New: Latest on Kroenke, Rams and NFL in STL

[OldSchool]

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.

Currently the Cardinals are #1 in operating income ranked on 2014. Revenue they're 6th, their operating income is inflated by a very large perceived value in the franchise. The Dodgers are 2nd in revenue behind the Yankees. A large reason for their decreased income has been their continued over spending both on salaries and international players. New ownership came in and they had a 2 pronged attack to build a winner. One was to go out and accumulate talent on the major league level regardless of cost. The second was to draft well and spend heavily on international players. Now that they've done that for a couple years it will be interesting to see how they proceed. The trend though is showing they were a profitable team under previous owners. But to illustrate my point of buying a winner followed by building the bottom up last years operating income was an $81 million loss. This year they've turned that around and are only $12 negative. So we'll see what happens in the long run.

As to the guy you quoted and his statement he is according to Forbes absolutely correct. Forbes estimates the St Louis market to add $548 million. For the Dodgers the LA market adds $1.179 Billion. Its also interesting to note in that valuation the Dodgers have 2 competitors closer than the Cardinals closest competitor by far. Yet those 2 competitors combined market value is less than the Dodgers at $895 million. So while the Cardinals did in fact have a better profit/loss statement last year according to Forbes the Dodgers are much more valuable and get a lot more of that value from their local market.

Also a side note but the 3 oldest stadiums in baseball in no particular order are Fenway, Wrigley and Dodger stadium. Those 3 teams are among the top 5 most valuable baseball franchises. (#2 3 and 5)

 

[RamFan503]

You very well may be right. But as of right now, we don't KNOW anything about what Stan wants. All we know is what we perceive based upon our observations. Who saw the last second jump in and buy the Rams out from under Kahn gambit coming? I think he likes keeping people guessing.

I did. Thought it was a no brainer in fact. I think the most surprised were the Bernies of the world but a lot of that might have been Bernie's obvious class envy and essentially being ostracized by the Rams.

Got to love men of integrity, huh?

You mean you know the city and the CVC were being men of integrity through this whole deal? Word is that they were not. I don't at all give them a pass in the blame department if Stan moves the team.

If he is a man of integrity, he'll do what he said he'd do... not do an about face just because it makes him more money... but just because that's what he said.

He actually never said he was keeping them there. But I do believe he was not happy to even have to make those statements at that time save for the fact he was being assassinated in the press.
NONE of us were privy to the negotiations with the CVC and city leaders. I have seen large businesses move out of an area even though they had infrastructure and investments in that area because the city/unions/county tried to play hardball. It just happened in Portland with a huge shipping outfit. They essentially told the Port/unions to go eff themselves and are pulling up stakes. The response? The Port tried to beg them to stay and the union withdrew their demands. The shipping company's response? It will just happen again in the future. We're gone.

I haven't looked, but I suspect revenues and income have remained at the same or perhaps better levels since he said those words. So, if that is true, then it is all about money... and Kroenke has to live with the fact he lied to a city and state.

You also are guessing. I'm not so sure those statements are anymore lies than in 2007 the CVC saying they would use the extra time to bring the dome to top tier. It was pretty obvious they did next to nothing during that time to try to make that a reality.

Yup.. he is failing... failing to put a winner on the field.

Yeah - not what I am seeing. This team and the entire organization is far stronger since he took over as majority owner.

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.
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.

Agree with this. And I've also seen some pretty mind boggling models for calculating ROI when there doesn't appear to be one.

In terms of making decisions based solely on a business plan, yes.
Stan probably has more interest in building a winner than Georgia did, but, that is/was probably secondary for both.

Georgia? Business plan? If taking every cent you could out of a franchise while investing as little as possible is a business plan then yeah - I guess I agree.

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.

Yeah - not sure how this was any kind of shocker. He was silent about it but I'm not sure how anyone could have been surprised at his move - including Kaan.

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

Not happening. I can't say anything is guaranteed but the idea of the NFL trying this is about as close as it comes to being a guaranteed not happenin'.

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!

I just don't get this. I followed the whole thing pretty closely. It just made perfect sense. You don't exercise that option until you know the other offer is solid and will not fall through. Then you buy at essentially rock bottom price. Who wouldn't do it that way?

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 .

This may indeed be the case. Hope not but it does make some sense.

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.

I'm pretty sure the people at Forbes can model with the best of them. They are not concerned with how much an owner pays his daughter to be a team "ambassador". How a team uses its gross profit is certainly difficult to figure when you get to the net income. I'm sure Jerruh has figured out a way to marginalize that gross profit in order to show the smallest net profit possible. Taking the gross profit is actually a pretty decent method for leveling the playing field.
The owners (by my reading of the bylaws) have to report their gross profit to the NFL auditors. The NFL is a 501 so they in turn have to make that information available. The bylaws do not state that the owners have to offer up their net profits IIRR.

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.

The league did not LET the move happen. And can anyone name a time that they NFL actually stopped a team from moving? And before anyone mentions Seattle, the partnership that owned the shecocks at the time couldn't afford to own the team let alone fight a court battle. One of the owners was in the middle of bankruptcy and the partners sold the team to Paul Allen at fire sale pricing.

 

[Irish]

Comparing baseball valuations to football valuations is absurd.

Baseball in this country is a regional institution. The entire structure of the league is predicated on that idea, from scheduling, to salary caps (or lack thereof), to the very rules the leagues play by (AL vs NL). You have the Yankees, Red Sox, Cardinals, Dodgers, and Cubs that are literally part of American history; they may as well be a part of the American flag. They have existed in one form or another for over 100 years; a period of time representing social, political, and even racial implications that go as far to marking American history as they do filling their own record books.

Despite this fact, baseball has and will always be, regional: this is reflected in TV ratings, the difference in value of successful teams and unsuccessful teams (see: the Rays, Indians, and Marlins), and even the ways in which the sport considers success (the best teams trumpet attendance numbers at the end of each season as a way of legitimizing the sport.) The game relies on the top teams and markets to prop up the rest of the league, which is why regional cable contracts for successful franchises are as gaudy as they have been in recent years.

Compare this to the NFL, a league which is very much greater than the sum of its parts. The NFL exists on a NATIONAL level: from Baltimore to St. Louis to Cincinnati to Phoenix to San Diego. Ticket sales are inconsequential. Television ratings are more or less huge across to the board, regardless of team success and market. A team like Buffalo isn't worth a butt load of money because of its history or tradition, for the most part the NFL and football as a whole are a young sport compared to Baseball and its Encyclopedic historical anthologies. A team like Buffalo isn't worth a butt load of money because of its crazy Bills fans. A team like Buffalo isn't worth a butt load of money even from a market standpoint; who the hell cares about Buffalo, New York? A team like Buffalo is worth a butt load of money simply, and this is no joke, because it was an NFL team that was for sale. Period. When you buy an NFL team, you aren't buying the Yankees or the Red Sox or the Cardinals or the Dodgers, you are buying membership into the elite club of 32 NFL owners that all share the same revenues, the same merchandise sales (for the most part, stupid Dallas), and the same television contracts.

Baseball is capitalism. The strong survive, and the weak suffer.

Football is communism. We are one, we are many.

Comparing the Dodgers and Angels as a means of projecting future revenues for an NFL team is an exercise in futility; its completely and totally irrelevant and asinine. If you want to claim that the LA market is worth more than the St. Louis market, that's fine, it is probably worth quite a bit more. But to say that the Dodgers are proof of that is a non starter.

Either way, Stan stands to make a metric butt load of money regardless of what he ends up doing, because, and I cannot stress this enough, at the end of the day, Football is communism.

 

[12intheBox]

The league did not LET the move happen. And can anyone name a time that they NFL actually stopped a team from moving? And before anyone mentions Seattle, the partnership that owned the shecocks at the time couldn't afford to own the team let alone fight a court battle. One of the owners was in the middle of bankruptcy and the partners sold the team to Paul Allen at fire sale pricing.

But this is a case of first impression for the league. This isn't about one team trying to maximize its own leverage with its host city - there are 3 teams involved here. Unlike the Raiders or the Browns/Ravens - this doesn't just affect the league tangentially - there is a significant and direct affect on 3/32 of the league's ownership. In a case like that - the worst thing you can have is a free for all where the owners can't at least to some extent control each other for mutual benefit.

Lets not kid ourselves - these are really rich people - being advised and counseled by really smart people - and all 3 teams are going to come out of this as winners - somehow someway. These guys are smart enough to realize that litigation of this extent is like a nuclear weapon - the threat is great but pushing the button is good for no one. This will be worked out behind the scenes and it will be a compromise. What I take issue with is the notion that the league may vote on what is best for the 32 owners collectively and that one owner can snub that vote, screw the others over, and the rest of them will just shrug and roll their eyes.

 

[OldSchool]

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...

Not sure how you got to that opinion of the article. It mentions a lot of declining interest in tickets and a lack of desire to spend on PSL's from current holders. One thing this article clearly neglects to mention, and it's been pointed out here many times and debated, is corporate purchases of boxes. They left that aspect out entirely. Also I don't have a link handy but how does the estimated $189 million from PSL's stack up vs the proposed stadium financing?

 

[Irish]

Not sure how you got to that opinion of the article. It mentions a lot of declining interest in tickets and a lack of desire to spend on PSL's from current holders. One thing this article clearly neglects to mention, and it's been pointed out here many times and debated, is corporate purchases of boxes. They left that aspect out entirely. Also I don't have a link handy but how does the estimated $189 million from PSL's stack up vs the proposed stadium financing?

The article literally spells out, in plain english, that the reason for the lack of enthusiasm and attendance in both the private and corporate worlds is directly attributed to on field performance. The team sucked so hard, for so long, that the majority of casual fans (read: the people the Rams are competing for entertainment dollars over with the Cards, Blues, and other things) simply lost interest.

The study shows that if the team was any good, support exists.

Also, the article says the financing calls for 150 Million from PSLs. This is more than covered by the projected 204 Million in PSL revenue

 

[RamFan503]

But this is a case of first impression for the league. This isn't about one team trying to maximize its own leverage with its host city - there are 3 teams involved here. Unlike the Raiders or the Browns/Ravens - this doesn't just affect the league tangentially - there is a significant and direct affect on 3/32 of the league's ownership. In a case like that - the worst thing you can have is a free for all where the owners can't at least to some extent control each other for mutual benefit.

Lets not kid ourselves - these are really rich people - being advised and counseled by really smart people - and all 3 teams are going to come out of this as winners - somehow someway. These guys are smart enough to realize that litigation of this extent is like a nuclear weapon - the threat is great but pushing the button is good for no one. This will be worked out behind the scenes and it will be a compromise. What I take issue with is the notion that the league may vote on what is best for the 32 owners collectively and that one owner can snub that vote, screw the others over, and the rest of them will just shrug and roll their eyes.

Shrug and roll their eyes? No. But I just don't see them actually being able to do much to prevent it and I think that if Stan did snub them and start building a stadium, they would figure out a way to make the best of it and cover their financial asses.

Yeah - I agree with the nuclear bomb analogy. Someone might win but you know extensive damage will be done.

 

[12intheBox]

Shrug and roll their eyes? No. But I just don't see them actually being able to do much to prevent it and I think that if Stan did snub them and start building a stadium, they would figure out a way to make the best of it and cover their financial asses.

Yeah - I agree with the nuclear bomb analogy. Someone might win but you know extensive damage will be done.

How does that play out for San Diego and Oakland? Tax the Rams and give them $$ to help finance their own new stadiums? What if the Rams don't pay?

 

[MrMotes]

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.

I got it from Forbes: http://www.forbes.com/mlb-valuations/list/

 

[Rmfnlt]

I got it from Forbes: http://www.forbes.com/mlb-valuations/list/

Never mind.

 

[RamFan503]

How does that play out for San Diego and Oakland? Tax the Rams and give them $$ to help finance their own new stadiums? What if the Rams don't pay?

Stan already has offered to help the other teams. Not sure at what level or in what way but...

My fear is that many Rams fans assume that SD and Oak are so much farther away from a workable financial arrangement than is St Louis. The financing of virtually every project over the past 10 years is really almost laughable to try to compare. There simply isn't an accepted format in which to compare them.

So while many would like to assume that Stan would be turning down the best deal available among the home markets, it may not take that much to make the deals in SD and Oak comparable if not better. Some have argued that the deal in SD is already potentially better for Spanos than the St Louis proposal is for Stan.

 

[ChrisW]

Make sure when you're reading forbes not to touch any of the ads. They all come up as malware at work.

 

[MrMotes]

Quoting the lease, or quoting hearsay?

http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1488&context=sportslaw

The lease goes on to provide that "the RAMS will then be entitled to negotiate and execute a lease with any person or entity and to relocate from [the Edward Jones Dome] as of the end of any year of the lease period." ' 4

 

[12intheBox]

Stan already has offered to help the other teams. Not sure at what level or in what way but...

My fear is that many Rams fans assume that SD and Oak are so much farther away from a workable financial arrangement than is St Louis. The financing of virtually every project over the past 10 years is really almost laughable to try to compare. There simply isn't an accepted format in which to compare them.

So while many would like to assume that Stan would be turning down the best deal available among the home markets, it may not take that much to make the deals in SD and Oak comparable if not better. Some have argued that the deal in SD is already potentially better for Spanos than the St Louis proposal is for Stan.

I'm not up to speed enough to form opinions on which deals are best for which owners, or for the league as a whole. I know enough to know that I just don't know.

My beef is with the whole going rogue theory. It just makes no sense to me. Suppose Stan decided to move the Rams to Miami. Would the NFL be able to do anything about it? Of course they would.

 

[RamFan503]

I'm not up to speed enough to form opinions on which deals are best for which owners, or for the league as a whole. I know enough to know that I just don't know.

My beef is with the whole going rogue theory. It just makes no sense to me. Suppose Stan decided to move the Rams to Miami. Would the NFL be able to do anything about it? Of course they would.

Meh. Not sure they would be able to honestly. I'm not saying going rogue is a good idea or that Stan is even considering it. I just haven't seen much evidence the NFL can do anything about it when it has come up. They could have done all those things you have mentioned as far as sanctions and penalties yet - have they? Why not? I just don't buy that it was out of the goodness of their hearts. It was somehow not in their collective best interest.

I'm only speculating here as well. But history often tells us more than we want to admit.

 

[The Ripper]

I'm not up to speed enough to form opinions on which deals are best for which owners, or for the league as a whole. I know enough to know that I just don't know.

My beef is with the whole going rogue theory. It just makes no sense to me. Suppose Stan decided to move the Rams to Miami. Would the NFL be able to do anything about it? Of course they would.

They wouldn't. The same way the Rams couldn't prevent the Raiders from moving into their home market.

 

[bluecoconuts]

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.

If the owners were pulling that, the Rams would have more to lose by not fighting it in courts than by fighting it in courts. Litigation would be unavoidable if they went that way. It's not that the league needs the Rams, it's that going that way would be such a lengthy process that would cost millions upon millions of dollars. And for what? To prove a point? While Kroenke up and moving after the owners say no would piss off everybody, it would still make them a lot of money. If they went to go and fight him over it, first they lose out on the 500 million in relocation fees, then they have to spend all those millions, and if they lose they have to spend even more.

I don't think it's going to get to the point where they deny anyone, I think they're going to try to convince one of these guys not to file. If Kroenke tells them that he's going to do it and tough shit, they might fight him on it, but I think they'll maybe just up the relocation fee and let him go. They'd never try to remove him from the league, schedule, or draft because that would be a guaranteed lawsuit, that's not what they want. Teams have left their cities plenty of times against the wishes of the owners, but they've never gone that far and they wont with St Louis or San Diego or Oakland.

 

[bluecoconuts]

The study shows that if the team was any good, support exists.

Problem is you can't guarantee a team will be good forever, so if support is that attached to the product, it's going to be hard to tell Kroenke he has to stay there and invest hundreds of millions into the city.

 

[Legatron4]

Problem is you can't guarantee a team will be good forever, so if support is that attached to the product, it's going to be hard to tell Kroenke he has to stay there and invest hundreds of millions into the city.

Cmon man, really? So fans are expected to endure 10 straight years of god awful football and still support the team like there been contenders every year? Very few people are hardcore fans like us. Unless the team is winning. Sorry but I don't agree at all with that thinking.

 

[Sum1]

Problem is you can't guarantee a team will be good forever, so if support is that attached to the product, it's going to be hard to tell Kroenke he has to stay there and invest hundreds of millions into the city.

Go look at attendance of each of the four major sports. I'll bet you the teams with poor records are also the teams with attendance issues.

Silly argument.