NFL IN LA: RESETTING THE CHARGERS, RAIDERS, AND RAMS
By Jaboner Jackson 8 a.m. | As the NFL offseason kicks into gear, the NFL in LA situation continues to unfold. Both AEG and Majestic Realty continue to work behind the scenes to secure an NFL team for their planned football stadiums--Farmers Field in downtown Los Angeles for AEG and LA Stadium in City of Industry for Majestic. Footballphds.com has extensively covered the stadium situations and all of the potential relocation candidates for Los Angeles, while also zeroing on the San Diego Chargers as the anchor tenant for Farmers Field and the Oakland Raiders as the anchor tenant for LA Stadium. Today we take a step back update the NFL in LA situation for our newer readers.
San Diego Chargers
Over the past several months, not much has changed for the Chargers in San Diego. Behind the scenes, the Spanos Family and Mark Fabiani continue to push for an East Village stadium in downtown San Diego. Unfortunately, little tangible progress has been made. The City of San Diego and the Chargers lack a shared vision not only for a location for the stadium but also in terms of financing.
Meanwhile, AEG remains singularly focused on the Chargers as the anchor tenant for Farmers Field. Unfortunately for AEG, negotiations between AEG and the Spanos Family have remained in limbo while AEG tries to finalize stadium and Convention Center design plans before pushing out the Environmental Impact Report (EIR) for Farmers Field. Since the EIR will require an analysis based on more established design plans than are currently available, the EIR has been delayed. The last Los Angeles City Council Ad Hoc Committee meeting on Farmers Field was early February 2012, at which time the Bureau of Engineering and Populous Architects presented updated design plans on Pico Hall. (The expansion plans for Pico Hall can be found on footballphds.com's Google Docs page here.
The Spanos family is still looking to take advantage of Bush-era tax cuts relating to capital gains and estate taxes that are set to expire at the end of 2012. In 2010, the Spanos Family hired investment bank Goldman Sachs to orchestrate a 30% equity sale to investors for estate tax planning purposes. But when Congress and President Obama extended these tax cuts until the end of 2012, the Chargers put the transaction on hold. We expect the Chargers to explore this option again this year before favorable tax laws expire.
If Farmers Field comes to fruition, the Chargers will be the anchor tenant for the stadium. Furthermore, AEG's billionaire owner Philip Anschutz will own a portion of the team, although at this point the Spanos Family and Anschutz have not reached an agreement as to what percentage this will be or at what cost. At the city level, Farmers Field has been a done deal for over a year now in that the City Council has shared AEG's vision from the start. But the NFL is waiting on the EIR and AEG's final ownership and financing models before sharing the city's enthusiasm.
Oakland Raiders
The Raiders are a more recent entry into the NFL in LA race. As we reported almost a year ago, AEG did have preliminary discussions with the late Al Davis about relocating to Los Angeles but these talks never reached advanced stages. Accordingly, AEG focused on the Chargers instead. But when Davis died in October 2011, the relocation situation for the Raiders became more complex. De facto new owner, Mark Davis, has exhibited a willingness to discuss relocation with stadium developers because of estate tax planning issues and operational cash flow situations.
The Raiders are the clear frontrunner for relocation to LA Stadium in City of Industry. Mark Davis--and his mother, Carole Davis--currently own 47% of the Raiders. Under NFL bylaws, Davis must maintain at least a 30% ownership stake in the Raiders to maintain operating control. As we demonstrated in December, Davis likely will look to sell between 15-17% of the team to settle estate tax bills that will become due upon the death of his mother. As importantly, a minority ownership group that owns 20% of the Raiders and is led by east coast financiers Dan Goldring, David Abrams, and Paul Leff, is open to the possibility of selling their equity positions.
In order to return an effective return on his investment for both LA Stadium and an ownership stake in the Raiders, Majestic's billionaire owner Ed Roski needs a 30% ownership position in the team. Davis' equity sale for estate tax planning purposes coupled with Goldring et al's equity sale will allow Roski to achieve the required profitability on the transaction.
Nonetheless, we expect the Raiders to sign a contract extension with the Oakland-Alameda Coliseum Commission for O.co Coliseum this year and continue to explore options for remaining in the Bay Area.
St. Louis Rams
Although fans have commonly cited the Rams as a major contender for relocation to Los Angeles, using Stan Kroenke's bidding for the Los Angeles Dodgers and current negotiations with the CVC of Edward Jones Dome as fodder for this speculation, the truth of the matter is that neither AEG nor Majestic Realty has reached advanced discussions with the Rams about relocation. As footballphds.com demonstrated last month, the lease situation for the Rams precludes stadium developers from relying on the Rams as an anchor tenant. Nonetheless, the Rams remain a contender for being the second team relocating to Los Angeles if the lease is not extended.
Minnesota Vikings
Despite a muddy stadium situation, the Vikings have never been a contender for relocation to Los Angeles. Neither AEG nor Majestic has ever reached advanced negotiations with the Wilfs. The NFL has always intended to maintain the Vikings in Minnesota. Talk about relocation to Los Angeles has been nothing more than a bargaining ploy by the Vikings and NFL to extract additional financing from county and state agencies in Minnesota for a new Vikings stadium. For this reason, footballphds.com has never focused on the Vikings in our NFL in LA analysis.
Jacksonville Jaguars
The NFL would love to relocate the Jaguars to Los Angeles because the cash flow situation for the Jaguars in Jacksonville has been meager at best. But due to an ironclad stadium lease with EverBank Field, the Jaguars and new owner Shahid Khan remain wedded to Jacksonville. And thankfully for Khan, winning will help place fans in the stands and improve his cash flow. Now, he only needs to field a winning team.
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Forgot what an EIR was, Wonderful Readers? Check out our NFL in LA Glossary here. And as always, take our NFL in LA Challenge here.
jaboner@footballphds.com
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March 26th, 2012 - 09:44
This list is BS. Raiders belong in LA. Got my Raiders Starter and ready to celebrate la raza style when thye come home
March 26th, 2012 - 09:45
in your missteps article (http://www.footballphds.com/2011/12/20/nfl-in-la-aegs-missteps-with-farmers-field/) you sounded skeptical about the nfl coming back to la. do you still feel this way? do you still feel like the nfl is using la as a pawn?
March 26th, 2012 - 11:13
Interesting that you still place the Rams in contention for relocation to Los Angeles. The Rams are locked in with a current lease. Period, end of story. The talk about the Rams moving to Los Angeles because of facilities/stadium up grade clauses built into the current language of the lease is nothing more than conspiracy theory and pie in the sky wishful thinking fodder.
March 26th, 2012 - 11:18
Now I’m not thinking the Rams are coming to LA but I do find it humorous how you (of all people) say it’s a conspiracy theory. You only think conspiracy. Maybe the dinosaurs will move to Farmers Field, Greg? Or maybe Farmers will get build with gold instead of currency?
March 26th, 2012 - 11:29
Sir, I was in the USAF for 20 years. I only deal with facts, not wild theories. From my first hand experience I can assure you dinosaurs are quite real. Genome mapping and duplication are both a medical blessing and a scientific montstrosity.
In regards to our financial system, it is intrinsically flawed but it still operates within certain standards and guidelines. A uniform commerical code if you will. Within these guidelines reside contracts and contract law. The Rams are in a binding lease contract. This contract will not be disolved due to minor upgrades needed for Edward Jones Stadium. The contract dispute would be mediated and then litigated if necessary. This is a long protracted process. In short, the Rams are not moving from St. Louis any time soon.
March 26th, 2012 - 12:20
I too was in the military but I don’t see what being in the military has to do with the Rams. The Rams will be out of EJD soon, I guarantee it. The CVC put forth an inadeqaute renovation plan. Not first tier at all. The Rams and Kroenke will deliver their response soon and the CVC will not be able to afford what the Rams need to stay, setting the stage for the LA Rams again.
March 26th, 2012 - 13:06
Greg is right on this one. The rams are merely posturing to get a better deal from the cvc and if they try to get out of the lease their move would be held up in litigation for several years. The two parties will eventually get a deal done.
The two major factors that are going to keep the nfl out of LA continue to be:
Finding several hundred million dollars (possibly half a billion) to pay the league’s relocation fee.
An owner willing to sell a minority stake in a franchise significantly below market value to roski or anschutz.
I don’t see either of these two events happening anytime soon.
March 26th, 2012 - 13:56
If the NFL really wants to NFL back in LA, they’ll put the kabash on the outrageous relocation fees. NFL needs to put their own money where their mouths are. I still remember the letter from Goodell after the lockout last year where he said the NFL needed to put a stadium in LA. It’s time for the NFL to put up or shut up.
Rack me.
March 26th, 2012 - 18:42
AEG is going after a team in MARCH. The Team will play @ the LA Coliseum https://twitter.com/#!/FarmersField/status/184362967482118144.
March 26th, 2012 - 17:36
It is Non Binding. I have read it I am almost 100% sure it is non binding allowing them to relocate. Going to double check in a bit. There was an article written and the author said it was a binding agreement and all the commenter s were telling the author he made a mistake and it was non binding agreement out clause if the stadium is not in the top tier status. What I find interesting as well is the Rams have never rejected the CVC before. I don’t want to dig to deep but I get alot of info and some is good and others you can’t really take it as for certainty.
Thanks 4 the post
March 26th, 2012 - 17:53
http://www.footballphds.com/2012/01/17/nfl-in-la-conversation-with-losangelesrams-org-about-return-of-rams-to-los-angeles/
OK I found this on this site about the Rams I suggest to read it it is very well thought out and written and the arbitration is non binding. The Rams can break their cheap lease and head to LA if talks break down with the CVC the Rams have this one in their pocket. And if they come back to LA to bad St Louis Jut like the Oakland fans the Rams fans should of never of lost their team. I know they were in cleavland for a decade but 50 years of Los Angeles history says it all. time will tell. For those who want football in LA I am with ya and hope we get a team. To bad we missed the 32nd expansion team in 1999. Ah well I can wait longer.
March 26th, 2012 - 17:29
All I got to say is you never know what is going on behind the scenes and the Rams wont be tied up in law suits 4 ever. Because whatever agreement is made the tax payers have to vote on it and they are still paying 153 million towards the EJD do you think they would pay for more towards a stadium built 17 years ago with their iffy economy?. You guys should read how bad St. Louis has become with businesses leaving and the state of their economy. The Rams also have a “non binding agreement” if you have read their lease which means this: Rams make or don’t make a deal they will announce the desire to relocate. Fan support could fail. Any which way you look at either by 2015 if it is not approved the Rams could buy the remainder of their lease out Ala Houston Oilers. Or tax payers reject tax money they don’t have right now even to pay for Fireman pensions and such. Bottom line is St Louis can’t afford this upgrade and there will be a gold mind in LA for Kroenke and the rams.
So If the deal is Rejected Rams can leave with the “Non Binding agreement.”
2nd if it is approved look around this country especially Minnesota. Tax Payers are tired of paying for stadiums they get nothing in return for. If you ever read some political news out Missouri you would get a better under standing along with the economics of the city of St. Louis that they highly doubt the Rams would stay and that the EJD and CVC would profit more by holding conventions instead of NFL football.
IMO the Rams are the front runners here to Los Angeles. AEG can strike a deal build the stadium and they can start playing either early with a broken lease due to loss of fan support which is already happening or close to the stadiums opening. It is going to happen @ Farmers Field.
March 26th, 2012 - 18:04
I would welcome the Rams back to LA and Farmers. I would welcome whoever really wants to be a part of this city and area. I’m impressed that Stan is still going after the Dodgers (this site says so) and that makes me believe that he can be part of this towns sports fabric. Nice points trancefreak.
March 26th, 2012 - 21:26
I watched the Leiweke interview. If Roski ever wants to be taken serious he needs to make his case to the fans too and keep the people excited.
March 27th, 2012 - 12:15
Roski isn’t getting a stadium. It’s AEG or bust.
March 27th, 2012 - 13:54
+1000 But they will definitely file a suit against them in their EIR wait period. The NFL is coming and yesterday Rodger Goodell Demeaned Los Angeles A NFL Market triggering cross ownership rules. So that means Kroenke is out of the Dodgers bid and could clear the way for the Raiders or chargers to LA next year. I don’t think LA will get a 2nd team 4 a long time because a single team needs to be successful first. If that happens I think then the Rams would arrive 2nd and Jaguars to another market.
March 27th, 2012 - 15:04
I agree, It’s Farmers or Bust. Look at it: Roski has had that thing in Industry for years now. Are you telling me the Raiders (if they’re really part of the conversation) are waiting for…what exactly? Raiders or Chargers could’ve moved whenever they wanted to Roski’s stadium. They didn’t/haven’t.
April 1st, 2012 - 06:22
Jags are not going anywhere! 2nd team would be the Raiders who have had more blackouts than any NFL team since they went back to Oakland!
March 27th, 2012 - 20:28
Sooooo nothing has happened. All speculation. San Diego will put our new stadium to vote and it will pass. Why? Because we are a football town and the San Diego Chargers are OUR team.
March 27th, 2012 - 23:00
^Not true, if the City of San Diego and San Diego County don’t start working together then I’m afraid East Village Stadium will never get off the ground. Once the EIR is out and the Chargers play another season in 2013 with nothing in site, you can fully expect the Chargers to leave to play in Los Angeles in 2014 and then Farmers Field will be ready in 2017.
The other interesting note is that the Raiders lease will be up after 2013 and could be in LA in 2014 as well too. Mark Davis isn’t dumb, I’m sure he knows that the City of Oakland will come up with no substance for a sporting & entertainment complex, it’s why the Warriors are looking at the China Basin for their new arena and well the A’s should be allowed to move to San Jose but the Giants are total jackasses in that sense.
Back to Mark Davis, I think he’s holding out for the best co-tenant lease he can sign with either Santa Clara Stadium or Farmers Field where he can get the most money for his franchise and get his revenues up. The Raiders will not stay in Oakland unless the City of Oakland finds a way to get a football stadium built for them, which they won’t.
As for the Chargers, it’s a toss-up as they’re going to try and get a vote out in a special election in May of 2013. That could very well change the game for the Chargers organization but I do think that’s their last grasp at the stadium straws in San Diego. Even if San Diego loses out somehow, then if I was them I would look at building a Basketball/Hockey Arena (NBA or NHL team relocating) or College Football/Major League Soccer stadium (for the Aztecs and an MLS expansion team) on East Village lot.
I’m interested in who will purchase the San Diego Padres now. They’re going to go for $500 million or possibly more now after the record-breaking Dodgers sale and they have that fat new contract with Fox Sports San Diego to takeover their broadcasting of games.
March 28th, 2012 - 09:48
Trust me, I’ve seen NFL stadium “plans” for years now. It’s a lot harder than people think to make something like this happen. Even on this blog, I’ve read about the relocation fees and doubts….and I think this blog is as pro-NFL as you can get.
http://www.footballphds.com/2012/02/09/nfl-in-la-devils-advocate/