Jerry Jones thought he could win them over. Now 77, the
Dallas Cowboys' owner and Hall of Famer is the NFL's most powerful person and maybe the most influential power broker in American sports. He has been the most passionate evangelist for the NFL to make a splashy return to Los Angeles, the city where he was born, envisioning a near-future with more money in it for everybody. In 2015, the Rams' Inglewood project, then estimated to cost $1.86 billion, was competing against a Chargers-Raiders $1.8 billion option in Carson.
Few outside the NFL knew it, but Jones positioned himself to profit from either proposal. Concessions for either project -- and the construction, in the case of Inglewood -- would be managed by Legends, the company co-owned by Jones and the Steinbrenner family. The competition between the proposals was bloody and toxic given the high stakes, pitting owners against one another. Ultimately, Jones sided with Kroenke because his stadium and project proposal had what Jones called the wow factor. "We had good insight on its vision,"
Jacksonville Jaguars owner Shad Khan says. "It was spectacular."
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Many owners sympathized with Spanos, but some were also frustrated by him. The league's $550 million relocation fee that Spanos would need to spend to move to L.A. might have been better invested in a new stadium in San Diego, where the Chargers would collect most of the revenue. Why move to a city that showed little interest in them? "It wasn't rational," a high-level league source says.
But Spanos had his own rationale, frustrated by years of wars with San Diego officials over public financing for a new stadium. The league-first guy was gone. He was determined to do what was best for his club and for his family, several of whom worked for the team, and in L.A. he saw "a favorable, low-risk deal," a Spanos confidant says. In L.A., the value of Spanos' team might increase by $1 billion from the Forbes-estimated $2.08 billion value it had in San Diego in 2016. He'd play in a glistening new park, with no stadium debt. His biggest expense would be the $550 million relocation fee, and Spanos intended to borrow to pay it.
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After the Irving league meeting, brass from the Chargers and Rams met with league executives and lawyers for a series of negotiations to finalize the term sheet, whose broad stipulations were set by owners and league executives the night before the secret relocation vote. Spanos and Kroenke, both of whom declined to comment for this story, had enjoyed a strange relationship, both cool and occasionally friendly, once playing gin rummy together on a private jet a decade ago. But the term-sheet sessions were awkward and "the body language horrible," according to one attendee. Spanos and his executives surprised Rams officials by drawing a hard line, demanding a cut of all revenue streams, input over design elements, and approval over all decisions made by Legends and by StadCo L.A. LLC, the stadium company controlled by Kroenke. Rams officials tried to be cordial, but they seethed. The way they saw it, Spanos had the entire Southern California market to himself for 21 seasons with little to show for it, but now he felt entitled to a chunk of revenue on a project to which he would contribute one dollar a year. Says one high-level executive involved in the negotiations: "The Rams felt like Stan was taking all this risk and would appreciate it if Dean would recognize what he was bringing to the table."
Spanos was keenly aware of the imbalance, but he also knew the league, a trade association at heart, would ensure him a share of stadium cashflow enjoyed by other teams.
The Chargers ended up with a sizable 15% share of all revenue streams, including joint luxury suite sales, sponsorships and SoFi Stadium's naming rights, which is estimated at more than $600 million over 20 years.
Spanos also won a major concession on the most divisive issue: stadium seat licenses, the tens of thousands of dollars NFL teams often charge for the right to buy season tickets. All the revenue from both teams' sale of SSLs would go to Kroenke to help defray the cost of the stadium.
But per the term sheet, the Chargers neither had to meet a revenue target nor even sell a single SSL. All the Chargers had to do was try to sell the SSLs, at whatever cost they determined, until one year after the stadium opened, after which they wouldn't even have to try to sell any.
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In March 2018, the Rams and Chargers launched their SSL programs for the new stadium. It was harder than expected for the Rams and couldn't have gone worse for the Chargers. Most teams hire at least a dozen staffers to handle SSL sales for a new stadium, in addition to hiring a company like Legends. The Chargers, which outsourced most of the work to Legends, were flying blind in L.A., with no analytics department or sophisticated method of reaching fans. The Rams had a huge head start; they had sold 70,000 season tickets for the 2016 season in the Coliseum in six hours. All the Chargers had was "a couple of email addresses" of potential ticket holders, in the words of a team executive, and a slogan -- "Fight for L.A.!" -- that sounded less like a rallying cry and more like a schoolyard challenge to their future landlord, which did not go unnoticed by Rams executives, who mocked the slogan. The Chargers spent $3 million marketing "Fight for L.A.!" -- including $2.3 million on Facebook ads that didn't move the needle.
That fall, Chargers executives reviewed a bracing study that was available only to a handful of teams, league and Legends executives. It confirmed what some around the league had predicted all along: There was practically no market for Chargers season tickets, no matter the price. Legends officials later told league executives and those from other teams that it was the worst feasibility forecast they'd ever seen. In 2018, the Chargers were in the middle of a season in which they would finish 12-4 but rank 30th in revenue, one spot down from their final year in San Diego, owing largely to the small stadium. The team had sold only $60 million worth of SSLs, far behind the league's $400 million goal. "The projections were made before anyone had a clue," one Chargers executive says. "They were completely unrealistic."
Spanos and Chargers COO Jeanne Bonk then made a controversial decision. They slashed prices for 26,000 upper deck seats, lowering tickets to the $50 to $90 range, and dropped the SSL rate to $100 -- up to 15 times less than the Rams were charging for the same seats. The Chargers' reduced prices were higher than options suggested by Legends, which included the idea of abandoning the SSLs altogether. But for a bottom-line league, it was an unmissable flare that L.A. might never be a two-team NFL town.
The Rams got a heads-up one day before the Chargers' fire sale was announced
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Chargers executives were convinced the Rams were lashing out because stadium construction was billions over budget. In the eyes of Chargers brass, the Rams had every right to be angry. But blowing up at Legends was tricky for the Rams because Jones had delivered the L.A. vote -- and Kroenke and Jones have become pals, a power clique of two. Still, Legends had never managed a project so massive -- and it had "gone off the rails," a source close to Legends says.
It began in 2016, when the Rams realized that both initial estimates -- $1.86 billion in early 2015, which rose to $2.4 billion by late 2015 -- had been poorly calculated. Vendor costs ballooned because of competition with LAX's $14 billion renovation. The infrastructure was unexpectedly pricey, with a massive retaining wall required 100 feet below grade for the field. A record amount of rain in early 2017 complicated matters even more, filling the hole of the field with up to 15 feet of water that needed to be drained and costing the Rams 40 work days. And so the Rams announced in May of that year that completion would be delayed until 2020. In March 2018, the project had hit a cost of $5 billion, but the price continues to go up. StadCo officials now refer to it to owners and executives around the league as "our $6 billion stadium," although some executives insist it won't be that high. All the construction complexities have turned SoFi Stadium into "the eighth wonder of the world," Khan says. "It's amazing how much earth has been moved."
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AT A HOTEL bar last spring in Key Biscayne, a few owners and executives discussed a lawsuit that had not only failed to fade away, like most inevitable litigation following a team's relocation, but had mushroomed into a leaguewide headache, shoving the L.A. mess into each owner's email server and threatening everyone's bottom line. A group that included the city of St. Louis, the surrounding county and the Regional Convention and Sports Complex Authority were suing the NFL, claiming in a 52-page state court complaint that Rams officials and league executives violated the league's own relocation bylaws by failing to negotiate with the city in good faith, among other issues. The suit argued that the Rams induced the city to spend more than $17 million on plans for a new stadium that the team never intended to consider because Kroenke had planned long earlier to move to L.A. The complaint alleged breach of contract, unjust enrichment, fraudulent misrepresentation and business interference. The city is seeking billions in damages.
The NFL publicly dismissed the case as baseless and privately saw it as retribution from a city angry at Kroenke, whose departure forever destroyed his relationship with his home state.
In his 2016 relocation application, Kroenke had written a scathing indictment of St. Louis both as a football city and as an economic engine, ignoring the loud and loyal crowds during the Greatest Show on Turf. But so far, the St. Louis plaintiffs have quietly won every court motion and decision, including a devastating defeat in the Eastern District of the Missouri State Court of Appeals, in a St. Louis courthouse, on June 12, 2018. The Rams' lawyer, Andrew Kassof, argued for the lawsuit to be sent to arbitration, corporate America's venue of choice. Kassof's argument hinged on what he saw as a clear and simple technicality: The NFL relocation policy was moot because the Rams had the right to relocate whenever they wanted, due to their year-to-year lease in St. Louis' then-Edward Jones Dome. The lease had expired in 2016, Kassof argued, so the Rams were free to leave.
Judge Philip Hess sounded suspicious. "Do the Rams have the ability to move without the NFL's approval?" he said.
"No," Kassof said. "They need the NFL's approval, and ..."
Hess cut him off. "Isn't that what this is about? The relocation policy of the NFL?"
It was a stunning moment in a nearly empty courtroom. Hess' question had forced Kassof to undermine his own case. Christopher Bauman, representing the plaintiffs, seized on it, winning the argument and keeping the case out of arbitration. Last month, the Rams petitioned the U.S. Supreme Court to issue a stay, but the high court has yet to rule.
Teams have been forced to provide eight years of phone records and emails for discovery -- and had to hire legal teams and data experts to sift through them. Kroenke has had to foot all the legal bills for the teams and league, part of an indemnification agreement the league presented to the Rams, Chargers and Raiders on the morning of the L.A. vote. The legal bills have reached eight figures for some teams.
St. Louis is now seeking each owner's cut of the Rams' and Chargers' $550 million relocation fees -- about $35.5 million per -- as restitution, infuriating owners. Over the past year, the league has dedicated a full hour at owners meetings to debating the merits of "Hard Knocks" but hasn't formally addressed the St. Louis case in depth, irritating some owners even more. The lawsuit has even reopened old wounds from the relocation process. Discovery turned up a damning email from a Carson project official outlining to St. Louis authorities all the ways the Rams seemed to be in violation of the league's relocation policy, providing a blueprint for the city of St. Louis' lawsuit. The email enraged league and Rams executives and undermined Spanos' reputation as the consummate company man, even though he didn't write it. "The perception was that Dean always put the league first and Stan was only out for himself," a team executive says. "Neither was ever completely true."
