Why Did Spanos Vote ‘YES’ on Raiders?

On Monday, the NFL owners voted overwhelmingly to OK the Raiders’ move to Las Vegas. With only one holdout, being Miami, the move was approved 31-1.

On the surface, it sounds like this was the clear will of the NFL’s top minds and wallets. However, this move has clear ramifications for a number of teams— and Los Angeles will surely be affected.

Let’s take a look at some numbers:

After crunching the 5 most ‘stable’ franchises (no new stadiums, markets, etc), there has been an average increase in franchise value of 21% annually (that’s a lot, and a bubble that is definitely going to pop soon, but that’s another article), and that value is used as a ‘baseline increase.’

First, let’s look how the Rams have increased in value over the past few seasons.

Rams value in 2014: 914 million (forbes.com for all historic numbers)

Rams value in 2015: 1.45 billion

Rams value in 2016: 2.9 billion

There was a 79% increase in their value after their move. This is largely attributed to moving to the second largest media market in the United States.

Rams estimated value in 2017: 3.2 billion

This is an estimate based on the baseline increase of 304,500,000. Keep in mind, there is going to be a lot of competition for eyeballs in LA in 2017, and their value could actually decrease. I have calculated that they will retain their current stranglehold on the LA market (for better or for worse) with little to no atrophy to the Chargers. This could be an incorrect assessment for 2017, as both could have the same game days in LA, but eventually scheduling should help even things out.

Now we head to the Chargers.

Chargers value in 2014: 990 million (forbes.com)

Chargers value in 2015: 1.53 billion

Chargers value in 2016: 2.08 billion

Chargers estimated value in 2017: The baseline increase would put the franchise at 2.5168 billion in San Diego. However, with the move, that value will likely increase. The most positive estimate would be equal to the Rams’ 79% increase after their move, making it 4.505072 billion. However, that increase was reflected in the Rams having the entire LA market to themselves for 2016. It’s more accurate that the market will split. Additionally, San Diego also drew a portion of LA’s market share from where it stood. Expect their final raw worth to be around 40% higher, or 3.52352 billion.

Now we subtract their debts, which equals about 50 million dollars annually for the next decade as part of the franchise-moving fee. As we can see, that is a drop in the bucket toward the final value of the franchise. There are additional debts, such as having to rebrand everything, building new facilities, and establishing a foothold in a new region. For a famously stingy ownership, I really wouldn’t put too much into the estimate of costs for the move. When we’re comparing to the actual value of the entire franchise, it’s again a drop in a bucket.

What on Earth does this have to do with the Raiders??

Ah, yes, back to the rub. With the Raiders moving to Las Vegas in 2 to 3 years, the southwest is destined to become rather inundated with selections (especially compared to the last 3 decades!). While Las Vegas itself doesn’t bring in too many viewers, this location is very well known to the populations of both San Diego and Los Angeles.

The team happiest about this potential move must be the San Francisco 49ers, who now extend their influence through all of Northern California and Oregon, right into the doormats of the Seahawks. They will reap the loss of Oakland more than any other team, and I would expect their value to raise commensurate with this gain.

However, the three biggest losers are the LA Chargers, the LA Rams, and the Arizona Cardinals. The populace of Nevada would otherwise be fairly split between them, but now that state will have a clear home team. The Raiders will undoubtedly pull viewers (and viewers become fans, and fans become dollars) from the LA market and the San Diego market, just due to proximity. Arizona is probably fairly buffered, but there should be some pull. If the Chargers and the Rams lose even 5% of their market share to Las Vegas, that amounts to $176 million in lost value to the Chargers and $160 million to the Rams.

So why did the Rams and Chargers vote yes on the move? Politics and image... and possibly the final dollar.

Although both Kroenke and Spanos lose dollars by the Raiders pulling anchor on Oakland, they had little choice but to cast their ballots for yes. By pulling the moves that they did, they have already stamped their approval for franchise fluidity. To have asked the entire league for permission to move (and received it), and then deny it for another would be blatantly hypocritical. And while few of these businessmen value image over the bottom line, even a hundred-million-dollar hit doesn’t outweigh the good graces of your fellow owners.

In the interest of the Chargers, however, this could be a hint of a silver lining. The good graces of the NFL can bring things like shiny new stadiums, favorable rule changes, and approvals for the sale of a franchise. That’s right—changes in ownership must be approved by a league super-majority. There have been rumors that Spanos is interested in selling the team. After all, he’s burned in effigy in his hometown, the stadium fiasco has proven what a headache this business can be, and there’s the risk that professional football has reached its market threshold and can only come down from here.

The move to LA was the quickest and most effective way for Dean Spanos to increase the value of the Chargers franchise without actually improving the product on the field. The Spanos family now owns the Chargers at the height of their worth. In just two short years, that worth could be cut by further splitting demographics between 3 teams. If Dean Spanos indeed has any interest in selling, this is the time and 3.52 billion is the amount. In order to cash that potential check, however, he still has one more hoop to jump: sweet talking 21 of 32 owners into approving the transaction.

Within the next year—two at max— we’ll know for sure whether the Chargers really are on the market.