Goldman Sachs has secret plan to control NFL team relocations, or something

Vampire squid sighting! Sharp-eyed readers might already have noticed that when the San Diego Chargers and Oakland Raiders announced their Carson stadium plan, neither team’s execs actually took the stage, but a guy from Goldman Sachs did. Now, the Voice of San Diego theorizes that the firm is even more intimately involved in the plan to move the Chargers north:

SportsBusiness Journal’s Daniel Kaplan, citing unnamed sources, reported Monday that Goldman Sachs will finance the Chargers’ costs of moving to L.A. by covering “any operating losses suffered by the team in the first few years in that city as well as costs for any renovations needed in a temporary venue.” If they relocate, the Chargers are expected to play in the Los Angeles Memorial Coliseum or the Rose Bowl while a new L.A.-area stadium is under construction…

Meanwhile, Goldman Sachs managing director Greg Carey is advising Missouri Gov. Jay Nixon’s task force on building a publicly funded stadium to keep the Rams from moving to Los Angeles. The St. Louis Regional Convention and Sports Complex Authority hired Goldman two years ago to find ways to keep the Rams, or at least NFL football, in St. Louis.

The Voice’s Beau Lynott puts all this together to suggest that since Goldman would make more money on a Carson stadium than a San Diego one (since it would cost more and require more private lending), and keeping the Rams in St. Louis would mean they’d get to help finance two stadiums instead of one, the firm is secretly trying to maneuver that scenario into happening. Or not secretly, maybe, but … fiendishly? Yeah, “fiendishly” sounds about right, even for things that Goldman Sachs just does as a matter of everyday business, because come on, people, Goldman Sachs.

Meanwhile, the Carson stadium backers launched a ballot initiative on Wednesday, which means they’re now looking at an Inglewood scenario: Either hold a public vote this summer, or have the city council just vote it in once the ballot signatures are collected, thus avoiding both the normal environmental review and an actual vote. Three guesses which one the Chargers would like to see.

I’m still having a really hard time finding the exact language of the Carson proposal or figuring out what’s being proposed — an attorney for the project promised that “not one penny [of city money] will go into the project,” but everybody says that. If anyone does manage to track it down, can you throw a link into comments? Thanks!

San Diego economist reports that all the other teams’ moms are buying them new stadiums

The president of the National University System Institute for Policy Research — hey, it’s never heard of you either, okay? — has come out with a report on plans for publicly funding a new San Diego Chargers stadium, and determined that all the other kids are doing it:

San Diego County would have to cover up to 65 percent of the cost of a new stadium, based on what other NFL markets have contributed. … The center’s president, Erik Bruvold, said he is still preparing his findings, but a much lower public contribution matched by a much higher private share would make a stadium deal in San Diego an “extreme outlier” in the NFL stadium world.

Well, yes, cities do tend to put in most of the money for stadiums these days — I believe I’ve read a book or two about that. This is somewhere between “painfully obvious” and “answering the wrong question,” since the point should be whether it makes sense for San Diego to pay 65% of the cost of a stadium, not whether other teams have gotten away with it. (It’s worth noting, which Bruvold did not in his U-T San Diego interview, that the Chargers’ best alternative option at the moment is a stadium in Carson that would be covered 0% by the public, at least so far as we know now.)

Bruvold did acknowledge, kind of, that 65% is a lot of money, but mostly because those pesky voters might not be happy about spending it:

“It’s unclear to me that the region has got an appetite for a 60 to 65 percent contribution on an $800 million stadium,” he said.

Fabiani has said a new stadium could cost as much as $1.5 billion or more — meaning that the public contribution according to Bruvold’s calculation could reach $975 million.

“People may not like that and I’m not expecting people to like that,” Bruvold said. “That makes some sense of Fabiani’s negative message in his letter to the task force, which is there may not be a deal.”

So to sum up: Other NFL teams have gotten an average of 65% of their stadium costs covered by taxpayers, so the Chargers are going to want that, even though no one else is offering it to them, but San Diego residents aren’t going to like it, so … let’s throw up our hands and say that people can either like the Chargers’ demands or lump them? I’m not really sure what to make of this, except that I’m now thinking I’d get more press coverage if I changed the name of this site to the National Institute for Analysis and Research of Field Schemes.

AEG issues another report on how Inglewood stadium would be a menace to planes

Apparently AEG’s plan to block Stan Kroenke’s Inglewood stadium plan is to pay anyone in sight to issue reports about how it’s too near the airport. Following on last week’s report claiming that it would be a terrorist missile pad, AEG has now commissioned a former chair of the National Transportation Safety Board to show that planes could crash into it, or fly real low over it and scare people, or something:

According to the [Mark] Rosenker report, approaching aircraft could be as little as 300 feet above the Inglewood stadium, potentially dangerously close for the safety of the plane as well as fans in the stadium.

“The (safety) margins are not there,” Rosenker told the Post-Dispatch on Tuesday. “You lose an engine. Something bad has happened for whatever reason, and you have got to come down quickly. This is not a place that you want to be having to dodge around to guarantee that you get in there safely and not collide with anything before you touch that touchdown zone.

“It’s a bad idea, just in general. … Why put something that could be a catastrophic result in a place, where if you put it anyplace else, you take all of those problems off the table?”

Now, I am not a former NTSB chair, but I am a Mets fan, which means that I’ve been overflown by hundreds if not thousands of planes while at games, both at Shea Stadium and at Citi Field, which was allowed to be built six years ago in the flight path of LaGuardia Airport without anyone raising any alarms. Also, FAA regulations do try to account for this, saying no buildings in a flight path within three miles of an airport can be more than 200 feet tall — the stadium would be about 150 feet tall, so what’s the problem, exactly?

(I could also point out that the only stadium ever to be hit by a plane wasn’t anywhere near a flight path.)

I guess Rosenker’s point, such as he has one beyond “Can I have my check now?”, is that if you’re going to have a football stadium, you might as well do it somewhere that’s not near an airport, just to be better safe than sorry. In which case, you know what’s nowhere near LAX? The Edward Jones Dome. I bet the Rams could keep playing there for years and nobody would crash into it.

St. Louis stadium plan for Rams nears $1B, would only require tearing down most of everything in sight

The state of Missouri has released some new renderings of its proposed St. Louis Rams stadium, featuring lights that won’t shine in the eyes of passing boat captains and some local buildings not being demolished. It still looks like it would wipe out the newly renovated, nationally historic Hammond Apartments, though, in addition to most of the remaining old warehouses by the river:

That’s a lot of riverfront land dedicated to parking lots, as well as a reminder that the Jones Dome would still be there, serving as a very-occasional plenary hall for conventions, I guess? There would also be crazy geometric shaped video boards, and room for additional seating for Super Bowls, and a $985 million price tag that nobody has much of a clue how to pay for. But it’ll bring more tourists and huge profits around each event, so what’s to complain about?

AEG says Kroenke’s Inglewood stadium no good because terrorists could shoot down airplanes from it

In what the Los Angeles Times calls “a bold move to undercut an NFL stadium at Hollywood Park” — “bold” being an adjective usually reserved by journalists for the sort of things done by, say, Vladimir Putin — AEG has attempted to throw a roadblock in the path of St. Louis Rams owner Stan Kroenke’s proposed Inglewood stadium by getting former Secretary of Homeland Security Tom Ridge to write a report that it would be too tempting a terrorist target and should not be built:

In a 14-page report, Ridge suggests that because the Inglewood stadium proposed by St. Louis Rams owner Stan Kroenke would lie within three to four miles of Los Angeles International Airport and beneath the flight path of airliners, terrorists might try to shoot down a plane or crash one into the stadium, scenarios Ridge described as “a terrorist event ‘twofer.’ “

Because when terrorists want to shoot down an airplane, the first thing they do is look for an NFL stadium to launch surface-to-air missiles from. It’s easy to bring those in, so long as you put them in a clear plastic bag.

The Times reports that “it is not known how widely AEG distributed the report,” which the paper got from Ridge’s PR firm. NFL vice-president Eric Grubman effectively dismissed its findings, saying, “We feel that the best approach is to look at these things with an independent eye.”

In addition to giving everyone a good laugh, the AEG report should show what we have to look forward to as three different developers and three different NFL owners all circle around the L.A. market, which is full corporate titan smackdown action. Recall that when the owners of Madison Square Garden faced off with the New York Jets owners over a proposed Manhattan stadium, it culminated in a giant ad war, so one can only hope that this will have as entertaining a denouement.

Back nearer to planet Earth, meanwhile, the Oakland Raiders are reportedly looking for a smaller, 55,000-seat stadium in Oakland, which would be more in line with the NFL’s new marketing reality, not to mention with what Raiders owner Mark Davis said two years ago, than an 80,000-seat behemoth in Carson. Not that anybody, including Davis, is proposing how to build such a thing, but it’s a way to get another Raiders stadium story into the paper, so hey, do what you gotta do.

And speaking of getting stadium stories into the paper, consummate NFL insider Peter King has an article at SI.com theorizing that since Kroenke seems to be “the most determined owner to want to move to Los Angeles” (though he hasn’t actually said anything about moving, and has only partnered with a development company in Inglewood on a stadium with unspecified funding) and St. Louis has the most advanced stadium plan (though it has its own problems with mystery funding), maybe the Rams will move to L.A. and then the San Diego Chargers will move in with them and the Raiders will move to a new stadium in St. Louis?

Even King calls this “a virtual sports-talk-show bit of guesswork by me,” but that doesn’t stop him from putting it in print. (And in a pull quote.) Nor does it stop him from writing his entire column with only two people quoted: Grubman and St. Louis stadium plan chief David Peacock, neither of whom say anything other than what you’d expect them to say. (Grubman talks about L.A. having “real momentum,” Peacock says “if we do our job, I can’t imagine 24 votes to approve the Rams moving.”) And now I just wrote almost two paragraphs about this piece of wild speculation, so maybe I’m no better than the rest of them — though at least I reserved the headline for the far more entertaining piece of wild speculation. That’s the defense I’m going with, anyway.

Crunching the Inglewood numbers: Rams stadium would bring new revenues, but getting to $1.86B is tough

The Los Angeles Times’ Tim Logan, who has been doing excellent work on St. Louis Rams owner Stan Kroenke’s Inglewood stadium plan (and I don’t just say that because he usually seems to interview me), had a long story yesterday headlined “Stadium economics: How building a venue in Inglewood makes financial sense.” So how does it make sense, exactly?

  • Sports economist Rod Fort says it’s a good deal for Kroenke if he can make enough money on the associated non-stadium development: “It’s more like a real estate development than a stadium.”
  • Sports economist John Vrooman says the Rams could bring in an extra $100 million a year in “sponsorships, marketing and premium seating” in L.A. as compared to St. Louis, calling a move “an economic no-brainer.”
  • Sports economist Victor Matheson says Kroenke could rent out and Inglewood stadium for concerts and the like, but “there’s just not that many 60,000-plus person events.”
  • I call spending $1.86 billion just to get uncertain revenues “a huge, huge risk.”

Fort’s and Vrooman’s points are the most viable arguments for a privately funded Inglewood stadium making sense for Kroenke, so let’s take them one at a time. First off, the real estate development at Hollywood Park might well bring in enough revenue to make a stadium-plus-development deal turn a profit — but then, why saddle it with a potentially money-losing stadium when the rest of the development was already approved and ready to go? Kroenke had to pay his development partners (no one knows how much) to buy into the bigger plan, and it doesn’t make sense that they’d voluntarily give him a lot more in revenues than he’s paying them to buy in, since a stadium doesn’t especially help them any.

As for the extra $100 million a year from being in Los Angeles, that is the big question: Precisely how much value does the L.A. market have to an NFL owner? We’ve heard that number before, on the San Francisco 49ers‘ move to Santa Clara, but we’ll have to wait till the new Forbes numbers come out this summer to see if they agree. We can use the Forbes numbers another way, though, to see how reasonable this is: What are the Rams revenues right now, and what would adding $100 million a year mean?

According to Forbes, the Rams were dead last in the NFL in revenue in 2013, at $250 million. (Being dead last in the NFL in revenue is still a pretty lucrative gig.) Adding $100 million would mean they’d have to jump to 5th in the league in revenue, behind only the Dallas Cowboys, New England Patriots, Washington Unmentionables, and New York Giants. That’s conceivable, I suppose, but I’d still call it a huge risk, even if maybe the Forbes figures might make me willing to lop off one “huge.”

And then, would even $100 million a year be enough to make a $1.86 billion stadium a good investment? Kroenke could presumably knock off some of that price tag with PSL sales (figure $300-400 million), naming rights (about $200 million in present value), and possibly NFL G-4 money ($200 million max). That leaves only a little over a billion dollars to pay off, which $100 million a year would cover, but without much left over for a return on investment. At best, then, Kroenke would be putting up more than a billion dollars out of pocket, plus whatever he’s spending on stadium land and a share of the associated development, for a return that he could get by putting his money in a decent stock index fund. (Okay, and increasing the value of his asset, which admittedly could come to a bunch — the Giants are worth about a billion dollars more than the Rams right now, according to Forbes, though the Giants also aren’t saddled with $1.86 billion in stadium debt.) And if there’s any significant relocation fee required by the NFL, then forget it.

Add it all up, and I would just suggest that the Times’ headline writers should have made one tense change: “How building a stadium in Inglewood could make economic sense.” We’re talking hypotheticals here, and everything would have to go Kroenke’s way for a $1.86 billion stadium to pay off for him. Or to put it another way: It’s a huge, huge risk.

San Diego officials propose bold new Chargers funding plan: Borrow money, pay it back somehow

San Diego county supervisors testified before Mayor Kevin Faulconer’s Chargers stadium task force yesterday on ideas for funding a stadium, and man, are they terrible. (The ideas, I mean. Not the supervisors, necessarily.)

  • Supervisor Ron Roberts suggested that the county provide a “bridge loan” that could later be paid back by property and sales taxes on new development around a stadium — tax money that would normally go to the general fund to pay for schools and other public costs associated with new development, but would be instead diverted to repaying stadium loans … somehow. Also, Roberts didn’t indicate how the loan would be repaid if the development didn’t pan out as expected.
  • Another idea, from supervisors chair Bill Horn, was for the county to sell a revenue bond that would be repaid by revenues on … something. (In the inimitable words of U-T San Diego, “no payback source was suggested — though he said there would need to be one.”)

No offense, guys, but it’s not much of a challenge to come up with ways of paying for a stadium that just amount to “Borrow the money, then pay it back somehow.” The not-so-fancy footwork is apparently being inspired by a California law that requires a two-thirds public vote before adding new taxes, a voter threshold that is never going to be cleared for a San Diego stadium, no way, no how. So instead we have local officials trying desperately to think of ways to fund a stadium with existing taxes, which would then need to be made up somehow, and backstopped if they don’t come in sufficiently, and oh it all just makes your head hurt, doesn’t it? I’m starting to understand why Sacramento used an arena financing plan that involved using city parking revenues and then filling in the resulting gap with more city parking revenues and then filling in that resulting gap by shrugging a lot and changing the subject.

Inglewood approves stadium plan with no public vote, as construction cost nears record $1.9B

The Inglewood city council voted unanimously yesterday to approve an NFL stadium near the old Hollywood Park racetrack site, bypassing both the usual environmental review and the public referendum that would normally be required to bypass the environmental review. The project, spearheaded by St. Louis Rams owner Stan Kroenke, can now move ahead just as soon as—

An economic impact report commissioned by the city estimated the privately funded stadium with open-air sides and a clear retractable roof could be the most expensive in U.S. sports history: $1.86 billion.

Okay, so to paraphrase things Everett Dirksen never said, this Inglewood project is starting to get into some real money. I’m already on record as being skeptical of Kroenke being able to make an Inglewood stadium pencil out when we were talking about $1.5 billion; at $1.86 billion, which is more than half a billion more than the 49ers spent on their stadium in Santa Clara without needing to worry about any NFL relocation fees, it seems like madness. (Or leverage to extract more money from St. Louis.) But I guess we’re one step closer to finding out whether Kroenke is super-smart, super-crazy, or super-smart about appearing to be super-crazy.

There is still one other possible way the Inglewood stadium, even if it doesn’t collapse of its own weight could be blocked, which is that a petition drive could be launched for a referendum to block the deal from going through without a referendum. No word yet of anyone launching such a campaign, but I’m sure someone will do so eventually, because California.

Jaguars owner gets all confused about how blackmail works, threatens self if state money is denied

Not to be left out in all the California stadium excitement, the owners of the Jacksonville Jaguars are levying some threats of their own, saying that if the Florida state legislature doesn’t approve $30 million in renovation subsidies over the next 30 years, they just won’t renovate at all! Yeah! That’ll show ‘em!

As Noah Pransky of Shadow of the Stadium pointed out on Friday, though, this is a pretty stupid threat:

The Jaguars’ own subsidy application claims the $18 million club upgrade would net the team an additional $2.3 million per year (plus the naming rights).

So, assuming Khan has no trouble financing a construction loan, the Jags could conceivably just pay for the profitable club renovations themselves now and make their investment back in 10-15 years.  The state, however, would need about 200 years to recoup its investment based on its 6% sales tax cut of that “new” revenue.

So: A football team is considering a renovation plan that would both pay for itself and turn a small profit, but decided to ask the state to pay for instead, because then it would turn a large profit. And if the state doesn’t agree to it, the team owner will refuse to go ahead with the renovation, costing the state next to nothing but himself a good bit more. I wonder if he also has a gub.

Chargers and Raiders say they can copy 49ers’ private stadium financing, but it’s not quite that simple

More information is trickling out about the proposed $1.7 billion San Diego Chargers/Oakland Raiders stadium in Carson, and it adds up to — well, let’s just run it down first, then see what it adds up to:

  • The promised press conference in Carson happened on Friday, and tons of local officials showed up, but no representatives of either team took the stage. (Chargers stadium chief Mark Fabiani was in the audience, but didn’t speak.) No details of how the plan would work were revealed, with one elected official (SFGate didn’t say who) saying, “The financing will work with the revenue generated by the stadium itself. I don’t have all the details. This is about convincing a community that this is a good project.”
  • Fabiani was busy talking up the press elsewhere, telling ESPN’s Aaron Markazi that St. Louis Rams owner Stan Kroenke’s announced Inglewood stadium was what prompted the Chargers to immediately jump in on a stadium elsewhere in the L.A. area: “We deliberately changed our strategy in the wake of what Kroenke did. When this opportunity to create an alternative came along we decided to seize it.” Fabiani also told Markazi that the Raiders just officially came on board last week.
  • Fabiani told Markazi that the model for the stadium is the San Francisco 49ers‘ $1.3 billion stadium in Santa Clara: “We took the template of the Santa Clara funding mechanisms … so we basically took that and adjusted it for different costs here.” (A Goldman Sachs rep who’s been working on the plan echoed this at the press conference.) He also insisted that the Chargers are prepared to fund the stadium alone if necessary.
  • Regarding the use of NFL G-4 funds for a Carson stadium, NFL VP Eric Grubman told the OC Register, “A stadium project can be eligible for league financing provided the project and its sponsors meet certain criteria. A Carson project would be eligible and could apply if it met those criteria.” Of course, one of the criteria of the G-4 fund is that “the project must not involve any relocation of or change in an affected club’s ‘home territory,'” so either Grubman is saying that the league has changed the criteria, or coyly saying that Carson wouldn’t be eligible, or just ducking the question because he doesn’t want to mess with the teams’ leverage.
  • U-T San Diego reports that San Diego residents hope the team doesn’t move, and more surprisingly, that the newspaper’s headline writers think they’re called “San Diegians.”

So what do we have? Clearly the message the teams are trying to send (or at least Fabiani is trying to send — the Raiders seem to be merely along for the ride) is “the 49ers did this in Santa Clara, so we can do it too.” There are some significant differences, though: First off, the Carson stadium is projected to cost an extra $400 million, something that additional G-4 funding won’t come close to making up, assuming the NFL changes its rules and approves it. Second, L.A. is not Silicon Valley, and the Chargers and Raiders aren’t the 49ers, meaning selling $500 million worth of personal seat licenses to fans, as the 49ers did, is less of a sure thing. And third, the NFL hasn’t committed to waiving relocation fees for teams moving to L.A., which could blow as much as another $500 million hole in the budget.

Probably the best way of looking at the Carson stadium plan is the way this commenter suggested: It’s part negotiating ploy, part fallback plan, and both Chargers owner Dean Spanos and Raiders owner Mark Davis are hoping that it will shake loose stadium money in San Diego and Oakland and they’ll never have to decide whether to shoot the dog. (Fabiani also spent a fair bit of media time over the weekend shaming San Diego officials about not being as friendly-like as Carson ones.) Grubman’s statement seems calculated to support this tactic: He’s not going to commit to G-4 funding, but he’s not going to rule it out, either.

The big question, then, is: If one or both teams can’t use the Carson threat to get stadium money out of their current home cities, will they really pull the trigger and move? That, we simply don’t know, and won’t until there’s more details revealed about how the Carson stadium money would work, beyond “We’ll have what Santa Clara is having.”

Come to think of it, though, there’s one equally big question: If the Santa Clara stadium’s private financing can be picked up and relocated to Carson, how come it can’t be done in San Diego or Oakland? Yes, L.A. is a bigger market, but market size doesn’t matter that much in the NFL. And as noted above, it comes with a bigger price tag, in both construction cost and relocation fees, than a stadium in the teams’ current homes would.

Good questions for officials, and journalists, in San Diego and Oakland to be asking, anyway. It’s possible to take threats seriously without taking them at face value, and that’s what everybody should be focusing on now. If only to take their minds off of the horror that is this photo: