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NFL Owner Stan Kroenke Wants to Take Over L.A.

The formidable (some say pitiless) dealmaker is set to snub St. Louis in his own home state to move the Rams.

Photo illustration: 731: Photographers: AP (2); Corbis; Superstock

At the NFL owners’ meetings at the Waldorf Astoria New York in October, reporters are kept in a hallway behind velvet ropes. They wait all day for anything they can get.

“You guys are in the pen? What’s going on over here?” NFL Commissioner Roger Goodell says as he walks by in the morning.

“You make the rules,” says one reporter.

“I didn’t make those rules,” Goodell says over his shoulder.

Now and again, an owner, this time Jerry Jones of the Dallas Cowboys, leaves the ballroom where the meeting is and walks down the hall to the men’s room at the other end. “Mr. Jones? Jerry?” the reporters plead. “Do you have a minute?”

Jones stops, and a scrum forms. Nobody has to say what everybody wants to know: What’s the latest on Los Angeles? “We have the opportunity to do something special,” Jones says, before ambling away. The reporters huddle to parse his words. He must mean the Stan Kroenke plan.

The National Football League wants to put at least one franchise in Los Angeles by the start of next season. Kroenke, the owner of the St. Louis Rams and arguably the most powerful owner in sports, wants it to be his. He’s ready to build a $1.9 billion stadium southwest of downtown. He has big backers. Jones, who built an 80,000-seat cathedral to excess known as “Jerry’s World” for his Cowboys in 2009, admires the grandeur of Kroenke’s plan and has sided with him against owners from the San Diego Chargers and Oakland Raiders, who want to build and share a stadium in the L.A. suburb of Carson, bringing two franchises to the city at once. Jones’s tossed-off comment about “something special” is the tiniest scrap, but when you’re covering Kroenke, that feels like a meal. He seldom gives interviews.

Kroenke (pronounced Kron-key) is one of the wealthiest and least-known owners in professional sports. He’s a Missouri-born (full name: Enos Stanley, after St. Louis Cardinals Hall of Famers Enos Slaughter and Stan Musial) real estate developer who’s married to a Wal-Mart heiress. At the Waldorf, he looks trim and fit for 68 years old. He’s wearing a dark suit, black tie, and white shirt with matching pocket square. His chevron mustache and sideways flop of hair are graying. At one point, in what passes for tweet-worthy news, he exits the restroom with Clark Hunt, owner of the Kansas City Chiefs and one of the members of the NFL committee overseeing the Los Angeles bids. As usual, he ignores the reporters. He didn’t respond to multiple requests for comment on this story.

According to the website for his project, billed as the City of Champions Revitalization, Kroenke aims to turn a demolished horse racing track and parking lot in Inglewood, Calif., into an 80,000-seat stadium with a latticed open-air roof; an adjacent 6,000-seat arena; 1.7 million square feet of retail and office space; 2,500 residential units; and a hotel. To put the Rams there, he’ll have to secure the approval of at least 24 of 31 of his fellow NFL owners and give a stiff arm to his native Missouri. Everything in Kroenke’s past suggests he will find a way. “If it can get done, he’ll get it done,” says Jim Gordon, a longtime business partner. The move would almost instantly create one of the most valuable teams in football.

 

Kroenke’s first attempt to land a franchise in the National Football League was a dud. In 1993, St. Louis was one of five cities bidding to become home to a new NFL team. A group of investors backing the St. Louis Stallions, as they planned to call the team, fell apart a few days before formal presentations to the league owners in Chicago. Kroenke, then a little-known strip mall developer said to be worth a half-billion dollars, stepped in to lead the bid. He went before the owners with Richard Gephardt (D-Mo.), then the U.S. House Majority leader, Jack Buck, the play-by-play man for the St. Louis Cardinals baseball team, and Dan Dierdorf, who’d played for the St. Louis Cardinals—the NFL team—before they moved to Phoenix in 1988.

Kroenke’s performance that day was memorably forgettable. “I don’t even know that he said anything,” Gephardt recalls. “He may have.” A league source told the Philadelphia Inquirer that Kroenke was “evocative of the cartoon character Droopy Dog.” The owners chose Charlotte, N.C., for a new team that day and, five weeks later, selected Jacksonville, Fla., for the second expansion slot.

The city of St. Louis then went shopping for a team to fill the domed football stadium it was already building. The Rams, who had been in Los Angeles since 1946, accepted a sweetheart deal to move in. Kroenke offered to purchase a stake in the team. The NFL approved the move in 1995, and he became a minority owner. In 2010, after the death of longtime owner Georgia Frontiere, Kroenke exercised his option to buy the available 60 percent share of the franchise for $450 million. “It’s exciting to be a 17-year overnight success,” he joked at a news conference.

Hopeful Los Angeles Rams fans watch a St. Louis Rams-Dallas Cowboys scrimmage during training camp in Oxnard, Calif., on Aug. 17.
Hopeful Los Angeles Rams fans watch a St. Louis Rams-Dallas Cowboys scrimmage during training camp in Oxnard, Calif., on Aug. 17.
Photographer: Allen J. Schaben/Los Angeles Times

Kroenke, as the NFL learned, specializes in slogs. For him, deals are like fence posts. “You’ve just got to pound on them,” Gordon recalls him saying. “You pound on it, pound on it, pound on it, and then all of a sudden it actually goes down.” In this way, Kroenke has built a fortune worth $5.6 billion, according to Bloomberg estimates. It includes 20 million square feet of retail property, more than a million acres of ranchland, a pair of California wineries, and a sports portfolio to rival any in the world. Along with the Rams, Kroenke owns the National Basketball Association’s Denver Nuggets, the National Hockey League’s Colorado Avalanche, Major League Soccer’s Colorado Rapids, and two-thirds of the English Premier League soccer club Arsenal—all separate from his wife Ann’s $2.4 billion inheritance.

 

 

NFL's Kroenke Plans Los Angeles Move for St. Louis Rams

 

 

Stan met Ann on a ski trip to Aspen, Colo., in 1971. He was a student at the University of Missouri. She was in nursing school. His father ran a rural lumberyard. Hers was James “Bud” Walton, co-founder, with his brother, Sam, of Wal-Mart Stores. Stan grew up in Mora, Mo., a town of fewer than 500 people southeast of Kansas City. Ann was from Versailles, Mo., 25 miles east. They were married three years later. Bud, who handled the real estate side of Wal-Mart, brought Stan into the family business. He took his son-in-law on visits to potential sites and introduced him to Raul Walters, a Missouri developer who had helped build some of the company’s earliest stores. “I chose to work for basically nothing to learn the business because I thought I would be good at it, and it turned out I was very good at it,” Kroenke once told Bloomberg. In 1979, Walters and Kroenke became partners. Together they built 20 strip malls across the Midwest, many of them anchored by a Wal-Mart.

When Bud died in 1995, he left half of his 40 million Wal-Mart shares to Ann, his eldest daughter. That year, Stan took a seat on the Wal-Mart board. Under pressure from labor groups concerned about insider dealing, the retailer had begun disclosing its commercial relationship with Kroenke four years prior. By 2001, when Kroenke left the board and the disclosures stopped, he was the landlord for 55 Wal-Mart and Sam’s Club stores. Over the decade, he collected $150 million in rents and fees from the company, always with the assurance that the price was “competitive with amounts that would be paid to a third party to lease similar space.”

Curtis Barlow, a former lawyer for Wal-Mart’s real estate division, thought otherwise about a 1991 deal with Kroenke to build a Sam’s Club in Dallas. Barlow told the Washington Post that Wal-Mart was paying almost double market price for the space. “I just didn’t feel that it was right, and being that was a publicly traded company, it shouldn’t continue to treat family members with special concessions,” he told the paper. Wal-Mart said it made a competitive deal. (Barlow, who left the company after the dispute rather than accept a demotion, declined to comment.)

David Glass, the chief executive officer of Wal-Mart from 1988 to 2000 and now owner of the Kansas City Royals, denies that Kroenke received any favorable treatment as a developer and says real estate wasn’t discussed in front of Kroenke during board meetings. “In fact, because he was Bud’s son-in-law, he got treated worse than the others,” Glass says. “We held him to a more demanding standard simply because of who he was.” Wal-Mart, he adds, benefited from Kroenke’s skill: “He did a lot of the legwork and got us into areas ahead of when we could have gotten into them by ourselves.”

Kroenke with St. Louis Rams owner Georgia Frontiere after the team won the Super Bowl in 2000.
Kroenke with St. Louis Rams owner Georgia Frontiere after the team won the Super Bowl in 2000.
Photographer: Scott Rovak/USA Today Sports

Wal-Mart is a touchy subject for Kroenke. In the few interviews he’s given over the years, he emphasizes the industrious habits he picked up as a child sweeping the shop floor at his father’s lumberyard and the entrepreneurial chops he showed as a college student. In the late ’60s, he started work at Ladigo of London, a clothing shop a few blocks north of the University of Missouri in Columbia that sold bell-bottoms and flowered shirts to students. Kroenke, by his account in the Columbia Daily Tribune, worked there as an undergrad, borrowed $2,000 from his father and MasterCard to buy a piece of the business, and sold it a couple years later at a profit.

“It’s hard to challenge his business acumen,” says Scott Rosner, a professor at the Wharton School at the University of Pennsylvania who’s followed Kroenke’s career closely. “That said, he has a significant advantage based on his family ties.”

“I’m not going to argue with people who want to paint me with that brush,” Kroenke once told the St. Louis Post-Dispatch.

  

In Denver, Kroenke bigfooted his brother-in-law, Bill Laurie, who’s married to Ann’s younger sister, Nancy. In 1999 the Lauries almost bought the Denver Nuggets, the Colorado Avalanche, and the Pepsi Center from Ascent Entertainment Group for $400 million. They’d already held a news conference announcing the purchase when it fell apart over a lawsuit filed by Ascent shareholders. Kroenke came in a year later with the winning $450 million bid.

When Kroenke first began buying shares in Arsenal in 2007, Peter Hill-Wood, then chairman of the London soccer club, tried to tell the Yankee to go home. “We don’t need Kroenke’s money and we don’t want his sort,” Hill-Wood said to the Guardian. “I don’t know for certain if Kroenke will mount a hostile takeover for our club, but we shall resist it with all our might.” Kroenke was undaunted by the Churchillian resolve and continued to snap up shares of the privately held club, becoming majority owner in 2011.

Kroenke frequently brings the with-us-or-against-us mentality of sports into his business relationships. He broke from his mentor Walters in 1985. It took the two nearly a decade in court to divide their holdings. Kroenke accused Walters of misrepresenting assets. Walters, who died in 2009, said Kroenke didn’t do his share of the work. The pattern repeated with Michael Staenberg. Kroenke and Staenberg formed THF Realty (the acronym for “To Have Fun”) in 1990 and, over the next 21 years, built more than 125 strip malls, about half with Wal-Mart as a tenant. The two split in 2011 and are in court in Missouri over how to divvy up an almost 20 million-square-foot retail empire.

Artists’ renderings of the 80,000-seat football stadium Kroenke plans to build in Inglewood.
Artists’ renderings of the 80,000-seat football stadium Kroenke plans to build in Inglewood.
Source: HKS, Inc.

Things ended poorly for Jim Alabach, who worked for Kroenke for 28 years, beginning as an intern in 1985 and eventually rising to development manager at the Kroenke Group. Alabach helped find land, secure permits, and build stores. When he decided to leave two years ago, he and Kroenke shared ownership in three buildings in downtown Columbia, Mo. In 2011, the two borrowed $5.4 million from a local bank to finance the properties. After Alabach left, according to legal filings in a dispute between the two, Kroenke stopped making payments and, instead of renewing the loan or agreeing to sell the buildings and pay it off, he bought the loan from the bank, declared default, and demanded that Alabach pay the remaining $5 million in debt, plus $250,000 in late penalties—hardball tactics that may prove perfectly legal. The money was inconsequential to Kroenke, but potentially ruinous for Alabach. Inflicting harm, Alabach alleges in a breach-of-contract suit, was the point. “You can’t be in business with people like that,” Alabach’s attorney writes of Kroenke. Kroenke’s attorney didn’t respond to requests for comment.

“I don’t know exactly what triggers those to make that happen,” Gordon says of the ugly splits with Walters, Staenberg, and Alabach. Gordon, a Missouri native whose grandmother was a close friend to Sam and Bud Walton’s father, Thomas, has worked with Kroenke for 30 years. He’s a partner in dozens of strip malls and apartment complexes owned by Kroenke-Gordon-Schaller Properties. “He’s always been a big brother to me and taught me a lot of things,” Gordon says of Kroenke. “It’s been cordial, and I hope it stays that way.”

 

 

In St. Louis, the relationship between the city and Kroenke is all but over. When Mayor Francis Slay calls, Kroenke doesn’t answer. “Every attempt we have made to contact him has been met with silence,” says Slay’s spokeswoman, Maggie Crane. Kroenke hasn’t made any public comments about his plans for the Rams. The team didn’t respond to requests for comment.

Missouri and St. Louis paid dearly to lure the Rams from Los Angeles in 1995. Through a joint city, county, and state body called the St. Louis Convention & Visitors Center (CVC), they funded the construction of the $260 million Edward Jones Dome and leased it to the Rams for just $250,000 per year. In the 30-year lease, the CVC promised to keep the stadium among the top quarter of facilities around the league by standards that left plenty of room for argument. Over the next two decades, all but two of the NFL’s other 31 teams built or renovated stadiums. (One of the holdouts, the Atlanta Falcons, broke ground on a new home last year.) St. Louis, meanwhile, struggled to cover basic upkeep costs at Edward Jones.

As the deadline approached for a check on the stadium’s standing on quality this spring, the city and team had very different ideas of what it would take to crack the NFL’s top eight. Kroenke and the Rams proposed a $700 million renovation that called for a bigger footprint, a sliding roof, and a glass wall on one side. The CVC offered to cover half the $124 million cost of a new scoreboard and upgraded luxury seating. In February 2013, a panel of arbitrators said the city’s plan wasn’t enough to meet the standard. The CVC declined to pay for more, triggering an out clause in the lease. A year after the ruling, Kroenke alerted the NFL that he had bought a key 60-acre plot in Inglewood, Calif. Wal-Mart was the seller.

The L.A. stadium plan fits Kroenke’s style. He likes to own teams the way he owns strip malls: from the ground up. “He certainly understands the adage that God isn’t making any more land,” says Marc Ganis, president of the consulting firm SportsCorp and a friend to many NFL owners, including Kroenke.

In Los Angeles, the Rams would be the centerpiece of a 300-acre mixed-use development. By Ganis’s reckoning, that would double the cash value of the franchise, which Bloomberg estimates to be worth $800 million in St. Louis. A large part of that windfall would have to be paid to the league’s other owners, who are expected to collect a relocation fee in the hundreds of millions, either upfront or through profit-sharing. The league, according to Sports Business Journal, also plans to collect a “flip tax” from any franchise that moves to Los Angeles and then sells within a set period.

The league aims to be ready to hold a vote among its ownership sometime in January, with the hope of moving a team or teams to a temporary venue in Los Angeles for the start of next season. That will require getting 24 owners to agree on whether to move two teams or one, how to fund a new stadium, which market or markets to abandon, and, trickiest of all, which of their fellows to back. “Anybody who tells you they know what it’s going to be is simply blowing smoke,” Ganis says. At the Waldorf, the owners spend the afternoon in a briefing from the league on Los Angeles. Like his rivals, Chairman Dean Spanos of the San Diego Chargers and Mark Davis of the Oakland Raiders, Kroenke has to leave the ballroom at the end of the day during the open discussion of their competing interests.

The NFL prefers to reward cities and states that help pay for their facilities and punish those that don’t. For the past two decades, an empty Los Angeles has been a powerful bargaining chip for a small-market owner trying to extract concessions. Owner after owner, either openly or in veiled terms, has threatened to move there unless they get public money for a new stadium. Smaller cities, afraid of a blow to their self-image, usually go along. St. Louis and the state of Missouri, after saying no to Kroenke in a rare display of prudence, are scrambling to come up with $388 million to help build a $1 billion stadium for the Rams on the Mississippi riverfront. San Diego is likewise dangling $350 million in taxpayer money toward a $1.1 billion stadium. Oakland, so far, is offering nothing but the fervor of its fans.

Kroenke is in the awkward position of rooting against his home state’s efforts to hand him money. His job is to convince other owners, especially the six-member Committee on Los Angeles Opportunities, that the St. Louis bid isn’t viable and can be rejected without setting the wrong precedent. State legislators in Missouri are helping his cause by demanding that either they or the public get a chance to vote on the stadium proposal. Eric Grubman, the NFL executive overseeing the bid process, told reporters in November that he wasn’t confident the St. Louis plan, as it stood, could win the support of NFL owners.

Charm offensives aren’t Kroenke’s strength. In the old boys’ club that is the NFL, San Diego’s Spanos carries greater sway. But Kroenke’s deep pockets, and the simplicity of his plan, may win the day. Spanos and Davis are looking to share the L.A. market with each other. Kroenke wants it to himself. And he has the resources to finance a stadium with minimal debt load. The two-team plan comes with a bigger marketing challenge. “They would have to go out and sell season tickets at the same time and build a fan base and sell sponsorships,” says Sal Galatioto, president of Galatioto Sports Partners, a consultant to franchises. On the flip side, two teams would play twice as many home games and share the burden of paying down the cost of a stadium, which Galatioto estimates will be about $40 million a year in debt service.

Kroenke at the Waldorf Astoria during a break in the NFL owners’ meetings.
Kroenke at the Waldorf Astoria during a break in the NFL owners’ meetings.
Photographer: Richard Drew/AP Photo

The only hint of Kroenke’s prospects to come out of the proceedings at the Waldorf is news that the league had approved his plan to transfer ownership of the Denver Nuggets and Colorado Avalanche to a family trust run by his son, Josh. When Kroenke became majority owner of the Rams in 2010, he got a temporary waiver from the NFL to maintain his stakes in the two Denver teams. The league forbids its owners from holding an MLB, NBA, or NHL team in a market where a competing NFL team operates. Denver Broncos owner Pat Bowlen, in this thinking, shouldn’t be battling with Kroenke for mindshare in Denver. Since 2010, as a compromise with the NFL, Kroenke has let Josh speak for the Nuggets and Avalanche among NBA and NHL owners. Now Stan will also move his equity in those teams into his son’s name. Stan’s ability to hang onto his Denver teams reportedly had been a source of grievance among other owners. The transfer of the Denver teams to Josh might help mollify them, though it still leaves the elder Kroenke as the hidden hand there.

In November, the Spanos team named Walt Disney CEO Bob Iger as nonexecutive chairman of their stadium project. Disney, through ESPN, owns the rights to Monday Night Football, and Iger is a friend of Commissioner Goodell. In return for Iger’s help, Spanos and Davis have offered him a chance to buy a stake in one of the two teams. Iger’s tenure at Disney is scheduled to end in 2018, and he may need something to do. Iger brings deep connections in the sports and entertainment industries and precisely the sort of polish that Kroenke lacks. If Kroenke moves the Rams to the center of the celebrity-industrial complex—jilting his home state in the process—he will have to work harder than ever to stay out of the spotlight. Los Angeles, after all, is where the Clippers’ new owner, Steve Ballmer, dances for the cameras at almost every home game. “There are a number of owners in professional sports who really like being in the limelight and being out front. And good for them if that’s what they like,” says Glass. “Professional sports are all about the players. It’s not about ownership, and it’s not about the front office or anything else. … I share Stan’s view on that.”

Kroenke, who tried and failed to buy the Los Angeles Dodgers in 2012, seems to love winning more than he hates attention. In the summer of 1997, he was determined to dunk a basketball on his 50th birthday. “He would practice day in and day out for that,” says a former business partner, who asked to remain anonymous. The 6-foot-2-inch Kroenke, who once scored a record 33 points for his high school team, did dunk on the day, according to the former partner: “He had to win at running. He had to win at basketball. Whatever he played, he had to always win.”

With Matthew Boyle

(Update: After publication, a spokesman for Kroenke told Bloomberg Businessweek that Kroenke owns an additional 23 million square feet of retail property and three California wineries not included in Bloomberg’s estimate of his wealth. The spokesman also said that Ann Kroenke inherited half of her father's stake in Wal-Mart, not 75 percent, a figure Bloomberg had estimated from disclosures in the company's SEC filings. The 13th and 15th paragraphs have been changed to reflect this new information.)

(Corrects the pronunciation of Kroenke’s last name in the eighth paragraph, and corrects the transfer of ownership of the Denver Nuggets and Colorado Avalanche to a family trust controlled by his son, Josh, and not to his wife Ann, in the 35th paragraph.)