Someone in NFL office says league plans return to L.A. soon, maybe, ARE YOU LISTENING OAKLAND AND SAN DIEGO?

Today (okay, actually Sunday night) in completely unsourced rumors/trial balloons being leaked by league-friendly sportswriters:

Per a league source, the current plan is that the NFL will send one or two teams back to Los Angeles within the next 12 to 24 months.

The timeline would include a team announcing its intention to move in the 2015 or 2016 offseason, with arrangements to play at the Rose Bowl or the L.A. Coliseum pending the construction of a new stadium.  Possible sites for a venue in L.A. include the AEG project at L.A. Live in downtown, the land purchased recently by Rams owner Stan Kroenke at Hollywood Park, Chavez Ravine, and a couple of locations that have not yet been publicly disclosed. Ed Roski’s shovel-ready site at City of Industry is not regarded as a viable destination.

Is Mike Florio’s report true? Who the hell knows! This is someone with the league saying the “plan” is to go back to L.A. soon — does this mean that it will only happen if a stadium deal is approved first, or that this is an attempt to shake loose a stadium deal, or even that this is an attempt to shake loose stadium deals in other cities? Florio specifically mentions the Oakland Raiders, St. Louis Rams, and San Diego Chargers as relocation targets, though it’s unclear whether he got this from his anonymous NFL source or if he’s just spitballing himself.

There’s even less detail here than in the last unsourced NFL-to-L.A. report, so probably best just to move along and forget Florio ever said anything. Except as an indication that the NFL really wants you to think of L.A. as a relocation threat for your team, if you needed reminding.


22 comments on “Someone in NFL office says league plans return to L.A. soon, maybe, ARE YOU LISTENING OAKLAND AND SAN DIEGO?

  1. As tools go, Mike Florio is not that useful because most folks see him for the bullcrap artist he is.

    As for an L.A. “timeframe”, well, you should know by now that we are *always* moving to L.A., haha.

  2. @ Neil, from the previous article…

    Neil deMause on July 24, 2014 at 3:01 pm said:
    “If the NFL could fund a stadium in L.A. with PSLs/naming rights/etc. and have enough revenue left over to provide the kind of profits that team owners are accustomed to, why couldn’t a team owner do the same?”

    The issue is who owns the stadium in order to avoid taxes on stadium construction revenues like naming rights, PSLs, ect…

    Any city, county, or state owned stadium can easily avoid taxation through the creation of a “stadium authority” that would own the stadium even if it is 100% privately funded. The NFL could also avoid taxation by owning the stadium as they are a tax exempt entity. A team owner could not avoid taxation which would greatly reduce the funds available to build the stadium.

  3. Have you accepted the fact that the only financially feasible way the NFL could return to LA is with 2 teams sharing 1 privately financed stadium?

    Next year is the first time since 94 that 2 teams are out of their lease at the same, with neither likely to get a new stadium in their current market, and no obvious objection to relocation. That’s why the Rams and Chargers moving to LA is a realistic possibility.

    The Chargers aren’t getting public funds for a new stadium even if they win the Super Bowl and the Rams chances of public funding doesn’t look any better.

    Farmer Ins. naming rights for 2 teams was $1 billion over 30 years, PV=~$500 mil. 2 sets of PSLs should conservatively raise $200 million each and 2 NFL G-5LA loan/grants for $300 million each would push the total to $1.5 billion without including any luxury suite revenue. All tax free through a “stadium authority” or the NFL. There’s your financing, just add in all of the usual behind the curtain taxpayer funded infrastructure and tax abatement that even LA will give out because it doesn’t require a public vote.

    Hopefully no one goes off on the typical “relocation fee” nonsense.

  4. Except that G-4 funding isn’t available to teams unless they put in private money. (Also it tops out at $200m per team, not $300m.) If all the cash is being funneled through the NFL and/or a stadium authority, that won’t work.

    The NFL could change its rules, certainly. But it would have to, or else your scenario would be impossible.

    Finally, yes, from the teams’/NFL’s perspective the best way to do this is with two teams. But those teams would prefer to have stadiums of their own, regardless of where. Certainly, there’s a point at which a bird in the hand becomes more tempting — see Islanders, Brooklyn — but there are downsides as well.

  5. There was G-3 before G-4, there will obviously be G-5. Pay attention, I said G-5.

    The PSL revenue for the 49ers was funneled through the “stadium authority” and was still considered the team’s contribution. So you are dead wrong about that claim. These ridiculous arguments just for the sake of saying no don’t move the discussion forward.

    The Chargers and Rams and every other team will stay in their current markets if the taxpayers pay up but that doesn’t look likely in either San Diego or St. Louis.

  6. I don’t think you’re correct about the 49ers PSL revenue, John. Yes, the PSL money is being used to pay off the G-4 loan:

    http://bayarea.sbnation.com/san-francisco-49ers/2012/2/2/2766948/49ers-stadium-update-nfl-owners-league-loan-200-million

    But the requirement is that teams put $200m of their own cash on the table as well to qualify for the G-4 loan. The 49ers are doing that via the “subordinated” loan, where they’re borrowing money, loaning it to the stadium authority, then making rent payments to repay it:

    http://www.fieldofschemes.com/2011/12/05/3235/santa-clara-stadium-deal-for-49ers-piles-risk-on-top-of-risk/

    Obviously, if we’re positing a hypothetical G-5 program that doesn’t exist yet, we can pretend it will provide money on any basis we want. But under current rules, I still don’t think your plan works without the team owner kicking in something directly.

  7. John:

    California has a possessory interest tax. According to a 2006 Sacramento Bee article by Dan Walters (http://www.m2mevolution.com/news/2006
    /08/11/1789157.htm), the tax comes into effect “when someone holds a long-term right to use publicly owned property, which is exempt from direct property taxes, the state assumes that the tenant is, in effect, the owner and must pay property taxes accordingly.”

    So, neither the NFL nor team(s) would be exempt from paying property taxes or something to the like. Given that AEG has to pay this tax for Staples Center despite being on public land and that Dodger Stadium is privately-owned and thus not tax-exempt, I do not see how the NFL or a team(s) could convince a city or county to give it a break on property taxes.

    http://www.m2mevolution.com/news/2006/08/11/1789157.htm

  8. Wow Neil

    Your SBnation link is pure garbage, read the G-4 rules. That loan is repaid with Club ticket sales NOT PSLs. You should know better.

    Your assessment of risk or contribution is irrelevant. The NFL has stated PSLs sales are the team’s contribution and nowhere in the G-4 rule is there a requirement for “cash on the table”. You are just making stuff up.

    The Vikings are using PSL sales for their matching G-4 funding. Linking to SBNation is a joke, you’ve got the G-4 rule right here on your site and you wont actually refer to it.

  9. @DW

    I stated team owners would not be exempt of income tax on stadium construction revenues. The NFL is a tax exempt entity and would be exempt from any income taxes.

    Possessory interest tax: boe.ca.gov/proptaxes/pdf/ah510.pdf
    is a interesting but separate issue and as your link states with the Kings arena example a city can eat that tax as a “subsidy” if they desire.

  10. Yup, here it is:

    http://media.signonsandiego.com/news/documents/2011/12/14/NFL_on_its_new_stadium_loan_program.pdf

    Item 7 says that PSLs are exempt from league sharing if used for G-4 funded projects, which is the same way it works for club seat money and incremental ticket revenue.

    As for the Vikings, all indications I can find are that they’re selling their PSLs themselves, not via the stadium authority. So that’s not evidence one way or another on how the NFL would handle this hypothetical L.A. situation.

  11. @Neil

    Thanks for proving me right by posting the link, but you quoted the wrong part.

    1a. “such loan to be repaid through waived club seat premium VTS and “Incremental Gate VTS” (defined below) during the first 15 seasons of operations in the new stadium”

    PSL sales are not used to repay G-4 loans, also PSLs are private contribution per 1b.

    1b. “Private Contributions in the form of proceeds from the issuance of equity or the sale of PSLs shall be counted”

    It doesn’t matter who sells the PSLs they are a private contribution. I was right on both counts and you were wrong.

  12. 1b doesn’t actually say anything about what happens if PSLs are sold by the public entity — just that PSLs in general *can* count as a private contribution. (And then only implicitly mentions this, as one means of counting as private one tranche of the G-4 loan.)

    One of the problems here, as I’ve noted previously, is that the G-4 rules are terribly, terribly written. We simply haven’t seen a financing structure like the one you’re proposing (NFL running the show, all revenues for construction payments funneled through a public authority), so there’s no way of knowing whether the league would sign off on it or not.

    I will grant you that the best chance of getting a stadium built in L.A. would be with two teams sharing the space, heavy league involvement, and a lot of tax dodges via a public authority. As to whether that would be an obviously good deal for the NFL without additional subsidies, I think we’re just going to have to agree to disagree, at least until somebody presents more concrete numbers.

  13. @Neil

    Of course we’ve seen the financing model that I’ve proposed. PSL’s and naming rights were both funneled through Santa Clara’s tax free “Stadium Authority”. There are differences in the $ amounts and the 49ers skimmed 30% of the naming rights money off the top, but it is the same model as I proposed.

    Do you not realize that you’ve bent over backwards to make repeated unfounded claims? The idea that the NFL, a tax-exempt entity, would penalize the owners of the NFL for avoiding income taxes on PSL sales is ludicrous. You’re predetermined stance is getting in the way of any rational analysis.

    BTW, you can bet that the “Minnesota Sports Facilities Authority” will be selling the Vikings PSLs. This is common sense tax avoidance, ask any qualified tax-CPA. You need to do a lot more research instead of relying on sports writers and football bloggers.

  14. PSLs and naming rights were funneled through Santa Clara’s stadium authority, but the 49ers *put in other money out of their own pocket as well*. So it doesn’t tell us anything about what the NFL would say about a G-4 loan proposal that *only* includes PSLs and naming rights funneled through the authority.

    For the Vikings, I finally found one document that implies that the PSLs *are* being sold through the state authority. I’ll call the authority in the morning to check, because you’re right, the press coverage on this is awful.

  15. The idea of the NFL owning a stadium in LA really makes little sense. The tax avoidance seems rather minimal, given the downside liability and other costs inherent in having one of these white elephants on the books. Even Robert Kraft owns his own stadium, and Boston is by no means a cheap real estate/construction market.

    I do see the hurry though, given public attention on the NFL Office’s tax exemptions and finances and particularly the stadium loan program.

    The broader challenge for the NFL is to maintain its image as the national opinion leader in the sports industry. It is hard to demonstrate that business is good and that the NFL is “important” when three teams that already left LA are thinking seriously of returning–makes the NFL look like the CBA or minor league baseball.

    Sports in general are struggling to maintain the “stadium experience” as a necessity for the casual fan, given the aging demographic that actually attends games. The NFL is not exempt from this, and with these teams lined up, looks like LA is on the way to having two New York Jets-like franchises. A “win” for LA!

  16. @GDub

    Tax avoidance on about $900 million to $1 billion of PV income streams “seems rather minimal”? Really?

    Gillette Stadium cost $325 million, expect an LA stadium to be $1.5 billion. Apples v Oranges.

  17. I guess I’d ask, why the difference in stadium costs?

    $1 billion over how many years? Again, I ask, if the savings are so big why doesn’t the NFL just try to own every stadium?

    More bluster than fact still at this point.

  18. Okay! Finally heard back from the Minnesota stadium authority, who explained that the SBL sales there go like so:

    • SBLs belong to the authority.
    • The authority contracts with the Vikings to sell the SBLs.
    • The Vikings hand over the money to the authority.
    • The authority hands the money over to the stadium builders, where it counts as the team’s contribution, despite coming from the authority.

    So, it sounds like John Ogre is right: PSLs *can* count toward the private contribution for G-4 purposes, even if the team isn’t the one actually collecting the money. So it presumably would work for L.A. as well — thanks for tipping us off to this, John.

    Not that I agree that an NFL-owned L.A. stadium necessarily makes sense. But it makes more sense than it would without this PSL dodge.

  19. I’m not a believer of an NFL owned stadium, I only mention it because of the incredibly important tax avoidance which really is necessary to finance a stadium in LA.

    Getting a “stadium authority” to own the stadium is ideal even if the stadium is “100% privately financed”.

  20. Complete nonsense GDub
    Almost all of the 31 existing NFL stadiums are owned by public entities which are already exempt from taxes on PSLs and naming rights.

    Ask the NFL why the last two stadiums built cost $1.6 billion and $1.3 billion both publicly owned.

    The 49ers avoided $100s of millions worth of taxes on PSL and naming rights by funneling both through the “stadium authority”. That’s a fact.

  21. I agree with you on stadium authorities. Why not do as is done in New York and have a public-financed fig leaf over what essentially is a privately-owned stadium?

    I disagree that the NFL has any interest in owning stadiums, even for tax breaks and even for a team in LA. The NFL has just had the most successful 20 years in the history of US sports leagues without a team in LA. It will likely have a less successful 20 years with a team in LA or not, and this leaves out whether people actually care or not.

    I think you answered your own question on why stadiums built largely with massive interest rate and other tax breaks would cost three times as much as a largely privately built stadium. I’d also say the proliferation of publicly subsidized luxury seating helps raise the costs significantly too.