New: Latest on Kroenke, Rams and NFL in STL

[fearsomefour]

Can you post the link to this Forbes story?

www.forbes.com/nfl-valuations/
should work.
It gives a list top to bottom and a little break down.
It is dated 2014 so I assuming this is reflecting 2013 numbers. Quick little read.

 

[12intheBox]

According to Forbes in August 2014 the Rams were rated dead last in team value and had just over $16 Million in operating income. By comparison the Buffalo Bills, the team ranked right above the Rams, had an operating income of $36 Million. The Cowboys, the most valued team, had operating income of over $124 Million dollars.
The Rams a cash cow? No.
Compared to the other owners Stan is failing.

Buckingham palace isn't the nicest palace in the world - but its still a palace.

Look at the financial investment Stan put in to the Rams and then look at their current worth. Thats how you know its a cash cow - you don't downgrade it by comparing it to other cash cows.

But again - take that wonderful corporation and kick them out of the league - and see what their team value is then.

 

[Rmfnlt]

Exactly, its a business.
The Buffalo Bills, in a crappy city (no offense Buffalo people), without a winner in forever made twice the money the Rams did.
I thought we were talking value (which, if someone can provide exactly how Forbes came up with their valuations, that'd be interesting).
As you know, income is revenue minus expenses. Those two components probably vary WIDELY from franchise to franchise. To me, it's not easy to see whether it's meaningful or not because we don't know how it was derived.
On an interesting note, the Rams made more money than all of these teams:
Lions
Bengals
Chiefs
Falcons
Vikings
Dolphins
The Rams made more money than 19% of the other teams in the NFL

The team value would skyrocket as would profit with the move even with no improvement in performance. In particular if it is "his" stadium. The opportunities for events/money makers at a stadium there are huge if he owns the building and not the city....or is a majority owner of it anyway.
Of course if he owns the building the value goes up... it's an asset he'd own after all.
But revenue? income? Not so sure... again, if the product stinks in L.A. like it has in St. Louis, people won't buy it. And, as we all know, cost of everything is more in L.A. So value might go up but income might actually decline. Remember, an asset is on paper only (until sold). Revenue/income/cash flow? Now, we're talking!! Not sure L.A. is some panacea for those important items.

In fairness to Stan I do think he has tried to put together a winner. He spent money on the team ect.
Trying isn't enough after a while. If the St. Louis fans attendance is dwindling because of the product, I am firmly convinced the same thing will happen over time in L.A.

I think he is a businessman first and foremost. He bought the team because he saw it as a good investment above all else. When a guy like that is ranked dead last in value/profit he is going to want to change things. The owners are competing on and off the field.
Again, he's not dead last in profit. And I remain that, if he'd produce a good product, his value would go up significantly. Like you said, he's failed... failed at putting a product out there that peple actually want to purchase. I don't really blame them... for the most part, St. Louians go because they are loyal fans.
Oh, and that businessman first and foremost? Investment only? I have NEVER read him saying anything of the sort. It's some personna that's been attached to him and gets perpetuated by media and some fans. Want to know what he ACTUALLY said? Well, you know what he said... it was that thing about being loyal to the city and state. Yeah, those words.

If St. Louis can put together something that makes sense in terms of dollars, building and potential profit ect. I think the Rams could well stay in St. Louis, but, it is an uphill fight.
The biggest block is the cost the NFL will assign to moving really....whats the time frame for return on cost ect.
Here's how I see it... and no sympathy for Kroenke.
Value is down because the product is not good - Kroneke's fault.
Income is still "not that bad"... like I said there are still 6 franchises that don't make as much... heck, the Lions lost money!
But again, want more revenue?
Sell more product.
Want to sell more product? Make it the best.
He isn't doing that.

 

[rick6fan]

Anybody that knew he had the option to and how he worked to get a minority stake in the Rams and the first buy option would have known he was going to exercise that and buy the rest of the Rams.

Except everyone knew how hard he worked to get a minority stake, and everyone knew he had matching rights, but it surprised everyone when he did it. In hindsight, it was obvious, but when it happened it was like BAM!

 

[fearsomefour]

It does depend how the numbers were calculated.
You are right value and profit can be two very different things. The numbers I was looking at was profit....gross means nothing really in terms of profitability. But again, who knows how Forbes arrived at their numbers. Anyway you slice it the Rams are in the bottom of the league in terms of money in coming.
While sitting pat and taking in a profit (true net profit) of 10 or 20 or 30 million may be great for you and I, I really don't believe this is how these people view business. If it were they would not be billionaires. They have other goals and other scales they use to judge their success in a venture.

"If the St. Louis fans attendance is dwindling because of the product, I am firmly convinced the same thing will happen over time in L.A."
Probably very true. But, attendance for 8 home games a year will be the least of his concerns if he gets that building in LA.

 

[fearsomefour]

Buckingham palace isn't the nicest palace in the world - but its still a palace.

Look at the financial investment Stan put in to the Rams and then look at their current worth. Thats how you know its a cash cow - you don't downgrade it by comparing it to other cash cows.

But again - take that wonderful corporation and kick them out of the league - and see what their team value is then.

I don't think that is how billionaires view things.
He has interests, including other sports interests, well outside of the NFL.
He has his own motivations. I suspect they go way beyond increasing value by 10% or going from 32nd (operating income) or 26th or 27th in revenue to the top 20.
Unlike franchise owners of say, Subway....where the corporate office holds the power, the NFL owners really hold the power. I think Stan will try to play by the rules but in the end will do whatever the hell he wants, for his own reasons. He has spent the money to hire good organizational people, they have been near tapped out on salary cap every year. He is not cheap in the sense of cutting costs on the field, but, if the team wins 12 games as opposed to 10, that is probably just bonus to him.
No one where his mind is at really. It just seems clear to me that the "business" model wins out over all with most guys like this.

 

[Rmfnlt]

It does depend how the numbers were calculated.
You are right value and profit can be two very different things. The numbers I was looking at was profit....gross means nothing really in terms of profitability. But again, who knows how Forbes arrived at their numbers. Anyway you slice it the Rams are in the bottom of the league in terms of money in coming.
While sitting pat and taking in a profit (true net profit) of 10 or 20 or 30 million may be great for you and I, I really don't believe this is how these people view business. If it were they would not be billionaires. They have other goals and other scales they use to judge their success in a venture.

"If the St. Louis fans attendance is dwindling because of the product, I am firmly convinced the same thing will happen over time in L.A."
Probably very true. But, attendance for 8 home games a year will be the least of his concerns if he gets that building in LA.

Cash flow... that's what business runs on. Of course, they're never going to see those financial statements (statement of cash flows). Private "companies". That's why I'd like to know the source of these valuations and income numbers. They coming from the teams?
And you're right... gross profit (which is a line item above net income) is even less meanngful.

To me, it's this simple:
Kroenke made a promise of sorts to the people of St. Louis and MO. He ought to live up to his word.
IF he starts producing a successful product in St. Louis, the franchise will march up the ranks in terms of value and income.
While the VALUE of the franchise will likely go up in L.A. (and I think a lot of the value will be tied up in assets, like the land and building... again, paper only unless he sells... which it appears he never does?) the cash flow and net income levels are unknown to us... I'm sure Kroenke has those estimates down to a science... but how much more will he actually make?
Takes a LOT of modeling to figure that stuff out. And, no matter how much modeling you do, a lot depends on consumers... and we know how fickle THEY can be!

 

[MrMotes]

The St. Louis Cardinals are arguably the best organization in baseball with the best fans, perennial winners, #2 attendance in baseball, yet they're worth a billion less than the Dodgers (1.4 vs. 2.4). Location matters, a lot...

 

[MrMotes]

But again - take that wonderful corporation and kick them out of the league - and see what their team value is then.

Do you really think disenfranchisement is an option?

 

[ramfaninsd]

Cash flow... that's what business runs on. Of course, they're never going to see those financial statements (statement of cash flows). Private "companies". That's why I'd like to know the source of these valuations and income numbers. They coming from the teams?
And you're right... gross profit (which is a line item above net income) is even less meanngful.

To me, it's this simple:
Kroenke made a promise of sorts to the people of St. Louis and MO. He ought to live up to his word.
IF he starts producing a successful product in St. Louis, the franchise will march up the ranks in terms of value and income.
While the VALUE of the franchise will likely go up in L.A. (and I think a lot of the value will be tied up in assets, like the land and building... again, paper only unless he sells... which it appears he never does?) the cash flow and net income levels are unknown to us... I'm sure Kroenke has those estimates down to a science... but how much more will he actually make?
Takes a LOT of modeling to figure that stuff out. And, no matter how much modeling you do, a lot depends on consumers... and we know how fickle THEY can be!

st louis made a promise to keep the stadium top tier, shouldn't they live up to it, perhaps that is why he is doing this, he no longer wants to work with st louis coz he don't trust them .

 

[RamFan503]

Yes, this is true. And, it reminds me that Georgia and John Shaw didn't say anything bad about Anaheim mayor Tom Daly, the city coucil members, or Gene Autry and his wife (Angel baseball team owners) before they moved in 1995 either.

IIRR they actually did have some pretty choice things to say about the project(s) Anaheim was offering up at the time. I believe they assassinated the plans before applying for the move that was originally voted down.

 

[bluecoconuts]

Buckingham palace isn't the nicest palace in the world - but its still a palace.

Look at the financial investment Stan put in to the Rams and then look at their current worth. Thats how you know its a cash cow - you don't downgrade it by comparing it to other cash cows.

But again - take that wonderful corporation and kick them out of the league - and see what their team value is then.

The most likely thing that happens is you kick them out of the league, then spend a lot of money in legal fees, probably end up losing if we're going off previous cases, and then have to pay hundreds of millions to Kroenke plus you've alienated the fanbase in LA.

I mean if they won then yeah, the Rams value would plummet. Then they have to deal with the schedule unbalance, getting another team, selecting where they would go, etc. Then fight the NFLPA who would undoubtedly sue for a shit load of money when the players on the Rams are suddenly out of the NFL, and then work to repair the image problem, trying to repair bridges burned in LA, bridges burned with former Rams fans, etc etc.

But if they lost? Now they probably have to spend hundreds of millions more to Kroenke's legal fees, plus you don't get the relocation fee that's supposed to be 500 million, and he does his own thing, and you look pretty bad, and pretty weak.

So win or lose they're out a ton of money and have a huge headache on their hands. It doesn't seem like a smart move.

 

[RamFan503]

Naive

Why I oughta...

I don't see a way this doesn't end with Stan getting what he wants. He's a business man on a level the other two considering moving to LA can only hope to be. The NFL is better off with him leading the restart there.

I will say that the league is likely best served having a happy Stan Kroenke. But I happen to think that getting a deal done in the Lou would make him quite happy. I dare say happier than ditching his home state and building something in LA. Just a hunch and it could be very wrong.

 

[MrMotes]

st louis made a promise to keep the stadium top tier, shouldn't they live up to it, perhaps that is why he is doing this, he no longer wants to work with st louis coz he don't trust them .

The lease that St. Louis agreed to said if the stadium wasn't top tier, The Rams were free to relocate. Seems pretty clear cut and honorable to me, however it plays out...

 

[ChrisW]

The lease that St. Louis agreed to said if the stadium wasn't top tier, The Rams were free to relocate. Seems pretty clear cut and honorable to me, however it plays out...

Quoting the lease, or quoting hearsay?

 

[Rmfnlt]

The St. Louis Cardinals are arguably the best organization in baseball with the best fans, perennial winners, #2 attendance in baseball, yet they're worth a billion less than the Dodgers (1.4 vs. 2.4). Location matters, a lot...

Well, when you obtain both organizations balance sheets, let me know.

Until then, relying on equity and not undestanding it's components is missing a lot of critical facts.

It's like comparing ten companies and only looking at net income and equity without looking at those important financial statements. Oh, and let's not forget the Statement of Cash Flows.

 

[12intheBox]

Do you really think disenfranchisement is an option?

I look at it like this. The NFL is a league. Sure, its a group of individual business - but its also a league based on rules. The NFL is able to discipline teams - to suspend their players, their coaches - even their owners. They take away draft picks, they cap the salaries that they can spend on players, they dictate when the games will be played, how the games will be scored, how they will be officiated, what uniforms will be worn and sold, etc.

They have bylaws in place that govern their business - and yes - the owners are the kings of their castles but those castles fall quickly if not for one another. The NFL as an entity is nothing but a blanket made by the owners for the owners. The commissioner is just an employee of the owners collectively.

But that doesn't mean that owners get to just do whatever they want because of the fear of collusion laws. Otherwise, wouldn't I be able to start up the Raleigh Muddogs and demand that my team be put on the schedule? If the other owners wouldn't let me in the league, could I sue and say that they are colluding against my business? Of course not, that would be ridiculous. The teams can vote and decide what is in their collective best interests and enforce the rules that they vote on.

There are teams of lawyers on all sides of this thing and unlike me, they actually know what the contractual obligations of these teams are as they relate to the rest of the league. They know what remedies are available to the league should an owner thumb their nose at a league wide vote.

The Raiders move happened and the league let it happen. Maybe that means that they really can't stop it, or maybe that is the poster child for why they know that they have to from now on.

 

[12intheBox]

The most likely thing that happens is you kick them out of the league, then spend a lot of money in legal fees, probably end up losing if we're going off previous cases, and then have to pay hundreds of millions to Kroenke plus you've alienated the fanbase in LA.

I mean if they won then yeah, the Rams value would plummet. Then they have to deal with the schedule unbalance, getting another team, selecting where they would go, etc. Then fight the NFLPA who would undoubtedly sue for a crap load of money when the players on the Rams are suddenly out of the NFL, and then work to repair the image problem, trying to repair bridges burned in LA, bridges burned with former Rams fans, etc etc.

But if they lost? Now they probably have to spend hundreds of millions more to Kroenke's legal fees, plus you don't get the relocation fee that's supposed to be 500 million, and he does his own thing, and you look pretty bad, and pretty weak.

So win or lose they're out a ton of money and have a huge headache on their hands. It doesn't seem like a smart move.

Litigation, like war, is never a smart move. It is always a losing proposition for both parties - even the ultimate winner of the litigation. But, like in war, the other side has to believe that its a viable option before any kind of a balanced compromise can be reached. The NFL would hate going down this road - no question about it. And the Rams would hate it even more. Both sides would lose badly.

But if I'm a group of 32 owners and as that group, we vote on a course of action that is in our collective best interests and the owner who gets what he perceives to be the short end of that vote goes rogue and defies our vote, screwing other owners in the process - then I have a hard time just bending over and taking it. In the end, the Rams need the other 31 teams waaaaaaaay more than the other 31 need the Rams.

And it doesn't even have to be kicking him out of the league. They could just put him on the schedule and have the Rams forfeit any home games that aren't played in St. Louis. They could enforce their cross ownership rules, they could not let them participate in the draft until they the Rams complied with the vote. There are all kinds of creative ways to enforce the rules - if they want to.

But I think the league likes the way this is playing out and the owners have no problem with the perception that any of these owners can up and leave their city - its good for each of them to have that bargaining power.

 

[Irish]

www.bizjournals.com/stlouis/news/2015/07/07/nfl-commissioned-study-raises-concerns-about-st.html

NFL-commissioned study raises concerns about St. Louis market

A study commissioned by the National Football League has found that there is enough demand to generate $189 million in personal seat license revenue for a new Mississippi riverfront stadium, but that some current season ticket holders are unlikely to buy new licenses because of the cost.

Further, the Rams rank among the lowest of all NFL teams for ticket revenue, the study, conducted by Plano, Texas-based Conventions, Sports & Leisure International (CSL), found.

St. Louis Rams to move to Los Angeles. Rams owner Stan Kroenke is building an NFL stadium in Inglewood, California. League owners will next meet in Chicago Aug. 11, when they’re expected to discuss relocation to Los Angeles.
CSL provided the study to Gov. Jay Nixon’s stadium task force, led byDave Peacock. The Business Journalobtained the executive summary, dated May 13.

The study also projected the Rams would generate more than $6.1 million in season ticket revenue.

When informed of the price of a license, which ranges from $500 to $40,000, not all current season ticket holders were committed to spending in a new stadium.

Twenty-eight percent of current premium buyers said they would not follow through on purchases. That group represents $95 million in license revenue, according to the study.

Sixty-three percent of current occasional ticket buyers would not follow through on purchases. And 29 percent of season ticket holders would not follow through.

The study projected that the Rams would generate more than $204 million in personal seat license revenue in a new stadium. The study’s executive summary did not make clear how long it would take to generate that revenue.

Fans who previously purchased a license told CSL they felt they received “proper value” for their purchase and indicated that the purchase of another license for a new stadium is “the cost of doing business,” according to the study.

“Focus group participants indicated that while keeping the Rams in St. Louis was preferred, remaining an NFL city was of the utmost importance,” the study said. “The vast majority of participants would support a new NFL team if it came to the market.”

The Rams, the study found, currently rank 29th out of 32 NFL teams for percent of total seating capacity sold seasonally. The Rams also rank 30th for total annual ticket revenue. The Rams rank 22nd for average season ticket price and 28th for average club seat price.

“Current support of the (St. Louis) Cardinals and past support of the Rams (1995 to 2005) indicates that the St. Louis market can and will commit to a successful team playing in a venue that offers quality fan amenities,” the study said. It added that once the Rams’ on-field play deteriorated, seat-license support “was not sustained.” The Rams have the fourth-lowest average NFL attendance over the past five years, according to the study.


The St. Louis market “lacks a robust regional area from which to draw individuals and corporations that are not already attending games and purchasing tickets,” the study said.

Peacock, who declined to share CSL’s study, has said that NFL officials assured him the St. Louis market is in good standing with the league.

The task force said in January, when plans for the riverfront stadium were unveiled, that $120 million to $130 million in personal seat license proceeds would be used for construction. Peacock said in a May email to St. Louis Mayor Francis Slay’s chief of staff and others that $150 million in personal seat license revenue would be used.

The stadium would also be funded with $250 million in city and state bond payments and $150 million in tax credits and other public funding mechanisms, such as a special taxing district. A pair of lawsuits is seeking clarity over whether a public vote is needed for the bond payments.

 

[Irish]

Stupid headline on an otherwise positive story. I don't see how anyone can honestly look at the results in the study, paired with the financing plan the task force is putting together, paired with the stadium plan that is MILES ahead of the other markets competing for LA and not determine that the Rams and Kroenke do not have a good enough case to move.

Of course, that would imply that the NFL had a shred of integrity...