University of Oregon

Relocating the Rams to Los Angeles

Kanin Harden, James Hick, Nate Roth, Riley Terhar, Whitney Parkin

SBUS 450 (Winter 2015)

Frank R. Veltri

March 3, 2015

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Table of Contents

I. Executive Summary .......................................................................................................... 2

II. Background ...................................................................................................................... 3

A. Product Description .............................................................................................. 3

B. Competitive Analysis ............................................................................................ 3

C. External Environmental Analysis ......................................................................... 3

D. Customer Analysis ................................................................................................ 5

E. Target Market Identification ................................................................................. 5

F. SWOT Analysis .................................................................................................... 6

III. Marketing Objectives ....................................................................................................... 8

IV. Strategies .......................................................................................................................... 8

V. Tactics & Programs .......................................................................................................... 9

VI. Detailed Marketing Budget ............................................................................................. 10

VII. Conclusion ...................................................................................................................... 11

VIII. Appendices ...................................................................................................................... 13

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I. Executive Summary The Rams have consistently been one of the lowest-valued teams in the NFL. Despite

having a long existence in the league and being housed in three different cities, the Rams have

been unable to garner national popularity. This lack of a substantial fanbase has been reflected in

the declining brand value and the loss of potential revenues. Our proposal of moving the team to

Los Angeles would give the Rams more national exposure while subsequently strengthening

their brand and increasing merchandise/ticket sales. The team could capitalize on the excitement

of a big city and large market longing for a football team. Rebranding hand-in-hand with

revamped marketing in LA will bring in a large avid fanbase through season ticket sales,

increased brand value, increased revenues through television deals and a new Rams

team/franchise propelled to instant incremental success.

Using the television ad segment of the marketing budget to promote season ticket sales of

up to 75% of stadium capacity will capture a large avid fan base. The move would grant the Los

Angeles Rams the coveted LA Prefix that has allowed teams like the Lakers, Clippers, Kings,

and Dodgers to become household names in the sporting world. Furthermore, purchasing

billboards to depict the Hollywood Park Plaza of Inglewood, CA, the stadium site, will promote

the atmosphere and environment that will be provided at an LA Rams event. Additionally, pre-

selling jerseys for the LA Rams will evoke a buzzing culture amongst the anxious city which will

drive revenues even before the team arrives. These factors and marketing strategies give the LA

Rams the potential to eventually become one of the most popular teams/brands in the NFL.

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II. Background

Product Description

The St. Louis Rams previously played in Los Angeles (LA) from 1946 until they moved

to Missouri in 1994, nearly 50 years of playing in the LA market. Currently the Rams have been

underperforming both on and off the field, having not made the playoffs since 2004 and ranking

31st in attendance. The Rams have consistently been in the bottom five for local TV market

viewership the last several years. There is a huge need for the Rams to relocate to a different city.

Competitive Analysis

The LA market is highly competitive and sought after by various teams looking to

relocate to a more profitable location. The Rams will face potential fierce competition from the

Oakland Raiders and San Diego Chargers. AEG and Farmers Insurance have proposed plans to

break ground and build a stadium in downtown LA in the “LA Live” area next to Staples Center

Arena. Other investors plan to break ground in Carson on top of an old landfill in order to attract

both the Oakland Raiders and San Diego Chargers, two teams that had also formerly played in

Los Angeles, to return and coexist in the stadium. Another competitive standpoint is the fact that

civic leaders in St. Louis are establishing and delivering counterproposals to the Missouri

Governor, Jay Nixon, in an attempt to keep the team in St. Louis.

External Environmental Analysis

Rams owner Stan Kroenke has been given approval from the city of Los Angeles as well

as the Mayor of Inglewood and plans to build the stadium whether or not the team is solidified,

breaking ground before the end of 2015 and finishing before 2018. He will then figure out if St.

Louis will let him part ways with his franchise afterwards.

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Threat of Substitutes

The threat of substitutes pertaining to professional football in LA is high. There is a large

variety of entertainment options including college football (USC and UCLA), competing NFL

franchises within the geographical region such as the San Diego Chargers, MLB (Dodgers and

Angels), NBA (Lakers and Clippers), and NHL (Kings and Ducks). All of the leagues and teams

mentioned above have scheduling overlaps with the NFL, which is a threat to both the NFL and

Rams. Given the competition in this market, the substitutes for alternative forms of live, sports

entertainment is high for a team operating in this market.

Threat of New Entrants

Given the NFL’s approval to relocate to the LA market, it is unlikely that an additional

NFL team would relocate as the high costs and long lead time to build a stadium create a barrier

of entry for teams. Also, it is unlikely that a team would elect to share the revenue with another

team in the same city.

Bargaining Power of Suppliers

As the only NFL team in the geographic market, the Rams will have considerable power

to influence ticket and merchandise prices. This power is reduced slightly by the abundance of

substitutes, however, exclusivity of being the only NFL team in relevant market creates power

given popularity of the NFL. This influence also extends to advertising arrangements and

corporate sponsorships as potential advertisers wishing to target the demographics of NFL fans

in this valuable market will only have one outlet in which to do so.

Bargaining Power of Buyers

The bargaining power of buyers is high for non-NFL related entertainment products, but

low for NFL related products. Buyers have access to substitutes such as USC and UCLA college

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football among many other live sporting events in the region. NFL related products are not

available in a close geographic proximity so their bargaining power is limited, creating a

favorable position for an NFL franchise.

Customer Analysis

Roughly 140 million Americans associate as football fans. In 2014, surveys indicated

55% of NFL fans are male and 45% are female. NFL fans ages 18-34 account for 26.7% of the

total fanbase, with 50-64 year olds and 35-49 year olds at 26.5% and 22.4% respectively. The

most common household income level for an NFL fan is in the $50-99K range. Of the reported

140 million fans, 18 million of them actually attended a game and 130 million viewed an NFL

game on TV.

Los Angeles has evolved as a leader in both entertainment and sports, and teams tend to

thrive in this active market. Given the history of the Rams in LA, our customer base will include

fans who have had previous connections with the team while they located in LA. Currently 14%

of NFL fans are Hispanic and this number will only continue to grow as the Hispanic population

in the US increases, especially in the LA area. Entering the Los Angeles market will allow the

NFL to form deeper ties with the Hispanic community.

Target Market Identification

Our target market would consist of two groups. For season tickets, we would target males

ages 24-34, or young professionals, that make upwards of $80,000 a year. Season tickets and the

PSL’s, or Personal Seat Licenses, necessary to purchase the right to buy your season tickets can

be extremely costly, hence the large yearly salary requirements for our target market.

For single game tickets or bundle deals as well as apparel sales we will target males and

females ages 18 to 34, with household income of $50,000 to $99,000, and of either Caucasian or

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Hispanic descent. With the large Hispanic population in the LA area and 14% of NFL fans

nationwide being Hispanic, we anticipate a large following of casual fans to come out of this

target group.

SWOT Analysis

Strengths: ● TV Market ● Fan Support ● Large Entertainment Industry ● Proven Success With Other

Professional Teams ● Location

Weaknesses: ● Current Poor Team Performance ● Weak Fan Experience ● Outdated Stadium ● Lack of Civic Support ● Declining Fan Base ● Season Tickets And PSL’s Are

Extremely Expensive

Opportunities: ● Increase Fan Experience ● Revamp Brand Image ● Expand Fan Involvement ● Boost Profits ● Reach A Larger Market

Threats: ● Competition Amongst Various Teams

Looking To Relocate To LA ● AEG And Farmers Insurance ● Opposition From Civic Leaders ● Resistance From Community

Strengths

There are a lot of strengths for the Rams in terms of relocating to Inglewood, California,

a neighborhood outside of Los Angeles and extremely close to the Los Angeles International

Airport. The location is easily accessible for fans from the downtown region, the San Fernando

and Santa Clarita Valleys, as well as Pasadena or other metropolitan areas in the greater Los

Angeles County. This location would be a great fit for the Rams and there is already a strong

Rams fan base in southern California from when the Rams were located and played in Los

Angeles from 1946 to 1994. The Rams would have access to a much larger entertainment

industry as well as TV market, which would provide their fans with a more enjoyable game day

experience.

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Weaknesses

The Rams are struggling to strive in their current location of St. Louis, Missouri. They

currently play in the Edward Jones Dome. This stadium opened in 1995 and since then has

undergone some renovations such as adding permanent turf, a few LED display boards, and

minor paint updates. In this time era, the stadium appears outdated to fans and is weakening the

fan experience. Currently, the Rams do not have any major game day experiences that keep the

fans interested in coming back for the atmosphere and environment. The team is not performing

at a high level either. They were 4th in the NFC West and 25th in the NFL during the 2014

regular season. With a weak game day experience and horrible performance on the field, the

Rams have seen a constant declining fan base.

Opportunities

One of the greatest opportunities the Rams have is the ability to completely revamp their

brand image. Through relocating to Los Angeles, they will have the ability to create new

experiences that football fans will want to be a part of. The building of a new stadium will

increase fan experiences at games, if done properly, and with the help of fan involvement

throughout the process. Los Angeles does not have an NFL team, therefore the Rams have the

opportunity to reach a much larger market which in return will boost profits.

Threats

Other teams have noticed the untouched market for NFL in Los Angeles. The Rams will

face competition to relocate amongst various teams such as the Oakland Raiders and San Diego

Chargers. This could make the relocation challenging. AEG and Farmers Insurance have also

proposed a plan to build a football stadium near The Staples Center Arena, in the LA Live

district, and other investors possess a contract to build a stadium in the neighboring city of

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Carson as well. Both would be a threat to Kroenke’s plan of building a new football stadium in

Inglewood. The team could face another potential threat if the community members of St. Louis

are upset with the Rams leaving. Additionally, fans could be hesitant to purchase season tickets

as PSL’s for new stadiums pass the expenses from the owners to the fans through spiked

necessary expenditures that give you the rights to buy season tickets.

III. Marketing Objectives:

● Successfully relocate the Rams to Los Angeles by the 2018 NFL season

● Pre-sell 75% of the stadium’s capacity to season ticket holders by 2017

IV. Strategies

Our proposed strategy involves the Rams being relocated to Inglewood on the former

Hollywood Park Racetrack site where an 80,000 seat stadium would be built primarily funded by

Kroenke. The revamped region of Hollywood Park will clean up the Inglewood area and provide

an environment for the fans that would allow for the greatest aesthetically pleasing experience. It

would mirror in similarity to the LA Live area that is so popular with the sporting fans in the

greater Los Angeles area as well. It will feature shops, bars, restaurants, a concert hall, and an

extremely awe striking football stadium all tucked into a large plaza type layout. This will allow

an environment, besides the parking lot tailgate site, where fans can interact, browse or shop,

grab a drink or bite to eat, and be fully entertained upon arrival up until the moment they leave

the stadium parking lot. It provides the greatest “driveway to driveway experience” possible.

Purchase and retainment of season tickets almost immediately moves a fan along the

spectrum from casual to avid fandom. Marketing season ticket bundles and deals to the target

market will provide a large quantity of avid fans that are already invested in the team and the

franchise’s future. With the purchase of season tickets and the necessary PSL’s to obtain the

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tickets comes revenue streams to the franchise that will nearly pay for the stadium’s building

expenses and allow for capital to be spent on improving the overall environment and enhancing

fan experience as a whole. Season ticket holders will be the highest marketing priority as well as

the highest priority of the customer service department. Keeping avid fans and season ticket

holders happy keeps them coming back, recruiting other casual fans to move along the spectrum,

and encouraging new fans to attend games to relish in the same great experience they do.

Obtaining season ticket holders and keeping them happy should and will exhaust a large amount

of the marketing budget.

V. Tactics & Programs

The current St. Louis stadium lease will be switched to a year-to-year basis so that

Kroenke can pull out of St. Louis as soon as his LA stadium is constructed.

Billboard space depicting the Hollywood Park region in Inglewood and the proposed

stadium will be taken out in order to create buzz and fan excitement. Print advertisements will

also be made to help reach the target market. This will cost $7 million and account for 20% of

the marketing budget.

The current St. Louis stadium lease will be switched to a year-to-year basis so that

Kroenke can pull out of St. Louis as soon as his LA stadium is constructed.

We will begin selling 20,000 LA Rams jerseys one year prior to the move, in 2017, to

establish a further fanbase than already exists. Rams apparel with the team name in Spanish,

“Los Rams” will also be sold to appeal to the Hispanic target market and large Hispanic culture

in Los Angeles.

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Single game tickets will be bundled to the first game with Eric Dickerson bobbleheads.

He is the best LA Rams running back of all time and fans still wear his jersey in LA. This and

other promotions will cost $1.75 million, 5% of the marketing budget.

Commercials with past LA Rams greats such as Dickerson and current Rams such as

Tavon Austin will be filmed to appeal to all generations and bring them together. The Los

Angeles Kings did something similar, pairing players with fans, and it worked wonders. This

will be account for 50% of the marketing budget, costing the Rams $17.5 million.

Other forms of advertising will include internet and radio ads. The internet ads will help

reach our younger target market, whereas the radio ads will go after our older target market. This

will help maximize our reach in order to insure we meet our goal of preselling 75% of the

stadium’s capacity to season ticket holders by 2017. Internet and radio ads will cost a combined

$8.725 million or 25% of the marketing budget.

First priority of future season tickets will be given to fans that were season ticket holders

when the Rams were last in LA (1994).

Erect a customer service department/season ticket sales team geared towards soliciting,

marketing, assisting, and retaining the season ticket holders and not only ensuring they are

satisfied, but happy. This sales team would interact with fans 1-to-1 in order to insure they have

all their needs met. If needs are not met, the sales team can deal with these fans individually and

also get feedback to better everyone’s experience.

VI. Marketing Budget

Budgeted marketing expenses take into account increased marketing expenses related to

the relocation of the franchise into a new market. Season ticket renewals will be assumed to be

0% and increased marketing expenses to drive fan awareness and subsequent season ticket sales

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will be necessary to achieve marketing objectives. Our marketing budget will cover expenses

related to TV, print, radio, and online advertising associated with the marketing plan

implementation. Additionally, to establish a relationship with the community, increased

promotions expenses will be incurred during the first year of operations. A budget of $35 million

has allocated to cover these expenses1.

Marketing Expense Percent of budget Amount

TV Advertisements 50% $17,500,000

Print/Billboard Advertisements

20% $7,000,000

Internet Advertisements 15% $5,250,000

Radio 10% $3,500,000

Promotions 5% $1,750,000

Break-Even Analysis Fixed Costs: $1.9 billion Marketing Expense $35 million Personal Seat License Fee: $25,000 per seat Average Ticket Price: $340 per game Combined total revenue for personal seat licenses and season tickets: $27,720 Break-even point: $1,935,000,000/$27,720 = 69,805 seat licenses with season ticket packages to break even VII. Conclusion

Moving from St. Louis to Los Angeles is a huge opportunity for the Rams organization.

According to Forbes.com, the Rams are dead last in terms of team value at $930 million with the

highest being the Dallas Cowboys at $3.3 billion. Our proposal of relocating to Inglewood can

1 Relevant annual team marketing expenses was derived from taking published 2009 Green Bay Packer marketing expenses of $23 million and increasing them for inflation and additional relevant costs associated with relocation. 2009 expenses were the most recent available.

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easily push them into the top five in team value within the first few years. As of 2014, the St.

Louis metro area population was 2.8 million people, where the greater Los Angeles area was

18.1 million in 2011. The 600% increase in population and second highest TV market in the

nation will have a huge impact on team revenue. Add that with past Los Angeles Rams fans that

have wanted their team back for the last 20 years and the team value will shortly be one of the

highest in the league. Being able to revamp the brand image will be a great opportunity to

immediately cash in on new merchandise sales from the LA area and also loyal Rams fans from

St. Louis. Our strategies to bring the Rams back to LA is built to capture the loyal, old LA Rams

fanbase as well as creating a great experience for new fans in the area so we can maximize our

avid fanbase. With Kroenke spending his own $1.6 billion to build the new stadium in late 2015,

a team moving to LA is imminent, especially with Inglewood’s Mayor James Butts being quoted,

saying, “Build it and they will come.” With our proposal, we’re confident that he will build it

and we will come back home.

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VIII. Appendices References

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Web. <http://quickfacts.census.gov/qfd/states/29/29510.html>.

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"2014 NFL Standings." ESPN. ESPN Internet Ventures, 2015. Web.

<http://espn.go.com/nfl/standings/_/type/vs-division/group/1>.