NFL Los Angeles: Rams Riverfront Stadium Sacrifices County Funding To Keep Pace With California Project

The continued progress of St. Louis Rams owner Stan Kroenke’s initiative to build a new NFL stadium in Los Angeles County prompted Missouri Gov. Jay Nixon to take a calculated risk late last month in his bid to keep the franchise in its current market. When Nixon’s office removed St. Louis County executives from efforts to publicly fund a new riverfront stadium for the Rams, it gambled that the ensuing mad dash to replace the county’s proposed contribution was worth avoiding the delays and potential rejection associated with a public referendum.

Cutting St. Louis County Executive Steve Stenger out of the deal allowed Nixon’s office to keep pace in the race among the Rams, the Oakland Raiders and the San Diego Chargers to either secure new stadiums in their home markets or bolt to Los Angeles. It also left Missouri with a sizable hole in its efforts to finance the proposed riverfront stadium project -- and without a clear way to fill it.

“We already knew they were scrambling for money,” said Neil deMause, a freelance journalist and co-author of the 1999 book “Field of Schemes.” “Now they’re going to have to scramble even harder.”

Nixon appointed a two-person committee in November to draw up a plan for an NFL stadium that would entice Kroenke to keep the Rams in St. Louis. Kroenke has repeatedly threatened to relocate the franchise if state, county and city officials do not agree to either renovate the Edward Jones Dome or build an entirely new stadium.

Moreover, Kroenke and a group of private investors have backed a $1.86 billion, 80,000-seat stadium project in Los Angeles County that has already received unanimous approval from the Inglewood City Council and could start construction as soon as this year. NFL owners could decide as soon as May on whether to allow a team to relocate to Los Angeles, the St. Louis Post-Dispatch reports.

Despite being just 20 years old, the Edward Jones Dome was already considered obsolete, so Nixon’s committee turned its sights elsewhere. They produced a plan in January for a $985 million, 64,000-seat stadium overlooking the Mississippi River, complete with a combination of public and private funding to cover construction costs.

It was expected that the state of Missouri, St. Louis County and the city of St. Louis would strike a deal similar to the one put in place to pay for the Edward Jones Dome. That deal called for $12 million annually in taxes for the state in addition to $6 million each from the city and county to be paid toward stadium bonds that run through 2025. Nixon’s team suggested officials could extend payments on the bond debt for Edward Jones Dome to free up money in the short term to put toward the new stadium.

But St. Louis County officials, particularly Stenger, were unwilling to commit to the project without a public vote, as local laws require a referendum before city or county officials can contribute money toward a sports stadium. Rather than wait until the November election for St. Louis County to vote on the issue and lose precious months to Kroenke’s Los Angeles project, Nixon’s office opted to cut them out of the deal altogether. To stadium proponents, it was better to lose a source of public funding in the short term than to count on that support and not get it in the long term.

It was a difficult decision, but one that was necessary to keep pace with Kroenke’s Los Angeles stadium project, said Victor Matheson, a professor of economics at the College of the Holy Cross in Worcester, Massachusetts.

“If they have to wait around for the money from the county, they may very well be out of the time frame to keep the team in St. Louis,” Matheson said. “It’s harder to do it without that tax source, but it may be easier to do it quickly if you have one less cook in the kitchen.”

The riverfront stadium’s backers have been tight-lipped as to exactly how they plan to replace the county’s tax contribution, which would have amounted to one-fourth of the $400 million to $500 million in public money required to build the stadium. Without the county, deMause estimated there was a $12 million to $14 million gap between what the city of St. Louis and the state of Missouri can afford to pay per year and what will actually be required to pay off both the new stadium and the existing Edward Jones Dome debt. If state and city officials are unwilling or unable to pay more, the stadium committee will likely have to find another private financier.

“Without that source of [county] revenue, there probably isn’t another source that will make up that deficit,” said Henry Ordower, a professor at the Saint Louis University School of Law in Missouri.

But a couple of factors work in Missouri’s favor. NFL Commissioner Roger Goodell said in March he would prefer that the teams interested in a move to Los Angeles first exhaust all stadium options in their current markets, according to Sports Illustrated’s TheMMQB.com. The NFL requires a three-fourths vote among its 32 owners to approve relocations, and the owners hired Goodell.

Moreover, it’s unlikely that Kroenke would be willing to foot part of the bill for a $1.86 billion stadium in Los Angeles if he can secure hundreds of millions in public money in St. Louis. NFL owners have used the threat of a move to Los Angeles for decades to secure the best possible deal from taxpayers in their local markets.

For Kroenke to relocate, he’d have to be convinced he could turn a profit on one of the most expensive sports stadium projects in history. It would be a difficult, if not impossible, task, especially without a second NFL team to play in the arena. The Chargers and the Raiders have already agreed to jointly pursue their own stadium project in Carson, California, so Kroenke would have to race to find a partner within the league. Kroenke does not want a second team in his stadium, but the NFL views Los Angeles as a two-team market, according to the Los Angeles Times.

DeMause said that “$1.8 billion is still an insane amount of money to spend out of your own pocket and try to earn back in new revenues,” adding, “I don’t know anyone serious about sports economics who thinks that you can make money on a $1.8 billion stadium in LA or anywhere.”

Los Angeles is a more dynamic economic market than St. Louis, but it would also be expensive for Kroenke to get there. Aside from the hefty cost of construction, the NFL would charge Kroenke a relocation fee estimated at $250 million, according to John Vrooman, an economics professor at Vanderbilt University in Tennessee. NFL guidelines stipulate that relocation projects are ineligible for the league’s $200 million “G-4” stadium loan, which would be applied if the Rams stayed in St. Louis.

“It really all depends on what the numbers are that Kroenke has for the value of that LA market and whether it’s worth building a stadium there,” said deMause. “If he’s ready to move ahead with a stadium in Inglewood, I doubt that Missouri’s going to get a plan together in the next few months to compete with that.”