Four years after St. Louis and Missouri launched a legal attack against the National Football League and the former St. Louis Rams for abandoning the city for California, they now must decide how to divvy up and spend the $500 million payday for their efforts.
St. Louis, St. Louis County and the Regional Convention and Sports Complex Authority sued the NFL, its franchises and their owners in 2016.
The parties agreed to a $790 million settlement Nov. 24 with about $500 million expected to go to the three governmental units after covering legal fees, allowing the league and Rams owner Stan Kroenke to avoid airing their laundry during a state court trial that loomed in January.
The lawsuit accused them of improperly approving the team’s move to the Los Angeles area sought by Kroenke and said Kroenke misled local authorities in negotiations first over stadium renovations and then over efforts to finance a new facility.
The
The payment must be made by later this month. No party admits to any liability and the deal does not give the city an NFL expansion team, as some locally had hoped the lawsuit would achieve.
"Today, St. Louis City, County, and the Regional Convention and Sports Complex Authority signed a $790 million settlement agreement with Rams owner Stan Kroenke and the National Football League," Mayor Tishaura O. Jones and St. Louis County Executive Sam Page said in a statement. "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."
The three entities must now negotiate how to split the funds since the lawsuit was filed without an agreement on the distribution in the event of a settlement or legal victory. Missouri Gov. Mike Parson is expected to put his mark on those discussions through his appointments to the convention and sports complex authority's board commissioners.
“The parties involved have not yet met regarding the settlement but that should be happening soon,” said St. Louis mayoral spokesman Nick Dunne. Discussions over the process for deciding to spend the funds also has yet to be determined.
Parson, a Republican, controls five members including the chairperson. The commissioners who were appointed by former Gov. Jay Nixon, a Democrat, continue to serve although their terms have expired. The city and county each have three appointments.
The Parson administration said it’s in the process of deciding future appointments. Several city and county positions are also expired or vacant. Statutes require that each executive name a mix of Democrats and Republicans.
The city, county and authority launched the
In approving the move “defendants have breached their contractual duties owed to plaintiffs,” the complaint read. “The Rams and Mr. Kroenke made repeated statements that were intended to induce the plaintiffs into continuing to support and finance the Dome and to spend money to create a new stadium for the Rams.”
The lawsuit alleges that the team violated the league's own policy to “work diligently and in good faith to obtain and maintain suitable stadium facilities in their home territories, and to operate in a manner that maximizes fan support in their current home community.”
The team announced new plans for a stadium in Inglewood, California, and moved Rams practices to California “improperly” enriching the team as its market value doubled to nearly $3 billion at the “expense of the plaintiffs” and the league was paid a $550 million relocation fee from the Rams, the complaint says.
The NFL approved the team’s relocation request in January 2016 citing the strength of the proposed stadium project in California.
The city said at the time of the filing it had lost over $100 million in net proceeds due to alleged improper conduct. The county has lost hotel and property tax revenue, as well as sales tax revenue.
Failure to approve the new stadium cost approximately 2,750 jobs in construction and more than 600 jobs per year. The average annual state revenue impact exceeds $15 million, the complaint alleges, citing Missouri Department of Economic Development estimates. The lawsuit’s specific counts included breach of contract, unjust enrichment, fraudulent representation, and tortious interference with business expectancy. It sought damages and the disgorgement of profits.
The NFL countered that it worked diligently with local and state officials and called the process honest and fair at all times. The Rams contended the move was permitted after local authorities initially failed to come up with sufficient funds to meet contractual renovation needs.
The dome was built in 1995 to lure the Rams from Anaheim, California, to St. Louis. It was financed with the help of $256 million of 30-year appropriation backed bonds in 1991 by the authority. The bonds were repaid under a complex agreement between the city, county, state with payments subject to an annual appropriation.
About $144 million remained outstanding in 2016 when the city lost the Rams and the
The city and state put together a $400 million public financing package in an effort to keep the Rams in town with a more than $1 billion stadium proposal. The plan called for a team contribution of $250 million and NFL support of $300 million with another $160 million coming from the sale of seat licenses.
After decisions are made on the settlement’s split, attention will turn to how to spend the funds, although some debate has already begun with some calling for Dome renovations and spending on city infrastructure.
The infusion of new settlement funds will come as the city, county, and state to varying degrees have begun spending down or are considering how to use their share of the American Rescue Plan Act’s allocations that have eased fiscal pressures stemming from the COVID-19 pandemic. The city is receiving $500 million, the county is receiving nearly $200 million in direct aid, and the state is receiving $2.6 billion.
“Specific spending plans for the state's allocation will be presented in Governor Parson's annual budget proposal to the General Assembly and during his 2022 State of the State Address,” the governor’s office said. The AAA-rated state is operating on a $35.3 billion budget for fiscal 2022 that runs through June 30.
St. Louis earlier this year garnered an upgrade from Moody’s Investors Service that reversed a trend of downgrades. Moody’s raised the city’s general obligation rating to A3 with a stable outlook from Baa1.
The GO upgrade “reflects the city's materially improved financial profile following consecutive years of surplus operations coupled with a large, regionally important tax base,” Moody’s said. “The rating incorporates the city's below average economic profile which includes a long-term trend of declining population and below average resident income.”
The city had reported just a few days earlier a $31.9 million operating surplus for fiscal 2021 that ended last June 30. Under city ordinance, half of the balance goes into the city’s capital fund and the other half to the city’s general fund reserve.
“The stable outlook reflects the expectation that ongoing economic development coupled with $498 million of federal funding through the American Rescue Plan Act will provide stability and flexibility to adapt to changing economic conditions over the next few years,” Moody’s said.
The city carries an A-minus rating from Fitch Ratings and A-plus from S&P Global Ratings. In May, S&P revised its outlook to stable from negative where it had moved the outlook in June 2020 in the early months of the pandemic.
Also in May ahead of a special obligation sale through the city’s land clearance redevelopment authority, Fitch raised the city’s outlook to positive from stable in recognition of its “improved financial resilience as evidenced by the increases in reserve levels over the past several years.”
