January 12, 2016 / 8:19 PM / 2 years ago

NFL poised for L.A. move after 20 years of hard bargaining with cities

Dec 24, 2015; Oakland, CA, USA; Spectators hold signs reading "Stay in Oakland" and "Stay in San Diego" in reference to the San Diego Chargers and the Oakland Raiders proposed move to Los Angeles during an NFL football game at O.co Coliseum. Mandatory Credit: Kirby Lee-USA TODAY Sports

SAN FRANCISCO (Reuters) - With resistance mounting to public financing of sport stadiums, the National Football League this week aims to follow through on two decades of threats to relocate franchises to Los Angeles.

League approval - expected in an owners vote soon - would send a blunt message to mid-sized cities wanting a team: $400 million won’t cut it.

That’s what St. Louis offered as its share of a new stadium for the Rams, only to be dismissed by the league and team owner Stan Kroenke. The Chargers shunned San Diego’s proposed $350 million.

Both teams, along with the Oakland Raiders, have applied for relocation to L.A. An NFL committee recommended a proposal for a stadium in Carson that is supported by the Chargers and Raiders, the league said Tuesday.

But the issue still requires approval of at least 24 of the 32 owners in a final vote. News reports indicate different owners are lobbying for various scenarios, including the Rams and Chargers playing together in either the Carson stadium or an Inglewood venue proposed by the Rams.

Los Angeles, because of its standing as one of the nation’s largest media markets, is among only a handful of cities able to draw the interest of teams without big subsidies.

But the expected vote of owners, meeting this week in Houston, could illustrate the league’s determination to retain the upper hand with smaller cities in future negotiations for subsidized stadiums that now regularly cost more than $1 billion.

The last of many teams to flirt with a move to Los Angeles - the Vikings - used the leverage to extract $500 million from Minnesota taxpayers in 2012. The league appears determined to hold that line, said Andrew Zimbalist, a Smith College sports economist.

“They are certainly not going to go down” and take $400 million from Missouri, said Zimbalist. “They don’t want the world to see there’s a trend that it’s getting cheaper for cities.”

Two of the teams once moved the other way. Both the Raiders and Rams left Los Angeles – for Oakland and St. Louis, respectively – in 1995 after failing to convince local officials to pay for new or renovated stadiums in Southern California.  

Despite the region’s continued resistance to subsidies, today’s NFL economics provide unique opportunities for rich profits in the nation’s second-biggest market. Boosted revenue from Super Bowls, luxury boxes, and sponsorships, for instance, could eclipse any taxpayer-financed dowry from a much smaller city.

With taxpayers and politicians in many cities refusing to pay – or at least to pay as much as NFL owners want – actually moving to Los Angeles may now be a better business than threatening to move there.

The NFL views the current stadiums in each of three cities “inadequate and unsatisfactory,” and their proposals were insufficient to ensure the retention of their teams, NFL Commissioner Roger Goodell wrote in a report to all 32 teams.

The Rams and the Raiders did not respond to requests for comment. The Chargers provided details of a 14-year effort to remain in San Diego. The NFL did not immediately respond to a request for comment.

Outside of the nation’s largest media markets – such as Los Angeles, New York, and Silicon Valley – the NFL and its teams expect cities to pay the lion’s share for stadiums, Zimbalist said, with the league and the team kicking in no more than $200 million each. 

STARK REVERSAL

Cities are increasingly pushing back. Since 2008, in the midst of recession, public money funding has on average paid for 27 percent of the cost of new stadiums in all professional sports, according to a study by Victor Matheson, an economics professor at College of the Holy Cross in Massachusetts. 

That’s a stark reversal from an average of 74 percent over the previous two decades, although the cost of the facilities has risen dramatically.

The recession changed the politics of stadium subsidies, at least in the short term, Matheson said.

“You saw real issues with taxpayers piling money into stadiums for billionaire owners while simultaneously laying off teachers, firefighters, and police officers,” he said.

Most sports economists agree that professional sports teams offer little economic benefit to their cities - especially compared with large corporate employers - and that stadium costs are often greater than expected and advertised.

Judith Grant Long, a sports management professor at the University of Michigan, found an additional $10 billion of unreported costs among publicly financed sports stadiums in 2010, bumping the average public cost per venue to $259 million from $170 million.

The typical costs for lavish new football stadiums – the most expensive of any major league sport – have skyrocketed. The two current proposals for new stadiums near Los Angeles top $1.75 billion.

The proposed St. Louis stadium, on the riverfront near the Arch, would cost $1.1 billion. The city’s plan called for the league to contribute $300 million, but the NFL warned that any request over $200 million was “fundamentally inconsistent” with its stadium financing policy.

St. Louis may still see interest in its plan for a new stadium even if the Rams leave for Los Angeles. An empty St. Louis could attract interest from other teams, such as the Raiders, which are unlikely to get a new stadium paid for by Oakland.

“In many ways, St. Louis is a better open market than Los Angeles,” said Mitchell Nathanson, a sports law professor at Villanova University School of Law. “I think it’s going to be much easier to get big offers that are pleasing to the NFL clubs.”

St. Louis Alderman Jack Coatar, a supporter of the new stadium proposal, said the plan would revitalize a blighted area of the city’s riverfront.

“We could clean up this area, and put 3,000 people to work,” he said. “We’ve lost an NFL team before. We don’t want to lose another one.”

The stadium plan was written to keep St. Louis an NFL city even if the Rams leave, said Coatar, leaving the door open for another team.

But in a city where rampant poverty bleeds into jailhouses and schoolhouses, others can’t rationalize giving taxpayer money to wealthy owners of a private entertainment enterprise.

“Why fund this thing that we know will run in the red, that will never turn a profit?” asked Scott Ogilvie, a St. Louis alderman who opposed the city’s stadium proposal. “We had the highest murder rate in the country .... We have a lot of important infrastructure and other things to provide over a football stadium that is used eight or 10 times a year.”

Reporting by Robin Respaut; Editing by Brian Thevenot

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