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Blackout ban may suggest L.A. mess close to solution

But do Chargers have money to relocate there?

Artist's rendering of proposed Inglewood stadium
Artist's rendering of proposed Inglewood stadium

National Football League owners and executives are huddling in Phoenix this week and Chargers fans are waiting for big announcements that probably won't come. The owners were given a thorough briefing on the team-relocation situation in Los Angeles, but it's doubtful there will be definitive word coming from this meeting.

However, team owners may have dropped a hint that the Los Angeles mess could be near a resolution. Next season, the league will end its blackout rule — the blacking out of home games on TV if they are not sold out 72 hours before kickoff. (Actually, teams themselves and companies have thwarted blackouts by buying up tickets.)

If some team or teams will be moving to Los Angeles, the league will not want a re-run of the experience when the Houston Oilers moved to Nashville in the 1990s.

In 1996, the Oilers played another season in Houston even though they had announced they were moving. Attendance was a disaster. In 1997, the team played in Memphis — another attendance disaster.

If the Chargers or Raiders announce a pending departure, then play another season, fans would not show up and the local TV audience would shrink. Or if either team played a season or two at another L.A. venue before going to a new stadium, something similar could happen. In theory, the NFL's ending of the blackout rule only applies to next season, but it could be extended.

If the owners are smart, they will be discussing (probably in private) the obvious bifurcation of NFL teams. Certain rich and populous locations are perfect for the NFL: the teams can rake in money from seat licenses, luxury seats, and suites, as well as fat TV markets.

Among the juicy markets: New York, L.A., Chicago, Dallas, Houston, Philadelphia, Washington D.C., Miami, Atlanta, Boston, San Francisco (including Silicon Valley), Minneapolis, and Seattle. Then there are markets that are medium-sized but not so financially flush: Phoenix, Detroit, San Diego, Tampa, St. Louis, Denver, Pittsburgh, Cincinnati, Cleveland, Kansas City, Indianapolis, Nashville, Jacksonville, New Orleans, Buffalo (ailing Oakland is considered part of the San Francisco market).

The game is changing: by and large, the big and rich markets get the fanciest stadiums — the kind that are out of the question in San Diego, with its huge infrastructure and pension deficits. The Chargers claim that Orange and Los Angeles counties represent 30 percent of the team's market; if that's true, an L.A. team — or two — would pull the rug from under the Chargers' market. You can see why the team so badly wants to relocate to L.A. The Chargers and Raiders came up with a goofy plan to combine their assets in a stadium in Carson. What assets? According to Forbes, the Spanos family is worth $1.25 billion and $1 billion of that represents the value of the Chargers. Oakland's Davis family is not even listed with Forbes's sports billionaires. Neither team can put significant cash into a Carson facility.

TV is increasingly the future of the NFL. But according to stationindex.com, San Diego is the 28th-largest TV market — even smaller than Sacramento-Stockton-Modesto, which is 20th, and Raleigh-Durham, which is 27th.

The Chargers' last hope would seem to be getting named the second team in Phil Kroenke's planned Inglewood stadium, which has its entitlements and is theoretically ready to go.

Kroenke, owner of the St. Louis Rams, will presumably move the team to Inglewood. He would make a lot of money if a second team played at his stadium, too, but he would charge a team heavily for the privilege — and that could eliminate the Chargers and Raiders. (On Monday, March 23, Raiders owner Mark Davis was asked if he could be happy if his team stayed in Oakland, and he replied, "Absolutely.")

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Artist's rendering of proposed Inglewood stadium
Artist's rendering of proposed Inglewood stadium

National Football League owners and executives are huddling in Phoenix this week and Chargers fans are waiting for big announcements that probably won't come. The owners were given a thorough briefing on the team-relocation situation in Los Angeles, but it's doubtful there will be definitive word coming from this meeting.

However, team owners may have dropped a hint that the Los Angeles mess could be near a resolution. Next season, the league will end its blackout rule — the blacking out of home games on TV if they are not sold out 72 hours before kickoff. (Actually, teams themselves and companies have thwarted blackouts by buying up tickets.)

If some team or teams will be moving to Los Angeles, the league will not want a re-run of the experience when the Houston Oilers moved to Nashville in the 1990s.

In 1996, the Oilers played another season in Houston even though they had announced they were moving. Attendance was a disaster. In 1997, the team played in Memphis — another attendance disaster.

If the Chargers or Raiders announce a pending departure, then play another season, fans would not show up and the local TV audience would shrink. Or if either team played a season or two at another L.A. venue before going to a new stadium, something similar could happen. In theory, the NFL's ending of the blackout rule only applies to next season, but it could be extended.

If the owners are smart, they will be discussing (probably in private) the obvious bifurcation of NFL teams. Certain rich and populous locations are perfect for the NFL: the teams can rake in money from seat licenses, luxury seats, and suites, as well as fat TV markets.

Among the juicy markets: New York, L.A., Chicago, Dallas, Houston, Philadelphia, Washington D.C., Miami, Atlanta, Boston, San Francisco (including Silicon Valley), Minneapolis, and Seattle. Then there are markets that are medium-sized but not so financially flush: Phoenix, Detroit, San Diego, Tampa, St. Louis, Denver, Pittsburgh, Cincinnati, Cleveland, Kansas City, Indianapolis, Nashville, Jacksonville, New Orleans, Buffalo (ailing Oakland is considered part of the San Francisco market).

The game is changing: by and large, the big and rich markets get the fanciest stadiums — the kind that are out of the question in San Diego, with its huge infrastructure and pension deficits. The Chargers claim that Orange and Los Angeles counties represent 30 percent of the team's market; if that's true, an L.A. team — or two — would pull the rug from under the Chargers' market. You can see why the team so badly wants to relocate to L.A. The Chargers and Raiders came up with a goofy plan to combine their assets in a stadium in Carson. What assets? According to Forbes, the Spanos family is worth $1.25 billion and $1 billion of that represents the value of the Chargers. Oakland's Davis family is not even listed with Forbes's sports billionaires. Neither team can put significant cash into a Carson facility.

TV is increasingly the future of the NFL. But according to stationindex.com, San Diego is the 28th-largest TV market — even smaller than Sacramento-Stockton-Modesto, which is 20th, and Raleigh-Durham, which is 27th.

The Chargers' last hope would seem to be getting named the second team in Phil Kroenke's planned Inglewood stadium, which has its entitlements and is theoretically ready to go.

Kroenke, owner of the St. Louis Rams, will presumably move the team to Inglewood. He would make a lot of money if a second team played at his stadium, too, but he would charge a team heavily for the privilege — and that could eliminate the Chargers and Raiders. (On Monday, March 23, Raiders owner Mark Davis was asked if he could be happy if his team stayed in Oakland, and he replied, "Absolutely.")

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Comments
14

Don: It's Stan Kroenke. Nobody's perfect.

March 24, 2015

aardvark: Yes, and I have written Stan Kroenke many times. Mea maxima culpa. Best, Don Bauder

March 24, 2015

Is Phil Kroenke related to Stan Kroenke? I don't believe that the fact that the NFL will end its blackout rule is really all that telling. After the FCC vote last October, it seemed a foregone conclusion that the NFL would do the same, which was what several owners had reportedly said. Out of 960 regular season games over the last 2 seasons, only 3 were blacked out. Since no owner may petition to move their team until after the upcoming season is over, that aspect seems to be mute.. I think more telling is this: http://www.latimes.com/sports/nfl/la-sp-nfl-meetings-20150324-story.html
The NFL wants back in Los Angeles. If Stan Kroenke wants to build a stadium there, it seems to be likely it will be built to eventually accommodate 2 2 teams. It also appears that if he wants to move the Rams back to Los Angeles, he can move the Rams back to Los Angeles. The NFL also seems to be saying, to San Diego specifically it seems, is that if you want to have the NFL, you better keep the Chargers because no one else is going to relocate their team there with 2 teams in Los Angeles. As of today, Spanos is worth $1.26 billion and the Chargers are $995 million of that valeu. The Spanos clan can't do anything on their own, so their best move, apart from getting the city of San Diego to build them a new stadium might be to rent rather than own.

March 24, 2015

danfogel: I agree that Kroenke is likely to have two teams playing in his stadium in Inglewood -- probably one from the NFC (Rams) and one from the AFC (but I question whether the Chargers or Raiders have the bucks to be the AFC team, unless the league makes a very fat loan at no interest rate and a long maturity.)

I also believe that, with two teams in L.A., the City would be throwing away money to build a stadium for the Chargers in San Diego. The Chargers are making very good money at Qualcomm; logically they should remain there. But such decisions are made emotionally, not logically. Best, Don Bauder

March 24, 2015

don bauder, The NFL won't be lending relocation money to ANY team that moves to Los Angeles. When the stadium construction support program was reinstituted in 2011 with the G-4 program, a specific requirement is that no team relocating receive funds. Roger Goodell is on record last year saying NFL would not participate financially by loaning stadium funds to any team relocating to Los Angeles.

March 24, 2015

danfogel: Never say never. There are numerous ways that rules can be evaded, especially in an institution such as the National Football League. But you may certainly be right. Best, Don Bauder

March 25, 2015

Personally, if Roger Goodell promised something, in writing, with his own blood, I MIGHT believe him. If there are only verbal words I'm sure he can spin his way out of them.

March 25, 2015

ImJustABill: Goodell is just one in a long line of NFL heads known for their double-talk. Best, Don Bauder

March 25, 2015

Don: The good money the Chargers are making apparently isn't good enough, as the Chargers continue to claim they need a new stadium to remain "competitive". And, of course, we all know being "competitive" in no way relates to wins and losses on the field.

March 24, 2015

aardvark: Correct. When the Chargers talk about being "competitive," they are talking about their own bottom line -- not the team's competitiveness. Best, Don Bauder

March 25, 2015

My guesses:

The Chargers and Rams will play in Inglewood by 2020. Now that so many teams have new stadia then there is more value in putting teams in LA. The NFL and it's owners will find a way to make it happen.

Regardless of the weak fan base in LA there is still a huge valuation premium to being in LA so it's in the Chargers' financial best interest to move to LA unless there is a pretty hefty corporate welfare check written to the Spanos family (e.g. 500M+ towards a new stadium)

March 25, 2015

ImJustABill: You may be right; the Chargers may play at Kroenke's Inglewood stadium by 2020. But like you, I wonder where the money will come from.

As I have said many times, the Spanos family is worth $1.25 billion and $1 billion of that represents the Chargers. There is another factor: possible inheritance taxes that could drain more away. Best, Don Bauder

March 25, 2015

My other guess:

"We can always move to London" will be the new "We can always move to LA" for NFL teams hoping for taxpayer freebies...

March 25, 2015

ImJustABill: Good point, but I am one who never believed that relocating to L.A. was an empty threat for teams wanting welfare in their home cities. To be sure, Tampa Bay was such a city. Several baseball teams, including the White Sox, talked about moving there. Finally, Tampa Bay got its own team.

But L.A. is just too juicy a potential market to be used for that purpose. Several journalists opined that L.A. was just being used as a ruse, but I didn't think so. Best, Don Bauder

March 25, 2015

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