The Work

August 25, 2010 6:23 PM

Trio of Firms Finalize Rams Ownership Handoff

Posted by Brian Baxter

A decade removed from their stunning victory in Super Bowl XXXIV, the St. Louis Rams are being sold for $750 million, The Associated Press reports. Three Am Law 100 firms are along for the ride, according to sources familiar with the transaction.

Covington & Burling, Irell & Manella, and Sonnenschein Nath & Rosenthal advised on a deal that will see real estate billionaire E. Stanley Kroenke assume complete ownership of the Rams. The sale of the team was at the top of the agenda at a meeting of NFL owners in Atlanta on Wednesday, and the league unanimously approved Kroenke as sole owner of the franchise.

Kroenke already owns a 40 percent stake in the team, which he purchased 15 years ago when the Rams picked up stakes in Anaheim and headed for the Midwest. But after the death of longtime Rams majority owner Georgia Frontiere in January 2008--Frontiere actually took over the franchise in 1979 after the drowning death of her former husband Carroll Rosenbloom--her children sought to unload the team to meet estate tax burdens.

In February, Illinois auto parts magnate Shahid Khan emerged as the favorite to purchase the 60 percent majority ownership stake held by Frontiere's children, Chip Rosenbloom and Lucia Rodriguez. But as previously noted by The Am Law Daily, Kroenke exercised a last minute right of first refusal to match Khan's bid and take control of the team.

Further complicating matters was the fact that Kroenke couldn't simply shunt Khan aside, because he was technically in violation of NFL rules by also owning professional sports franchises in other leagues. Kroenke owns the NBA's Denver Nuggets, NHL's Colorado Avalanche, and is the largest shareholder in English Premier League franchise Arsenal. He also has owned teams in the Arena Football League and National Lacrosse League. (Bleacher Report has a nice breakdown on the Khan v. Kroenke ownership battle.)

Helping Kroenke navigate the thicket of legal issues holding up his Rams ownership bid was Sonnenschein corporate partner Alan Bornstein in St. Louis. Bornstein, who did not respond to a request for comment, previously advised Kroenke on his $450 million acquisition of the Nuggets, Avalanche, and Pepsi Center playing arena in 2000. He was assisted by Sonnenschein capital markets cochair Michael Froy, corporate partner Nadim Kazi, litigation partner Bradley Winters, trusts and estates partner Charles Redd, and antitrust partner Katherine Funk.

The AP reports that NFL owners approved Kroenke's new Rams ownership on the condition that he turn over operational and financial control of the Avalanche and Nuggets to his son, Josh, a former University of Missouri basketball player, by year-end. Kroenke, a 63-year-old Missouri native, must divest himself of a majority stake in both teams by the end of 2014, according to The AP.

While Kroenke turned to an old legal hand to help him land the Rams, Rosenbloom and Rodriguez also turned to a familiar face to counsel them on the sale of their portion of the team. Irell partner emeritus Milton Hyman and corporate partner Ian Wiener in Los Angeles advised both Rams owners on the sale of their 60 percent stake in the team. Hyman, who declined to comment, previously represented the Rams on their relocation to St. Louis 15 years ago.

Advising the NFL on the ownership transfer were Covington corporate partners Peter Zern and Douglas Gibson, who were assisted by associate Heather Davis. Both partners were unavailable for immediate comment on the completion of the Rams sale, as Gibson was traveling and Zern was on vacation on Wednesday.

Covington has a longtime relationship with the NFL. Former NFL commissioner Paul Tagliabue is senior counsel with the firm and litigation chair Gregg Levy serves as the league's principal outside counsel. Last year Zern and Gibson advised the league on the $1 billion sale of the Miami Dolphins to another real estate billionaire, Stephen Ross.

The two Covington partners have had their hands full closing major sports deals this year. Zern and fellow corporate partner Bruce Wilson represented former Golden State Warriors owner Christopher Cohan when he sold the franchise for $450 million in July, a record for an NBA team. And Zern and Gibson were part of a Covington team advising Turner Broadcasting, which in conjunction with CBS and its lawyers at Weil, Gotshal & Manges, inked a whopping $10.8 billion deal with the NCAA in April to televise the annual March Madness basketball tournament.

Joseph Leccese, cohead of the sports law group at Proskauer Rose, advised Khan on his unsuccessful bid for the Rams. On Wednesday, Khan publicly congratulated Kroenke on his takeover of the team, wishing him luck in the upcoming season.

Considering that the Rams have won exactly six games over the past three years, the franchise figures to need every bit of Khan's good wishes when it takes the field next month behind rookie quarterback Sam Bradford.

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