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LA Rams To Pay At Least $550m For Relocation As Team Value Doubles, St. Louis Lawsuit Rages On

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The after effects of the Rams’ move to LA are still filtering out...

The Los Angeles Stadium at Hollywood Park
The Los Angeles Stadium at Hollywood Park
Kirby Lee-USA TODAY Sports

When NFL Owners approved the relocation of the Rams back to Los Angeles from St. Louis, they set in motion a number of events.

Yes, the Rams themselves moved. But the approval also kicked into gear the relocation of the San Diego Chargers to LA as well as the Oakland Raiders to Las Vegas. The ramifications of those moves continue to play out with three major storylines this week.

Skyrocketing value

In St. Louis In 2015, the Rams were estimated by Forbes to be worth $775m that I will not link to because it’s the most annoying, worst-designed slideshow on the internet. Last year, that value doubled to $1.4b. Now? The franchise valuation has exploded as they are now the 12th-most valuable sports franchise on Earth worth $2.9b.

It’s worth remembering that Kroenke paid $80m for his initial 40% stake in the Rams in 1995. That 40% stake is now worth $1.16b, a net profit of $1.08b.

It’s not hard to understand why Kroenke wanted to move the team. The ridiculous amount of wealth he’s accumulated in the move alone, to say nothing of the expansive development in Inglewood, is staggering.

Pay day

Both the Rams and the Chargers will pay a relocation fee of $645m over the next decade on a 10-year loan to the other 30 teams. The fee is essentially an incentive against relocating, but also a way to disperse valuation increases throughout the league. As mentioned above just by moving the team, Kroenke essentially created more than $2b in value in his holdings. The 31 other owners were going to want some kind of payment to allow him to do so. It’s just how cartels work.

So the Chargers will reap the benefit of the Los Angeles market (their own valuation jumped 36% to cross the $2b mark) and the other 30 teams will get a $40m cash windfall (none of which will go to the players, FWIW).

The Raiders meanwhile will pay a lesser $378m fee over 10 years beginning when they move to Las Vegas.

Rams seek arbitration in suit in St. Louis

There was a minor development in the lawsuit filed by the city of St. Louis, St. Louis county, and the Regional Convention and Sports Complex Authority against the Rams this week.

The suit contends the Rams, and the NFL, broke the terms of their contracts by lying about relocation for years prior to the move and in doing so led those entities to spend capital that they otherwise wouldn’t have had the Rams not suggested they were staying in St. Louis.

The Rams moved this week to dismiss the case on two counts or to have the suit dealt with through arbitration instead of heard in front of a jury in St. Louis.

We’ll have to see if either of the two dismissal motions are upheld. If not, the call for arbitration could be interesting as it relies upon the terms of the lease the Rams signed in moving to St. Louis in 1995, a lease they terminated themselves.

It’s hardly the first shady move on behalf of Kroenke and the Rams since relocating. In March of last year as the Rams were out the door, they hit the 2016 free agency period trying to negotiate contracts as if they were remaining in St. Louis. The reason? worker’s compensation in California is much more pro-employee than in Missouri.

The suit will likely be the last avenue of closure for the St. Louis area. There is no timetable on a decision on the three motions.