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October 14, 2011
How to write a stadium article: ESPNLA debunks Roski's NFL plans
I take back everything bad I ever said about ESPN LA's Arash Markazi ... well, okay, no, I still really hated that damn gravy analogy. But let's just say that Markazi has more than made up for with yesterday's in-depth investigation of Ed Roski's proposed NFL stadium in City of Industry. His conclusion: Roski's whole financing plan is a house of cards — or, as one obscure stadium blogger tells him, "somewhere between 'optimistic' and 'pie in the sky.'"
I'm not just praising this article because it cites me, though, or even because it's critical of the Roski plan. Rather, Markazi's piece gets stadium journalism right in just about every way:
- He doesn't fall for pretty pictures. The artists' renderings, Markazi acknowledges, are "perhaps the most beautiful stadium proposal NFL owners have ever seen," with "wave pools, gondolas in which fans fly over the site, concert stages, an 'NFL Experience' area with punt, pass and kick competitions, a BMX course, and a Harley Davidson Cafe with an area for fans to show off their classic bikes and cars." However, he then cuts to the chase: How will all this be paid for? Noting that Roski's initial confusing financing plan has now been replaced by a new, even more confusing one, Markazi then spends the bulk of the article crunching numbers to see if any of it makes financial sense.
- He doesn't take team owners' or stadium builders' word for things. Asked how the $800 million stadium would be paid for, Roski lieutenant John Semcken replies, "The team pays nothing for the stadium. The stadium pays for the stadium." Many reporters would stop there, but Markazi presses on: How would that work, exactly? To which Semcken replies: $300 million would come from personal seat license sales, $150 million from the NFL, and the rest would be paid off by an estimated $28 million a year in naming-rights fees.
- He talks to economists. Not just one economist, which is the most you'll see in a typical newspaper article, but multiple economists, so we can see whether they all agree on the numbers. And this case, they do: Retired stadium financier John Gillespie and Holy Cross economics professor Victor Matheson both say that $800 million sounds far too low for a state-of-the-art stadium in a major metropolitan area. (Particularly one with flying gondolas.) Matheson boggles at Semcken's claims of $300 million in PSL sale proceeds, speculating that he may have neglected to notice that PSLs are taxable, which in California would cut the resulting revenues just about in half. And Smith College professor Andrew Zimbalist rolls his eyes at the notion of $28 million a year in naming-rights fees, noting that both AEG's downtown L.A. stadium and the new New York Giants and Jets stadiums top the current market, and they only yielded $20 million a year.
There's more, including info on how bank loan requirements have tightened up since the Staples Center was paid for with arena revenues a decade ago, and a long discussion of why no team is going to move to L.A. without a firm financing plan in place, yet Semcken says there can't be a financing plan until there's a commitment from a team. The one thing I wish Markazi had included was a breakdown of what siphoning off PSL money and other stadium revenues would do to a NFL team's cash flow at an Industry stadium, but with this article already running almost 4,000 words, I'm happy to wait for the next one for that.
I realize this might be a little off the wall, but do you think that the sole purpose of one of these bids might be to make the other look better?
A sort of reverse stalking horse designed to make the other bid appear much more palatable to either elected officials, the public, a prospective NFL tenant or all of the above?
The excellent article does note that Roski & Anschutz are friends (something I didn't know, though both were involved in Staples' construction). But the fact is that while they are competing with each other, they don't seem to be doing so with any real fire.
I'm not even sure which of the two bids would be most likely to be the stalking/sulking horse... perhaps Roski's, since the financing appears a little more ethereal in his model than in Anschutz'.
" "The team pays nothing for the stadium. The stadium pays for the stadium." Many reporters would stop there, but Markazi presses on: How would that work, exactly? To which Semcken replies: $300 million would come from personal seat license sales, $150 million from the NFL, and the rest would be paid off by an estimated $28 million a year in naming-rights fees."
Please send this ESPN reporter to Santa Clara, where the 49ers and our pro-stadium city council majority are playing the same 'the stadium pays for the stadium', game, assuming the PSLs (which failed across San Francisco Bay for Oakland, leaving the taxpayers to foot the bill), naming rights, and the NFL will pay for the stadium.
The latest from our city council (June 2011) is that the 49ers will cover 15% to 25% of the stadium, at most, and Santa Clara's agencies (Stadium Authority primarily) will cover the rest, starting with massive loans, apparently, from the 49ers to our redevelopment agency and stadium authority, with no firm way to pay the loans back.
Smoke and mirrors.
"The team pays nothing for the stadium. The stadium pays for the stadium."
Bill Bailey, Treasurer,
Santa Clara Plays Fair.org
No job, no prospects = no worries: "We'll live on love, baby..."
Oh, and the "stadium will pay for the stadium."
I echo SantaClara's sentiments--please send this reporter to Sacramento. The Bee happily accepts the estimates of 4,100 jobs, $387m in construction costs, and $7b in new revenues over 30 years. Put together, you wonder why the City would even be allowed to own any part of the arena, much less pay for 1/3 of it.
@MikeM - I agree.
If stadiums/arenas were a good deal, private investors would be lining up to participate.
It's precisely because stadiums/arenas are not a good investment that the public is asked to pick up so much of the tab.
Responding to John's stalking horse question: Given all that the two developers have gone through to get this far, I have to think they both are taking this seriously. Plus, Roski did take advantage of AEG's recent setbacks to revise his own offer and get in the papers. So I think if anything, the "one makes the other look better thing" is just a happy side effect.
Anyone who's been following the LA sports scene for a while knows how good Markazi is. I'm sure he feels validated by your newfound praise, Neil.
My concern about Markazi's article is that he does not apply the same level of scrutiny to the AEG proposal, which I believe is actually MORE dishonest than the Roski proposal.
ESPN, of course, has an incentive to promote AEG's plan because of their investment at L.A. Live.
Mike Florio at ProFootballTalk.com (NBC Sports) echoes my sentiments about the apparent bias in Markazi's piece:
I'm not sure Florio read the article. He said it should have disclosed the ESPN LA offices were at LA Live and that disclosure is clearly included towards the beginning of the story.
Markazi wrote a story based on the financing of the stadium, nothing else, which is more important in my mind than a story on tailgating or parking. He asked both groups what their financing plan was and took it to five independent economists in the field and they had far more questions about Roski's financing plan than AEG's financing plan.
Maybe if Roski had some of his own equity in the project, tempered his expectation for PCLs and naming rights, wasn't using the naming rights deal to pay for the debt service, adjusted the price of his stadium a couple times since 2008 and wasn't putting the team on the hook for financing and building the stadium there wouldn't be so many questions.
All I'm going to say is that Markazi works for ESPNLA.com whose offices are located at the L.A. Live complex which is owned by... AEG! It's a hit piece more than anything but it's always good to question financing. Ed Roski and AEG wouldn't go through all this trouble with the NFL if they didn't think they could get this stadium built, they would have given up by now.
Nothing is going to happen until 2013 anyways, the Vikings lease expires after this season, the Chargers will see if they can get the vote approved for Nov. 2012, the Raiders lease expires after the 2013 season, the Rams lease expires after the 2014 season and the Bills will be on the selling block once the passing of Ralph Wilson happens. Majestic Realty & AEG are going to wait this thing out and get the final plans in place.
NFL in LA:
Would you go out of your way to do anything for your landlord?
NFL in LA: What does the location of ESPN's offices have to do with the facts in the article? Does that mean ESPN can't cover this story or the Lakers, Kings and Clippers that play across the street in an AEG-owned building? Does that mean they can't cover any event in an AEG facility or any team AEG has equity in? If he got something wrong or slanted the facts in the story then I'd call it a hit piece but the article raises serious questions in Roski's plan. If the only thing wrong with it is that ESPN has offices at LA Live, then I guess there's nothing wrong with it. As Ty mentioned, I doubt ESPN is bending over backwards for their landlord. Besides they cover events all over the world. Whether the football stadium is in downtown or 20 miles away doesn't effect them. It's not like they have a stake in the team or stadium. If anything if the stadium were in downtown I'd think rent would go up.
The ESPN article is intellectually dishonest.
Markazi questions, appropriately, the cost estimate of the Grand Crossing stadium, suggesting that $800 million won't be enough to cover stadium costs, especially given recent cases in the Meadowlands and Arlington.
In nearly the same breath, Markazi regurgitates the AEG talking point that the retractable-domed stadium at L.A. Live will somehow be built for only $1.2 billion, and never challenges that figure.
Most balanced articles on the subject matter have stated time and time again that the cost of building Farmers Field will likely run far greater, possibly closer to $2 billion given higher constructions costs in California and the added costs of replacing Convention Center space and structured parking.
Futhermore, Markazi breezes over the fact that AEG has been trying to buy a minority share of an NFL franchise at BELOW MARKET VALUE. That is going to be a non-starter for any prospective NFL partner.
Pudgie, at least it was intellectual. Listen to Peter King's podcast on the subject at SI or read T.J. Simers at the LA Times, who has been covering this issue for the past decade. They aren't spending any time on Roski's proposal because they say league officials don't think it's realistic. This story actually explains why.
The construction estimate for Farmers Field at $1.2 billion was made in August by AEG and confirmed by the city and CSL. Roski's $800 million figure hasn't changed since 2008. Cowboys Stadium, a retractable roof stadium nearly twice the size of Farmers Field was built for $1.33 billion in 2011 dollars.
So the article goes off the 2011 projections made by the AEG, the city and CSL and doesn't talk to some anonymous "high-end builder" that has done no research on the project and says it would cost twice as much as a stadium twice its size. That's fair. I have no problem with that.
Markazi mentioned that AEG wanted to get a cut of a team at a discount but said it was part of a negotiation. He also mentioned Roski tried to get a cut of team for free in exchange for land but that too was part of a negotiation.
Again, seems like you're reaching. This was a story about Roski's financing plan since his proposal has been around for four years and cleared for construction two years ago with no action. Seems like you're not spending enough time looking at the facts in the article and spending more time trying to find ways to knock it.
The article wasn't saying that the AEG stadium was somehow the perfect option...it was only comparing the figures to show how out to lunch Roski is. It's offering no endorsement of the other stadium.