Leiweke: L.A. stadium will bring fans, jobs, no matter what “professors” say

While we’re catching up on news, last week’s New Yorker featured a long profile of AEG president Tim Leiweke and his media-shy boss Philip Anschutz, featuring much discussion of their company’s proposed Los Angeles NFL stadium. Subscribers can read it here; for the rest of you, here are some of the choice stadium-related bits:

Anschutz and Leiweke had a specific model in mind [for L.A. Live]. “When we started dunking this up, we went to Universal Studios and Disneyland,” Leiweke said. The theme parks have a very brilliant concept. If twenty million people go through Disneyland, why can’t we build hotels, restaurants, and retail that service the twenty million people? That’s all we did here.” L.A. Live attracts only thirteen million people a year so tar. “But twenty million, soon!” he added—a prediction based on the assumption that the football stadium will he built.

That’s a great nutshell description of how the modern entertainment titan thinks — how can we bring people in to see an event, then get money from selling them everything they’ll spend money on during their visit? — but author Connie Bruck lets Leiweke get away with a bit of mathematical sleight of hand: a stadium is going to bring in an extra seven million people a year? Given that they’re planning for a 70,000-seat stadium, that’d mean they’d need to either host 100 events a year, which is unheard of for a football stadium, or boost the popularity of L.A. Live just from proximity to the stadium, which is more plausible, but still a bit of a reach.

Many studies have shown that stadiums, after the construction period, do not generate new economic activity for a community; a dollar spent at a stadium is a dollar taken from somewhere else. At a town-hall meeting, one member of the audience said that the last time Leiweke had been asked about these studies he had said he would cite academics on his side of the argument. Who were they?

“I’d be more than happy to show you that,” Leiweke responded. “And I’ll make you a deal. I’ll buy you dinner one night at L.A. Live, and we can sit there, look at three billion dollars in development, and we can question whether the professor that came in and said there will be no economic development that will come from Staples Center was right. I can show you studies—but how about I show you brick and mortar?” His questioner pressed about the research, and Leiweke, raising his voice, replied, “You bring your professor, who never has invested one penny in this community, and then I will bring all the union guys, who are sitting here with forty-per-cent unemployment, and you ask them, Do they want to let those people that have never spent a dime of risk in this community sit there and preach that there’s no economic development and impact that’s going to come from stadiums and arenas?”

In other words, a restatement of Leiweke’s “professors in classrooms that have never built anything in their lives” quote. It’s becoming clearer that Leiweke, from all accounts a pretty upbeat, effusive guy, resorts to name-calling when the subject of actual economic numbers comes up.

“This is not about doing a deal with the commissioner,” Eric Grubman, the N.F.L.’s executive vice-president of business ventures, said. “This is about finding a structure and terms that will attract a team.” In the league’s view, the deal that Anschutz was proposing was doubly flawed: not only was he trying to get a share of a team at a discount but he wanted a landlord-tenant relationship that, in its control of revenues, amounted to a kind of asset-stripping. “It’s unlikely the league or a team would approve this proposal,” Grubman said. Six weeks earlier, Grubman continued, he had given Leiweke an outline of elements that he thought would persuade a team to sign with Anschutz. “Since they haven’t quit, I have some optimism they’re working toward it,” Grubman said.

Tea-leaf reading a bit here, but that doesn’t exactly sound like a ringing endorsement, which matches what was reported back in October about the NFL’s disdain for the AEG plan. It’s always possible that Leiweke has something up his sleeve that will enable AEG to turn a profit on a $1.2-billion stadium while leaving enough revenues left over for an NFL team to get rich off of them, but I wouldn’t count on it. Unless people who build things instead of sitting in classrooms have developed their own kind of math.


17 comments on “Leiweke: L.A. stadium will bring fans, jobs, no matter what “professors” say

  1. Surprised he didn’t pull the “E word” out of the bag. Use of “elitist” is very popular these days when trying to sway the opinions of the masses. Indicates that the speaker thinks the listeners are idiots.

  2. oh, you “professors” and your “science”. The next thing you know, you’ll be saying that we all evolved from apes!

  3. I think it is fair to say that a majority of economics professors reject supply side economics to some degree, so if TL’s point is, “they’re not worth arguing with,” then I think that is a fair one. To use something referenced in a previous post, if you don’t believe in supply side economics by now then you might as well reject evolution, too.

  4. Yeah, right, it’s all about rejecting “supply side economics” and has nothing to do with that pesky “…a dollar spent at a stadium is a dollar taken from somewhere else” thing. If you aren’t a believer in the magical money created out of thin air by publicly subsidized stadia by now, then you’re just a blind apologist for “professors in classrooms”.

  5. If you feed the horse enough oats, some will pass through to the road for the sparrows. Right Ben?

    Anyway, this has nothing to do with supply-side economics as that relates to MACROeconomic TAX policy (not local economic spending policy).

  6. Neil, I’d be surprised if you didn’t hear the NPR report this morning that, as of today, the Rams’ lease in St Louis is now at an end, which leaves open the possibility that the Rams could move back to LA.

    In my opinion, this leaves two losers: LA, and St Louis. But what are your thoughts on this?

  7. Ben,

    A) Supply side economics makes no sense. Neither does “demand side”, of course, but luckily those aren’t our only options.

    B) The stadium doesn’t pay off for reasons unrelated to this. These have to do with opportunity cost and substitution effects. It looks like a great deal to AEG because they are only counting the benefits not the costs.

    If the state coerces you into giving me $50 and I spend it on a business venture that earns 52$,my pointing to my $52 is not going to allay your anger at being coerced, especially if you feel you also could have made $2.

  8. The lease isn’t at an end, the Rams can just opt out if St. Louis doesn’t upgrade their stadium to make it “state of the art” by 2015. And while it may have taken until now for NPR to notice, I’ve been writing about this for four years now:

    www.fieldofschemes.com/news/archives/2008/05/3359_stl_stadium_chi.html

    In any event, state of the art or not, the Rams have a great deal in St. Louis (see Chapter 2 of Field of Schemes) and aren’t likely to give it up for the pricey deals Roski and Leiweke are offering. This is non-news.

  9. I loved the part of the article where Leiweke talked about Obama’s class warfare and how he esentially never got a handout in his life when the whole article talks about current and previous handouts and environmental law exemptions he’s gotten from local and state governments. It’s great how arena, stadium, and other facility owners see themselves as up by your bootstraps capitalists while they have their hands out.

  10. JJO:

    But, but…. those bootstrap capitalists only got their massive taxpayer subsidies through hard work and “investment” (IE: seed money & promises… let’s not call it the unpleasant name it really is).

    For a nation that was founded based on a rejection of European feudal systems, America has evolved to look a great deal like that which it rejected two centuries ago.

    Neil: Does this mean the Rams are about to get (taxpayer funded) holographic displays??? Oh no, that was Cincinatti, wasn’t it…

  11. I think most people here in LA do not care about the economics of a new stadium, just give us a damn team!!!

  12. In my talking to sports fans at the baseball parks I go to in So Cal, I’ve talked to very few who want a team to return, much less a public subisdy to bring one back.
    You viewers who don’t have the Sunday Ticket have the best of all worlds. Always a double header with the best games, no games blacked out, and you’re always able to watch your favorite team with Sunday Ticket. I live in the Oakland area and I wish I had that kind of luxury.

  13. In my talking to sports fans at the baseball parks I go to in So Cal, I’ve talked to very few who want a team to return, much less a public subisdy to bring one back.
    You viewers who don’t have the Sunday Ticket have the best of all worlds. Always a double header with the best games, no games blacked out, and you’re always able to watch your favorite team with Sunday Ticket. I live in the Oakland area and I wish I had that kind of luxury.

  14. He’s lying. LOL. These stadiums are big white elephants when it isn’t game day. The only ones that impress me are the baseball ones. Comerica Park is beautiful. Ford Field…isn’t. Most football stadiums are hideous and not worth the ridiculous amount paid for them. I hope St. Louis tells the Rams to scram. They just built that stadium in 1995. It’s not that old.

  15. The substitution effect is diametrically opposed to supply side economics, and that’s why profs love it. Substitution effect is a theory that only the very well educated would have the lack of common sense to believe.

  16. Please tell me there are enough suckers in LA that will relieve us of the cancer that is the San Diego Chargers and Spanos family.

  17. At least it is private developers in LA selling their pipe dream instead of another city council screwing their taxpayers. I don’t see any private developers trying to get in on the 49ers new stadium. I guess without massive subsidies from the city of Santa Clara that whole ROI thing just doesn’t work out.