Tuesday, October 13, 2009

Connecting the dots

Had a conversation at lunch with a friend who read my blog earlier in the day. He felt there was a missing link in the argument that I should clear up. If Kroenke is in the pole position for ownership of the Rams, how does this connect with Ed Roski's field of dreams in Industry?

Oh this is the most facinating question (in sports business) currently on the table for consideration. We have scuttlebutt, and scuttlebutt only, but it is highly logical scuttlebutt. The logic goes like this:
  1. St. Louis is not a growing city. It is a shrinking city. It's economic base is shrinking. Its population is shrinking. People say that the ghetto covers more and more of St. Louis every year. Many are expressing their doubts as to whether St. Louis can be considered a viable NFL city both now and in the future.
  2. Many other cities, particularly Cincinnati, are in the same boat. Around the center of our country, we have a collection dying Midwestern towns that were formerly flagship destinations in the U.S. These are the towns in which the NFL has established camps back in the 1930s through 1960s. Many financial analysts have forecast an unprecedented period upheaval and movement as teams like the Bengals, Jags, Bills, and perhaps the Vikings begin looking for better markets to play in. Do you recall that moment in time when a bunch of NHL teams suddenly packed their bags and moved south? Do you remember the Quebec Nordiques?
  3. Other teams in other dwindling cities are not for sale. The Rams are. The Rams new owner is going to have to figure out some way to payoff the sizable debt he will incur by purchasing a minimum of $550 million in stock. We do not expect any billionaire to produce this sum as cash out of pocket. There will be financing in this purchase, probably from Goldman Sachs. This will not be easy to do in a dying city.
  4. The specific rumor is the Kroenke is well aware of all this, and it is already in his plan. He has cut a deal with Ed Roski which is absolutely confidential. It is confidential for several reasons. It is confidential because any announcement of this deal would destroy the Rams next several years in St. Louis. This would produce terrible financial repercussion for the new owner, at a time when he needs to pay down debt, and prepare for a move. It is confidential because Kroenke is not yet the majority owner of the Rams. The deal could still fall through, no matter how unlikely that is.
  5. Further rumors say that Kroenke will temporarily take 100% ownership of the Rams, and never comment on questions regarding a move to Los Angeles... At least for the next two years. Shortly before the Rams break their lease, something between 33% and 40% of the Rams' stock will be sold to Mr. Edward Roski Jr. Roski will then become the minority owner of the Rams. The Rams will then break their lease on the Edward Jones Dome and head to Industry California.
  6. It took the Cowboys 3 years and 8 months from ground breaking to grand opening to get Dallas Cowboy stadium ready. They broke ground on 9/30/2005 and opened for business on 5/27/2009. This is the Taj Mahal of football. It cost $1.8 billion to build. The facility planned for Industry California is not nearly so glorious. Cut a billion off that price tag. We're talking about a much more modest open-air stadium. Let's presume that the Roski needs 2.5 to 3 years to get the stadium ready.
  7. This would mean that the facility could be ready for the 2012 season. Yep, right on schedule. That is when the Rams can break their lease on the Edward Jones Dome.
  8. This would also make Los Angeles an NFL city just about the right time for Los Angeles to put in a bid for Super Bowl 50.
Yep, it all sounds like a plan coming together. How about that?

The one huge point of inference, rumor, innuendo, and speculation is the connection point between Roski and Kroenke. Some say the two are rivals, competing for ownership of the Rams. Many others think this is not the case at all. Rather, the two are partnering to get the job done.

Next time, we shall discuss the possibility that Los Angeles might windup with 2, not just 1 NFL franchise. Surprise! It ain't the Jags, and it ain't the Vikings, and it ain't the Raiders either. Rather they say it is the Bengals.