Ballmer, Inglewood enter “agreement” on new Clippers arena with pretty much no details at all

Los Angeles Clippers owner Steve Ballmer has been talking for a while about wanting to build an arena of his own — with maybe some kind of L.A. Live–style entertainment district around it — in Inglewood, and now it looks like he’s taken a step closer, with the city voting today on opening talks for a new arena to be built adjacent to the new Rams and Chargers stadium:

The Inglewood City Council is scheduled to vote Thursday on an exclusive negotiating agreement with the Clippers to build a state-of-the-art arena on city-owned land. The 18,000- to 20,000-seat arena would be fully financed by Clippers owner Steve Ballmer, sources said. Ballmer, who is worth an estimated $31.8 billion, bought the Clippers for $2 billion in 2014.

So what does all that mean, exactly? “Exclusive negotiating agreement” means that Ballmer would have three years to work out environmental permits, which works well with his timetable in that he has a lease to play at Staples Center through 2024. As for how the financing would work, it sounds like Ballmer would pay for construction, while Inglewood would provide free land (some of which it may have to acquire, possibly by eminent domain), but there are many other variables — would Ballmer pay rent on the land? would this include land for the entertainment district as well? would he receive any tax breaks? who would pay to operate and maintain the building? — and the agreement itself doesn’t answer any of them, beyond a whole lot of legalese that comes down to “We’ll figure that stuff out later.” This is just the opening buzzer, in other words: Figuring out who’s actually winning, assuming this arena ever gets built at all, is still going to take a while.

16 comments on “Ballmer, Inglewood enter “agreement” on new Clippers arena with pretty much no details at all

  1. At first glance I rolled my eyes. Even if the Clippers & Inglewood were able to get enough land via eminent domain, there’s a popular Costco and adjoining shopping center right next door. Creating an LA Live-like campus would be next to impossible.

    After thinking about it, however, I wonder if Ballmer is serious. I can’t imagine AEG giving Ballmer a significantly better lease at Staples Center and I can imagine that Ballmer wants to keep his franchise’s value high. He needs his own arena to do that, even if it means taking on a lot of debt initially in order to get the Clippers’ own arena.

    • Why would he need a dime of debt? He could easily pay cash for a dozen or more arenas. He’s really rich and this is his hobby.

      • No reason to risk $500 million-plus of your own money when debt is easy to come by and still relatively cheap.

        • You have to pay back money you borrow. I mean if Steve Ballmer can earn a return greater than the interest on debt, he will, but if he can’t he can simply toss down the cash.

          On the same note, he could have taken a loan to buy the Clippers in the first place but I don’t believe he did.

  2. Suddenly the Clippers in Seattle makes one entire boatload of sense.

    And if there are two arenas that close together in the LA area, won’t the result be two money-losing arenas, instead of one successful one? I’m betting it would.

    Move the Clippers to Seattle, solve a million problems.

    • A whole lot of sense = a waste of $1 billion considering most NBA arenas are built for $500 million and recent non-clippers sales are around $500 million ?

    • We have to keep in mind how large LA is. With so many traveling acts wanting to play in the 2nd largest market in the country, you could probably make ends meet and then some despite the competition.

  3. The only way I see this working in Inglewood is a three-way partnership with Ballmer, OVG/Leiweke and MSG. Leiweke would love to stick to AEG by running something newer and shinier in LA. A mutual booking arrangement with The Forum (or something to entice MSG to abandon a perfect concert venue) could help this happen.

    Don’t know how two entertainment districts (stadium and arena) would work. As Ben Miller states, there’s already a busy tax-producing shopping center adjacent. If they got rid of the new HP casino, that would be an added benefit.

    • Why is that “the only way you see this working?”

      Because the 15th richest man in the US couldn’t drop something like 1-2% of his fortune to keep himself entertained?

      • Sure he can build it, but other than Clipper games, how will he book it? If he tries to run the arena himself:

        MSG will offer package deals to concert promoters for NYC & The Forum.

        AEG can also offer group discounts for their arenas in other cities.

        • I consider those details after the fact. Ballmer is pragmatic enough that I’m sure he wouldn’t turn down the money outside of basketball season, but he’s clearly not running this as an investment. No one in their right mind would have bought the Clippers for $2B as an investment. He’s having fun.

          I’m sure booking concerts isn’t terribly fun but there are plenty of ways to outsource doing so if you aren’t really trying to come up with a positive ROI.

          • One possible solution is for Ballmer to sign MSG as the promoter of non-sports events at his new arena, then MSG can decide whether to use both this new arena and the Forum or to demolish the Forum.

            And as you note there are several options for hiring a promoter for non-sports events. The LA metro area has 10 million people; there’s no reason to think that there won’t be enough attractive events to support another arena.

  4. Entertainment district because we know our product sucks to continue selling on its own. That’s why players went off when the Knicks turned off the music and gimmicks.

  5. Okay, say this comes off. Didn’t Inglewood just put a bunch of money and effort into the old Great Western Forum? What then becomes of that iconic (and recently successful) building?

  6. how about the lakers and kings knock down the fourm and build a new arena on that site, give the staples center to the clippers

    • That would require arch rivals AEG (owners of the Kings and part owner of the Lakers) and MSG (owner of Forum property) to come together. AEG owns LA Live — they have no incentive to move their biggest assets elsewhere.

      Inglewood bills itself as the “city of champions”. The teams that used to play there (Lakers and Kings) have won multiple championships in the modern era (1970 onwards). The future teams (Rams, Chargers and possibly Clippers) have won one — and that happened in St. Louis!