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Thread: Cheer up. It could be far worse ..

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    MauiRam's Avatar
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    Cheer up. It could be far worse ..

    Bryan Burwell
    Friday, May 11, 2012 s

    The high cost of keeping the Rams in St. Louis is about to be presented for your viewing enjoyment. Let's hope St. Louis can stand the sticker shock.

    Better yet, let's hope there are enough intelligent people who can understand the difference between a bargain and a boondoggle. Part of that hope is that when on Monday, by a judge's decree, the city's Convention and Visitors Commission releases details of the Rams counteroffer on plans to upgrade the Edward Jones Dome to a "first-tier" NFL facility, the public isn't staggered so much by the price tag that people don't understand they actually might be getting a fairly decent deal.

    We're still a long way from the completion of haggling over the cost to fix the Dome, but by the time this goes through the full process, a $400 million price tag might look positively reasonable. That's pretty much the high end of what you ought to expect, according to the best intelligence I can come up with. And while it might seem crazy to think that a response to the CVC's $124 million offer to renovate the dome could jump up to as much as the $450 million asking price from the Rams counteroffer, based on the current state of NFL stadium high finance, whatever the Rams' counteroffer might be, it will be a lot more reasonable than the soaring price of building a new state-of-the-art stadium.

    Some of the details are already leaking out, such as the possibility that the Rams have listed a retractable roof as part of the 15 upgrades that should bring the Dome up to that elusive "first-tier" level required by the existing lease to keep the Rams from breaking the lease and moving out of town by 2015. According to sources who are familiar with the negotiations, the Rams simply gave the CVC a laundry list of upgrades to satisfy the organization's needs. It's no different than when you're building a house and you present the builder with a punch-out list after a final walk-through. You don't list how much it's going to cost, only that these are the things that need to be completed before you're willing to move in.

    Best guess on what the Rams' counteroffer will look like?

    Look to a bottom line of between $200 million and $450 million.

    Now before you fall off your chair and spit out your morning coffee, it's important to remember two significant things:

    1. According to the terms of the existing lease, the Rams are simply doing what their signed lease agreement allows them to do: ask for "top-tier" renovations to keep the franchise in St. Louis.

    2. Whatever the Rams are asking for, and whatever an arbitrator is likely to come up with as a compromise, will surely be a lot cheaper than a new stadium.

    Look no further than the new most recent NFL stadium deals for the San Francisco ***** and Minnesota Vikings. Both franchises are embarking on new stadium construction projects that will cost $1.2 billion and $975 million respectively. The ***** just broke ground on a new $1.2 billion stadium in Santa Clara, Calif., 40 miles south of their current San Francisco home of Candlestick Park. The team is footing $400 million of the cost, including a $200 million loan from the NFL's new G-4 loan policy to owners.

    In Minneapolis, the Vikings just received approval this week on a $975 million public-private project where ownership will pick up $477 million and the city and state will provide $498 million in financing. Ownership will also probably receive that G-4 $200 million from the league.

    Understanding the intricacies of the NFL's G-4 loan program also might provide a hint as to what neighborhood both sides will ultimately settle on when the negotiations are over. The G-4 program was set up by league owners as a way of helping to finance new stadium projects and renovation construction, too. What makes this G-4 loan so beneficial to an owner is the so-called "repayment" process, which makes the loan in essence more of a grant. Teams can repay the loan with revenues from club seat money they normally would have had to share with the league. They can also use "incremental regular ticket revenue," defined as the difference between ticket sales in the newly renovated stadium and average sales in the last three years of the old one.

    Under this G-4 program, if Rams owner Stan Kroenke contributes $150 million toward a public-private renovation project costing between $250 million and $400 million, he could receive a loan worth 50 percent of his total contribution, or $75 million. However, if the total cost of the renovation is between $400 million and $450 million and Kroenke is asked to contribute $200 million towards construction, the most he could receive from the G-4 program is $50 million.

    So based on those criteria, the best way for Kroenke to maximize the G-4 loan is if the final Dome proposal mandates that his share of the financial burden for renovation not exceed $150 million and that the total cost of the project costs between $200 million and $400 million.

    So, remember that whatever you see Monday is just part of the overall working plan for this deal. The Rams' negotiators have given the CVC the cold-blooded punch list to turn the Dome into that "top-tier" facility with all the bells and whistles. The true art of the deal will be for both sides to put a price tag on the upgrades that works for everyone.

    And the thing that works for everyone is making sure that the Rams stay right here. After seeing what it cost the good folks of Minneapolis to keep the Vikings, suddenly $400 million doesn't sound so bad.


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    laram0's Avatar
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    Re: Cheer up. It could be far worse ..

    Renovation vs building a new state of the art facility sure sounds like a bargain. It's a lot of zeros no matter how you slice it!

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    Re: Cheer up. It could be far worse ..

    I don't know how many people feel the way I do but, I really don't care about the stadium issue.

    Let me clarify that... I care about the outcome, but I couldn't care less about the details during the process.

    I get that the St. Louis media will focus on this issue as it develops. For me, its a non-issue until someone tells me that I have to go someplace other than Broadway near Laclede's Landing to watch a home game.
    THOLTFAN81 likes this.

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    berg8309's Avatar
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    Re: Cheer up. It could be far worse ..

    The cost of new stadiums is ridiculous, and far out-stretches their usefulness. I love football, but spending one billion for a stadium that will be used 10 times and a year and be "old" within 15-20 years is ridiculous. Of course even major renovations will only last so long. If they do agree, I hope the agreement comes with a lease extension. I wouldn't was to spend a few hundred million of tax payer money only to have the rams turn around in 5 years and say the lease is almost up, what else do we get now.

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