Published>Wed, Apr 14 10 11:49 PM
Sports and real estate investor Stan Kroenke could have his cake and eat it too, buying both the St Louis Rams American football team and English Premier League soccer club Arsenal.
The Missouri native on Monday said he would exercise his right to buy the 60 percent of the National Football League Rams he does not own, which will likely cost up to $450 million.
Some Arsenal watchers said the Rams deal likely precludes a takeover by Kroenke of one of the most traditional English soccer teams that Forbes magazine last year valued at $1.2 billion, but analysts are not buying that logic.
"Stan and his family have sufficient wealth that they can do both Arsenal and the Rams acquisition without any major problem," said Marc Ganis, president of sports consulting firm Sportscorp Ltd.
"Financially, the issue is not one or the other. He and his family are legitimate multibillionaires and have tremendous borrowing capacity," added Ganis.
Ganis represented the Rams during the team's relocation from Los Angeles to St. Louis in 1995 that included Kroenke's purchase of a piece of the team.
Kroenke, whose fortune Forbes has estimated at $2.7 billion, also owns the National Basketball Association's Denver Nuggets, National Hockey League Colorado Avalanche, Major League Soccer's Colorado Rapids and National Lacrosse League Colorado Mammoth.
He also possesses a regional sports TV network, a sports arena and soccer park, and a real estate portfolio that includes shopping centers, office and apartment buildings, vineyards and ranches throughout North America.
Adding control of the Rams and 124-year-old Arsenal would make him arguably the biggest team owner in sports.
"That would be one hell of a sports empire. He'd be king of the world," said Robert Tillis, chief executive of Inner Circle Sports, a merchant bank focused on the sports industry.
The company is running the sale of English Championship (second division) soccer club Sheffield Wednesday.
HURDLES AHEAD
There are many hurdles for Kroenke to overcome, however, if that is his goal, analysts said.
Shahid Khan, owner of auto parts supplier Flex-N-Gate Corp in Urbana, Illinois, agreed in February to buy the 60 percent stake in the Rams owned by Chip Rosenbloom and Lucia Rodriguez in a deal valuing the team at $750 million.
With NFL rules capping team debt at $150 million, the price tag is likely to be between $360 million and $450 million.
However, the NFL prohibits owners from controlling a club in another major U.S. team sport in a different city -- a rule league officials have suggested will not change.
"We're going to respect our policies and make sure we treat everyone the same," NFL Commissioner Roger Goodell said last month. "We have great respect for Stan and he has to make some choices."
Some analysts said it could get ugly between Kroenke and the league.
"This is going to be a mess with the NFL," said one sports banker, who asked not to be identified discussing an ongoing deal. "He either sells the Avalanche and Nuggets or he cannot, under current NFL rules, buy the Rams."
Nevertheless, the banker expects Kroenke to try to keep all his teams. "The league's going to have a tiger by the tail."
Officials with Kroenke Sports Enterprises (KSE), which owns the Denver teams, said the owner has no mind to sell.
"Mr. Kroenke and his family remain fully committed to Denver and each KSE-owned property," KSE executive vice president Paul Andrews said in a statement on Tuesday.
An NFL spokesman said no timetable has been set for Kroenke's offer to be reviewed or voted on by owners.
With credit markets still tight and franchise values hurt by the recession, others think the NFL will welcome the chance to add the stability of Kroenke's wealth and expect the league to change or modify the rule.
"The NFL is like a big subdivision where if one house sells below the market value that really impacts all the other houses," said Robert Boland, professor of sports management at New York University.
"At the end of the day, I can't imagine that the NFL owners don't like the idea of bringing in a guy whose family household net worth is almost $6 billion," added Boland.
He was referring also to Kroenke's wife Ann Walton Kroenke, of the Walmart Walton family, whose net worth is estimated at $2.9 billion.
Kroenke could even turn around after buying the Rams and sell shares to recoup some of his expenditure, Boland said.
INTENTIONS UNKNOWN
Meanwhile, no one knows Kroenke's intentions for Arsenal. He has raised his stake to just shy of the 30 percent threshold that would require a mandatory takeover offer.
One of Arsenal's biggest shareholders, Nina Bracewell-Smith, has decided to sell her stake of almost 16 percent, setting the stage for a possible showdown between Kroenke and Russian steel magnate Alisher Usmanov, who has a 26-percent stake.
Usmanov's Red & White has said it remains a "committed long-term investor".
Roger Noll, professor emeritus of economics at Stanford University, speculated Kroenke may simply be taking advantage of a weak market to scoop up undervalued sports assets.
Others wonder why Kroenke would want to leave himself open to criticism similar to that faced by Premier League champions Manchester United's American owners, the Glazer family.
"He's got the best of all possible worlds with Arsenal," said the banker who asked not to be identified. "He owns a big economic slug. He doesn't have to be criticized for being the control owner. What's the benefit of him taking it over?"
Analysts agree, however, that whatever the outcome, the next several months will offer great entertainment.
"It's going to be very interesting to see how this unfolds," Inner Circle's Tillis said.
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