NFL Valuation Gap in Los Angeles: Rams Soar, Chargers Lag

The Los Angeles Rams and Los Angeles Chargers, both playing at SoFi Stadium, have a significant valuation gap, exceeding $2 billion. This difference isn't just about on-field performance; it's largely driven by stadium economics and revenue share.

• The Rams, owned by Stanley Kroenke, own and operate SoFi Stadium, while the Chargers, owned by the Spanos family, are tenants.
• This ownership structure leads to a significant revenue split: Rams get 85% of luxury suite and sponsorship income, plus all non-NFL event revenue, while the Chargers receive only 15% of suite and sponsorship revenue.

SoFi Stadium: A Revenue Generator for the Rams

The Rams benefit significantly from SoFi Stadium's revenue streams, including:

• Non-NFL events like Taylor Swift's Eras Tour, Beyoncé, Ed Sheeran, Metallica, and Pink concerts.
• The full $625 million from SoFi's stadium naming rights.

Impact of Non-NFL Events: A Boon for Rams, Not for Chargers

The Rams’ control over SoFi Stadium allows them to capitalize on non-NFL events, which significantly contribute to their overall revenue and valuation. The Chargers, as tenants, miss out on these lucrative opportunities.

NFL Revenue Sharing and the Valuation Gap

While the NFL shares a significant portion of its revenue (national media rights, sponsorship, licensing) equally among all teams, individual teams do not share revenue from stadium suites, hospitality, and sponsorships.

• This lack of shared revenue from stadium-related sources creates a significant advantage for teams like the Rams, which control their stadiums and can leverage non-NFL events.
• The Chargers, in contrast, have a smaller slice of the pie, leading to a lower valuation.

Rams: Growth Stock, Chargers: Dividend Play

The Rams, with their high valuation and growth potential, can be considered a "growth stock" in the NFL, while the Chargers, with their stable revenue stream and lower valuation, could be viewed as a "dividend play."

Risks and Rewards of Stadium Ownership

The Rams' high valuation comes with the significant financial burden of owning SoFi Stadium, which cost more than $5 billion and resulted in $3.5 billion in debt, the most in the NFL.

• Despite this debt, the Rams' investment in the stadium and their relocation to Los Angeles have yielded positive results, with their valuation increasing significantly since 2010.
• The Chargers have also seen their valuation increase since relocating to Los Angeles in 2017, but their financial gains are significantly less than the Rams.

NFL Valuation and the Importance of Stadium Control

The story of the Rams and Chargers demonstrates the impact of stadium control on NFL valuations. Teams that own their stadiums have a significant advantage in generating revenue from non-NFL events and other sources, leading to higher valuations.