Liveblogging that ginormous ESPN article about the Rams’ and Chargers’ new stadium

ESPN ran a major print feature yesterday on the difficult road the Los Angeles Rams and Chargers are facing since winning the right to move to L.A. from their previous homes of St. Louis and San Diego, respectively, touching on the teams’ attendance woes, bad blood between their owners, and pretty much everything else you could want to know if you’re a football obsessive. As a non-football obsessive myself, I mostly wanted to know what this all means for the present and future of sports stadium deals — Rams owner Stan Kroenke is famously funding the teams’ new Inglewood stadium out of his own pocket — and so the only way to approach this was to break it into bite-size chunks as I went along, because damned if I was going to read the whole thing twice.

And so, as a public service, here is me reading that ESPN article so you don’t have to:

It is a futuristic mass of steel and concrete that appears to have both risen from the earth and descended from space.

This is going to be really long, isn’t it? Normal-length articles don’t get to stop and milk their purple prose like that; I smell longform.

backers hope SoFi will mark the end of one NFL era in Los Angeles — defined by rotting venues and teams that have drifted in and out over 73 years

“Rotting venues” — everybody drink!

the Los Angeles Rams and the Los Angeles Chargers, an arranged marriage of clubs whose high-level executives barely speak with one another

Okay, maybe this will be juicy! Getting interested now.

In the fourth quarter against the Steelers, the opening of the Styx song “Renegade,” a Steelers anthem, blared from the stadium’s sound system, the setup to a failed Chargers joke that got the visiting fans even rowdier. Overhead, as with most Chargers home games, a plane dragged a banner that read: “Impeach Dean Spanos.”

Look, I don’t have any rooting interest against the Los Angeles Chargers — I think the last football team I either rooted for or against may have been the New Jersey Generals — but it is very easy to hate Dean Spanos as a man who 1) tried to get his city to pay several hundred million dollars toward a new stadium even though residents were clearly massively against it, and 2) when that didn’t work, moved his team a hundred miles away without really considering the consequences, mostly so that nobody else could do it first. So schadenfreude, yep, that seems like the appropriate response here.

In 2015, the Rams’ Inglewood project, then estimated to cost $1.86 billion, was competing against a Chargers-Raiders $1.8 billion option in Carson. Few outside the NFL knew it, but Jones positioned himself to profit from either proposal. Concessions for either project — and the construction, in the case of Inglewood — would be managed by Legends, the company co-owned by Jones and the Steinbrenner family.

I mean, sort of? Legends manages concessions at all kinds of venues, so really Jerry Jones just profits from “sports existing as a thing people like.” But getting the construction management for Inglewood certainly had to be the cherry on the top for Jones.

Kroenke — one of the NFL’s wealthiest team owners, worth an estimated $9.7 billion — would pay to build the stadium, perhaps the only option in California, whose legislators and voters rarely approve a single public dollar for new stadiums. Spanos, a long-respected owner with a reputation for putting the league first, would be given the first option to be Kroenke’s tenant, for $1 a year, and if the Chargers decided to remain in San Diego, the Raiders could join the Rams in L.A. — an outcome nobody around the league wanted, owing to Al Davis’ burned bridges and the co-opting of team apparel by gangs…

Now these unequal partners are locked in a bitter fight, stoked by Kroenke’s fury over cost overruns exceeding $3 billion, questions over the Chargers’ long-term viability in the market, a lawsuit seeking billions over Kroenke’s departure from St. Louis that has engulfed the entire league, and an increasingly fractious and sometimes petty civil war between Rams and Chargers officials, according to documents and nearly two dozen interviews with owners, league and team executives, and lawyers.

First of all, of all the reasons NFL owners, or anyone, hates Al Davis, I’m sure “gang members wear his team’s jerseys” is wayyyyy down the list. But I’m down for the increasingly fractious and sometimes petty civil war. And tell us about those infuriating cost overruns!

A PHONE CALL between Kroenke and Goodell in the autumn of 2015 was a harbinger for the current impasse.

Aw hell, this is going to be one of those New Yorker–style “But first we must return to the beginning…” formats, isn’t it? Scroll scroll scroll.

On a whiteboard, the two options that had been on the table for a year — “STAN/LA” and “CHARGERS-RAIDERS/CARSON” — were crossed out.

Scroll.

“I don’t want to go to L.A.,” Spanos said. “I want to stay.”

Ha ha whiny rich boy! Scroll.

He was determined to do what was best for his club and for his family

For his family! Scroll!

Spanos and his executives surprised Rams officials by drawing a hard line, demanding a cut of all revenue streams, input over design elements, and approval over all decisions made by Legends and by StadCo L.A. LLC, the stadium company controlled by Kroenke. Rams officials tried to be cordial, but they seethed. The way they saw it, Spanos had the entire Southern California market to himself for 21 seasons with little to show for it, but now he felt entitled to a chunk of revenue on a project to which he would contribute one dollar a year.

Kroenke sort of had a point there, except that much of that revenue — seat licenses, suite sales, naming rights — would be generated by those extra eight home games a year played by the Chargers. Spanos ended up getting to keep 15% of revenues from suites, naming rights, and sponsorships, the story notes shortly afterwards, which had the unfortunate consequence that each team owner would benefit as much from the other’s luxury seating sales as his own. This was not a good start for two owners who didn’t much like each other to begin with, and liked each other even less after a contentious negotiating session.

All the revenue from both teams’ sale of SSLs would go to Kroenke to help defray the cost of the stadium. But per the term sheet, the Chargers neither had to meet a revenue target nor even sell a single SSL.

Anyone getting the sense yet that Stan Kroenke is maybe kind of a terrible negotiator?

When it was Spanos’ turn to speak, he surveyed the scarce and scattered Chargers fans. “This is surreal!” he said. A group of fans flipped him off.

Seriously, I will be just fine if this article is nothing but this the rest of the way down.

JERRY JONES HAS always believed in the transformative power of a new home

SCROLL!

“big balls”

Drink again!

Most teams hire at least a dozen staffers to handle SSL sales for a new stadium, in addition to hiring a company like Legends. The Chargers, which outsourced most of the work to Legends, were flying blind in L.A., with no analytics department or sophisticated method of reaching fans… All the Chargers had was “a couple of email addresses” of potential ticket holders, in the words of a team executive, and a slogan — “Fight for L.A.!” — that sounded less like a rallying cry and more like a schoolyard challenge to their future landlord, which did not go unnoticed by Rams executives, who mocked the slogan.

Well, you know, of course they did. Because of the way the agreement was written, no matter how many seat licenses the Chargers sold, the money would just go to defray Kroenke’s stadium costs. And while it would be no fun to not sell many tickets to Chargers fans, if you’re getting 15% of all the shared venue revenues, that makes the empty seats go down a lot easier.

I’ve had a bunch of conversations with Roger Noll where we’ve scratched our heads about what Kroenke was thinking by spending billions of dollars on a new stadium just so he could move into a bigger market in a league where market size means next to nothing thanks to the equally shared national TV contract, and I think we may have our answer: Hey, Roger, I think Stan Kroenke may just be an idiot.

Spanos and Chargers COO Jeanne Bonk then made a controversial decision. They slashed prices for 26,000 upper deck seats, lowering tickets to the $50 to $90 range, and dropped the SSL rate to $100 — up to 15 times less than the Rams were charging for the same seats. … Spanos insisted the price drop wasn’t a spiteful move but a reflection of weak demand.

Nothing saying it couldn’t be both!

Chargers executives were convinced the Rams were lashing out because stadium construction was billions over budget. In the eyes of Chargers brass, the Rams had every right to be angry. But blowing up at Legends was tricky for the Rams because Jones had delivered the L.A. vote — and Kroenke and Jones have become pals, a power clique of two. Still, Legends had never managed a project so massive — and it had “gone off the rails,” a source close to Legends says. It began in 2016, when the Rams realized that both initial estimates — $1.86 billion in early 2015, which rose to $2.4 billion by late 2015 — had been poorly calculated. Vendor costs ballooned because of competition with LAX’s $14 billion renovation. The infrastructure was unexpectedly pricey, with a massive retaining wall required 100 feet below grade for the field. A record amount of rain in early 2017 complicated matters even more, filling the hole of the field with up to 15 feet of water that needed to be drained and costing the Rams 40 work days. And so the Rams announced in May of that year that completion would be delayed until 2020. In March 2018, the project had hit a cost of $5 billion, but the price continues to go up. StadCo officials now refer to it to owners and executives around the league as “our $6 billion stadium,” although some executives insist it won’t be that high.

It’s tough to make apples-to-apples comparisons of cost overruns on the Inglewood stadium, because Kroenke has been sort of hazy at times about whether he was talking about construction costs for just the stadium or for the entire complex, which will also include a 6,000-seat theater, housing, office and retail space, a 12-screen movie theater, a luxury hotel, a brewery, and a lake with a waterfall fountain. Still, $4 billion in extra costs is a stupendous amount of money, and makes what was already a questionable deal for Kroenke look like a total disaster, no matter how many seat licenses the Rams and Chargers can manage to sell. And given NFL owner politics, “Kroenke can’t do anything about it because Jerry Jones’s company is in charge of construction and you can’t cross Jerry Jones” makes total, stupid sense.

There’s more, including the lawsuit against the NFL for violating its own relocation rules that’s demanding that NFL teams pay over the $1.1 billion in relocation fees received from Spanos and Kroenke as restitution, and more bickering between the two owners (“There have been spats over the types of golf carts the stadium will use”). Go read it yourself, but be forewarned, it is so very, very long.

And yet despite its length, it never really addresses the elephant in the room: Will the opening of the new Inglewood stadium solve anything, for Kroenke or Spanos or the NFL or anyone? It sure seems unlikely: The teams remain relatively unpopular in L.A. (though the article does raise the prospect that they could end up fighting to be everybody’s second-favorite team in town behind whatever out-of-town team fans adopted during the NFL’s long absence, and then maybe eventually drawing new fans from a younger generation), Kroenke and Spanos are still trapped in a marriage of convenience, and that $5-6 billion price tag is going to be super-hard to make pay off, even if the stadium and luxury hotel and movie theater and whatnot are all massive successes. If so, it’ll be great for schadenfreude purposes of laughing at the owners who thought they could make a bundle by hightailing it to greener pastures and abandoning existing fans, but maybe less so for providing a model by which teams can effectively fund new stadiums without resorting to public subsidies. Which maybe isn’t so bad — if new stadiums mostly don’t pay for themselves, maybe everyone should just stop pretending the world needs tons of new stadiums — but given the way development politics work, I have to be at least a bit worried about future NFL owners telling cities, You gotta help us with money for this, we don’t want to be the next Stan Kroenke. Schadenfreude and glasses half-empty, those are this site’s two mainstays, and they’ve served me well so far!


13 comments on “Liveblogging that ginormous ESPN article about the Rams’ and Chargers’ new stadium

  1. What a delightful way to start my day – #LOLSpanos, #LOLChargers, #LOLSpanosstayinLA, there’s just too many to list!

  2. Gang members and Oakland Raider jerseys got me thinking

    The Chicago Fire came out with a new logo no one seems to like. It does however look a lot like the Latin Kings logo — LK is a rather large gang here in Chicago. Maybe the fire figure they can sell lots of merch to gang members.

  3. What a boondoggle. But…

    AEG didn’t even exist before Staples Center was built in the late 90’s, and Anschutz got serious bids on his $8 billion ask when AEG was up for sale in 2013.

    Between the increase in the value of the Rams, the development around the stadium, and the ability to potentially win rights to copycat developments in other cities, this could end up working out for Kroenke.

    • Except that Staples is in operation 200+ nights a year, where even with two NFL teams and a roof, the stadium will max out at what, 30-40? Unless the Beatles reform (with John and George as holograms) and establish a residency in Inglewood, it’s hard to see Kroenke earning back his $6B (including the relocation fee).

    • “… the ability to potentially win rights to copycat developments in other cities…”

      In what way?

      Are you suggesting that Mr. Kroenke could somehow copyright this development plan?

      Time will tell, but this development plan might be “too big” even for Los Angeles… so it’s difficult to see how it could be transported to any other location in the nation.

      The problem with doing something like this in Tokyo, New York or London is that land is significantly more expensive in other major cities than it is in sprawling LA.

  4. What happened to Spanos and Kroenke was Karma biting them on the you know where, and well deserved after what they did to San Diego and St Louis. They should have known why LA survived for a long time without the NFL. That reason is simple: LA’s football team now just like then is USC.

  5. Interesting, thanks.

    It seems the article did explain one of the main mysteries of this affair…. why was Jerry Jones so eager to welcome Kroenke and the “Los Angeles Rams”?

    Because he intended to insert the feeding tube into the Rams bloodstream and drink drink drink, possibly forever.

    Be careful who your partners are.

    If there’s one other rule this sorry affair proves it’s that no matter how rich you are, once you commence a building project (aka dig a hole and start filling it with money) you are just a passenger. EVEN if you are Stan Kroenke.

    Any thoughts on what the most likely outcome here is?

    Even if they boot Spanos’ sorry arse out (read: allow him to buy his way out), I don’t see how it helps the project at all. In fact, I don’t see how it doesn’t make the economics even worse – though arguably the Chargers aren’t bringing in enough revenue to justify the money they are entitled to take out.

  6. I never understood this deal from the get-go. In St Louis he would have been putting up about $500 million for a new stadium. I’m not seeing how LA is worth the extra $5 billion.

    Also for a guy who develops real estate for a living how do you underestimate the cost of a project by 60%?

    • My guess would be he didn’t hire Jerry Jones to build any of his non sporting commercial developments…

      • Well not to mention his other developments are mostly strip malls, which are comparably simple, and he was generally renting them to his wife’s family also known as Walmart.

        He clearly should have moved the Rams to Arkansas, played games in a glorified warehouse and sold all the PSLs to family members. I’m sure he would have been able to manage that.

          • It would be ridiculous under normal building circumstances, yes. When you are building what Kroenke is trying to build, though, everything is a one off and a significant amount of the engineering is being done and redone as the project unfolds.

            Not sure if either of you read the complete original article, but one of the foreseeable problems was that the giant hole they dug for the stadium filled with water from unexpected rains… one of the unforeseeable problems was that their engineers decided after the fact that they would need to build the world’s biggest and most expensive retaining wall to secure the development. Oops.

            Those are the kinds of ‘engineering developments’ you often don’t find out about until after you’ve started moving giant volumes of dirt and uncovered what the true subsurface conditions are.

            Add to that the fact that Jerry seems to be wetting his beak at every possible opportunity and cost overruns can spiral out of control (which it appears, they have).

            If this were any kind of ‘normal’ building project, you would find this out early on and decide to either proceed or not before a ton of money had been spent. In this project, Kroenke doesn’t have that luxury. The land has been bought, hundreds of millions (if not well over a billion) have been committed and/or paid, and the project must go ahead.

            It will be interesting to see whether any of the so called “extras” get cut as the project moves forward. That is really the only way to save money on a project like this that is already off the rails (as the article explains).

            The only other option would be for either Kroenke to sell some other assets to ensure completion (unlikely) or to appeal to the NFL to provide either additional funding/loans/investment.

            Or, you know, Jerry could agree to take a haircut on his company’s management fees (which these days typically run 12-17% of the project’s total cost as an adder… not sure what kind of deal JJ and SK agreed, but I’m guessing it is at least market rate.)

            The up side is that Kroenke is locked in financially. He has to finish the project some how. And he has the means. It will be interesting to see if he does sell off other assets to reduce financing costs though. Assuming he didn’t pledge the revenues from, say, Arsenal, toward the project in order to secure loans, for example.

            May you live in interesting times, as the Chinese say…