Update:
Kevin Demoff, executive vice president of football operations and chief operating officer for the St. Louis Rams, confirmed early on January 31 the purchase of the former Wal-Mart site in Inglewood.
“As real estate developers, the Kroenke Organizations are involved in numerous real estate deals across the country and North America,” he wrote in an email to the Business Journal. “While we can confirm media reports that we recently purchased land in Inglewood, as a private company we don’t typically discuss our plans for commercial or residential investments. We have yet to decide what we are going to do with the property but we will look at all options, as we do with all of our properties.”
Wal-Mart Stores Inc. this month sold a vacant 60-acre parcel in Inglewood, renewing speculation that the site could become a National Football League stadium. One team official last week said there is suddenly a lot of “chatter” in the NFL that a team owner may have made the purchase.
The Inglewood mayor said he did not know who bought the land, but it had been of interest to professional football in recent months.
“My office has been contacted by no less five separate sets of parties” with regard to the property, said Mayor James Butts. “At least three of them were football team owners.”
Butts would not identify those who had been in contact with the city of 111,000 located just east of Los Angeles International Airport.
The site sits between the Forum, which reopened a couple of weeks ago, and Hollywood Park race track, which closed in December. Hollywood Park is slated to be redeveloped into a 238-acre mixed-use community.
The Wal-Mart property was the subject of a contentious battle a decade ago when the retailer wanted to build stores there but the public voted it down. Wal-Mart held on to the property until selling it Jan. 15.
According to property records at the Los Angeles County Assessor’s Office, the buyer was Pincay RE, apparently named for the street next to the property. The principals could not be determined, but the agent for Pincay is an associate in the New York office of law firm Clifford Chance. That law firm represented St. Louis Rams owner E. Stanley Kroenke in his 2011 purchase of British soccer club Arsenal.
Kroenke, whose sports business is based in Denver, is married to the daughter of late Wal-Mart co-founder Bud Walton. He has developed sites for Wal-Mart and sat on its board until his term ended in 2001. Kroenke also reportedly owns a seven-bedroom villa on the Pacific Coast Highway in Malibu. His net worth was estimated by Forbes to be $5.3 billion.
In addition to owning Arsenal and the Rams, which left Anaheim for St. Louis in 1995, Kroenke owns the Denver Nuggets basketball franchise and the Colorado Avalanche hockey team. He has vast shopping center and other real estate holdings.
Rick Kinnard, vice president of realty for Wal-Mart in Bentonville, Ark., confirmed the sale, but would not say who the principals of Pincay are.
“It’s a viable site for multiple things, including a mixed-use development,” Kinnard said. “Our big concern was finding a person that would close the deal and not hold the property to speculate. We didn’t want a buyer who would then sell it to somebody else.”
Told that it appears Kroenke could have been the buyer, Kinnard would only say, “That’s a bold statement.”
An NFL team executive, who spoke on condition of anonymity, said he did not know who purchased the property but said league officials last week were buzzing that Kroenke may have been the buyer.
“There’s a lot of chatter about that,” he said.
Representatives of Kroenke and Clifford Chance did not return calls seeking comment. Todd Davis, the Rams’ L.A.-based vice president for legal affairs, declined comment.
Timing issues
County records show that in May 2004 three parcels that comprise the 59.8-acre site changed hands for an aggregate of $41.4 million. Wal-Mart purchased the property with plans to develop a Wal-Mart and a Sam’s Club. However, voters in Inglewood rejected the company’s plans in 2004 and the lot has since sat vacant.
It had been marketed with an asking price of $95 million, but the sale price last month was not disclosed.
Both Madison Square Garden Co., owner of the Forum, and Stockbridge Capital Partners, the investment company that owns Hollywood Park, made runs to buy the site.
Wal-Mart and Stockbridge struck a deal for the site in 2008, but the transaction never closed. After purchasing the Forum in 2012, MSG, which leases the former Wal-Mart site for overflow parking during events at the Forum, also tried to buy the parcel. The NFL team source said officials from MSG were scheduled to meet Wal-Mart executives earlier this year to discuss a potential deal but that Wal-Mart canceled the meeting shortly before it was to take place, saying a transaction had been completed.
“I worked with the city of Inglewood, Mayor Butts and the Madison Square Garden group for three to four years,” said Kinnard. “We made it clear that we wanted to sell. We never could agree upon a price with Madison Square Garden.”
Representatives of both Stockbridge and MSG said they were aware of the site’s sale but that they were not the purchaser and did not know who was behind the Jan. 15 deal.
If Kroenke is the purchaser of the property, of course, he could try to build a retail center or seek some use other than a stadium. But if he wants to builds a stadium for a football team, he’d need to make decisions soon.
Once construction begins on the $1.6 billion Hollywood Park project just to the south, perhaps as soon as March, any opportunity to build an NFL stadium at the Wal-Mart site could start to diminish. The developer plans to put housing across the street from the Wal-Mart site, which could deter development of a stadium.
Stockbridge, led by Executive Managing Director Terry Fancher, purchased the Hollywood Park site in 2005. It partnered with developer Wilson Meany for a planned 238-acre mixed-use development of 2,995 residential units, 620,000 square feet of retail and a 300-room hotel. The existing card club is the only part of the current property that will remain, to be renovated in place.
The Hollywood Park developers have planned a ceremonial groundbreaking for the project this week.
What’s more, teams must apply to the league for relocation between Jan. 1 and Feb. 15. If that window closes and a team has to wait until next year to apply, the prospect of hundreds of new homes adjacent to the Wal-Mart site will make it harder to gain approvals for the stadium project.
Another complicating factor: At 60 acres, the site would be cramped for an NFL stadium. If one were to be built, owners might be tempted to buy additional land.
Upgrades needed
The Rams relocated to St. Louis in 1995, signing a 30-year lease to use the Edward Jones Dome. As part of that deal with the St. Louis Convention and Visitors Commission, every 10 years the lease is reviewed and the city must guarantee the team a “first-tier” stadium. If the stadium is not deemed “first tier” at the time of the review, the lease converts to a year-to-year deal and the team has the option to depart.
With the second 10-year review looming, the Rams and the city have disagreed on whether a proposal to upgrade the stadium was first tier. Last year, an arbitrator sided with a plan put forward by the Rams that called for a $700 million rehabilitation of the dome. The city has refused to make that investment. However, Missouri Gov. Jay Nixon has said that he would negotiate with the team in an effort to reach a stadium deal.
But decamping from a city is not simple. The NFL keeps a tight grip on its franchises. Two years ago, Commissioner Roger Goodell sent a memo to the 32 team owners regarding plans for any relocation to Los Angeles. In outlining terms for a return of the league to the nation’s second-largest media market, the commissioner wrote that a new stadium had to be capable of hosting two franchises. The memo also stated that the league is the sole party with the rights to the L.A. market and that approval to move an existing franchise would require approval by three-fourths of team owners.
Goodell reiterated that guidance in a memo sent in October, the same month in which Pincay RE was formed. The latest memo also cautioned that a team buying real estate in Los Angeles would not preclude the league from moving forward with its process.
“We would like to return to Los Angeles. We do not have a timetable. Our procedures and rules with respect to Los Angeles are very clear and apply equally to all NFL clubs,” Brian McCarthy, a league spokesman, wrote last week in an email to the Business Journal.
Revisiting Inglewood
There were few blog posts and other reports last fall saying that Inglewood could be a site for an NFL stadium. For that matter, Inglewood has been mentioned as a possible home for a franchise for years. It is served by four freeways, is only three miles from the airport and is not subject to the politics of the city of Los Angeles.
In 1995, near the end of the Raiders 13-year run in Los Angeles, the team’s late owner Al Davis completed an environmental impact report for a stadium at Hollywood Park. He opted to move the team back to Oakland rather than develop a stadium in the area after the NFL put conditions on the development.
“(Davis) had completed plans with a model for a stadium there. It would have been constructed at Hollywood Park and shared parking. There was room without demolishing the racetrack,” said Roy Weinstein, president of L.A. consulting firm Micronomics. “The NFL wanted the ability to have a second team play in the stadium after it was built. Al Davis wanted the stadium solely for the Raiders.”
Regional officials and business leaders have been trying ever since to bring football back to Los Angeles.
The efforts looked to be gaining momentum in recent years as AEG proposed building a stadium to be called Farmers Field in downtown Los Angeles and developer Ed Roski proposed building the Los Angeles Stadium at Grand Crossing in City of Industry. There have also been proposals to build stadiums in the parking lots of Dodger Stadium and Anaheim Stadium, the Rose Bowl in Pasadena and a proposal in Carson.
Plans in downtown Los Angeles and Industry both call for stadiums to be privately funded. Inglewood Mayor Butts said a stadium in his city would not receive subsidies from the city.
“Any sports endeavor would need to be totally privately financed. There will be no city grants or bonds,” he said.
The cost to build a stadium in Inglewood could be as much as $1.5 billion, based on recent stadium construction costs.
The NFL would contribute to a new facility through what is called the G-4 fund, which was created as part of its last collective bargaining agreement, signed in 2012. The fund provides teams with up to $200 million in loans and grants for stadium construction. Should two teams share a stadium, that amount would double.
None of the plans for L.A.-area stadiums have moved past the theoretical stage, in part because no tenants have stepped up to move into them.
In addition to the Rams, other teams that could be relocation candidates are the Raiders, who are playing in one of the oldest stadiums in the league, and the San Diego Chargers. The Raiders signed a one-year lease for the 2014 season at Oakland/Alameda County Stadium. The team has not committed to remaining in Oakland long term. The Chargers, whose lease at Qualcomm Stadium will run until 2020, could opt out sooner by paying a penalty.
If a deal to move a team to Los Angeles is not consummated soon, the window of opportunity might shut for a while as time is running out for both the downtown and Industry projects.
A memorandum of understanding between the city of Los Angeles and AEG to construct Farmers Field on the site of the Los Angeles Convention Center will expire in October. Michael Roth, a spokesman for AEG, said the memorandum could be extended by six months to the next off-season if the NFL is still considering the site. After that, the MOU will expire and would have to be renegotiated.
“We are still committed to the project and bringing the NFL back to Los Angeles,” he said.
In Industry, grading for the NFL stadium site began under a requirement in developer Majestic Realty’s lease agreement for the land. John Semcken, a vice president at Majestic, said the company plans to begin development on a stadium or on the original retail, office and industrial complex that had been planned for the site.
“If the NFL project gets delayed, we will move forward with our original project. If we prelease and have tenants, we can move forward,” he said. “We’re ready to go. Whichever project comes first is the one that gets built.”
At Chavez Ravine, a potential deal to construct a stadium was complicated when Frank McCourt was forced to sell the Dodgers in 2012, but retained a stake in future developments at the site. In Carson, part of the land that could be used for a stadium was sold to Porsche last year, and the automaker is building offices and a test track for its motor sports division. Construction began in August.
No site is completely without its drawbacks. Even in Inglewood, Micronomics’ Weinstein said, a stadium would have a problem due to its proximity to LAX.
“You wouldn’t be able to fly the blimp over there because the site is within the flight path,” he said. “The blimp shots are a valuable marketing tool for L.A. to show the beautiful weather to people back east.”
That said, he continued, the benefits of locating a stadium there outweighed that drawback.
“At the end of the day, a blimp ought not defeat a valuable football franchise,” he said.
