LA Rams SoFi Stadium faces as many questions this year as do the Rams

With little income and a mortgage coming due, the LA Rams SoFi Stadium and Sports Complex future is facing plenty of uncertainty

The construction of a new home for the LA Rams has been a long time coming. After the LA Rams moved away from the city of Los Angeles in 1994. From that moment on, the NFL has had its eye on returning. the Rams to Los Angeles.  The team finally did so in 2016, with the understanding that the return would coincide with the construction of one of the bold sports complexes in the word: SoFi stadium.

Delays, limited construction resources, and numerous other factors drove the original cost estimates up from $2.5 billion to the latest estimates of over $6.0 billion.  Would you believe it if I told you that is the good news?  You see, that all means that construction occurred.  It did.  But what of the grand opening?

Not so much.

COVID-19 crunch

Due to restrictions and regulations that went into effect in March, the likelihood of the Rams home opener before crowded stands in not likely. The maximum limit to the number of fans attending has been set to 15,000.  But keep in mind that is the maximum number, and will likely start the season as no fans in the stands.

That’s a problem. You see, no fans mean no revenue.  And SoFi stadium was built with borrowed funds. It would be very similar to buying a new home, only to find out that you’ve lost your job as you finish moving in.  SoFi Sports Arena has all of the boring finance terms associated with a mortgage – debt payments, accrued interest, capital payment, interest payment

No money, no      mortgage?

At the end of the day, the revenue for fans showing up, buying food and drink, and buying souvenirs and merchandise, isn’t happening this year. No revenue means when the mortgage payment comes due, there won’t be enough money in the cash register to pay it.

The Athletic’s Jourdan Rodrigue sat down to discuss the financial aspects of the current situation with SoFi Stadium with Amy Trask, former CEO of the Oakland Athletics, (subscription required), to discuss the risks facing SoFi stadium this year and into the future. They do a very nice job of covering the challenges of today and the risks facing the project in the future.

SoFi Stadium and Sports Complex is more to the Los Angeles community than construction and the home of the LA Rams and LA Chargers.  It’s jobs. It brings new recreation. It’s a modern marvel of architecture and landscaping which will breath new life and energy into the area’s economy.

How ironic that the coronavirus pandemic has SoFi Stadium in critical condition as well.