NFL Ownership Rule Challenged

From this morning’s Saint Louis Post Dispatch, Stan Kroenke is challenging the rule of cross-ownership in the NFL. Kroenke has been the minority owner of the the Saint Louis Rams since they relocated to Saint Louis in 1995. When majority owner Georgia Frontiere passed away in early 2008, her children inherited the majority ownership of the club. Recently, her kids agreed to sell their share (60%) to Shahid Khan pending league approval. However, the deal that Khan agreed to allowed for Kroenke to exercise an option within 60 days to match Khan’s offer to purchase that 60% making Kroenke the sole owner of the Rams.

What makes this interesting is that the NFL prohibits cross-ownership of professional sports teams. That means if a person owns the majority interest in another professional sports team, he/she cannot be a majority owner in the NFL. Kroenke currently owns both the NBA’s Denver Nuggets and the NHL’s Colorado Avalanche.  In addition, he is the largest minority owner of  Arsenal in the English Premier League. Therefore, Kroenke will either need the NFL to change its rule or he will have to challenge that rule in court. According to the Post Dispatch article, Commissioner Goodell stated that the league had no desire to change the cross-ownership rule stating it is for the fairness of all the owners in the league.

I am not a legal expert so I do not know the chances that Kroenke would have in court to overturn the NFL’s rule. From an ownership perspective, this is probably the best time to purchase the Rams. The Rams have been terrible on the field over the past few seasons (6 wins in the last 3 seasons) and couple that with the global recession, the value of the franchise is probably the lowest it will be. Therefore, it looks like Kroenke is buying the franchise at its lowest value. Whether the NFL will let him is another story.

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