[Elvis]

https://theathletic.com/1814617/2020/05 ... ed_article

Rams seeking to borrow up to $500 million more from NFL for stadium

By Daniel Kaplan

The Los Angeles Rams have requested up to $500 million in additional NFL stadium financing, and a doubling of the amount of time typically required to pay the money back, sources said. That would bring to as much as $900 million the club arranged to borrow from the league for SoFi Stadium.

The Rams’ planned shared venue with the L.A. Chargers is scheduled to open this summer, though whether it can do so in the midst of the pandemic is unclear. And if it does, the teams almost certainly will not play in front of fans, depriving the Rams of much-needed cash to pay down debt.

“There’s a massive request for debt waivers and additional G-4 from those in LA,” said one team source, referring to the NFL stadium lending program, known as G-4. “And they’re asking to pay that over 30 years as opposed to 15 years.”

The Rams deferred to the NFL, which declined to comment. The request is on the agenda for next week’s virtual owners meeting, a source said.

There are three issues driving the Rams’ request: cost overruns, less than expected personal seat license sales, and the prospect of a gut punch to gate revenue this fall.

When in January 2016 owners voted to approve the St. Louis Rams’ Inglewood, Calif. proposal, the price tag was then $2.2 billion (the Chargers a year later would trigger an option to share the venue). But the cost of the stadium, which includes a retail and entertainment district, rapidly escalated in part because of pricey earthquake mitigation measures. Reports have now pegged the cost at anywhere from $5 billion to $6 billion.

In 2018, the league agreed to waive its restrictive team debt limits, and allow the Rams to borrow $2.2 billion, in addition to a $400 million loan from the G-4 program. Half that G-4 loan belongs to the Chargers, so it is possible the new up to $500 million request is split with the Chargers as well. To borrow more money would require another NFL debt waiver.

As part of Rams’ owner Stan Kroenke’s 2016 deal with the NFL, if the Chargers joined him in the stadium, they would contribute their PSL sales to the capital cost. But Kroenke remained on the hook for any cost overruns, and if the Chargers’ PSL sales fell short, it essentially became the Rams’ problem.

Why did he agree to this?

In 2016, the San Diego Chargers had jointly proposed moving with the Oakland Raiders to Carson, Calif., pitting that project against Kroenke’s Inglewood one. On the first round of voting that day in Houston 2016, the Rams came within a handful of owner ballots of the three-quarters threshold necessary. But to get Kroenke over the finish line, he had to agree to welcome the Chargers (or the Raiders if the Chargers stayed in San Diego). And as part of this agreement, the new team’s capital contribution would be the G-4 share and their PSL sales. The Chargers took that deal, but their PSL sales are under the goals, sources said.

“The PSL numbers are dramatically under what was projected,” one source said. “I mean, all those things, a lot of teams would take what the Rams have sold, but they (too) are well under pro forma numbers.”

The Chargers said in a statement: “Sales were trending positively towards our goal as we turned the calendar and approached the new league year, but the pandemic has had a quieting effect on what is traditionally the biggest sales period of the year — the lead-up to the NFL Draft through the schedule release. Due to the positive momentum, however, created by our free agent signings, draft picks and uniform unveil, we are still seeing significant fan interest in season tickets and continue to onboard new Season Ticket Members”

The Rams and Chargers jointly expected to sell $850 million of PSLs, a contract that gives a fan the right to buy tickets to a particular seat. Instead, the source said they are collectively considerably south of this level, with the Rams the majority of the amount raised. Because the Rams essentially shoulder any Chargers’ shortfall, the sources expect the Rams’ request to glide through next week.

“That’s obviously one of the big reasons that they’re upset, you know, them being the Rams,” one source said. “It’s gonna be really fascinating to see. Obviously, I assume they’ll get approval for it as Roger (Goodell, the NFL commissioner) is pushing for it.”

The Rams’ debt request comes as the NFL is moving to increase the borrowing limit for all its teams. Owners will vote next week on a proposal to increase the amount each team can borrow from $350 million to $500 million because clubs are looking at a dramatic drop in revenues if games are played without fans.

League-wide national revenues make up between on average 70 percent and 80 percent of proceeds for teams. But for some higher-revenue clubs, for example, the Dallas Cowboys, it is closer to 60-40 national to local if not closer.

One team source said his club’s back-of-the-envelope estimate is if all local revenues were removed, it would be the equivalent of $65 million of the nearly $200 million salary cap. Teams are hoping if there are no fans they can salvage some local sponsorship money and are lobbying the league to allow sponsor signs at field level. Currently, only NFL national sponsor signs are visible, so the move would allow local team deals to get visibility.

The NFL does not have a labor provision to correct the imbalance in 2020 other than new talks with the NFLPA. However, the NFL salary cap is structured so it is set in part on the previous year’s local revenues (national revenues are contracted long term). So the NFL cap, if it does not come down this year, would in 2021 no matter if there is a return to normalcy.

The Rams are scheduled to open their season at home on Sept. 13 in a Sunday Night Football tilt against the Cowboys. California Gov. Gavin Newsom, however, has expressed deep skepticism about large gatherings commencing by then, and even recently suggested playing without fans could be a problem.

“It’s difficult to imagine a stadium that’s filled until we have immunity, until we have a vaccine,” Newsom said. “Imagine what the leagues do when one or two of their key personnel or players are tested positive. Do they quarantine the rest of the team? If an offensive lineman is practicing with a defensive lineman, and they tested positive, what happens to the rest of the line? What happens for the game coming up the next weekend? It’s inconceivable to me that that’s not a likely scenario, so it’s a very challenging question.”

[Elvis]

One interesting side note to this is the salary cap could be substantially lower for 2021. How would that work?

[St. Loser Fan]

It will be interesting if anything comes out about how bad the Chargers PSL sales are. I'm talking raw, hard numbers.

Plus, would anyone bring up the question Goodell doesn't want asked: could this $500 million be better spent 120 miles down the road?

[CanuckRightWinger]

Kroenke's original budgeted $2.2 Billion for construction costs went to north of $5 Billion??!!!

Sheesh!!!!

Sorry, but that's not just merely "poor project management" there....

In my best aeneas1...
"MAMMA MIA!!!"

[St. Loser Fan]

It probably wouldn't be a good idea to give the Rams & Chargers $500 million when there's an open lawsuit in St. Louis. Let's not forget that the NFL recoiled in horror at the thought of loaning an extra $100 million to try and keep the Rams.

http://www.stltoday.com/news/local/govt ... 56ad8.html

Goodell: $300 million for St. Louis stadium 'fundamentally inconsistent' with NFL policy

David Hunn

ST. LOUIS • The Board of Aldermen is poised to approve on Friday a financing package for a $1.1 billion stadium that counts on an extra $100 million from the National Football League.

But on Thursday, NFL officials wanted to make sure no one was taking league money for granted.

In a sternly worded letter to Gov. Jay Nixon and his stadium task force, NFL Commissioner Roger Goodell warned that the league has no current plans to provide $300 million toward construction of a riverfront stadium here.

The NFL provides a maximum of $200 million to help teams build new stadiums, Goodell wrote. The premise that the league has committed $300 million to the Mississippi River proposal “is fundamentally inconsistent with the NFL’s program of stadium financing,” he said.

The letter comes at a critical moment. St. Louis aldermen are set to meet at 3 p.m. Friday to vote on the latest version of the city’s financing package — a deal that changed at the last minute to give up city tax revenue in exchange for an extra $100 million from the NFL.

It’s unclear if Goodell’s letter will affect that vote. Aldermen could amend the bill, introduce a floor substitute at Friday’s meeting, and — should it pass — schedule another special session for next week, in time to meet the league’s Dec. 30 proposal deadline.

They could let the bill, and the region’s hopes of keeping the St. Louis Rams, die. Without a new stadium here, NFL owners would have far less reason to block Rams owner Stan Kroenke’s efforts to move to Los Angeles.

Or they could do nothing.

“We are not changing this bill,” said downtown Alderman Jack Coatar late Thursday afternoon. “We are passing the bill as is tomorrow. We have the votes and we're moving forward.”

Moreover, Coatar said, Goodell’s letter isn’t particularly surprising. “Everybody that's been working on this deal knows that these funding sources are not guaranteed,” he said. “This is the city's proposal. This is what we're willing to spend.”

I still think this is all Spanos and the Chargers and the Rams are providing cover. Stan has the assets and liquidity to drop $500 million without breaking a sweat. But this is an extreme situation that never been seen before so the NFL could repeatedly state that over and over if they do float the money.

[aeneas1]

gotta pay gurley somehow i guess...

[Elvis]

I know Kroenke has some deep pockets but this has got to suck. I'm sure he's more than ready for his investment to start generating some cash.

Article indicates the league is likely to approve and the Rams can't be the only team hurting because of the pandemic.

And like i already said, gonna be nuts if the cap goes down substantially for 2021 because they had a season without fans. Gotta figure they'll adjust for that somehow, then again maybe not...

[St. Loser Fan]

Article indicates the league is likely to approve and the Rams can't be the only team hurting because of the pandemic.

The Jaguars need to be able to prove 3 consecutive years of financial losses to escape Jacksonville. They could use the pandemic to cover that.

[aeneas1]

Reports have now pegged the cost at anywhere from $5 billion to $6 billion.

"reports have now"? say what? back in 2018 it was reported that the project would hit $5 billion, this is nothing new... also, we're of course talking about more than a stadium here, we're talking about one of the largest mixed-use developments that l.a. has ever seen, that will include office space, retail space, additional entertainment venues, etc., etc.

Rams stadium cost shoots up to nearly $5 billion
By Jesse Reed - March 27, 2018
https://sportsnaut.com/2018/03/rams-sta ... 5-billion/

[Elvis]