LOS ANGELES — Inglewood, Calif.'s approval of a proposal by St. Louis Rams owner Stan Kroenke to build a $1.86 billion, 80,000-seat National Football League stadium in the city is a credit positive, according to Moody's Investors Service.
Moody's cited a city-commissioned report that said the Los Angeles-area city stands to gain $18.7 million to $28 million annually over a 16- year period and more after.
The $21 million revenue bump anticipated when construction is completed in 2020 would be equivalent to about 25% of the city's fiscal 2014 general fund of $80 million, according to Moody's.
The City Council on Feb. 24 approved zoning changes to Hollywood Park, the former horse racing track, to allow a stadium in the mixed-use development planned there. Supporters of the proposal by Kroenke and his partner, Stockbridge Capital, to build a stadium had announced in late January they had gathered enough signatures for a ballot measure to speed environmental approvals.
Kroenke's plans sparked a combined proposal by the owners of the Oakland Raiders and San Diego Chargers to build their own stadium in Carson, 13 miles south of Inglewood. That proposal marks the fourth proposal for an NFL stadium in the Los Angeles area over the past five years.
Officials in both St. Louis and San Diego are scrambling to come up with new stadium plans of their own to retain their teams.
"The council approval is the latest in a sequence of events that started in January, when St. Louis Rams owner Stan Kroenke confirmed a land purchase in Inglewood and a partnership with Stockbridge Capital to build the stadium," said Moody's Analyst Viv Shifei Li.
The city's agreement with the developer involves no public funds initially.
The developer would make infrastructure improvements at its expense, including water, sewer and street upgrades. Once the city receives $25 million a year in tax revenue from stadium activity, it would discount the tax revenue above that threshold, until the developer is reimbursed for the infrastructure improvements, however.
As part of the agreement, the city would receive a 10% admission tax on tickets sold for all stadium events, according to Moody's. Of that total, 70% would come from NFL ticket sales, with the rest from non-NFL related events like concerts and college football. The second most lucrative source of tax revenue would come from property taxes on the $1.86 billion construction project, Li said.
At this point, no NFL team has committed to play in the stadium, which could be a factor in whether the project gets built. Kroenke's Rams are on a year-to-year lease in St. Louis.
Moody's declaration of "credit positive" or "credit negative" does not connote a rating or outlook change. It is indicative of the impact of a distinct event or development as one of many credit factors affecting the issuer.