On the Long Road to L.A., the Owners Followed the Money
Putting a bow on a 20-year process, we have reached a decision point for the NFL’s return to the nation’s second-largest market, Los Angeles. And, in what should be no surprise to readers of this space, the NFL and its ownership followed the money. The league will relocate the former St. Louis Rams to L.A. to eventually play in the venue being developed by Rams owner Stan Kroenke. It is, and always has been, the option that has offered the most revenue producing opportunities. The Chargers will have the option to move before this time next year. If they choose not to, the option will revert to the Raiders.
Kroenke is the clear winner tonight among a trio of losers: Chargers owner Dean Spanos, Raiders owner Mark Davis and the city and fans of St. Louis. Let’s briefly look at how we got here.
Long time coming
My first NFL owners meeting was at the famous Arizona Biltmore Hotel, where I vividly remember an agenda item prioritizing placing a team in L.A. The problem always came down to having a proper stadium site. That changed over the last two years with two viable sites emerging, and they both have some history with the league. The site proposed by the Chargers and Raiders in Carson was one studied by the NFL several times in the past but rejected due to concerns about a landfill, concerns since addressed. The site proposed by the Rams at Hollywood Park in Inglewood was approved as a site 20 years ago for the Raiders to move from the L.A. Coliseum, but they chose to return to Oakland.
Until this year, potential relocation to L.A. has largely been a stalking horse used for leverage in a team’s stadium financing negotiations with their home markets. This time, however, the owners in play “broke up” with their city leaders (and fans) in formally applying to relocate and taking direct aim at them (Kroenke insulted St. Louis as a market not worthy of supporting three professional sports teams).
The NFL was complicit in these exit strategies, poking holes in the existing cities’ stadium financing plans and taking the hits at town hall meetings so the owners didn’t have to. And at owners’ meetings over the past months, it has been NFL staff—not those owners—giving updates on St. Louis, San Diego and Oakland.
Many have asked why such a push to L.A. since there hasn’t seemed to be any clamor from L.A. residents for a team. Well, it wasn’t about the fans: follow the money.
NFL stadiums were once buildings that housed 10 NFL games a year (two preseason, eight regular season), until it became clear that these facilities needed to be revenue positive for more than 10 days a year. Thus, over the past two decades stadium economics have become an increasingly important component for owners to throw off revenue from a variety of sources beyond NFL games.
As vice president of the Packers, I remember facing this necessity. While the idea of tearing down or replacing Lambeau Field was blasphemous, a renovation was vital for financial preservation; our rank in league revenues was plummeting as newer stadiums—with added revenue sources—were coming online. We were able to modernize and monetize (with a year-round restaurant, new Packer Hall of Fame, expanded pro shop, etc.) while keeping the traditional feel of Lambeau.
The $2 billion stadium proposal from Inglewood (Rams) presented the NFL and its owners an irresistible package of multiple uses beyond hosting NFL games. In what L.A. Committee member and Texans owner Robert McNair called an “NFL Campus,” the stadium’s other NFL-related uses would include future Super Bowls, Pro Bowls, drafts and combines, as well as potentially housing west wings for the NFL and Pro Football Hall of Fame. Non-NFL uses could include college football games—bowls and otherwise—as well as NCAA Final Fours, international soccer matches, concerts and other events. The building would immerse into the L.A. sports and entertainment scene, attracting all of the ancillary revenue from naming rights deals, exclusive sponsorships, local media deals, parking and concessions, etc.
As the relocation applications point out, the existing markets pale in comparison to revenue possibilities. When it was announced in December that National Car Rental would provide naming rights for a proposed stadium in St. Louis for $158 million, Jerry Jones commented, That would buy a lobby in Los Angeles. That statement was telling.
• THE DAY FOOTBALL DIED IN L.A.: On Dec. 24, 1994, the Raiders and Rams both played their last games in L.A. The stars were out—from Marcus Allen and Jerome Bettis to Whoopi Goldberg and Kelsey Grammer—as were fans desperate to hold on
The NFL is a complex web of relationships, marked by long memories. Owners note which fraternity members support them and oppose them on personal initiatives and remember for future dealings. This politicking has been on full display during the L.A. relocation process. Let’s look at the three applicants.
The members of the Spanos family, owners of the Chargers, have been what NFL leaders refer to as “good partners” for many years. They were the sentimental choice of the league to move, and they added the gravitas of the politically connected Carmen Policy and the highly respected Robert Iger to their application. Dean Spanos played the “league loyalty” card in his messaging and had the recommendation of the league’s L.A. Committee during the day.
Unless anyone hasn’t been paying attention, these NFL owners are ruthless and unflinching when it comes to chasing all possible revenue streams.
However, in covering the meetings, I thought it telling that nothing happened after the L.A. Committee recommended Carson as a site to the full membership. In a “normal” voting situation, that recommendation would carry significant weight towards a winning vote. This, however, was not normal. First, there was a requirement of 3/4 of owner votes—24—rather than a simple majority. More importantly, there was building momentum towards the Jerry Jones proposal—not the Carson recommendation—to move the votes towards Kroenke and the Inglewood venue.
I also thought it was telling that Bob Iger walked through a media throng and stopped to talk, while “getting coffee,” in the middle of the day. It seemed an odd field trip, and his public lobbying on behalf of Carson, which he had already done in the meeting, seemed curious. Maybe, in hindsight, it showed some weakness on the part of the Carson project that Iger felt the need to take that stroll.
• THE END OF FOOTBALL, SOMEWHERE: In December, The MMQB attended the final 2015 home games of the Rams, Chargers and Raiders, and found three fan bases confused and angry about being toyed with by the NFL
Toward that end, Stan Kroenke presented the best proposal for those who vote with their wallet. Although Kroenke is an enigma who rarely attends owners’ meetings or league functions, his $11 billion net worth—between him and his wife, from the Walton (WalMart) family—endears him to owners wanting the most resources to lift the overall league brand. His supporters include “new money” owners such as Jerry Jones, Dan Snyder, Stephen Ross, Woody Johnson and Jeffrey Lurie. And ultimately, business won out over sentimentality. Unless anyone hasn’t been paying attention, these NFL owners are ruthless and unflinching when it comes to chasing all possible revenue streams.
As for Mark Davis, he never really expressed a strong desire to leave Oakland, and owners were quite impressed with Oakland mayor Libby Schaaf in her presentation in November to keep the Raiders. Having said that, Davis did not look happy with the result.
Roger Goodell has had some defining moments over the past couple years, mostly dealing with the player and union side in his emphasis on player conduct and discipline. Here, however, instead of responding to actions of team employees, he is responding to concerns and priorities of his own employers. As often said in this space, Goodell’s role is not only to “protect the shield” but also to shield the owners from criticism. In this instance, his role has been to build consensus towards a “managed outcome” that all of his bosses (owners) can support, defend and endorse. With the scoreboard showing a 30-2 result, he was largely successful.
My sense is that this is the result the league always wanted. As one owner noted to me, the Kroenke plan presented “a truly exciting opportunity.” The league’s point person on L.A., Eric Grubman, was thought to be a driving force behind the Inglewood site. Perhaps this is another reason that Spanos and Davis seemed so glum on Tuesday night.
While there will be disappointed and disapproving city leaders, fans and media in the wake of this outcome, Goodell’s role ultimately is to please “the membership,” which he has done in this era of booming NFL business. The commissioner will be judged on this L.A. outcome in a variety of ways, but as long as he is applauded for his job by the vast majority of people in that conference room in this Westin hotel in Houston, he is doing his job.
This L.A. decision, perhaps more than any other in recent initiatives, hits home the point of football today: The business of the NFL is the NFL.