Full Podcast Transcript
NASIR: Welcome to our podcast where we cover business in the news and add our legal twist to that business news. My name is Nasir Pasha.
MATT: And I’m Matt Staub.
NASIR: And welcome to another football episode even though the season’s ending.
MATT: Well, I mean, actually, it’s not really ending. I mean, we’re kind of going right into the most exciting part of the year. I guess, for you, it’s ending because (1) your local team just got crushed last weekend – I guess, by the time this comes out, the previous weekend – lost 30-0 at home. And then, your favorite team is no longer going to exist anymore. So, I guess, for you, it really is ending.
NASIR: It’s true. It’s been a bad year for myself and football. I’ve pretty much given up on the Chargers. Of course, my wife’s upset at me about it because it feels like I don’t have any loyalty but, hey, the Chargers have given no loyalty to me and they’re moving to Los Angeles now – or at least that’s what they’re trying to do. I think, as of today, there might be a chance that there might be one more year here until they make a deal with St. Louis which would be a very awkward year, by the way.
MATT: I don’t get how they’re expecting that to go over. I mean, from my perspective, the people I’ve spoken to that are big Chargers fans in San Diego have kind of already said their goodbyes and they’ve given into the fact that the Chargers are going to be gone. So, now, it’s possible they might come back for this weird in-between year before they go to LA. I just can’t see people signing up for that – the season ticketholders. I don’t know. The real die-hards might a lot of people are just going to back out of that.
NASIR: I think the ones that are not going to root for the Los Angeles Chargers – or whatever they’re going to be named – are probably not going to be too kind to them this next year if they stay in San Diego. But there is going to be a portion of fans – and, apparently, including my wife – that are going to follow the Chargers to Los Angeles and good luck to them.
MATT: What it’s going to be is next year it’s the same thing. It’s going to be in LA and it’s basically going to be a gigantic game for all the away fans because both San Diego and LA are cities with a lot of people not from there. So, whatever team is playing there, they’re going to load the stadium with their fans and that’s what it’s going to be.
NASIR: And then, ten years from now, they’ll probably come back from Los Angeles after failing there.
MATT: Well, I think the interest is still there in San Diego if they would have been able to build a new stadium but too late, I guess.
NASIR: Yeah, too late.
MATT: So, let’s talk about another stadium that actually is getting built – I believe it’s going to be ready for next season – that’s in Minnesota. Was it US Bank?
MATT: Stadium? US Bank Arena? It’s probably US Bank Stadium, I’m guessing that’s what it’s called.
MATT: That’s important because they’re going to have this nice, big, new, fancy stadium with the US Bank branded on top of it. It’s going to look really nice in the aerial.
NASIR: It’s a rooftop, of course.
MATT: Yeah, it’s going to look really nice in the aerial photos.
One thing that’s happening – and I think these other towers are getting built or maybe they were getting built at the time when US Bank Stadium got approved – is Wells Fargo is also building or has these high-rises I think that are seven-stories high – something to that effect. And so, let me back up a little bit.
The Vikings are building the stadium and basically went around to the neighboring businesses – Iguess entered into agreements with them in terms of signage, things like that – whilst one of the nearby buildings is Wells Fargo. They agreed that Wells Fargo could have two very specific aerial logos on top of its building but that’s it and we’ll get into the specifics of that. The Vikings wanted to have two just standard things that said “Wells Fargo” on top and Wells Fargo has now built this – we’ll put the photos in so you can see for yourself – elevated logo that I guess is also going to light up at night. So, the Vikings aren’t happy because Wells Fargo is obviously a competitor of US Bank and, when they do all the aerial photos panning out during the game – which really doesn’t happen that often so I don’t get why they’re that upset about it – but, when they do that, it’s going to say “US Bank Stadium” and then you’ll be able to see this illuminated, big Wells Fargo logo right there which they’re basically building on top of their own stadium and getting free advertising for and the Vikings are not happy, so much so that they’ve filed for a preliminary injunction against Wells Fargo and, at this point in time, nothing’s been decided but that’s where we stand now.
NASIR: Yeah. I mean, it’s interesting because you have this US Bank that’s probably paid – I don’t know, did it say how much they paid? I mean, at least millions.
MATT: Oh, yeah, sure.
NASIR: Probably tens of millions if not even I should say nine figures there, right?
NASIR: But, anyway, yeah, they paid a bunch of money and then, all of a sudden, they have this Wells Fargo move next-door which, by the way, what’s interesting about this lawsuit, it’s not like US Bank wasn’t aware and didn’t mind and I think that’s the issue. For some reason, if you look at Wells Fargo’s response, their response is more like, “Well, look, we’ve been communicating with you the whole time. This is what we agreed upon. If you look back here, we gave you these plans and, as depicted, this is what we built.” If you look at these plans as you would normally see in a lease of some sort is a drawing of the Wells Fargo logo, its dimensions, and it’s a square logo if you can kind of picture it in your head for a second and you can take a look at the website. In the lease, however, it doesn’t necessarily depict any kind of raised lettering or three-dimensional drawing. It’s a two-dimensional drawing and so Vikings argue, “Well, we didn’t agree to this. We didn’t agree to lighted signs and raised signs,” as Matt said. But then, Wells Fargo says, “Well, there’s no description within the contract language which prohibits that so why would that be a problem?” It didn’t go into so much detail as to what material or the construction itself so why should that matter?
MATT: I want to say – and I should probably confirm this but I want to say, at the time, when the Wells Fargo stuff just started being built, it wasn’t possible to have this sort of raised signage through the city.
NASIR: That’s right.
MATT: And so, I believe, obviously, now they can because they’ve built it – or I’m assuming they can. Actually, I do know they can because they submitted a plan to the city. This is what you were just kind of getting at. Wells Fargo submitted this new plan to the city and the city had no objections and so that’s when Wells Fargo started building this and it’s this elevated logo – not your standard two-dimensional one as you described. And so, I think one of their arguments is it wasn’t part of this agreement because it wasn’t possible before but, now that it is, different story. “We got it approved by the city. There’s nothing in the signage agreement saying we can’t do this – prohibiting that – so we’re going to do it.” I mean, if I remember correctly, this is latches, right? Isn’t that the defense that they can use?
NASIR: Well, actually, yeah, because it is a preliminary injunction. I think, in the same aspect, the same kind of set of facts with that, you can also argue, “Okay, well, maybe there’s some kind of ambiguity in the contract because it neither states it either way but maybe that was the intent of the parties and so forth.” But, you know, like you said, there was a city ordinance which prohibited these certain types of rooftop signage which apparently where it sits on a table or something to that effect. When Wells Fargo solicited the city to actually make this amendment – and, of course, the amendment passed – the Vikings didn’t put up a fight. Therefore, like you said, they’re either latches or it also confirmed the understanding of the contract – that that wasn’t part of it and maybe, like you said, maybe they should have raised it at that time which this was early in 2014 is when they started promoting the amendment in the city of Minneapolis.
MATT: Yeah, I’m actually going to be there later this year so I should go check it out.
NASIR: Really? What for?
MATT: Family vacation.
NASIR: Oh, nice.
MATT: Flying into Minneapolis but I’m not going to be spending a lot of time there so maybe, after I land at the airport, I can circle around and see what the deal is. Well, to get back to something I said at the beginning, I don’t see why this is such a big deal. They’re making a huge deal out of the… I don’t think the raised logo is that big of a deal. Maybe it does make it look different, I don’t know. But, like, the lights, I mean, most games are played during the day. The lights aren’t going to be on.
NASIR: Except Monday night football and then maybe Sunday evening games, right?
MATT: Yeah, and those would be the games where, you know, they would have the pan out because, you know, the networks get there and do all these shots. Like, the football team that used to be in San Diego, they used to always show the shot of the Coronado Bridge, things like that.
MATT: I guess they have these pan out shots but one thing I failed to mention was – not only these logos that are on top which the two-dimensional, non-illuminated ones were approved – they have these logos on the side of the building that light up.
NASIR: Those were approved as well, right?
NASIR: But I don’t think the Vikings are pushing back on those, right?
MATT: No, that’s the thing. I mean, there are these lit up logos – you know, the Wells Fargo words – that are on the side of the building which I would think would be able to be seen on any sort of, I mean, if it’s a direct aerial shot – like, literally, right above, no – but, if it is a panning shot, it’s going to be able to see it.
NASIR: If I was Wells Fargo, representing them, my job would be to prolong this lawsuit as long as possible in order to get to next football season because, you know, the first home game in Minneapolis, the announcers are going to talk about – well, unless they’re encouraged not to by the NFL – about this Wells Fargo-Vikings dispute and this signage.
MATT: That’s kind of what they did in their response. Keep in mind, too – this is the Vikings versus Wells Fargo. I mean, as far as I know, US Bank’s not involved at all.
NASIR: They probably have contractually obligated to and I heard the Vikings have a better offense than US Bank.
MATT: Yeah. So, they filed for this injunction and what you just said was basically Wells Fargo’s response. Like, you know, “These injunctions are reserved for emergencies. This is hardly an emergency.” I think the first line of their response was, you know, “This is just a contractual dispute.” Yeah. “This is a straightforward contractual dispute about signs, not an emergency requiring extraordinary remedy of injunctive relief,” which I would agree with that.
NASIR: They’re right on that, yeah. I think they’re correct on that. In fact, if they were in the NFL season, I think there would be more of an argument.
MATT: Right, and that’s the thing. Let’s say that the Vikings win on this and they get an injunction. I mean, the only people that are going to suffer any loss are going to be Wells Fargo for continuing to build this likely expensive logo on top and that’s all by their choosing. I guess the Vikings still, as much as it was a loss for the home town Texans for you last weekend, the Vikings’ loss was worse. I don’t know if you saw that.
NASIR: I did not.
MATT: They missed a 27-yard field goal.
NASIR: Oh, yeah, I know. Yeah, I heard about it.
MATT: I really think you or I could probably kick that. I realize it was the coldest game on record in NFL history or it was supposed to be but, you know, 27 yards.
NASIR: That’s why I’m wondering if we should talk more about your Minneapolis vacation as to why you’re going there in one of the coldest areas in the country.
MATT: Well, I’m going in July. I think it’ll be…
NASIR: Yeah, I’m still pretty sure it’s going to be the coldest area in the country in July – minus Alaska.
NASIR: It’s not going to be cold. It’s just going to be the coldest.
MATT: Uh, maybe. I see what you’re saying. I’m thinking it might be. It’s possible.
NASIR: Well, we’ll report back. But, you know, all these leases with stadiums, I mean, this is big deal stuff. I mean, let’s put it in the right context that these are highly negotiated issues, signage, every size, and, by the way, it’s not like we’re talking about it in the NFL context with big stadiums but it’s not like the same conversations don’t happen in office leases because signage on doors and offices on the front lawns of buildings, on the sides of buildings, I mean, these are all negotiated issues and I see often, if you don’t discuss it beforehand or have signage approved and so forth, there can be some issues down the line when the tenant moves in and like, “Hey, I want to build a sign here in this color,” and the landlord is like, “Hey, no, we didn’t agree to that, you know.”
MATT: Yeah, there’s going to be signage clauses in all these commercial leases and it’s going to vary from small-end which is are you going to pay for a little placard by the elevator all the way up to big-time stuff of, you know, most high-rises have some sort of company name on the top of the building and that’s where stuff like this is going to come into play. I mean, you don’t see aerial disputes – or at least I don’t see aerial disputes – too often but…
NASIR: You know what’s funny? I paid for Pasha Law PC on the top of my building just for fun in case there’s any aerial shots in the middle of West Galleria, Houston. But the only problem is it’s really small and it’s just a piece of paper that I printed out and then taped to the roof.
MATT: I thought you just threw your business card up there and it landed.
NASIR: That would be worse. But, speaking of leases, we have to talk about the St. Louis Rams moving to Los Angeles and how that fiasco happened, right?
MATT: Well, yeah, and we were talking about signage for stadiums but, basically, all the issues surrounding teams relocating are around stadiums.
MATT: I guess, at the end of the day, there was three possible teams that were going to move – St. Louis.
MATT: And San Diego. If anyone has ever been to San Diego Stadium, it is possibly the worst one in the NFL.
NASIR: Dalal and I have been there a couple of times and she always asks me, “What’s wrong with the stadium?” and I don’t know what to tell her. I mean, it’s an old stadium but it still works.
MATT: What’s wrong with it?
NASIR: Yeah. Like, what’s wrong with it
MATT: She doesn’t like the spirals. Well, the spiraling ramps up, it’s just really weird and it takes forever.
NASIR: Those are annoying, I agree, but, okay, other than that, what’s wrong with the stadium?
MATT: There’s not a lot of good seats. It’s hard to get to and hard to leave.
That was the whole Chargers thing. I guess the St. Louis one’s a little bit different but, like a lot of these professional sports stadiums – not the one that’s going to be built in Inglewood by the Rams owners, he actually bought the land and he’s going to do that himself – but this one in St. Louis was built in ’95, predominantly paid for by the taxpayers and the city. It was a 30-year lease and I think just last year – or at least the years leading up – the Rams were only paying $500,000 a year to use the stadium which is nothing. I was pretty shocked by that number.
NASIR: Yeah, I think the debt service is three times the amount by the city every year.
MATT: Yeah. So, right now, the state pays $12 million a year, the city of St. Louis pays $6 million a year, and St. Louis county pays $6 million.
MATT: To pay off all these bonds they have. Like you said, the Rams are moving from St. Louis to LA. That’s for sure going to happen. And there’s $129 million still owed on the stadium. I mean, even if the Rams stay there, I don’t know how… I guess there’s jobs, things like that, but I don’t know what they’re going to do with this now.
NASIR: Yeah. I mean, they said they’re going to make up the cash by having certain events and so forth. You know, unless they have me fly in to do a speech to sell out the stadium, I don’t know how they’re going to get that kind of income. But what’s interesting is how they got out of that lease, right? Thirty years ago – or I shouldn’t say thirty years ago – back in 1995, a 30-year lease, there was a provision in there which – by the way, of course, the St. Louis Rams or I should say the Los Angeles Rams at the time – heavily negotiated and, of course, they were coming there for the new stadium but they said, “Okay, you have to maintain the stadium to be in the top 25 percent of all NFL stadiums,” which is, what is that? The top ten or twelve?
MATT: Well, thirty teams so seven or eight.
NASIR: Okay. Of course, in the last ten years even, there’s been a ton of new stadiums and, over the years, stadiums tend to depreciate in more ways than one. Apparently, the San Diego Stadium is the worst in the country.
MATT: Probably. It was contingent upon this 30-year lease and it was, like you said, it’s vague. It had to be in the top 25 percent of NFL stadiums based on various criteria. We don’t know what that is. Since then, 22 of the 32 teams have built a new stadium since theirs – pretty much a guarantee that they weren’t going to stay in the top 25 percent.
MATT: So, instead of that 30-year lease, they had this now opt out and it’s a year-to-year lease.
NASIR: Yeah, they had to give a year notice and then, instead of giving a year notice, they basically said we’re going to do it year-to-year and that’s where we are today.
MATT: I thought that was a big deal until I saw that they were only paying $500,000 a year. I mean, at the end of the day, I guess that’s… I mean, of course, there’s other things that get brought. There’s money that gets generated just by having the team play there.
NASIR: You’ve seen John Oliver’s this week in the news or last week in the news. Have you seen that before?
NASIR: I don’t know if you remember. He did that one thing about cities paying for stadiums and so forth but this has to be a prime example of where these kinds of deals go wrong. Am I right? I mean, the Rams are leaving with debt on a stadium that they don’t have a team to fill in for and a lease for which they weren’t getting that much payback anyway and they’re kind of left just hanging, right?
MATT: Yeah, and, if I had to guess, what happened was they were just desperate for a team back in the mid-90s. At that point, you pretty much agree to anything to get a team there and you figure everything out afterwards. Now, they’re stuck with this big problem. The worst part, the owner is from Missouri so it’s not like they were sold and he has no idea what’s going on, he doesn’t understand the importance of having the team there, things like that. But I will give him credit. At least he did go buy the land in Inglewood and is going to build that instead of having the taxpayers do it.
NASIR: Wasn’t that something that the Chargers owner was upset about or something?
MATT: Well, yeah, because the Chargers and Raiders plan was to build it in Carson which would have been a massive mistake. It’s all just very extremely rich people complaining about having to spend some more money. For the Chargers, for example, the Spanos family, they bought the team for $70 million and now they make that in net income every year.
MATT: They’re making money hand over fist and, you know, just these little complaints about “we don’t want to.” Basically, nobody wins – except the owners.
NASIR: Okay. Well, I’m okay with that. I think the Chargers and Rams seem to be right for each other in Los Angeles so let them go have fun over there.
MATT: The stadium that at least the Rams and possibly the Chargers are going to play in isn’t even going to be ready for the next few years.
NASIR: Are they going to be in the coliseum or something for a year?
MATT: I believe one team is allowed to be in the coliseum. The coliseum’s approved one team so that’ll be the Rams next year but then all the other big venues have said no like Dodger Stadium where the Angels play.
NASIR: Oh, I see. So, that’s why the Chargers are more likely to stay in San Diego for a year.
MATT: Yeah, but they still have to have, I mean, I don’t think the stadium in Inglewood is going to be ready till, like, 2019 so they still have to figure something out.
NASIR: Well, I think maybe Qualcomm might cancel the lease saying, “If the Chargers are in the bottom 25 percent of the NFL for more than one year in a row, then they should be kicked out.”
MATT: I think there’s no doubt there. I’m trying to think. There’s older stadiums but it’s definitely one of the worst.
NASIR: They can play in my backyard.
MATT: Oh, man. I don’t think we even have a takeaway for this one.
NASIR: Well, to give a real takeaway, I mean, we’re talking about leases again, right? Leases about signs and leases about these out-clauses and it shows you, like, you know, if you negotiate correctly and there’s a lot of ways you can finagle yourself into different terms – both on the landlord and the tenant side – and those leases are so long that it’s worth going through it with an attorney. I think that’s obvious.
MATT: Well, in this case, the dispute was over the signage agreement. The lease is not even really coming into question here. It’s this separate agreement that the Vikings went around and had all these other businesses enter into. So, I guess they should have contemplated those things then.
NASIR: I mean, I think there is a drafting mistake here, right? Because, if Wells Fargo was, I mean, I guess they didn’t know, right? They didn’t anticipate that they were going to have raised lettering but, if they had any inkling that that might have been a possibility, they should have threw it in there and made it more clear. Vikings, on the other hand, they should have been protesting much sooner, as you mentioned, when they found out that this is what Wells Fargo was trying to do. But it’s not surprising. Who would catch something like that during that time, you know?
MATT: I guess, no, I think they found out through, once Wells Fargo submitted their new plan to the city and it got approved, I think that’s when they found out about it, if I remember correctly.
NASIR: Well, all right, I think that’s our podcast episode for today. Thanks for joining us. I haven’t done this in a while but, one thing that helps us a lot – I think it does, I’m just saying, I have no idea if it helps us out at all but – if you could go to iTunes and leave us a positive review, what it does do is it inflates our egos and that’s probably the most important thing that we’re going for right now.
MATT: If it inflates it enough, we can somehow have enough money to have that bigger aerial sign on the building. That’s what we’re looking for.
NASIR: Well, I’m going to do a GoFundMe campaign just to make a bigger sign for the roof.
MATT: All right, I’ll donate.
NASIR: I still have to get it approved by the landlord, though. I’ll have to work on that.
MATT: We can figure that out.
NASIR: Yeah, actually, well, I’ll just follow Well Fargo and just do it anyway and wait for them to say something.
MATT: Yeah, exactly.
NASIR: Well, thanks for joining us, everyone.
MATT: Yeah, keep it sound and keep it smart.