he typically finds a way to get what he wants.
In the big picture, the poker games have just begun. This is going to be a ride with bumps, bruises, twists and turns. My best advice would be to take everything related to stadium rumors with a grain of salt – or maybe a bucket – for the here and now.
As we have seen around the NFL, these things usually get ugly before they get pretty. These things usually don’t progress much until deadlines approach.
Another thing to keep in mind through all of this is that Kroenke is not the ideal owner for an L.A.-based team. He is reluctant to directly communicate with his fan bases and seems to be unwilling to regularly communicate with the public, whether in London, Denver or St. Louis. How would Kroenke handle the bright lights and media pressures of L.A.? There are certainly other owners who would seem to be a much better personality and public relations fit in Hollywood than “Silent” Stan.
For those who still insist that it’s a no-brainer to go to L.A and an automatic gold mine, then I assume you are suggesting that a substantial number of NFL owners and the league itself have been brainless in leaving the market void for nearly two decades?
Or maybe they have a whole different long-term plan in place, one that keeps all existing markets and their respective revenues in place, avoids alienating any current fan bases and those regions of the nation, and continues to grow the overall pie via new franchises and a fresh start in L.A. and other prospective cities.
After all, how many thriving corporations look to shrink their reach rather than expand into additional territories and markets? In the minds of some, you would think that McDonald’s would stop opening new restaurants and instead begin relocating them unnecessarily.
In the end, expansion makes the most sense to the league, likely at or near the end of the current TV deals and collective bargaining agreement.
In the meantime, expect “Silent” Stan to do what NFL owner after NFL owner has done: find a way to get the best deal they can in the city they are in, just as almost every corporation of any kind does worldwide.
It is big business, and in the end, expect the Gateway to the West to house one of the finest venues in the league, something that I personally believe has been in the mind of Enos Stanley Kroenke for a very long time.
People forget how the Rams captured the city’s collective attention just a decade or so ago. Eventually, the Rams’ on-field play will make the region and state wildly proud again. And with what I expect will eventually be a long-term agreement and the chance to truly begin building a multi-generational fan base, it will be appropriate to do so in a venue that better showcases this great city and the bright future that it – and the St. Louis Rams – possesses right here.
Many are already villainizing Kroenke, but if it were not for him, the Rams would not be here in the first place. Perhaps some should wait and see how this plays out before they make some of the judgments they are. Nobody, after all, likes to feel awful about talking bad about someone who they eventually view as more of a hero than a villain, do they?
Additional resources via 101sports.com on the Rams’ stadium saga:
–The column touted by ESPN’s Mike Sando as arguably the best he had seen on the Rams stadium situation here, with an expansive look at Kroenke’s background from various angles, his history of building stadiums for a variety of franchises, much more on L.A. and much more on why the Rams and Kroenke are liking staying put.
–The NFL’s best and most extensive community work is detailed here, including why that commitment starts with Kevin Demoff, who has deep family roots in St. Louis. This piece also includes an extensive interview with Rams vice president of marketing Brian Killingsworth. Killingsworth explains why the “future fan” in St. Louis is at the forefront of everything the organization does off the field and what the big picture hopes are for all the club’s community initiatives.
–Timely analysis from Randy Karraker on article 4.3 regarding the Rams’ future.
–A compelling take on why the Rams belong in St. Louis, also via Karraker.
–Full copy of Article 4.3 regarding NFL relocation.