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Volume 21 No. 34

Leagues and Governing Bodies

The NFL was always going to bend its rules to get a new stadium in Los Angeles after a decades-long absence from the city, but how much it has done so is still something of a surprise to people around the league.

 

At the annual league meeting last month in Orlando, owners passed a debt waiver for the Rams of $2.25 billion. That amount is approaching three times the largest waiver the NFL has ever passed before, for the Atlanta Falcons ($850 million in 2014). The Rams’ waiver, which was confirmed by the league, has been disclosed previously, but not the correct amount.

The league also approved $400 million of NFL-backed stadium financing through its G-4 program, bringing the total potential amount of debt to more than $2.6 billion, an unheard of figure in the debt-conservative NFL.

The development comes as the cost of the joint Rams-Chargers stadium in Inglewood is skyrocketing, now in excess of $3 billion, sources said, after initially being estimated by the Rams in 2016 at $2.2 billion, then $2.6 billion and then just under $3 billion last month. Design measures to protect the venue from earthquakes are sparking the increase (the San Andreas fault line passes within a mile of the site), one of the sources said.

The Rams declined to comment on the debt matter. The Chargers will be tenants in the building, so half the $400 million of G-4 financing is their contribution.

The Los Angeles Rams were granted a debt waiver of $2.25 billion for their new stadium.
Photo: rendering courtesy of los angeles chargers

The increase in the Rams’ debt waiver — allowing the club to borrow more than the $350 million debt cap for teams under league rules — did not come without some concern. Cincinnati Bengals representatives raised their worry at the annual meeting that the revenue necessary to pay such debt would, because of the way labor costs are derived, cause the salary cap to spike for all teams. The Bengals declined to comment.

This is not a new issue in the NFL, but one that was settled with the 2011 collective-bargaining agreement. Previously, lower revenue teams such as the Bengals complained that new stadiums caused cap spikes for all clubs while the host team captured most of the revenue. Getting more of a share of revenue from the players negated the issue for owners.

Now, because of the sheer size of the yet-to-be-named L.A. stadium, that issue is re-emerging. To cover billions of dollars in debt will require revenue generation at levels not seen before in the NFL. Because that revenue goes into the pool of revenue shared with the players, that might substantially increase the salary cap.

The stadium will not open until 2020, the last season of the current CBA. The issue of team salary cap spikes could be negated by a new CBA — though the players are intent on recapturing some of their financial losses from the 2011 labor pact.

The total cost of the Rams’ project is close to $5 billion. That includes an amphitheater, office and retail buildings, a new home for NFL Media and costs such as access roads.

Owners chose the Rams’ stadium project in January 2016 over one proposed by the Chargers and Oakland Raiders in Carson, Calif., largely because of the grandeur of the envisioned stadium and the fact that the team’s billionaire owner, Stan Kroenke, could afford the necessary equity.

“Why did owners who approved Kroenke because of his wealth then allow him to borrow so heavily?” asked one source in sports finance, who requested anonymity because he did not want to alienate NFL owners.

The Chargers relocated to Los Angeles in 2017, while the Raiders are scheduled to move to Las Vegas in 2020.

Major League Baseball is making adjustments to its 2019 master schedule as a result of the historic run of poor weather and game postponements this month in the Northeast and Midwest.

 

The developing shifts in next year’s schedule primarily involve concentrating games in April and September, where the threat of weather postponements is highest, to intradivision matchups. Those games, typically involving teams that play each other 18 or 19 times a year, allow for easier rescheduling since the road clubs make multiple trips to the home market during the course of the year.

“The thing we’ve been focusing on for 2019 is emphasizing in-division games early and late in the season when the weather is potentially bad,” said Chris Marinak, MLB executive vice president of strategy, technology and innovation. Marinak oversees the league’s schedule development.

The new season has seen poor weather wreak havoc on teams in the Midwest and Northeast.
Photo: getty images

“The benefit of that is when you have games in the division, you have opportunities to make those games up, and it’s not a burden to have a club play a doubleheader or add a game to an off day at the front end of a series. We’re trying not to have a West Coast team come into the East in the first week of April, getting two games rained out or snowed out, and have to make another coast-to-coast trip,” Marinak said.

The 2019 schedule is set to be finalized by the league and approved by the MLB Players Association this summer, and then released publicly in September. This year’s schedule included four extra off days for each club, which have been used to help manage the current spate of reschedulings.

Through April 18, MLB had endured 25 weather-related postponements this season, equaling the worst March and April for the league since tracking began in 1986.

Several individual clubs have been setting records, too. The Detroit Tigers have already had six postponements, more than any full season in Comerica Park’s 18-year history. The Minnesota Twins lost an entire weekend series from April 13 to 15 against the Chicago White Sox due to snow, the first time in Target Field’s eight years that three consecutive games have been postponed.

And for many other games that were played, raw, wet conditions have depressed attendance. Through the first three weeks of the season, MLB attendance is down more than 8 percent. But Marinak refused to give up on the vital turnstile counts breaking even or even potentially showing an increase for the season once clubs use the warm summer months to dig out of the current attendance hole.

“You look at some of the venues where the decline so far is significant, 20, 30 percent; they’re not going to be down 20, 30 percent for the full year,” Marinak said.