Thursday, October 26, 2006

NFL heading to Canada, not to Los Angeles

Who would have imagined there will be a National Football League game played in Canada, Germany, England and Mexico before there will be a game played in Los Angeles? Tuesday, the NFL announced that starting with the 2007 season the NFL will play as many as two games in Canada, Mexico, Germany or England. While Canada isn’t a part of the NFL’s plans for 2007, it’s a near certainty a regular season game will be played in Toronto, Montreal or Vancouver during the 2008 season. The 2007 games are expected to be played in Berlin and London.

As for Los Angeles, NFL team owners attending a Board of Governors meeting in New Orleans, finally admitted what had been obvious to anyone who understood the NFL’s future in Los Angeles – there isn’t a future.

Two years ago while Paul Tagliabue was commissioner, league owners where told it would cost around $500 million to renovate either the Rose Bowl of the Los Angeles Coliseum. Two years later those plans are out the door, if the NFL heads backs to Los Angeles where an NFL hasn’t been played since the 1995 season, NFL owners were told the cost of a new stadium will top $1 billion.

"I don't think at this meeting anybody was prepared to pay that for a Los Angeles stadium," New Orleans Saints owner Tom Benson, chairman of the league's finance committee told The Los Angeles Times. "I don't know if somebody else is out there who's willing to come into the NFL and do that or not. At this moment, I think it's on the back burner."

"I don't know if somebody else is out there that's willing to come in and do that, or not," New Orleans Saints owner Tom Benson told The Los Angeles Daily News. "(But) I think there's something to that. I'm cautiously optimistic that somebody - we've tried working with government and local people - that maybe now an entrepreneur will come out."

Denver Broncos owner Pat Bowlen agreed, adding in the Los Angeles Times report: "We've got a lot of other things going on. I think Los Angeles is on our radar screen, but we're not concentrating on it right now."

"There's no doubt about it," Jerry Jones told The Los Angeles Daily News. "You don't have the passion, the proprietary feeling because the people making this decision (the other owners) aren't going to be the home team there.

"They're going to be playing there, and we've got a lot of passion for what we can do in Los Angeles, but there's another level that you want to go to, and that's when you get the people that are going to be responsible for making the franchise successful. They need to be in this picture, in my mind."

The NFL’s about face concerning Los Angeles may have come as a surprise to those who drank the Fool-Aid the NFL has been serving for the last ten years concerning placing a tam in Los Angeles.

As early as 1996, then NFL commissioner Paul Tagliabue addressing the media at his Super Bowl press conference made it clear Los Angeles was very much in the picture when it came to NFL expansion.

''I've said several times already we have to take a hard look at expansion to deal among other things with Cleveland and Los Angeles,'' Tagliabue said, emphasizing he doesn't consider moving current franchises to those cities as an acceptable option.

''Our first goal, and one I think we made a lot of progress on, is team stability. We solved very difficult problems in the last 12 months in Tampa and Cincinnati and Detroit and we made a considerable amount of progress in Seattle. We accomplished our goals in Cleveland under the agreement we struck early last year.

''Hopefully, we can accomplish the two goals together: team stability, no more moves, and teams in Cleveland and Los Angeles.

''Earlier this week, Mayor Thomas White announced all the goals have been met, that the Browns will be in a new stadium on the lake front playing as the Browns in Cleveland in 1999. That plus the LA situation requires us to look at expansion.''

The NFL awarded an expansion franchise to Al Lerner in September 1998. Lerner paid $540 million. That left the NFL with 31 franchises. Historically the NFL doesn’t like to have an odd number of franchises. While the league has continued bye weekends for teams (initially created when the Cleveland Browns returned to the league in 2000), the NFL wants every team to play the first few and last few weekends of each years’ NFL schedule.

After awarding Cleveland the league’s 31st franchise, the league made it clear it wanted to award their 32nd franchise to Los Angeles. The NFL considered the Coliseum in 1998 and stadium projects in Hollywood Park and Carson. After then California Governor Gray Davis opted not to deploy $150 million in taxpayer money to build new parking garages, suggesting taxpayers had more important priorities, the NFL’s plans to expand to Los Angeles began to fall by the way side. The NFL’s Los Angeles stadium suggestions died on September 15, 1999.

Former Disney president Michael Ovitz and the grocery chain executive Ron Burkle emerged as the leading candidates interested in owning an NFL team using land around Hollywood Park. Six weeks later Ovitz and Burkle were on the outside looking in, as was billionaire Marvin Davis who didn’t believe he could make it work.

It was only then; the NFL began to seriously consider Bob McNair. McNair was ready to pay an expansion fee and had a $310 million stadium plan in place for Houston. He was ready, Los Angeles wasn’t.

''We should give Houston the team, and look forward to another day in Los Angeles,’’ the late Robert Tisch, the co-owner of the Giants and a member of the league's finance committee told The New York Times on September 29, 1999.

Greg Aiello, a league spokesman, told The Times only expansion would be discussed at a meeting the following week in Atlanta. ''We're looking at the possibility of expanding by a 32nd team,'' he said. ''But long term, we'd like to be in both cities.''

The NFL awarded their 32nd franchise to Bob McNair for a then record expansion fee of $700 million the following week at meetings in Atlanta. At the dawn of a new century, the NFL accepted that America’s most important entertainment center would be without an NFL franchise for the foreseeable future.

Not a great deal happened, until ten months ago, when now retired NFL commissioner Paul Tagliabue met with California Governor Arnold Schwarzenegger in November 2005. The two focused their discussions on being able to bring an NFL expansion plan to NFL owners in March.

At his last Super Bowl press conference on February 3, Tagliabue addressed where the league was as far as expanding back to Los Angeles.

“I think we're making the kind of progress that I anticipated in November when I was out there to meet with the mayor and the governor. At that time I said we were looking to have two clear-cut alternatives, focused on the Coliseum and Anaheim to bring to our membership at the March meeting and I think we're on track to do that. As to which one is in the lead, I think is something we'll be talking about at our March meeting,” Tagliabue answered that day as part of his state of the NFL question and answer period.

On March 28 NFL staff offered the league’s 32 owners a 30 minute presentation regarding two potential locations for an NFL Los Angeles expansion franchise, a new stadium beside the Coliseum and a new stadium in Anaheim, located near Angels Stadium. Each facility would cost more then $800 million to build.

"My guess is that we will be going forward with those presentations on behalf of the Coliseum and Anaheim so that we can make some decisions in Denver," Tagliabue told The Los Angeles Times, referring to the league's spring meetings May 21 to 24.

Asked what those decisions would entail, Tagliabue said, "To select one of the stadium projects and to go forward with the process of identifying a team and building a stadium."

Tagliabue led the 11-member Los Angeles Stadium Working Group to California for a series of meetings in early May. The end result – the league announced they would invest $10 million in feasibility studies for both ($5 million for each) interested location.

"I do believe the sooner we do it, the better," said the New England Patriots' owner, Robert K. Kraft, a member of the 11-member Los Angeles Stadium Working Group in a New York Times report a week before the NFL’s May meetings. "We all realize this is important for our future. In the end, we need to have a team there."

Steve Tisch, the Giants' chairman and executive vice president and a member of the Los Angeles working group, told The New York Times, "We think it is important to have a team in Los Angeles, but the conditions have to be right, the economics have to work, and the business community has to be strongly involved."

As for interest in Los Angeles, it was lukewarm at best, when the New York Times spoke to several Los Angeles based business people to gauge the level of interest.

"It's not a mandatory part of the culture here, like it is in other places where it's the dominant part of civic pride," said Kevin Roderick, a lifelong Angeleno and the editor of LAObserved, a Web site about life in Los Angeles. "You have an entire generation of kids growing up without football."

Of the new team, Roderick added: "They just better win. They better have a charismatic person on the team, a Kobe or Shaq or a Sandy Koufax, who can be the face of the team."

"It's like your wife left and 12 years later you say, 'I don't care,' " Jack McGrath, a Los Angeles based public relations executive told the New York Times. "We're getting along quite well without them. What are you going to do, keep crying? They left.”

"But that gets rekindled again. If you know you have a stadium and you know you'll have a team, you'll start getting pretty excited."

Ten days later the NFL moving at a snail’s pace ‘tabled’ any definitive plans to expand to Los Angeles. The owners met on May 23, and quickly realized putting a team back in Los Angeles was a political and economic minefield. A stadium had to be built. An expansion fee had to be paid. And whoever owned the team had to have the capital to operate the franchise. If you take a moment to consider all of the financial obligations the owner of an NFL franchise could be expected to secure, it easily tops $2 billion, an impossible financial number for anyone to seriously consider.

"The L.A. thing is hard to get your hands around," Dallas Cowboys owner Jerry Jones said in a Los Angeles Times report. "We don't have an owner. We don't have a team. We've got some leadership that we haven't had before. We've got a L.A. market that's better than it's been the last seven years. We got viability out there."

"Every constituent involved has to be willing to overdo here and be willing to have an area where you don't have the answers," Jones said. "That's why I use the example of buying the Cowboys. When I bought them, I did not have all the answers. I thought I had all the answers. I thought I had a way to keep from going broke, but I wasn't sure. I don't know an owner who has come into this league knowing he's is going to come into this league thinking he's going to make money owning a football team."

"We are looking at an investment of multiple hundreds of millions of dollars and a partnership that hopefully will extend over most of the next century. The emphasis is to do it right and do it thoroughly and not set deadlines that turn out to be meaningless," Tagliabue told The Orange County Register.

"We need to be a lot more reliant on something called value engineering, and to understand what are the best ways of monitoring stadium construction costs," Tagliabue said. "We've got to work really hard on the costs. There is not money to be wasted there. I think the committee and I emphasized to the membership that we have to be looking in the analysis of each of the new stadiums to be looking for two teams."

Eight weeks into his tenure as NFL commissioner Roger Goodell is saddled with a very difficult challenge. Goodell made it clear he’s well aware every day the NFL hasn’t found anyone interested in building a stadium that could cost close to a billion dollars, and paying an expansion fee that will be close to a billion dollars as well.

"If you delay it, it would be a significant increase," Goodell told the Los Angeles Times. "When you're talking about billion-dollar projects, a 10% increase is pretty significant."

"We haven't been successful to date on the approach that we've taken," he said. "We do believe we've made some progress. But circumstances may change where we take a different approach to go forward."

What exactly that approach is going to be either Goodell doesn’t know, or he isn’t saying what his plan(s) may be. If the NFL is serious about putting an expansion franchise in the second biggest market in the United States, the NFL had better gain a better understanding of California politics. The options the NFL faces in Los Angeles are few:

Allow Tom Benson to move the New Orleans Saints to Los Angeles. Benson could then either agree to play his games in the Los Angeles Coliseum or at the Rose Bowl. Neither stadium offers any of the amenities needed to make an NFL franchise work economically. However that would be Tom Benson’s problem and not the NFL’s. The NFL would have a franchise back in Los Angeles and as long as Goodell makes it clear to Benson the ‘lay of the land’ in Southern California he would be free to move at his risk.

Allow the San Diego Chargers to move to Los Angeles (same as above). The bottom line, permit any franchise seriously interested in moving to Los Angeles to move the team. The bottom line NFL owners have held cities hostages since the Rams left Los Angeles for St. Louis in 1995 and the Raiders played musical cities and went back to Oakland the same year. It’s insulting to common decency to believe a current NFL franchise is going to move to Los Angeles without a taxpayer built stadium – and that is never going to take place.

On the off chance Tom Benson (Saints owner), Alex Spanos (Chargers owner) or Zygi Wilf (Vikings owner) move their team(s) to Los Angeles, the NFL will be able to expand to New Orleans, San Diego or Minneapolis. Each city has an NFL ready stadium or enough local political support to finance a shared public/private stadium. It would be addition by subtraction.

Assuming (and it’s a pretty good bet) every NFL owners realizes they can’t move to Los Angeles and play in antiquated facilities, the league can expand to Los Angeles, but as Goodell suggests under a different business model, one that take courage and conviction. The NFL expands to Los Angeles, agrees to cover the cost of a stadium and charges an expansion fee of $1.2 billion. The NFL builds the stadium in the belief having a team in the second biggest American market is important to the evolution of the business of the NFL and needs to be very creative in moving forward with a workable solution.

"The one comment you hear is it's got to be the right deal for everybody," said John Mara, co-owner of the New York Giants, who is working on a cooperative $1-billion-plus stadium deal with the New York Jets in a Los Angeles Times report. "For whatever reason, we haven't been able to get to that point yet.

"I'm worried about building my own billion-dollar stadium right now. I have another team helping me with it, and I know how difficult that is. At some point, I think everybody in the room would like to have a team in Los Angeles. Whether it will happen or not, I don't know."

Cowboys’ owner Jerry Jones a member of the 11-owner Los Angeles Stadium Working Group made it clear he believes the NFL needs to find an owner for an expansion NFL franchise and then make it incumbent upon the owner to determine where his team will play.

"I have always felt you're missing a very critical ingredient when you don't start with a team and ownership group," Jones told The Orange County Register. Does Jerry Jones or any rationale business person really believe anyone in their right mind would consider a plan that could cost as much as $2 billion to put an NFL franchise back in Los Angeles? When you get to the heart of the issue, not even Jones believes the NFL has a future in Los Angeles.

"There's a point where it doesn't work," Jones said. "You're just sticking your neck out too far."

The Lords of the Pigskin know what must do. They need to have courage, conviction and a sense of purpose. They need to be visionaries. With the average NFL valued at more than $800 million, a business that guarantees franchises $106 million annually in television revenues, already shares 83 percent of all of their revenues, the Lords of the Pigskin know what has to be done; now will see if they’re capable of doing it.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Los Angeles Times, The Los Angeles Daily News and The Orange County Register

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