With this said, let's play the micro economic business management game. You are the new owner of the Rams. You just laid down $500 million of your personal wealth to purchase an NFL franchise in St. Louis. You acquired $429m additional in collateralized debt. You have acquired 100% of the stock from Dale, Lucia, and Stan. You are now the boss.
You are now mortgaged up to your eye-balls for $429 million, and you just blew all your dry investment powder. If you default, the Bank gets the team. You loose your $500 million down. Now what are you going to do?
Option 1: Keep the team in St. Louis and pay down the debt of $429 million as quickly as possible from team revenues. This means slowly. Try to get the city of St. Louis to make serious improvements in the Edward Jones Dome so that greater revenues might flow. Bleed your other business ventures for capital such that the debt can be repaid quickly.
Option 2: You see that you have the open option to move the team back to the 2nd largest market in North America, where they have a history. There you will have a new state-of-the-art convertible domed stadium in Industry California. This can all happen in 2014.
Now what are you going to do, my business manager? You make the call, knowing for certain that it's your financial ass on the line. How are you going to reduce debt, reduce risk, and optimize returns?
You know what you do? You do point #1 in the short run, and you execute point #2 in the middle of the night Jan 1, 2014. That's how you pay off the team and make it your solid asset.
You see, this is a pretty devastating question when it is phrased this simply. You know these are very rich men we are dealing with here. Most of them got that way for a reason. They are very shrewd money men. They think as serious managers would. This is the biggest single reason to fear, if you are the city of St. Louis.
There is one other factor to consider. Just about every billionaire in the billionaire's club took a haymaker to the chin in September of 2008. Just about all these guys sunk a lot of money in CDOs and MBS paper. They also held considerable stock in financials. All of these investments have gone to shit in the past 9 months. You should read the Forbes report on billionaires. Believe it or not, they are in a lot of trouble right now.
What does this mean to the Rams? It means the next guy to own the Rams is very likely to a fellow whose personal assets are hurting right now. Said billionaire has such a deep love for the sport that he just cannot resist the irrational temptation to buy this team, even despite the fact that he can ill-afford to do so right now.
Consider this my friends and fellow Ram fans.
