The new SoFi stadium has gained a lot of interest over the recent months with talks about it hosting the opening ceremony for the 2028 Olympics, World cup games, and 2022 Super Bowl. The stadium has been estimated to cost $4.25 billion covering 298 acres which has more than doubled the cost of the most expensive stadium ever built. This cost does not include planned retail and commercial developments which are estimated to drive total costs over $5 billion. In January of 2016, Stan Kreonke proposed a budget of $2.3 billion which soon rose to 2.6 then in March the media reported a $3 billion budget. The increasing costs are due to earthquake percussions as well as “soft costs” ( access roads and utilities). A slew of banks, as well as Kreonke and the NFL, have been lending money to the Rams and Chargers to fund this massive project from firms such as JP Morgan, Bank of America and US Bank ranging from $50 million to $300 million. This deal has an interesting financial model according to Liz Clarke of the Washington Post who reported that the stadium is entirely funded by private organizations which is a break from traditional stadium financing which has always asked for public funding from the city. This will be the new home of the Los Angeles Rams and Chargers, the Rams are a primary equity partner which means that most of the debt will fall on them but the Chargers will have to contribute some money to the debt as well. The interest alone from this debt is estimated to be $50 million annually. For the teams to pay this debt, they will have a sale of seat licenses (SSL). The seat licenses range from $1,000- to $15,000 per seat while club seats range from $15,000 to $100,000.Both teams will refund the full price of the SSL after 50 years to pay off their debt. Financing will also come from such as naming rights and other sponsorships. The largest has been the SoFi deal for $400 million over the next 20 years, sponsors will be bidding to be featured on their “Oculus” that will span the length of the field. These multiple streams of revenue seem to be lucrative and allow the teams to quickly pay off the enormous debt that is growing at an expedient rate. Most of the financing and loan details have been kept a secret to the public but as time goes on more information will be uncovered about what this stadium will mean financially to parties involved.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Clarke, L. (2019, January 31). The Rams' $5 billion stadium complex is bigger than Disneyland.

It might be perfect for L.A. Retrieved November 23, 2019, from https://www.washingtonpost.com/sports/the-rams-5-billion-stadium-is-bigger-than-disneyland-it-might-be-perfect-for-la/2019/01/26/7c393898-20c3-11e9-8e21-59a09ff1e2a1_story.html.

Kapalan, D. (2018, May 16). Rams stadium costs top $4 billion. Retrieved November 23, 2019, from https://www.bizjournals.com/losangeles/news/2018/05/16/rams-stadium-costs-top-4-billion.htmRooney, K. (2019, September 15). Finance start-up SoFi strikes deal to put its name on new LA stadium for the Rams and Chargers. Retrieved November 23, 2019, from https://www.cnbc.com/2019/09/15/sofi-naming-rights-for-los-angeles-stadium-for-the-rams-and-chargers.html.