We've been focusing on football lately, and mostly ignoring the high stakes game of poker (extortion?) between St. Louis Rams owner Stan Kroenke and San Diego Chargers owner Dean Spanos as they vie for control of the Los Angeles market.
A report came out this morning that is probably meaningless, but I like it and want to comment on it, so here it is.
Per a league source with knowledge of the situation, the NFL may ultimately move only one team to Los Angeles. And that would happen not as a short-term thing, but as an indefinite move that could result in a second team never going to Los Angeles.
The shift comes from the league's intense desire to get it right in L.A. Although it would be a lot easier to build a stadium with private money if 20 games per year are played there, instantly assigning two teams to a market that for 20 years has had none may not be the best way to reconnect with Los Angeles.
If only one team goes, that team likely would be the Rams, since owner Stan Kroenke already has plans in place to fund privately a one-team stadium in Inglewood. The proposed project in Carson hinges on two teams: the Chargers and the Raiders.
A one-team market in L.A. likely would hinge on working something out for the Chargers in San Diego, which may not be easy to do without public money. It could be even harder if the Chargers are dead-set on leaving — and if owner Dean Spanos has the votes to block Kroenke from moving to L.A. alone.
See, now we're actually making some sense.
Los Angeles hasn't had an NFL team in 20 years. They should be eased back into it, and I don't mean "one team now and another in two years." I mean one team in Los Angeles that can rule supreme in the market for the next decade or so. There's a reason that the Lakers and Dodgers are still the "Kings of L.A.", and it's because the market had a chance to fall in love with them before the Clippers and Angels barged in. That's how the NFL should be handled there, as well.
So, how does this get done?
Well, and I was going to write this last week except we had so much game review and preview going on that there literally wasn't time or space for it, currently it feels a lot like Spanos is trying to blackmail (that may be a strong word, but hang on for a better one...) Kroenke and the league to pay for his stadium for him.
There was a report last week, passed along by my dear friend Fred Roggin, that Dean Spanos had more owner support behind him. Not necessarily for the Carson stadium project, but for the right to "block" a Kroenke move to Los Angeles.
With Carson dead, the only reason Spanos would be collecting those votes is to gain leverage. Leverage for what? Leverage into the pockets of a man much richer than he is.
I assumed that Spanos was going to give Kroenke two options to keep the owners from blocking his move. Either let Spanos move the Chargers into Inglewood as the second team (with Kroenke still fitting the bill for building the stadium), or pay Spanos off (with Kroenke's money fitting the bill for building a new NFL stadium in San Diego).
Now, depending on how familiar you may be with the legal system, you may notice that what I just proposed is illegal. It is the definition of extortion, so you're welcome for the legal lesson.
Whether or not this report from the NFL has anything to do with Spanos' power-play behind the scenes, I have no idea. I don't even know if that power-play is happening or if it's happening for the reasons I think it is, I'm just here connecting dots. However, I do think it sounds an awful lot like Kroenke's side (i.e. the league itself) responding to Spanos' side (i.e. the other owners), by saying "We make the rules and you just play by them."
Money, Money, Money
One thing that was mentioned last week, almost in passing, was that the Carson project (which, I assure you, is very dead) was hurt by the fact that both teams would be asking the NFL for a G4 loan.
Remembering that we're dealing with the NFL, and they make up the rules as they go along, I could see a situation where Kroenke's relocation fee goes partially into the pockets of the other owners and partially into immediately replenishing the G4 coffers.
Sure, the other owners will be pissy. They want every dime they can get, theoretically, but you have to realize the type of money we're dealing with here....
Steve Ballmer bought the Clippers, who have a partial lease to play at Staples Center, for $2 billion. The Guggenheim group bought the Los Angeles Dodgers for $2 billion.
Currently, the Dallas Cowboys are the most valuable team in the world (and the NFL) at $4 billion. The Rams are worth $1.45 billion, but that number will at least double the second Kroenke's Inglewood stadium is finished being built. As a matter of fact, as owner of the land, stadium, and team, the estimation on what the "Rams organization" will be worth is somewhere in the range of $5 billion. It will likely be the most valuable team in all of sports.
Now, let's talk about Kroenke's investment.
In 2010, he paid $450 million for a 60% share of the Rams. He's paying somewhere around $1.3 billion for this Inglewood stadium. I believe he paid $200 million for the land, but I'm having trouble confirming that right this second.
That's roughly a $2 billion investment into something that will be worth $5 billion the day it opens for business in L.A., and will seemingly only appreciate in value from there.
This may sound crazy, but the NFL likes money. The owners like money, and while they're out to get every last penny they can, they also know when to walk away from the table with the chips they have left.
Simply put, if Kroenke offered to pay a $2 billion relocation fee, everyone probably walks away happy. At least $1 billion of that gets dispersed amongst the other 31 owners, at least $500 million gets thrown the way of the Chargers and Rams (which may just be restocking the G4 fund), and the other $500 can go one way or another.
Kroenke still walks away having appreciated his assets in value by $1 billion, or nearly doubling the value of the franchise overnight (even with penalties and fees mixed in).
Even on the low-end, that's $32 million of pure profit going into the bank accounts of every single non-Kroenke owner just for saying "I won't fight you." Take out Spanos and Davis, it goes up. Throw in some of that extra $500 million, it goes up (we're now north of $51 million per owner).
I know these are billion dollar corporations, but it's not often that someone walks up to them with an offer that nets them over $50 million in pure profit, and if Roger Goodell is sitting behind Kroenke's money saying "This is what the league has ruled," I find it very hard to believe that it won't go exactly that way.
Does any of this mean anything?
I guess? I mean, it's just a report added to some of my own assumptions, but with each passing day it seems like Kroenke (who decided to go for the league's support) is going to win this war against Spanos (who decided to go for the other owners' support).
One thing the NFL won't do? They won't let Kroenke move to L.A. by himself without it benefitting at least the Chargers, and probably the Raiders as well. Which, if I'm being perfectly honest, is what I believe Spanos (and Mark Fabiani) has actually been fighting for this whole time.
Spanos gets to stay in San Diego, which he wants, and he gets some financial assistance from Uncle Stan, which he needs. Everyone stays happy.
It's a nice picture, isn't it?