NFL deal allows Kroenke to recoup part of St. Louis payments

If you’re a little disappointed with the matchups in the NFL TV marquee windows in Week 7, blame an unfortunate streak of bye weeks. The Bills and Vikings (both 5-1), Rams (reigning Super Bowl champions) and undefeated Eagles are all absent in Week 7.

Rams owner Stan Kroenke will be able to recoup nearly half of his tab for St. Louis settlement from the rest of the league under details of the deal approved Tuesday, sources said. These previously undisclosed terms mean that the rest of the league will ultimately assume more than double what it initially appeared.

The total involved is about $820 million: $790 million for St. Louis, plus an additional $30 million in interest and attorney fees. Kroenke has to pay around $600 million, with the other 31 owners having already paid around $220 million.

Kroenke’s roughly $600 million obligation is split into two tranches: $320 million due to the league in March and an additional $283 million due in five years. Here’s the important part: The Rams will be able to recoup this second game over 30 years by keeping SoFi Stadium ticket revenue that they would normally have to share — in the same way teams can already fund stadium upgrades.

This solution means that Kroenke’s liability is greatly reduced while still not requiring the other 31 teams to cut checks. The initial $220 million payout from the Others came in the form of $7 million per team deductions from the domestic revenue distribution this year. Their share of Kroenke’s sizable return on investment will be felt in incremental reductions to future SoFi Gate revenue distributions.

Jaguars owner Shad Khan told me he didn’t like the deal very much, but he voted for it, as did his 31 colleagues. “That’s right,” Khan said. “And I’m delighted to have him behind us. It’s an ideal solution — nobody likes it.

While many owners still thought Kroenke should pay in full, the deal reflects some acknowledgment of his arguments:

  1. SoFi Stadium makes them all richer and wouldn’t exist without Kroenke’s personal financial outlay.
  2. Missteps by the league office and some other teams increased the cost of the settlement with St. Louis.

Because the Rams are effectively taking an advance on future funding from the league’s G4 stadium funding program, Kroenke will not be eligible for league assistance for SoFi upgrades during the term of this arrangement.

The big market has been much easier due to the financial strength of the NFL, which is even stronger than it looks due to its ability to take on more debt in a crisis. While an unexpected $790 million settlement was not without consequence, the league’s low leverage and new media revenue stream gave them good options for a painless compromise, sources said.

Another part of the deal was a waiver for Kroenke to exceed the club’s usual $500 million debt limit to fund his share. Historically, the NFL has been conservative with club finances, limiting leverage to levels well below what banks would be willing to lend. While extraordinary debt waivers have already been issued to fund the construction of SoFi, there is still room to grow. One source speculated that the Rams, a big-market team in a state-of-the-art stadium, could easily get six times the debt limit at good rates.

Last December, Fitch Ratings, which rates NFL debt A or A+, calculated the debt ratio for NFL clubs at 1.8x – that’s less than 3.2x for the NBA and 2.4x for MLB (a lower number means you have more revenue secured by each dollar of debt). Even if Kroenke and the Rams borrowed every penny of their share of the St. Louis settlement, the Rams’ figure would be 3.9x, said Harry Flynn, head of sports at Fitch Ratings. It would be lowered in future years due to growing media revenues.

Al Michaels says Dan Snyder is no longer welcome in the NFL ownership fraternity. Then Jim Irsay said much, much more. And then Roger Goodell said he wasn’t disappointed with Irsay’s remarks (although he also said “speculation is not beneficial”).

All of this makes it tempting to say that Snyder’s departure from the NFL is only a matter of time — but that would be wrong.

My sources believe it’s still too early to say for sure how this ends, mainly because we don’t know exactly what facts will emerge from investigations by Mary Jo White, Congress, or a number of attorneys general. Snyder has given no public indication that he plans to go on his own. While many others fundamentally agree with Irsay, their reading of how cost-benefit of going to war can be very different.

As Goodell said, “We’ll see what the results of the next survey are and we’ll go from there.”

  • While certain inevitable legal and political maneuvers remain, the Titans could inaugurate a new stadium “as early as the fall of 2023 and be complete by the 2026 NFL season”, notes the Tennessean.
  • The Marchand & Ourand Sports Media podcast this week looked at Amazon’s Black Friday NFL game and where the NFL Sunday Ticket talks stand. Check out the full episode here.
  • Bills-Chiefs in the national Sunday window drew 25.4 million viewers on CBS, marking the NFL’s third-best game this season to date and CBS’ best Week 6 viewership in 15 years. SBJ’s Austin Karp broke down the rest of the Week 6 issues here.

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