How the LA Rams Could Win the Super Bowl And Still Be $6 Billion In Debt

Basically every new professional stadium and athletic franchise is now a real estate development with a loss leading team attached. JL

The Hustle reports:

The team privately financed SoFi Stadium, the most expensive stadium in history, for ~$5.5B. And in 2020 the Rams had an operating income of ~$37m, 0.7% of the cost of the stadium. Owner Stan Kroenke pitched the Rams relocation and SoFi Stadium as part of a redevelopment of Hollywood Park, (which) is 3x the size of Disneyland and features 500k square feet of retail, 2.5k homes, and commercial office space. The Rams are “the loss leader that put (Kroenke) in control of developing the biggest swatch of undeveloped land inside a major metropolitan area in 50 years.”

The Rams, who play in and host Sunday’s Super Bowl, owe a boatload of money for moving to Los Angeles.

The team privately financed SoFi Stadium, the most expensive stadium in history, for ~$5.5B. And in 2020 the Rams had an operating income of ~$37m, per Forbes. That’s 0.7% of the cost of the stadium.

How did this move ever make sense?

Because football didn’t bring the Rams to California

Owner Stan Kroenke pitched the Rams relocation and SoFi Stadium as part of a massive redevelopment of Hollywood Park, located in the Los Angeles suburb Inglewood.

Hollywood Park, 3x the size of Disneyland, features ~500k square feet of retail, 2.5k homes, and commercial office space.

Inglewood politicians wanted a revived Hollywood Park. And Kroenke wanted the land.

As for the football team?

Stanford economics professor emeritus Roger Noll tells The Hustle to think of the whole thing as a deal on tomatoes at Safeway:

• Kroenke is the Safeway
• Inglewood is the Safeway customers
• The Rams are tomatoes being sold at less than cost

“The Rams facility is the tomatoes in the Safeway ad,” Noll says, “the loss leader that put (Kroenke) in control of developing the biggest swatch of undeveloped land inside a major metropolitan area in 50 years.”

The Rams are just a component of Kroenke’s LA empire

The team makes good money, but his real bounty comes from the entire SoFi Stadium/Hollywood Park development. Kroenke cashes in off:

• Offices, apartments, and retail he owns and leases
• Concerts, festivals, film shoots, and huge events like this year’s Super Bowl and potentially the 2026 World Cup

Meanwhile, economic benefits have not trickled down to Inglewood’s middle-class residents. Many have been displaced by skyrocketing rents.

SoFi may represent the future of sports

Many cities no longer want to subsidize the cost of NFL stadiums.

So Noll expects more owners to go the Kroenke route: move to the exurbs, develop apartments and retail, and build a planned community around a stadium that pays for the stadium.

Game of Homes: Washington University in St. Louis sports business professor Patrick Rishe tells The Hustle “a lot of professional sports ownership these days has become partly about being a real estate mogul.”