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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.