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.