The Los Angeles Rams: Already Winners?

The Los Angeles Rams: Already Winners?

Eminent Domain and Publicly Funded Stadia

Raymond J. Nhan January 19, 2016

Recent news of the Los Angeles Rams is a win-win-win for the NFL and taxpayers in Los Angeles and St. Louis. Though citizens of the Gateway City may feel differently right now, they just avoided a massive waste of taxpayer funds and a series of eminent domain abuses. And the NFL may have avoided another embarrassing story about taxpayers financing their multi-billion dollar (until recently tax-exempt) operation.

There is a long history of cities subsidizing expensive sports stadium projects. While supporters of these sports stadiums tout the economic boon that these projects bring, these successes never seem to materialize. Study after study, from those on the left and the right, have shown that government-subsidized sports stadiums hurt local economies rather than help. The Barclays Center, built to house the Brooklyn Nets and to re-vitalize the community, for instance, has been a financial disaster. It has lost 9 million dollars in its third year of operation and the promise of low-income housing in the area has not materialized. In response to these public burdens, commentators have long been calling for organizations like the NFL and FIFA (the governing agency for international soccer) to foot the bill for these stadiums.

Not only is taxpayer money wasted, but eminent domain is often used and abused to obtain property to build these stadiums. Cities will typically attempt to negotiate to purchase private property initially. But if owners do not oblige, cities have shown little hesitation to use eminent domain to obtain the desired land. Cities like Sacramento, San Diego, Washington, D.C., Brooklyn, and Los Angeles have all used eminent domain to acquire land to build sports stadiums.

The story of Chavez Ravine in Los Angeles might be the most heart-wrenching of these stories. In the early 1950s, city officials condemned land and displaced a Mexican-American community in Chavez Ravine to redevelop the area into “Elysian Park Heights.” Like so many eminent domain projects, “Elysian Park Heights” fell through. The Dodgers then purchased the land for a fraction of what Los Angeles had spent in trying to develop it.

Unlike these previous public projects, Los Angeles seems to have gotten a very good deal this time around. Not only is the team that called Los Angeles home for 49 years returning, but the Rams' new stadium (actually located in Inglewood, California) will be on privately owned land and the project will be privately financed. The planned development is also expected to have residential housing, office space, a hotel, a public park, and entertainment facilities. Also, the stadium is expected to be capable of hosting future Olympics, Super Bowls, Final Fours, the NFL Combine, and other entertainment events. 

Rams owner Stan Kroenke will likely bear most of the financial liabilities—up to $3 billion dollarsassociated with the project.  Kroenke also has likely acquired all of the land needed, and eminent domain likely will not have to be used. It is certainly possible that Angelenos will have to bear some costs associated with the stadium, such as public transportation to Inglewood. Also, only time will tell whether the County ultimately puts the burden of the paying for the required infrastructure upgrades on the stadium owners or the taxpayers. For the more skeptical among us, the Inglewood stadium will be bought and paid for to some degree by the citizens of the City of Angels. But in comparison to other public stadium projects, the Inglewood stadium will have a lighter footprint for taxpayers and private property owners.

In contrast, St. Louis proposed to build an open-air riverfront stadium along the Mississippi River. This project would have included approximately $400 million dollars in public money and would have likely required the city to condemn private property. And these figures do not seem to take into account potential upkeep costs or the remaining money that is owed for the Rams’ former stadium. So this story has a silver lining for St. Louis residents: they may have avoided a financially onerous plan that may have launched additional eminent domain proceedings.

While the NFL and St. Louis may have dodged a bullet, there are still potential problems down the road. First, the current stadium situations for the San Diego Chargers and Oakland Raiders are still in limbo. San Diego is set to vote on providing public money for a new Chargers stadium. But San Diego’s plan may be moot if the Chargers exercise their option to join the Rams in Los Angeles. The Raiders’ situation is more fickle. They currently are not as close to a long-term plan for a new stadium and Oakland is still in debt from refurbishing the Oakland Coliseum when the Raiders moved back in 1995.

St. Louis taxpayers are not out of the woods either. The city could conceivably use the money they had promised to the Rams to try to entice another NFL team to move there, even though city officials have initially said they will not do so. If that is the case, St. Louis may become leverage, just like Los Angeles has been for the past 21 years, for other NFL teams to force their cities to build new stadiums. This may ironically lead to more squandered taxpayer funds and eminent domain abuse in other cities.

While there may be more troubles down the road with the Rams and the Inglewood project, namely additional costs, it so far looks like a win-win-win situation. The NFL saves face, Los Angeles gets an NFL team and a privately financed world-class stadium, and St. Louis saves hundreds of millions in taxpayers’ dollars.

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