NFL and Rams reach $790 million settlement in St. Louis relocation case

Dallas Cowboys owner Jerry Jones, left, with Los Angeles Rams owner Stan Kronke prior to a NFL playoff football game at the Los Angeles Memorial Coliseum on Saturday, January 12, 2018 in Los Angeles, California.
Keith Birmingham | MediaNews Group | Getty Images

The National Football League and Los Angeles Rams owner Stan Kroenke reached a settlement with officials in St. Louis for $790 million, the city announced on Wednesday.

The settlement stems from a lawsuit from the Rams’ relocation to Los Angeles in 2016. The city, St. Louis County and the Regional Convention and Sports Complex Authority sued the NFL and the Rams in 2017. They claimed the league did not honor its own relocation policy and hold good faith negotiations to prevent the Rams’ relocation from St. Louis.

“This historic agreement closes a long chapter for our region, securing hundreds of millions of dollars for our communities while avoiding the uncertainty of the trial and appellate process,” said St. Louis Mayor Tishaura Jones and, county executive Sam Page, in a joint statement. “The City, County, and STLRSA are still determining how settlement funds will be allocated.”

“The NFL and the city of St. Louis, St. Louis County and the St. Louis Regional Convention and Sports Complex Authority have been able to fully resolve the dispute,” added NFL spokesperson Brian McCarthy. “We appreciate the effort by all parties to reach a settlement and thank Judge Jack Garvey for his service as mediator.”

The settlement also comes just before a trial set for January. Earlier this month, the NFL and Rams lost their effort to have the case tried elsewhere in Missouri instead of the team’s former home of St. Louis.

The defendants in the lawsuit are Rams owner Kroenke Sports & Entertainment, the other 31 professional football teams, and their owners. The suit sought at least $1 billion in damages. 

The St. Louis Post-Dispatch first reported the settlement.

The NFL also risked sensitive documents about NFL owners’ finances becoming public if the case reached trial. St. Louis Circuit Judge Christopher McGraugh, who handled the case, issued a roughly $44,000 fine to four NFL owners for failure to turn over the financial documents last October. Another hearing on the matter was also scheduled in December.

St. Louis officials sought financial damages they claim they suffered when the Rams moved to Los Angeles. The move left St. Louis with debt on the team’s former stadium, which was built with public funds.

An exterior view of The Dome at America’s Center prior to the St. Louis Rams 29-24 victory over the Philadelphia Eagles in St. Louis, Missouri.
Elsa | Getty Images

Officials alleged the city lost between $1.85 million and $3.5 million per year in amusement and ticket tax collections, another $7.5 million in property tax and $1.4 million in sales tax, totaling more than $100 million lost in annual revenue.

The suit also claims the County of St. Louis also lost hotel, property and sales tax revenue after the Rams relocated. The impact on the state totals more than $15 million, according to the suit, which used figures from the Missouri Department of Economic Development.

According to the suit, St. Louis officials also sought a piece of the increased valuation associated with the Rams’ relocation. That total eclipses $1 billion.

Also, the NFL risked the lawsuit taking up headlines in early 2022, at the same time as the Super Bowl LVI — which will be played in the Rams’ new home complex, SoFi Stadium.

Hence, settling before then was a “smart move,” sports attorney Irwin Kishner told CNBC on Wednesday.

“The fact is, the St. Louis judicial system has been heavily favoring the hometown,” Kishner said. “Why undergo years of litigation, paying millions in fees, and having the uncertainty of a lawsuit? It just made sense so that people can focus on better things.”

Asked about the more than $700 million reported, Kishner called the amount “fair” but didn’t comment further. “We don’t know enough about it,” he said, questioning if the settlement would be paid over a period of years or upfront.

Patrick Rishe, director of the sports business program at Washington University, called the large settlement figure “unprecedented,” especially when considering that cases like this usually favor sports leagues and owners.

“If you asked sports executives or sports lawyers four years ago, ‘What do you think this case is going to settle for?’ I think most people would’ve said zero,” Rishe said. “So for the city to walk away with almost $800 million, it’s not only unprecedented, it’s going to make its mark with every team and every league.

“Ownership and leagues will need to be transparent, forthcoming and follow the rules or else this is what could happen,” Rishe added.

Business

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