Cross-ownership rule could soon be extinct
Two years ago, when NFL owners voted to allow St. Louis Rams owner Stan Kroenke to relocate to Los Angeles, the move underscored the changing ways of league ownership. Owners had spurned the proposal of San Diego Chargers owner Dean Spanos, who had followed all the league rules on relocation and worked on important committees, to build a stadium in Carson, Calif., that would host the Chargers and the Raiders, opting instead for Kroenke’s plan in Inglewood.
Newer, richer owners saw Kroenke’s wealth as a deciding factor in allowing the Inglewood project, which came with a $2.66 billion price tag, to move forward.
This week there could be another shift away from the old-world, gentlemanly ways of NFL ownership that will be discussed at the league’s fall meeting in New York. Eliminating the cross-ownership rule would do away with the notion that NFL owners don’t compete with one another in their local markets.
One high-level team source from a small-market team bemoaned the pending move, likening it to the L.A. vote. “That rule was sacrosanct for so long,” he said.
The cross-ownership rule prevents owners of other big four sports teams in NFL markets from buying football teams. The rule also prevents an NFL owner from buying a non-NFL big four team in a league market. The rule is in place to prevent NFL owners from competing with their fellow owners in the local sports marketplace. However, with valuations of teams so high, the pool of prospective buyers has shrunk, leading to a rethinking of the rule, sources said. Only three bidders emerged for the recent sale of the Carolina Panthers, which David Tepper bought for $2.275 billion in a deal that closed in July. Although that amount was a record for an NFL team, it still came in under expectations.
While old-school types within the league may bemoan the demise of the rule, those who work to buy and sell teams view it favorably. Sal Galatioto, a sports investment banker, said that if the NFL does lift the rule, it would be a boon to the sports mergers and acquisitions market. “It would have a very positive effect on the NFL and other sports assets,” he said. “It opens up the market for an NFL team to a large group of very wealthy people.”
The NFL has not always strictly enforced the rule. In 2010, Kroenke exercised an option to buy the Rams despite already owning the NBA’s Denver Nuggets and the NHL’s Colorado Avalanche. After a long grace period, he did not sell the Denver teams but instead moved their ownership to family members.
Several years earlier the league had prevented the Glazer family, which owns the Tampa Bay Buccaneers, from bidding on MLB’s Los Angeles Dodgers. While at the time there was no NFL team in L.A., the league considered it an NFL market.