Los Angeles Rams owner Stan Kroenke may have bucked modern trends by going and building a $5 billion stadium without asking for major taxpayer subsidies, but if there’s one thing about stadium deals, it’s that it’s never too late to make new demands. And so it is with Kroenke’s lawsuit against the city of Inglewood, where he’s claiming that the city owes him $376 million for roads, sewers, other infrastructure, and police and fire services that he says he fronted the cost of:
Kroenke’s companies argue the city must still reimburse them for $376 million in public improvements — payments the city counters it can’t make because there’s no valid development agreement.
“This isn’t about SoFi and what’s already been built,” said Louis “Skip” Miller, the city’s attorney. “It’s about public funds being paid to a private party going forward — for which the law requires a valid agreement.”
The legal battle actually started last spring, when Inglewood had the temerity to sign a contract to put up ad boards (the city calls them ad kiosks, Kroenke calls them billboards, this is apparently a key legal distinction) on the roads around the Rams stadium — something that Kroenke’s lawyers said would allow for “ambush marketing” by advertising to the same fans who Kroenke is offering in-stadium advertisers exclusive sponsorship rights to. The notion that fan eyeballs belong to the team from the moment their owners get in their cars until they arrive at the game is a novel twist on the Casino Night Fallacy, but as it turned out, it wouldn’t be tested in court: Judge Maurice Leiter ruled last August against granting an injunction to block the billboard contract on the grounds that Kroenke (and Clippers owner Steve Ballmer, who also sued over the ad signage) couldn’t show irreparable harm, then also (per Bloomberg, at least, the chain of rulings is a little confusing) ruled that the whole development agreement barring billboards near the stadium is unenforceable because it was “improperly enacted.”
We are now deep in the legal weeds, but what it looks like happened is this: Back in 2015, when the Rams’ move from St. Louis to Inglewood was first being negotiated, Kroenke chose to get the stadium development agreement adopted via a voter initiative, rather than being negotiated with the city — though the initiative never ended up voted on after the city council preempted it by approving the agreement themselves. Unfortunately for Kroenke, a state appeals court ruled in 2018 that development agreements are the sole purview of local legislative bodies, and can’t be approved by ballot initiative (though they can be modified by ballot referendum, which is a different thing in California). So once Inglewood Mayor James Butts realized that this could apply to the Rams deal, he informed Kroenke that sorry, Inglewood wasn’t bound by the 2015 agreement, the courts say so.
Kroenke then pivoted to suing over the infrastructure and public service costs — originally $100 million, now $376 million, no explanation given — that he said Inglewood had promised to reimburse him for once the stadium generated $25 million a year in tax revenue. Again unfortunately for Kroenke, that reimbursement was also promised in the development agreement, and Butts now says the appeals court ruling means the DA is “void,” so no payments will be forthcoming.
If all this sounds like Butts is trying to take advantage of a legal loophole to get out of paying Kroenke tax money, that seems like a correct interpretation — especially since the city council ended up approving the initiative, not voters. (Disclaimer: I am not a lawyer by any stretch of the imagination.) For his own part, Kroenke also may be trying to get away with something by inflating his costs from $100 million to $376 million. After much searching, I finally found an archived copy of the development agreement, but it doesn’t appear to spell out how “public infrastructure and improvement costs” are to be calculated, nor impose any obvious prohibitions on billboards.
The two lessons here: Even “privately funded” stadium deals can end up costing public money, and you never really know the full public cost until all the court paperwork has settled. No matter how this works out for Inglewood, those are important things for officials in other cities to remember as they negotiate their own deals.
Kroenke doesn’t appear to have much leverage here. It’s much easier to move your team than it is to move your stadium.
Wait it says “a state appeals court ruled in 2018 that development agreements are the sole purview of local legislative bodies, and can’t be approved by ballot initiative” so if it was approved by Council and not a referendum why is it void?
Right, that was my question as well.
I can’t find the quote, but when National Car Rental Field naming rights announced at $158 million over 20 years, Jerry the Jones said that wouldn’t buy a lobby in LA.
Guess it’s not enough for “infrastructure” either.
Good ole Stan Kroenke. Just wait until he threatens to move the Rams to the Rose Bowl of this.
The Rams can always move.
This is a really interesting one, absent all the usual crap that is thrown up around the main issue.
Impossible to know without seeing the actual details (and all of the details pertinent), but it seems to me the city cannot both have been blindsided by the agreement and also have signed off on it.
There is little doubt that development agreements are the sole scope of the municipal authority and the parties to the agreement. It is not clear why Mr. Kroenke either did not seek or did not receive one. Nor is it clear why he would spend tens or hundreds of millions on infrastructure that he expected would be reimbursed based on a “promise”.
Trust in Allah, but tie your camel as the saying goes.
If he had an agreement on cost sharing surely it should be in writing and have been written/agreed by lawyers for both parties?
Kroenke may yet prevail on this one… but, seriously, who spends $5bn on a development but skips the development agreement?
Hilarious. Finally a politician got over on a sports owner. What a rare occurrence. Kroenke thought Butts would simply capitulate since you know he’s Stan Kroenke. Didn’t happen so now he goes the legal route.