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Leagues and Governing Bodies

NFL draws closer to L.A. battle

Decision may reveal split among owners

The vacant Los Angeles market is likely to lead to a standoff between NFL owners, marking the first major confrontation facing the league’s leaders in a decade.

While there has been hope behind the scenes for a negotiated settlement paving the way for the league’s return to the nation’s second-largest market, last week’s meeting in New York seemed to dash such hope and offered few hints of which three teams — the St. Louis Rams, Oakland Raiders and San Diego Chargers — would get the 24 owner votes necessary to move to Los Angeles next year.

Art Rooney, the Pittsburgh Steelers president and chairman of the crucial six-owner Committee On Los Angeles Opportunities, said after the meeting that he expected three teams to file relocation bids when they are allowed to starting Jan. 1, 2016, and then owners would vote.

The Cowboys’ Jerry Jones (above), with Charlotte Jones Anderson, strongly supports the Inglewood, Calif., proposal of Rams owner Stan Kroenke (below).
Photos by: AP IMAGES (2)
Such a situation likely would mark the first major ownership battle in a decade. Ten years ago owners battled intently over supplemental revenue sharing. Before that, one would have to stretch back to the multi-ballot election of Commissioner Paul Tagliabue in 1989 for a time when owners seriously butted heads. With three teams’ fortunes and the long-awaited return to Los Angeles at stake, this battle looks to be as serious.

One owner, appraising the landscape, foreshadowed such a chasm, saying, “It is going to

come down to the old guard protecting the old teams that have inherited theirs versus the new guys who own the teams who are more entrepreneurial in terms of how the vote is going to come down.”

Chargers owner Dean Spanos and Raiders owner Mark Davis, who are proposing a shared stadium in Carson, Calif., each inherited their team. Rams owner Stan Kroenke’s initial wealth derives from his wife, a Walton heir, and is a first-generation owner.

One could sense the divide within the hallways of the Waldorf Astoria in New York City last week.

Jerry Jones, the Dallas Cowboys owner most closely associated with entrepreneurialism in the NFL, is strongly supporting Kroenke’s Inglewood, Calif., proposal. Jones scoffed at the naming-rights deal announced last week by the task force trying to build a St. Louis stadium to keep the Rams. Informed of the $158 million agreement with National Car Rental for a proposed new stadium, Jones stared ahead and said, “Well, that buys the lobby.” He then stressed the size and scope of Kroenke’s proposed development in Inglewood.

“This [Inglewood] is a $3 billion project,” he said. “That would buy the lobby, OK. This is a several-billion-dollar project. It [St. Louis] doesn’t have in terms of the magnitude of what we are doing in Los Angeles.”

“Those aren’t significant numbers,” he said of the National Car deal, as he stepped onto the elevator.

On the other hand, Rooney, a third-generation owner and from a similar-sized market as St. Louis, said with a smile of the National Car deal, “Good for them. They are working hard on it.”

Rooney’s committee is now taking the lead on Los Angeles, with league staff stepping back and leaving it to the owners to grapple with. New York Giants owner John Mara, Rooney’s colleague on the committee, for example, last month met personally with Missouri Gov. Jay Nixon, who appointed the St. Louis stadium task force.

NFL Committee on
Los Angeles Opportunities

Art Rooney, Chair
Jerry Richardson
John Mara
Robert Kraft
Clark Hunt
Robert McNair

At it stands now, the owners meet one more time before the end of the year — Dec. 2 in Irving, Texas. Their next formal gathering is an as-of-yet unscheduled meeting in January or February to decide which of the three teams go to Los Angeles. If a team does receive approval, it would relocate operations immediately to a temporary facility in the Los Angeles market while any new facility is constructed for the 2018 or 2019 season.

It’s not even clear whether one or two teams will go. Robert Kraft, the New England Patriots owner and Los Angeles opportunities committee member, predicted in March that two teams would play in Los Angeles in 2016. Last week he seemed to walk back such thinking and said the issue had to be discussed.

In the interim before the December meeting, the St. Louis task force still needs to secure a city council vote to support extending stadium bonds for the new venue. Until then, the task force is unable to give the league a term sheet.

While St. Louis has been seen as far ahead of San Diego’s effort to build a stadium, that city delivered a term sheet to the league late last month.

That bit of news was delivered by Eric Grubman, NFL executive vice president, who has been in charge of that Los Angeles process. What he left out, however, is that San Diego would still likely hold a vote, which could not occur until June 2016. That seems to push San Diego out of the picture, unless the NFL delays the relocation to Los Angeles by another year. That is unlikely, unless the owner rifts bubbling to the surface now prove too intractable to secure 24 votes for either Inglewood or Carson.

FROM THE MEETINGS

MONEY MATTERS: NFL owners heard from investment bank PJT Partners about models for assessing relocation fees. PJT offered valuation for the three teams currently and what those valuations would be if owners approved relocation. PJT also offered discounted cash flow estimates if the team would be in Los Angeles. Discounted cash flow projects future cash flow and then discounts the figure to arrive at a present value. This allows the owners to compare actual cash flow of a team today and what it would be if the team was located in Los Angeles. A relocation fee likely would be derived from a percentage of the increase in valuations and paid out over several years from the increased cash flow.

MILLER TIME: Jeff Miller, the NFL senior vice president in charge of player health and safety, outlined several key initiatives. The league is pouring resources into grants and research, and hopes one day that helmets will be developed specifically for position players. How much head impact a player receives can vary among positions, he said. The league also expects new materials to emerge that can reduce by 25 percent the impact when a helmet slams into the turf.

EARLY BIRDS: The Kansas City Chiefs have long been a leader in migrating fans away from paper tickets (the club was the first in the NFL to go ticketless) and awarding points to be redeemed. The team has an interesting new approach to awarding points. It gives fans points, which can be used to purchase merchandise, when they arrive early. That helps reduce Arrowhead Stadium’s traffic before games.

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