New Ram Owners Want to Do What's Right ..

[MauiRam]

owners want to do what's right
By Bernie Miklasz
ST. LOUIS POST-DISPATCH
05/22/2008

Sports Columnist Bernie Miklasz

If the Rams and the NFL were pieces of a movie plot, Chip Rosenbloom would utilize his talents as a screenwriter, producer and director and script a happy ending. And as the credits roll, the St. Louis audience would stand in applause.

But this isn't a movie.

This is reality.

There are no heroes or villains, either. Just two sincere people — Chip and his sister, Lucia Rodriguez — who are struggling to do the right thing for everybody, including the fans of St. Louis.

I had the chance to speak with Rosenbloom about the brush fire of rumors of a possible Rams sale. He was trying to make it to his young daughter's soccer party but had to experience another lesson on what it's like to be an NFL owner.

Privacy and family time are compromised, and it's the price he'll have to pay for being the Rams' managing partner. Does he need it? Does he really want it? Rosenbloom has a fulfilling life in Los Angeles, with his wife and two children and a burgeoning film career. There will be many more Rams-sale rumors to deal with, and a bunch of other headaches. And Rosenbloom must determine if it's all worth it.

Rosenbloom didn't want to be quoted, but after our conversation, the situation seems clearer to me. So I'll share what I think I know based on our discussion:


— Are the Rams for sale? Answer: no — and yes.

Chip and Lucia aren't seeking a buyer. Rosenbloom stressed that repeatedly. Nothing has changed, he insisted. Ideally, they'd like to hang on to the Rams for a long time, in part to honor their late mother, Georgia Frontiere. Chip isn't in any hurry to sell, but tax-related issues related to their mother's estate are complicated, and selling the Rams may be the one sure way of settling everything.

If a credible figure expresses interest in buying this team, Frontiere's children will listen. And if that potential buyer is an excellent fit, they'll be inclined to sell. But Rosenbloom and Rodriguez want to be careful. If they sell, they want to place the Rams in good hands. There is no timetable, but this franchise will eventually be sold. I have said that all along; I just think it will occur further on down the road.

— But what about Rosenbloom's pledge of allegiance to St. Louis? Was that a flagrant example of a phony sports owner telling the locals what they wanted to hear? Answer: no.

Rosenbloom has never said he wouldn't sell. He feels a strong connection with St. Louis, because of the support given to his mother, and because of the family's NFL history. But again, it isn't that simple, because of the taxes owed. And as Rosenbloom indicated: Suppose an impressive buyer surfaces? Other than shooting down speculation that he'd move the team to LA one day, Rosenbloom won't make promises. He'd be foolish to box himself in. Why make a guarantee that he can't keep?


— OK, so what are Chip and Lucia looking for in a potential owner? Answer: They would like a St. Louis-based buyer to emerge. They want someone who cares deeply about this community, someone who can network the politicians and the corporate bosses, navigate through stadium issues and keep the franchise in St. Louis.


— So who is the perfect St. Louis owner? Answer: nowhere to be found, at least up to now. Take a look around; it's pathetic. The Blues are operated by Dave Checketts (based in New York and Utah). The Cardinals are owned by Bill DeWitt (primarily based in Cincinnati). The Rams are owned by LA residents. This may be a passionate sports town at the fans' level, but at the ownership level, this town is woefully lacking in commitment. Where is the leadership? Will anyone step up?


— What about Stan Kroenke? Answer: Kroenke, who has 40 percent of the Rams, has built a sports empire in Denver, and his friends say he's reluctant to sell those Denver teams to satisfy NFL rules prohibiting cross ownership. And nothing suggests the rule will be waived to accommodate Kroenke.


— Is there a larger issue in play? Answer: yes. It doesn't matter who owns the Rams; an impasse over the condition of the Edward Jones Dome could jeopardize the franchise's long-term future in St. Louis. According to the Rams' most recent agreement with the CVC, the dome must rank among the top eight stadiums in the NFL by 2015. To put it mildly, that's a real long shot given the 20 new stadiums (by 2010) built in the NFL since the Dome opened in 1995. If the Edward Jones Dome doesn't meet the top 25 percent standard, the Rams have the right to leave after the 2014 season.

Options, however, appear to be limited. The NFL controls the LA market. And will the NFL really allow a team to set up shop in the gambling mecca of Las Vegas? So where are the available football markets?

That aside, there's a potential mess here.

Chip Rosenbloom will try his best to find that happy ending. He'll try to do it to honor the memory of his mother and father, and he'll try to do it for the St. Louis fans. But sooner or later, Chip and Lucia will also have to take care of their own interests.

[general counsel]

If he wants to do "whats right" he should have put his foot down and kept isaac bruce, especially in the context of the promise that ziggy made to him.

ramming speed to all

general counsel

[RealRam]

Originally Posted by General Counsel

If he wants to do "what's right" he should have put his foot down and kept Isaac Bruce, especially in the context of the promise that Ziggy made to him.

Ramming speed to all

General Counsel

You got that right, GC!

[Rambos]

Chip isn't in any hurry to sell, but tax-related issues related to their mother's estate are complicated, and selling the Rams may be the one sure way of settling everything.

They are for sale.

They would like a St. Louis-based buyer to emerge.

They are for sale.

Chip and Lucia will also have to take care of their own interests.

They are for sale.

[txramsfan]

San Antonio Rams......that has a really nice ring to it.

[HUbison]

Originally Posted by Rambos

They are for sale.



They are for sale.



They are for sale.

Oh yea, they're for sale, Rambos, you're right. But everything is for sale. I doubt they're rushing to get it done, but yea, they're for sale. I don't think anyone expected Chip & Lucia to own the team long-term, but I doubt they sell short-term either. However, their issue is going to be Uncle Sam. As I wrote back in January, prior to Georgia passing away....

Originally Posted by HUb, 1-18-08

Shaw and Zygmunt are here, because the owner basically handed operation of the team to Shaw. Once (God forbid) Georgia passes on, Shaw's last move with this franchise will be to broker a deal for Chip to sell to a new owner. I'm not an estate tax expert, but as best I can figure, Georgia's estate is looking at roughly $150M-$200M in taxes. The Rams equity (I assume) are the only marketable asset that could generate that kind of cash.

It's being reported now that the tax could be closer to $225M, so I lowballed a little, but the situation is the same. Kind of a raw deal for the kids (don't get me started on our tax code), but the law is the law and the estate will have to come up with those funds somewhere.

[BM_Face]

Originally Posted by MauiRam

Sports Columnist Bernie Miklasz

Rosenbloom didn't want to be quoted, but after our conversation, the situation seems clearer to me.

Chip and Lucia aren't seeking a buyer. Rosenbloom stressed that repeatedly.

Chip isn't in any hurry to sell, but tax-related issues related to their mother's estate are complicated, and selling the Rams may be the one sure way of settling everything.

If a credible figure expresses interest in buying this team, Frontiere's children will listen.

Rosenbloom has never said he wouldn't sell.

Most NFL owners will sit down with credible potential buyers, just to hear the numbers. The Rams are for sale to the right buyer, which is good. As long as Chip and Lucia have complicated tax-related issues, they are probably not going to be putting much money into the organization.

The Rams need aggresive ownership that has a bankroll to increase the value of the franchise. NFL owners are investors (usually), and doing "What's Right" means improving the value of their financial interests. In the NFL, that means spending 'outside the cap' to improve the fan experience and increase the teams chances onfield.

I am unsure how the NFL intends to deal with a lagging economy. Many fans are struggling to keep up with the rising price of energy and commodities, and some families may choose to cut home-game attendence from their budgets. I see fewer fans making road-trips to away-games if gas stays around $4 a gallon.

What is the market for an NFL team right now? How many investors will drop hundreds and hundreds of millions of dollars for the St. Louis Rams?

I think there is good news in one respect; the probability seems small that the Rams will be sold off to indifferent ownership. Yay. It looks like Chip and Lucia will hold on to Rams through the 2008 season in an attempt to improve the value of the franchise. A decent (or better) season will increase the selling price, while another mediocre season will hardly hurt.

Short term ownership concern: How pressing are the "complicated" "tax-related issues"? The IRS is usually pretty cool about understanding the complications involved in large estates so my guess is that the tax-concerns can be put off for a time.

Long term ownership concern: The Ed Jones Dome.

C'mon! GoRams!

[general counsel]

Your perspective stating that "The IRS is usually pretty cool about the tax related stuff" is fascinating to say the least. I dont know how much experience you have in dealing with the IRS in a business context, but i have plenty, and while i have heard the IRS described in many many ways, "Pretty cool about tax related stuff" has never been one of them.

The IRS is not patient and in this case why should they be? This is a rich person's problem. Every year that the estate tax is not paid, millions of dollars in interest and penalties will accrue and there is nothing cool about that. I guarantee you that the IRS will not be patient.

Bottom line is that this liquidity crunch was 100% foreseable. There are any number of things georgia could have done to deal with this situation while she was alive, but i agree that its a very safe bet to conclude that the ability to raise 200 or more million of cash would leave the estate with very limited options, especially in this financing market. Borrowing against the value of the team is probably the best shot that the kids have if they want to keep the team, but keep in mind that they dont own 100% and that adds additional financing issues.

The government is owed tax money, why should it wait just because the rosenblooms might want to hold onto the team? Would the government wait for its tax money because other people who arent worth hundreds of millions want to hold onto their belongings and not pay taxes?

ramming speed to all

general counsel

[HUbison]

Originally Posted by GC

There are any number of things georgia could have done to deal with this situation while she was alive

It's moot now, but that is what puzzles me. There are strict rules governing that type of transaction, but GF could have "sold" the franchise to the kids a few years ago and avoided the current estate tax bill. I'm sure there's all sorts of legal nuances that may have been the reason for lack of action, but on the surface it's truly puzzling.

[BIG-BLUE]

Originally Posted by HUbison

Oh yea, they're for sale, Rambos, you're right. But everything is for sale. I doubt they're rushing to get it done, but yea, they're for sale. I don't think anyone expected Chip & Lucia to own the team long-term, but I doubt they sell short-term either. However, their issue is going to be Uncle Sam. As I wrote back in January, prior to Georgia passing away.... It's being reported now that the tax could be closer to $225M, so I lowballed a little, but the situation is the same. Kind of a raw deal for the kids (don't get me started on our tax code), but the law is the law and the estate will have to come up with those funds somewhere.

Hub,

So you agree the Rams are for sale, so now it's just a debate of how soon. You state that we shouldn't expect the kids to hold on to the team long term, but you doubt they will sell short term either. Now short term & long term is all in ones opinion & I have a feeling this team will have new ownership in place by 2009 season. Just can't see Chip & Lucia holding on any longer than that, with all the estate debt piling up they will have to come up with the monies somewhere & it seems like the Rams are just a burden for Chip. Doing right by his mother means finding an ownership group that will keep the Rams strong in St.Louis, but as the clock ticks ever so close to that IRS debt being due the list of perspective buyers will grow.

[HUbison]

Originally Posted by BIG-BLUE

Hub,

So you agree the Rams are for sale, so now it's just a debate of how soon. You state that we shouldn't expect the kids to hold on to the team long term, but you doubt they will sell short term either. Now short term & long term is all in ones opinion & I have a feeling this team will have new ownership in place by 2009 season. Just can't see Chip & Lucia holding on any longer than that, with all the estate debt piling up they will have to come up with the monies somewhere & it seems like the Rams are just a burden for Chip. Doing right by his mother means finding an ownership group that will keep the Rams strong in St.Louis, but as the clock ticks ever so close to that IRS debt being due the list of perspective buyers will grow.

As I've said......everything is for sale. The question is just "how much".

As for timeline, I'll quantify my earlier statements. They're not in a rush. They're not going to sell on the first offer. So, I figure they own the team at least through the 2008 season. However, in the long-term, say by 2011, I doubt they own this franchise.

The gray area in between (2009-2010), who knows?

[txramsfan]

Let's just say that 30% of 800 million ONLY for the Rams, not necessarily the rest of the Estate, is a pretty hefty tax bill. I've never done an estate of that size and never will, but I know that the tax burden on that estate is a monster. I'm sure they have made contingencies for this, but even they don't have that much liquidity lying around.

Believe this also......having an understanding and the IRS go together about as well as hot sauce and ice cream.

[general counsel]

Furthermore, lets all not forget that georiga got the team in the first place in what was basically a tax avoidance scheme by carroll rosenbloom. His clear intention was for his son steve to "beneficially own" and run the team. He transferred the team before his death and paid tax at the time, rather than pay the massive estate taxes that might have led to a sale of the team outside the family.

In short, he trusted georgia to follow his wishes and she spit on his grave within months by firing his son. Thus, all the more reason that i dont care about her wishes or legacy now as for the tax problems of the estate. What goes around comes around.

ramming speed to all

general counsel

[BM_Face]

Originally Posted by general counsel

Your perspective stating that "The IRS is usually pretty cool about the tax related stuff" is fascinating to say the least. I dont know how much experience you have in dealing with the IRS in a business context, but i have plenty, and while i have heard the IRS described in many many ways, "Pretty cool about tax related stuff" has never been one of them.

The IRS is not patient and in this case why should they be? This is a rich person's problem. Every year that the estate tax is not paid, millions of dollars in interest and penalties will accrue and there is nothing cool about that.

The government is owed tax money, why should it wait just because the rosenblooms might want to hold onto the team? Would the government wait for its tax money because other people who arent worth hundreds of millions want to hold onto their belongings and not pay taxes?

ramming speed to all

general counsel

If you are going to "quote" me, please do not replace my words "understanding the complications involved in large estates" with "tax-related stuff".

In my experience, a person's opinion of the IRS is based on thier experiences; if they have had favorable dealings with them, things can be "pretty cool", if they have had unfavorable interactions, then their feelings may reflect that. For instance, a tax lawyer may treat the IRS as the enemy, and is unlikely to meet many people who have positive experiences with the IRS.

As a business owner, I always treated the IRS with respect. When they sent me a bill I paid it, even when I knew they were over-charging me(their mistake). When they once sent me a check (their mistake), I put it in a savings account and waited for a letter asking me to return the money. Each time I had a problem I called them to fix it.

I came to the realization that the IRS was just another vendor; a tax vendor in fact. It is all about the money(of course). If you owe, pay. If you cannot pay, let them know right away, and they will work with you if you send them something. That is the key, and yes it is "pretty cool".

Of course, Chip and Lucia are not only dealing with the IRS in a business context. There is an estate that needs to be settled, and that takes time. I never said or implied that the IRS could be put off forever.

Originally Posted by general counsel

I guarantee you that the IRS will not be patient.

Really? You guarantee it? J. Howard Marshall II died in 1995, and it was not until 2006 that the case reached the Supreme Court. For an estate valued at $1.6 Billion what do you think the IRS did for eleven years? They got in line with everyone else.