Los Angeles Gets Closer to Regaining an NFL Team
Next month NFL owners will decide whether the Oakland Raiders, St. Louis Rams or San Diego Chargers will be allowed to relocate to LA.
Los Angeles has long been a great sports town — just ask Dodgers or Lakers fans — but the City of Angels has had a hard time keeping a National Football League franchise. That could change soon, however, as three NFL teams — the Oakland Raiders, St. Louis Rams and San Diego Chargers — are looking to move to LA, where they each used to play.
“Some believe it’s a pot of gold at the end of the rainbow, while others think it’s more like a marshmallow at the bottom of a Lucky Charms box,” says Marc Ganis, president of SportsCorp, a Chicago-based business consulting firm focused on athletics. “People forget that LA had two teams that left because they weren’t supported.”
Part of the problem had to do with the NFL’s TV blackout rules. Both the Rams and the Raiders played at Los Angeles Memorial Coliseum, a stadium with more than 90,000 seats that rarely sold out even when the teams were doing well; under NFL rules their games were blacked out to local TV viewers. In 1980 the Rams moved to Anaheim, some 30 miles south of LA, before relocating to St. Louis. The Raiders moved from Oakland to Los Angeles in 1982 but returned to the Bay Area 13 years later.
“People forget television broadcasts are doing well in Los Angeles without a home team because people get the best games,” Ganis says.
The U.S.’s second-largest metropolitan area will get its shot at an NFL franchise during the league owners’ meetings in Houston on January 12 and 13, but Robert Caporale, chairman of Miami-based sports investment bank Game Plan, says right now it’s unlikely that any of the three teams could get the necessary 75 percent of the NFL’s 32 owners to vote in favor of the move. “That can change between now and then,” he adds.
“It’s hard to get [the owners] on board for anything,” says Andrew Zimbalist, sports business expert and economics professor at Smith College in Northampton, Massachusetts. But if they don’t reach an accord, the NFL will suffer, he continues. “They have waited 20 years [since the Rams and Raiders left LA], and there are now two viable proposals,” Zimbalist says.
The owners looking to relocate their teams to Los Angeles are the Rams’ E. Stanley Kroenke, the Chargers’ Alex Spanos and the Raiders’ Mark Davis. The Chargers (which played their first season in LA in 1960 before moving to San Diego) and the Raiders have proposed building a stadium together in Carson, California, 18 miles south of Los Angeles. Rams owner Kroenke wants to put up a stadium in Inglewood, near Los Angeles International Airport. He has offered to allow a second team to invest in the stadium, but that team wouldn’t have a say in its design and wouldn’t share in profits from other parts of the project.
Forbes estimates Kroenke’s net worth at $7.6 billion, thanks to his marriage to Ann Walton Kroenke, daughter of Wal-Mart Stores co-founder James (Bud) Walton. The 92-year-old Spanos made his money in real estate. Davis is the son of legendary Raiders owner Al Davis, who died in 2011.
Walt Disney Co. CEO Robert Iger has agreed to advise the Chargers on their stadium project if they’re allowed to leave San Diego. He would have an opportunity to buy a stake in the Chargers or Raiders after he leaves Disney in 2018.
Sports analysts say that with all the moving pieces, it’s very difficult to predict the outcome for Los Angeles. But Zimbalist is willing to hazard a guess. “If I had to bet, I would say the Chargers and Rams will move to Inglewood,” he says. “Spanos is well liked by NFL owners. Kroenke is not as well liked, but he’s not reviled, and he got the whole thing moving.” Kroenke was the first to come up with a stadium plan for a new Los Angeles football team.
Of course, fans in St. Louis, San Diego and Oakland don’t want their teams to leave. And if a city has made a demonstrable effort to keep a team, the team can’t move, according to Article 4.3 of the NFL’s operational bylaws: “No club has an ‘entitlement’ to relocate simply because it perceives an opportunity for enhanced club revenues in another location. Indeed, League traditions disfavor relocations if a club has been well-supported and financially successful and is expected to remain so.”
On that front, St. Louis has done the most so far, with a $1 billion stadium plan that includes a naming rights sponsor, National Car Rental. But Zimbalist doesn’t think St. Louis’s stadium proposal to keep the Rams from moving will satisfy the NFL. Meanwhile, “Mark Davis is not well liked,” he says. “Oakland is probably seen as a more viable long-term solution [for the Raiders] than San Diego or St. Louis.”
Still, consider Steve Ballmer’s $2 billion purchase of the Los Angeles Clippers in 2014 and Guggenheim Baseball Management’s $2.2 billion acquisition of the Los Angeles Dodgers in 2012. These deals illustrate that “there is a huge location premium for Los Angeles–based sports teams,” SportsCorp’s Ganis says. “Whoever goes there will have a dramatically increased valuation.”