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August 01, 2011

AEG: L.A. stadium needs public funds because it's so unprofitable

The Los Angeles city council held another hearing on AEG's NFL stadium plan on Friday, and councilmembers got to hear the slightly weird argument that the public should fund the project because it's such a crappy investment:

During the full council's first public review of the stadium's financing plan, economic consultant Bill Rhoda told the City Council that Anschutz Entertainment Group will see a 6.7% rate of return from the project over 30 years. Projects of a similar size typically generate a return of 15% to 20%, he said.
"You really can't take any more revenues out of this entity because then [the deal] won't be financeable," he said.
Chief Legislative Analyst Gerry Miller, who advises the council, offered a similar take, saying AEG's return will be "less than half" the amount that such deals normally produce.

You can sort of see the logic here — "It's not like we're getting rich off this!" — but it's still a bit of a strange tack to argue that taxpayers should be footing the bill for part of a stadium project in order to protect a private developer's profits. Especially as it's not like the city would expect to see any profits from the deal at all. Still, it looks to have been enough to sway councilmember Bill Rosendahl, the plan's most prominent skeptic, who declared on Friday, "I'm not there yet. But I'm getting close."

More on Friday's hearing, including how the LAPD barred some reporters from reporting on it, from the L.A. Weekly.


Traffic in that area is going to be absurd if they actually build this stadium. The surrounding streets are already a madhouse when the Lakers play. I can only imagine what it'll be like with three times the number of fans.

Posted by UpstartChris on August 1, 2011 06:37 PM

I think the same thing when reading about LA stadium news. I foresee crowds of people scurrying after the 3rd quarter to beat the rush. Don't see this working without more mass transit.

Posted by Andrew T on August 4, 2011 12:45 AM

Thats right, its gonna be a living hell!! Now, lets hurry up & build it, WooooHooooo, welcome back NFL!!!

Posted by bottomline on August 5, 2011 11:49 PM

As Lieweke observed when he was pushing the Houston dynamo deal: "These things don't pencil out without public participation" or words to that effect.

Posted by L.Lane on August 10, 2011 10:37 AM

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