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The NFL in Los Angeles: Why did it Fail and Will it Work Again?

Football
The NFL in Los Angeles: Why did it Fail and Will it Work Again?

The city of Los Angeles, is the second-largest market in the United States and calls itself home to a number of successful sports franchises. The NBA’s Lakers and Clippers,  MLB’s Dodgers and Angels of Anaheim and the NHL’s Kings and Ducks all play in the Los Angeles metropolitan area. But with two teams in each of America’s other major sports leagues, LA does not have a National Football League team. Of course, the NFL has had two teams in the City of Angels in the past, they just didn’t stick around.

The Cleveland Rams left for Los Angeles in 1946 and the team played its games in both Los Angeles and Anaheim. In 1995, team owner Georgia Frontiere relocated the team to St. Louis. She was upset that the team was well behind others in the NFL in terms of non-shared revenue and that no one in Anaheim or Orange County was willing to make a deal to save the Rams. The St. Louis Rams have since won a Super Bowl and there were rumors of the team moving back to LA after Frontiere’s death in 2009. However, a Missouri-based businessman acquired the team soon after.

Meanwhile, the Oakland Raiders moved to Los Angeles in 1982. Owner Al Davis felt that he would have more success getting his games on pay-per-view in the Los Angeles market while also having the potential for more luxury boxes in the Los Angeles Memorial Coliseum. Davis also made this move without any approval from NFL commissioner Pete Rozelle. However, he moved the team back to Oakland in 1995 after the city refused to answer his demands for stadium renovations.

Since then, the NFL has not attempted to establish another team in the Los Angeles area. The city had UFL and XFL teams, but those leagues both ultimately failed. Also, Los Angeles was expected to have a team in the revived USFL but that new league has failed to come into fruition.

Los Angeles City Council members voted 14-0 in October 2013 for a resolution saying it is in the interests of both the city and the league to bring a team to LA. A year earlier, they approved a plan by sports and entertainment company AEG to build a $1.5 billion downtown stadium, but construction can’t begin until a team is secured.

This all leads to a simple question – is the NFL going to ever come back to Los Angeles? Several obstacles must be navigated before this question can be answered.

What About the Stadium?

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It’s an age-old questions in the process of transplanting any sport team. Stadium issues have been a major factor in causing teams to seriously consider moving to Los Angeles. Of course, some teams like the Minnesota Vikings will use the same old stadium excuse for staying in town. In fact, much of the $975 million going to build the new Vikings stadium or the 2016 season came from the city of Minneapolis in order to keep the team from moving to Los Angeles.

Needless to say, there’s a potential for the Raiders to move back to LA due to issues surrounding their attemp to get $300 million to upgrade the O.co Coliseum. Whatever the case, this team, like many others in the past, is using the LA card as a means of trying to get funding for a stadium.

This is where the concern about penetrating the Los Angeles market comes into play. The big question involves finding a new venue. A new place has to be built as the Los Angeles Memorial Coliseum is too old to handling a pro team and lacks many of the commodities a modern football stadium needs.

Farmers Field is by far the most prominent option for a stadium in the city. This stadium is to be built near the Staples Center and is expected to cost $1.2 billion. In addition, Farmers Insurance Group is willing to pay $700 million for a 30-year deal for the stadium’s name. This could move to $1 billion if two teams play there. However, the AEG organization has pulled out of construction plans and some groups are protesting the plan for the stadium, citing threats to affordable housing communities in the planned area.

What’s the Demand?

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The demand for NFL football in Los Angeles is clearly high in many forms. First, it is estimated that there are close to 85,000 people on the waiting list for personal seat licenses at Farmers Field. It is uncertain as to what these PSLs would cost, but their prices are expected to be high. They could top the $80,000 maximum value of PSLs for the San Francisco 49ers.

Of course, PSLs could be made for cheap in specific parts of the stadium. For instance, the majority of PSLs that the Vikings are offering for their new stadium are going for $3,000 or less. The demand for PSLs at Farmers Field is so strong that perhaps the venue or whatever teams move there could charge more.

Television ratings are also very strong. The market regularly experiences primetime television ratings with a 25 share or greater. At least 800,000 households in the LA market tune in to NFL games on average.

Is the Sports Market too Saturated?

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One problem surrounding Los Angeles could be the strong sense of support for other professional sports teams. It could be easy for an NFL team to be lost in the shuffle. This is nowhere clearer than it is in the NBA.

The Los Angeles Lakers are by far one of the hottest teams in the area. The team has a value of $1 billion and makes close to $200 million in revenue each year while managing to stay competitive (until recently) in a highly challenging Western Conference. The team consistently draws close to 19,000 fans per game, too.

The Los Angeles Clippers have finally started to draw as many fans as the Lakers do. This newly successful and competitive team has a value of only $430 million but the team has sold out almost all of its games in the past year and is currently owning their hometown rivals and leading the Pacific division.

LA is also home to two of the MLB’s ten most valuable teams, the Dodgers and Angels. The Dodgers are worth $1.61 billion and the Angels are worth $718 million and earn a combined total of close to half a billion dollars each year while drawing more than 36,000 fans per game.

There are also two NHL teams in the Los Angeles Kings and Anaheim Ducks plus two MLS teams, the Los Angeles Galaxy and Chivas USA. Let’s not forget the massive college football competition with UCLA, Stanford and California all being competitive just about every year.

When all is said and done, is there really any room for the NFL in LA?

What About the LA Populace?

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The economy of the Los Angeles area is important to consider when it comes to determining whether or not an NFL franchise can survive there. It’s estimated that Los Angeles has a gross domestic product of $700 billion, a value greater than that of places like Taiwan or Belgium. It’s also estimated that about 40% of all containerized products that come into the country move through Los Angeles.

Unfortunately, Los Angeles also has one of the highest unemployment rates in the country at 8.6% in the Los Angeles-Long Beach-Santa Ana area, according to the Bureau of Labor Statistics.

Home values in Los Angeles are also recovering with an average home valued at $480,000. It’s far from the $600,000 average from 2006 but it’s a boost from the $370,000 average value at the early part of 2012. Also, only 2.5 out of 10,000 homes are foreclosed in LA, a number that’s half the national rate.

Los Angeles’ economy is clearly one that is on the rise, but it is still trying to recover from economic issues just like so many other parts of the country. The strong industry in the city could help to bring in sponsors for a team and plenty of ticket holders, but the unemployment rate and the fiscal conservatism shown by people who survived the housing bubble could hurt a new franchise.

Are the People of LA Jaded?

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The last thing to examine about a team in the area is whether or not the people of Los Angeles as a whole actually want an NFL team. The market has suffered from losses twice before as well as failures in other professional football leagues, thus making the NFL a hard sell to the average Joe.

NFL commissioner Roger Goodell has stated that he wants the NFL to come back to LA whether it’s from expansion or relocation. This is a positive sign as it shows how committed the NFL is to possibly moving back into the market.

However, there have been several concerns from citizens of LA over many of the financial aspects associated with getting back into the NFL. There’s the need for the city to pay $350 million or more in bonds to get a stadium ready and to land a proper NFL team. This is an extremely hard sell in a city where people and the city in general are strapped for cash.

There are also constant fears about the long-term drawing power of a new NFL team. People have often cited the Jacksonville Jaguars as an example. While the Jags did draw well at the start, the team has struggled to sell tickets in recent years. The team’s $15.5 million operating income is dramatically less than the rest of the NFL while the team is worth only $840 million, a total just $15 million more than the Raiders. These concerns are unlikely to dissipate until proven wrong over the long term.

The desire to have a successful team in Los Angeles is clearly there. However, it may take a while before anything could actually come out of such a plan to get a football team back in the city. Until then, we can only watch as assorted NFL teams look for stadium upgrades and play the Los Angeles card in order to get what they want.

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