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Kroenke Exercise Option to Buy Rams; Arsenal May Be in Play

Stan Kroenke, the billionaire by marriage owner of the Denver Nuggets and Colorado Avalanche, not to mention a significant stake in Arsenal of the English Premier League, which we will get to later, has decided to exercise his option to purchase the equity interests in the St. Louis Rams which he did not own.  Kroenke currently owns 40% of the Rams, with the remaining 60% held by Chip Rosenbloom and Lucia Rodriguez.  Kroenke also held a right to match any offer Rosenbloom and Rodriguez received to purchase their interest.  He exercised that right last week, setting up a showdown with the NFL and Commissioner Goodell.

The NFL has cross-ownership rules that prohibit an owner from owning a franchise in another sport in a different city than the owner's NFL city.  Under that rule, Kroenke's Denver franchises would preclude him from owning the Rams - Arsenal would not yet be a problem as Jacksonville has yet to decamp for London.  It would appear that Kroenke is itching for a fight and believes that he either has enough owners on his side already or has found a way around the restriction.  According to espn.com, he has not asked for an exemption nor does he intend to sell the Nugget or Avalanche.  ESPN suggests he may hand over control of the Denver operations to his son, implying that may be enough to satisfy the NFL.  If so, that would be an awfully easy way out of the problem and a fix that would seem to be available to almost any owner; enough so that the rule would be gutted, which wouldn't be a bad thing since it doesn't make any sense in the first place.

Across the pond, it appears that control over Arsenal may finally be put into play.  Kroenke and Alisher Usmanov have been accumulating shares for some time in anticipation of the opportunity to gain control.  That opportunity is at hand.  Nia Bracewell-Smith, the owner of nearly 16% of the club has hired Blackstone to market her interest.  If either Kroenke or Usmanov acquire it, he will cross the 30% ownership line which, under UK law, requires a mandatory takeover bid.  Stay tuned, the buying and selling of Premiership clubs as if they were houses in a game of Monopoly  continues unabated.

Full post as published by Sports Biz on April 18, 2010 (boomark / email).