Good morning.
I wanted to pass along some info and perspective that I couldn’t squeeze into my column.
As I write this it’s very late on Saturday night, so please excuse my typos. And if I don’t cover all of the ground here, but I’ll try my best for now. And we’ll be writing and talking a lot about this in the coming days. All of my comments here are relayed based on conversations I’ve had with sources close to Rosenbloom in the last 24 hours or so … as well as my knowledge of Rosenbloom’s thinking based on our many conversations over the past 15, 16 months.
Warning: this will be a lot longer than a 5-minute read. But I hope it serves as a basic primer on the issues.
1. WHY SELL NOW? A few reasons, in no particular order. (A) Rosenbloom and Rodgriguez have resolved estate-tax issues stemming from the death of their mother, late Rams owner Georgia Frontiere. But cash flow for the family is a problem; the tax rate of 45 percent on Frontiere’s estate, which includes the Rams, is a strain, and both Rosenbloom and Rodriguez want to do what’s best for their respective families. (B) The Rams will be the only NFL team available for sale, so they should attract plenty of interest. (C) Rosenbloom is concerned over the likelihood of an unpleasant outcome in negotiations to fix up the Edward Jones Dome in a way that would satisfy the team’s needs into the distant future. He doesn’t believe he’s the best person to lead this fight. He thinks a St. Louisan or St. Louis-based person would be in better position to network here locally and reach a happy ending with St. Louis and regional politicians and the St. Louis CVC, which operates the Edward Jones Dome. With his film career on hold, the last thing Rosenbloom wants is to get embroiled in a lengthy battle over stadium issues. Moreover, Rosenbloom doesn’t have the personal capital necessary to invest in the private financing of a new St. Louis stadium, or a privately funded extensive renovation of the Edward Jones Dome.
2. DIDN’T ROSENBLOOM SAY HE WOULD ONLY SELL TO A ST. LOUIS PERSON/GROUP? Yes. And he waited for more than a year for someone, or a consortium, to come forward from the St. Louis community. And it hasn’t happened. He hasn’t received any offers. He hasn’t fielded any serious inquiries from a poential St. Louis-based owner. So, looking at it from his point of view, how can you sell your controlling share of the team to St. Louis interests when no one from St. Louis makes a move to acquire the team? Rosenbloom figures he has no choice at this point but to open up the sale to all interested parties, no matter where they live. Here’s how it was put to me: instead of waiting for someone to approach and ring the door bell — and turning them away unless they’re willing to keep the Rams in the STL — Rosenbloom is going to open the doors and let anyone have a look. Yes, even if the potential owner is based in Los Angeles, which is angling for the return of NFL football
3. BUT ISN’T ROSENBLOOM BEING A PHONY? IF HE CARES FOR ST. LOUIS, AS HE CLAIMS, THEN WHY WOULD HE PUT THE RAMS IN THE HANDS OF HOSTILE INTERESTS? That’s a good question. I put it to one Rosenbloom confidant, who supplied this answer, and I will paraphrase: Rosenbloom and Rodriguez are selling 60 percent of the team; that’s their share. Billionaire Stan Kroenke owns the other 40 percent and wants to keep it. So if no one from St. Louis has a desire to buy 60 percent of the team to guarantee its future in the city, then what does that tell you? Finding an individual or a group to fund the purchase of 60 percent of the Rams shouldn’t be a mission impossible. Having Kroenke on board as 40 percent partner makes the enterprise a lot easier; a lot less money is required to purchase 60 percent, compared to 100 percent. But if no one in St. Louis cares enough to make a pitch for the team, then what is Rosenbloom supposed to do — put a loaded gun to someone’s head and force a St. Louisan to make an offer?
It should also be noted that all three of our local franchies are owned by those who reside in other cities. Rosenbloom is in LA, Cardinals owner Bill DeWitt lives in Cincinnati, and Blues chairman Dave Checketts spends most of his days in Salt Lake City or Connecticut.
4. DOES ROSENBLOOM WANT THE RAMS TO REMAIN IN ST. LOUIS? Yes. His best-case scenario would be to make a quick deal with an individual or a group that moves aggressively to secure the Rams and ensure that St. Louis will remain the team’s long-term home. While he will listen to offers from beyond St. Louis, potential suitors from the outside will need time to sort through details, get up to speed on the stadium issues, and study the comprehensive financial aspects of the deal. He believes a St. Louis group or individual can move more quickly. And that is his hope.
5. COULD ROSENBLOOM TAKE A PROACTIVE ROLE IN ALLEVIATING A POTENTIAL STADIUM CONFLICT? Come to think of it, yes he could. As one wise man suggested to me, and I will quote: “If Rosenbloom really wants to avoid ‘conflict’ he can simply back off of the top-tier stadium requirement. Seriously. That is not a standard part of NFL team agreements. Let him void it. The team will still sell.” Any thoughts, Chip?
6. WHY BRING IN GOLDMAN SACHS TO HELP WITH THE SALE OF THE TEAM? Goldman Sachs has facilitated the sale of other sports franchises. It maintains a file of individuals who have expressed the desire to own NFL, MLB, NBA or NHL franchises if the right opportunity arises. Even though the economy remains at a low ebb, and the credit industry is tight, there are still a lot of wealthy people out there who want to own an NFL team. And Goldman Sachs can be an effective matchmaker.
7. CAN’T ROSENBLOOM AND RODRIGUEZ SELL THEIR 60 PERCENT TO KROENKE? Yes … in fact, he has the right to match any outside offer made for that 60 percent. But there’s a huge obstacle in the way. Kroenke owns the NBA Denver Nuggets and the NHL Colorado Avalanche. He would have to sell them, or the NFL would prohibit him from purchasing control of the Rams. The NFL is firm about its cross-ownership rules. If Kroenke owned an NBA and/or NHL team in St. Louis, then the NFL would allow him to own the Rams, because he wouldn’t be competing against another NFL owner. But the way the NFL sees it, the profits generated by Kroenke in St. Louis as the majority Rams owner could be put to use in Denver, where Kroenke could take the revenue and enhance the Nuggets and Avalanche, who compete with the NFL Broncos for the sports dollar. The NFL doesn’t want that to happen. Some of you may be wondering: well, what about Paul Allen? He owns the NBA team in Portland, and the NFL allowed him to buy the Seattle Seahawks. So what’s the difference? There is no NFL team in Portland, so Allen isn’t using his NBA Trailblazers to compete against a fellow NFL owner in Portland. That’s the difference. Personally, I think it’s a silly rule, but …
8. WOULD KROENKE BE WILLING TO SELL THE NUGGETS AND THE AVALANCHE? Unfortunately, I haven’t spoken to Kroenke in months, so I don’t know what he thinks about all of that. But he certainly enjoys owning the Nuggets and the Avs. And he’s reportedly wary of the stadium issues in St. Louis.
9. WOULD THE NFL BE WILLING TO WAIVE THE CROSS-OWNERSHIP RULE TO ACCOMODATE KROENKE? Possible, but doubtful. I’m told that Kroenke has been networking behind the scenes, to line up support from his fellow NFL owners. One influential NFL owner told me several months ago that the league would be crazy to push Kroenke away, because he has everything that the NFL covets in an owner. I’m told that he has probably 8 or 9 owners firmly on his side — but he needs a lot more than that to get NFL Commissioner Roger Goodell to bend the rules.
10. COULDN’T ANN KROENKE BUY THE RAMS? AFTER ALL, SHE’S WORTH MORE THAN 2 BILLION DOLLARS. I’ve chatted with Mrs. Kroenke on several occasions and she has a lot of class. But I have no idea if she’d be interested. I have no idea if the NFL would allow such an end-run around the cross-ownership rules, but I doubt it would fly with the league.
11. WHAT ARE THE RAMS BEING SOLD FOR: Forbes gave the Rams an estimated value of $929 million, which may be a bit high. A source told me that Rosenbloom had been willing to sell (previously) for $850 million to a St. Louis group (which never emerged) … but I cannot confirm that. But would he give a discount to a St. Louis-based buyer? No. That’s what I was told. Now that he’s made the decision to sell, unconditionally, he’ll strive to get fair market value for the Rams. So the price tag (based on 100 percent ownership, not 60) is is probably around $900 million. That’s just a guess.
12. IS IT POSSIBLE THAT CHIP AND LUCIA WILL HOLD ONTO THE RAMS FOR A WHILE? Yes. I’m told that unless they receive the price they want, they are under no immediate pressure to sell at a lower price, and can wait for a few more years if necessary. I am also told that, even if they do sell, they would like to retain a small ownership stake in the franchise.
13. ONCE AGAIN, WHAT ARE THE STADIUM ISSUES? I covered this in the column, but let’s break it down again. The Rams’ lease with the St. Louis CVC requires that the Dome be rated among the top 25 percent of NFL Stadiums by 2015. That means the Dome must be considered one of the top 8 stadiums in the 32-team league by 2015. And even with some renovations — like the $30 million improvement project that’s being executed now — there’s no way that “The Ed” will qualify as one of the league’s top eight stadiums by 2015. The Dome opened in 1995, and since that time more than 20 new stadiums have been built or completely renovated throughout the NFL. There is no way that The Ed can match those newer, more lucrative stadiums that generate a huge revenue flow for the team owners. As hard as it is to believe, The Ed already is one of the oldest stadiums in the NFL. It’s crazy but true. In 2012, the Rams and the CVC will exchange proposals on what should be done to get the Dome up to standard. If the two sides can’t agree, then the disagreement will head to arbitration. And if the arbitrator decides that the Ed fails to reach the top-eight standard, the Rams can terminate the lease after the 2014 season. In other words, they’ll be free to go.
14. IS THERE ROOM FOR MIDDLE GROUND? A COMPROMISE? Yes. But it depends on who buys the Rams from Rosenbloom-Rodriguez. If an out-of-town owner is set on moving the team to Los Angeles, then why compromise? The escape hatch will open after the 2014 season. But if a St. Louis-based owner steps in, then obviously it would enhance the possibility of a truce between the Rams and the CVC. A local owner would be connected in the St. Louis community. A local owner would likely have an exisiting relationship with some of the more powerful figures in town. A local owner would be more trusted. A local owner knows how St. Louis works, and would have a better chance of getting something done here.The two sides could reach some type of interim agreement to spruce up the Dome and make it more viable until a long-term plan is put in place. In other words, a St. Louis owner and the CVC could buy some time and put off the inevitable, hardcore discussions about a new stadium for at least a few more seasons beyond 2014.
15. WILL THE NEW OWNER PUSH FOR A NEW STADIUM? Probably so … again, it depends on the owner. I’m not going to lobby for a new stadium. And I don’t believe the climate exists to use public money to build a new stadium for the Rams. And there are more worthwhile uses for public dollars. But take a look at Indianapolis. It lured the Colts from Baltimore to play in the RCA Dome, which opened in 1984. The Colts moved into a new stadium last season. In other words, the RCA Dome — which was similar to the Edward Jones Dome — lasted 24 seasons. By 2015, The Ed will be 20 years old.
16. ARE THE RAMS THE ONLY POTENTIAL CANDIDATE TO MOVE TO THE OPEN LOS ANGELES MARKET? No. First of all, the NFL controls the LA market and will have authority over any proposed move. But there are problems in Jacksonville, Minnesota and San Diego. St. Louis isn’t the only city with potential NFL stadium or market issues.
17. IF THE RAMS MOVE, WILL ST. LOUIS GET ANOTHER NFL TEAM? Let me answer that by asking another question: after seeing St. Louis lose two teams, the Cardinals and the Rams, within a 30-year period, why would the NFL want to put a third team here? And would the city/region have the stomach (and the money) to go through a long, painful, protracted struggle of attracting another franchise? And what franchise would that be? The NFL has no plans to expand. Prognosis: grim.
18. BOTTOM LINE, ARE THE RAMS GOING TO MOVE? Hard to say. But unless local ownership emerges, the franchise’s future in St. Louis will be on shaky ground. Now that Rosenbloom and Rodriguez have enlisted Goldman Sachs to find a buyer, it’s obvious they’re serious about selling the team. But that realization should be helpful to the St. Louis cause. With the Rams on the block, I believe it will motivate a local buyer (or group) to mobilize and come forward to save the team.
I hope I have covered most of the relevant ground.
Thanks for reading …
-Bernie
