Why the LA Rams Are Worth $2 Billion More Than LA Chargers

Los Angeles is facing an unsustainable $2 billion budget shortfall for their National Football League franchise Los Angeles Rams – currently No. 22 overall in the standings – at this moment in time. CNBC has published their Official 2024 NFL Team Valuations list and it ranks the Los Angeles Rams second with an $8 billion value, while Los Angeles Chargers come in 26th with $5.83 billion. Even though Rams have recently won Super Bowl LIII while Chargers don’t, differences in valuation reflect much more than just team performance alone. Stadium economics play an integral part of their decision. Both teams share SoFi Stadium, owned and managed by Rams owner Stanley Kroenke to the tune of over $5 billion financing financed through debt finance agreements with banks. The Chargers, owned by the Spanos family, are just tenants at Qualcomm Stadium; The Rams generate about 81% of stadium revenues through luxury suite sales and sponsorship deals as well as non-NFL events revenue according to someone knowledgeable of this matter. That leaves only 15% of suite and sponsorship revenue available to the Chargers — no money from non-NFL events such as Taylor Swift selling out six nights at SoFi Stadium during her Eras Tour this August, without giving anything back in return to them as profit.LOS ANGELES RAMS OWNER STAN KROENKE speaks during “Football Meets Football” Youth Clinic held during NFL Training Camp held on Loyola Marymount University Campus Los Angeles July 26, 2024 | Patrick T Fallon/ Afp | Getty ImagesThe mega tour provided an enormous windfall for multiple NFL franchises this past season: it gave many teams extra boost and helped boost profits at each team as it brought new customers from around the country while simultaneously increasing ticket sales for Taylor Swift’s Era Tour dates sold-offer for Taylor herself alone! CNBC learned from someone familiar with the matter that one stop on the Eras Tour generated $4 million per show for its hosting stadium, making stadium economics an integral component of NFL valuation, given that 67% or $13.68 billion out of its $20.47 billion annual revenue share among 32 clubs was distributed equally across them all in 2023. Most of this estimated $13.68 billion comes from media rights plus sponsorship and licensing deals on national media outlets. Teams do not share revenue from stadium suite rentals, hospitality agreements and sponsorship deals that do not benefit all teams equally; that can allow some franchises to gain significant value by taking advantage of those revenue sources. SoFi Stadium hosted several concerts by Beyonce, Ed Sheeran Metallica and Pink in 2018. The Rams would receive 100% of this revenue and retain SoFi’s stadium naming rights until 2039 – totalling $625 Million over that timeframe. These revenue sharing arrangements make the NFL unique among major professional leagues. CNBC sources indicate that other franchises sharing stadiums – New York Giants and Jets, in particular – split their stadium revenues evenly, according to sources at CNBC, while remaining roughly equal overall franchise values as per CNBC 2024 list. However, their margin was much smaller than LA teams’; last season the Rams finished second behind only Dallas Cowboys for total sponsorship revenue in the NFL. CNBC’s 2024 list ranks them No. 1, in terms of overall value. According to someone familiar with their finances, their sponsorship revenue will soon top $250 million and that for Rams was under $200 million last year, per another person close with both teams’ finances. Naturally, building your own stadium comes with risks. SoFi Stadium cost over $5 billion — the world’s most costly stadium — while its owner, Stan Kroenke, holds over $3.5 billion of debt — by far more than any team in NFL. But Kroenke appears to have taken an advantageous risk; when he purchased St. Louis Rams for $750 million in 2010, they already played there. Kroenke relocated the Rams franchise from St. Louis to Los Angeles at great personal cost; paying the NFL an unprecedented relocation fee of $550 million as well as settlement costs related to litigation that city of St. Louis filed over his decision is estimated to cost him an extra $571 million settlement fee and relocation fee totalling an astounding total cost of more than $1.12 billion; yet his investment in Rams has seen exponential returns, increasing by four-fold since taking control. Since moving to Los Angeles in 2003, the Rams have reached five playoff appearances and two Super Bowl appearances (winning one!). Since 2017, when their rival Chargers moved here too, just two out of a possible six playoff trips (divisional round only!) have taken place since. Although not as successful, Spanos family haven’t done too badly either: three divisional round losses haven’t stopped them reaching this far into playoff contention in Los Angeles! Alex Spanos acquired the then-San Diego Chargers for $72 million in 1984; similar to their purchase by Rams owner Stan Kroenke at $7 billion for $750 million relocation fees; since August 1984 the value has skyrocketed 81 times more. Over this same time period, the S&P 500 index has experienced remarkable gains of 53-fold growth – roughly equivalent to when Rams was up 4 times and Chargers twice! Think of these teams like growth stocks while CNBC x Boardroom presents Game Plan on September 10, in Los Angeles! Join us! At this exciting, high-powered event, industry leaders, visionaries, influencers, executives and investors from business, sports, music and entertainment converge for an in-depth exploration into its intersection. For more information and invitation requests please click here.