February 03, 2012

Goodell promises 34 NFL teams if L.A. gets one? Not so much

This was a weird news item to wake up to this morning:

Commissioner Roger Goodell says if the NFL puts a team in Los Angeles, it is probable the league would expand to 34 franchises.

Appearing Thursday night on "Costas Live" on NBC Sports Network, Goodell said the league "doesn't want to move any of our teams."

Why, exactly, would Goodell risk blowing the one thing the NFL is getting out of the two as-yet-unworkable L.A. stadium plans — leverage for team owners to threaten their home cities with a move to L.A. — by promising that any teams that move would be replaced with expansion franchises? True, it's not like Vikings fans will be entirely placated by "Don't worry, there'll be two expansion teams, and we'll have first dibs on one," but still it's an odd thing to volunteer on national TV.

Except that's not quite what Goodell said. To the videotape:

Key section:

Costas: Thirty-two seems like the right number for any number of reasons, the right number of teams. So if L.A. is going to get a team, it's going to be a team that will move. ... How likely is it that L.A. has a franchise sometime soon?

Goodell: It's hard, Bob. There's several issues. First you have to have the stadium. We're developing the stadium--

Costas: The city council there has approved the funds recently, right?

Goodell: There's two plans that are developing in Los Angeles, both of which we think have a great deal of potential. But really, we want to keep our teams where they are. That's the dilemma. Because not only do we have to get the stadium in L.A., then we have to find out how to get the team.

Costas: And 33 is unwieldy?

Goodell: You probably wouldn't go to 33. You'd probably go to 34. I would think you would have to do it by two.

In other words, the interpretation here could just as easily have been "Goodell says probably no expansion team for L.A., because you can't add just one." But that doesn't fit as well in the headlines.

January 17, 2012

Leiweke: L.A. stadium will bring fans, jobs, no matter what "professors" say

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.

January 11, 2012

Davis threatens to move Raiders to L.A. (yes, again; no, different Davis)

Newly anointed Oakland Raiders owner Mark Davis made his first public remarks on the future of the team yesterday, and they were drawn straight from the threatmongering playbook:

"The timetable is yesterday. So that's where it is. We've got to get a stadium. We've got to get that done," Davis said Tuesday in his first public comments since taking over the organization in October following the death of his father, Al.

"It's such a competitive business. It really is competitive. We can't compete for a lot of the players that other teams can, at times."...

"We're trying to get something done up here but if we can't, we've got to get something done somewhere because we need to be able to compete," he said. "And that's where it's at."

The message is clear: If no new stadium is forthcoming in Northern California, then Davis will likely look south to Los Ange—

Davis said he has talked to groups in Los Angeles but hasn't received an offer he likes.

Well, alrighty then. It's no surprise that Davis hasn't liked the offers from L.A. — as covered here previously, they both pretty much come down to "if you pay for it, we will build," which isn't what most sports owners want to hear, especially in the NFL, where moving to a bigger market doesn't even get you more TV money. So this pretty much comes down to a reiteration of Davis' late dad's strategy: Complain loudly that you need a new stadium, and see what shakes loose, whether in Oakland, Santa Clara, Los Angeles, or Cucamonga. It's worked before, though sometimes you have to repeat it for a few years first.

December 20, 2011

NFL establishes "G-4" stadium fund, there is much rejoicing

Just realized I never recapped last week's NFL owners meeting to formally re-establish the exhausted G-3 stadium fund, as previously pre-announced last summer. And so, without further ado:

• The new loan program — which actually will be called "G-4" — ups the maximum loan level from $150 million per team under the old plan to a maximum of $200 million under the new one. Only projects costing at least $400 million, and with a "private contribution" from the team of at least $200 million, will be eligible for the top loan level
• As under G-3, teams can repay the loan with club seat money they normally would have had to share with the league. They can now also use incremental regular ticket revenue, defined as the difference between ticket sales in the new stadium and average sales in the last three years of the old one.
• "The project must not involve any relocation of or change in an affected club's 'home territory.'" That's in keeping with the old G-3 plan's goal of aiding teams in building new stadiums in their existing hometowns (to avoid the kind of city-hopping that gave us the St. Louis Rams and Tennessee Titans). Still, it's worth noting that this means the Minnesota Vikings, for example, can access $200 million in G-4 loans for a new stadium in Minnesota, but not for one in, say, Los Angeles.

Teams looking to build new stadiums without paying for them themselves are, naturally, thrilled — since this is money that they wouldn't normally get to keep anyway, it's effectively a grant, not a loan. (Unless club seat and ticket sales come in below projections, in which case they're on the hook for the difference.) San Francisco 49ers owner Jed York tweeted that he was confident his team would be first to get a cut of the G-4 boodle, San Diego Chargers stadium czar Mark Fabiani called it "great news for the team and our fans," and Vikings stadium chieftain Lester Bagley called it "good news," though he quickly added the caveat that the Vikings still don't have a deal for the other $800 million it takes to build a stadium these days.

And that's the catch: Most of these teams were counting on NFL funds as part of their stadium deals already, so while the establishment of G-4 comes as a relief to them, it doesn't really do much to fill the funding holes that most of these teams (except for the 49ers) still have in their plans. And while it'd be nice if the teams used this free league cash to reduce their demands on taxpayers, it looks like most of them instead intend to use it to replace their own share of stadium costs.

For more on all this, the San Diego Union Tribune has helpfully posted a document containing a brief summary of NFL commissioner Roger Goodell's press conference and the actual G-4 document language. Highly recommended for anyone who finds discussion of "tranches" to be compelling reading.

November 16, 2011

AEG proposes removable roof for L.A. stadium

The proposed AEG downtown Los Angeles football stadium may not have a team, a solid funding source, or the support of the NFL, but it does have one thing you haven't got: a removable roof. Figuring that in the dry Southern California climate the only times you'll really need a roof are for basketball games and conventions, AEG has opted for a "deployable" roof that can be stored under the stadium and then lifted into place when needed.

Renderings of this new marvel are available at ... um, actually not anywhere, so far as I can tell. Also not pictured: how much assembling and installing the roof each time would cost, and whether the L.A. convention center (or the NCAA or whoever is holding the roof-requiring events) would be required to pay to hire the roof assemblers.

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:

1. 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.
2. 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.
3. 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.

October 11, 2011

NFL hates on AEG Los Angeles stadium, Roski retools Industry offer

The Los Angeles NFL stadium competition, thought by many (though not by me) to have been settled in favor of AEG's downtown stadium plan when that was approved by the L.A. city council back in August, just got turned topsy-turvy again:

• On Friday, Yahoo News reported that the NFL isn't interested in the AEG plan as currently constituted: "During a Sept. 6 meeting at the NFL offices in New York, commissioner Roger Goodell told Los Angeles Councilwoman Jan Perry and political aide Bernard Parks, Jr. that neither the league nor any team interested in moving there would agree to the business proposal set forth by Anschutz Entertainment Group, according to three sources with knowledge of the conversation." Added one unnamed NFL exec: "The problem is that when you start to look at the expenses and how much has to be divided among all the competing interests, you have to wonder how much is going to be there for a team." Or, as the invaluable (and I say that not just because they linked to us) I Dislike Your Favorite Team puts it: "Wait, you want to charge HOW MUCH to have a NFL team in your stadium?"
• With the AEG plan apparently dead in the water for now — at least until they can figure out how to pay for it without demanding that any team playing there give up a ton of stadium revenues and a chunk of equity in the team — developer Ed Roski has retooled his City of Industry stadium plan: Now, instead of seeking to trade development rights to land around the stadium for an ownership share in an NFL team, Roski would buy a chunk of the team at market rate, and offer to hand over the development rights to the land to any team that would move in and finance the stadium themselves.

On the face of it, Roski's new proposal doesn't sound all that much more tempting to an NFL owner: Either way, they're looking at giving up a chunk of their team and having to build a stadium on their own dime, with the uncertain prospect of getting to develop the surrounding land the only upside. That's not what team owners are looking for — as I've written before, if teams wanted to use their own revenues to pay for new stadiums, they could do that right now in their current cities.

L.A. is no doubt a tempting market — albeit less so in the NFL, where local TV revenue is inconsequential — but it remains exceedingly unlikely that either the league or any individual team owner is going to jump at a stadium offer that mostly requires them to pay their own way. (Yes, the New York Giants and Jets did it, but New York is an even bigger market than L.A., and there the teams didn't have to start fresh with a new fan base.) Unless somebody figures out how to either cut the cost of the stadiums or generate cash out of thin air — or from those increasingly standoffish California taxpayers — we could be a long way from seeing the NFL return to Los Angeles.

September 12, 2011

Cal legislature okays fast-track for all stadiums and arenas

The bill to fast-track Los Angeles' $1.2 billion downtown football stadium indeed passed the California State Senate on Friday, by a 32-7 margin. And later the same day, the senate also passed president pro-tem Darrell Steinberg's bill allowing all development projects to be exempted from lengthy lawsuits — which, depending on how you look at it, either puts all of the state's big projects on equal footing, or uses a loophole granted to one developer as an excuse to grant loopholes to all developers (so long as their projects are worth at least $100 million).

Assuming Gov. Jerry Brown signs the bills — no word from the governor's office at last check — this will obviously smooth the path for AEG's L.A. stadium, as well as proposed buildings for the San Francisco 49ers, Sacramento Kings, and San Diego Chargers, among others. Still, the main holdup in all of those cases is money: The 49ers still haven't firmed up their share of construction costs, the Kings arena finance plan right now mostly amounts to wishful thinking (the latest involving selling off future parking revenues for up-front cash), and AEG needs to find an NFL owner who wants to give up either a hefty annual rent, a hefty share of stadium revenues, or a hefty share of the team itself in exchange for moving to L.A. Not having to worry about pesky lawyers is a nice plus, but pesky bankers are still the main reason why stadium deals do or don't get done.

September 09, 2011

California senate to okay fast-track for all stadiums, arenas?

It's D-Day for AEG's Los Angeles stadium fast-track bill, which passed the state senate on Wednesday and now goes to the state assembly. With the legislative session ending today, either the bill will get swiftly approved — just nine days after it was written, though that still wouldn't be a record — or AEG will need to decide whether to move ahead with its project without the promise that any lawsuits will be swiftly resolved.

The state senate, however, appears to be focused on a new bill, introduced just yesterday, that would allow the governor to fast-track any development project over $100 million, for the next three years. Reports the L.A. Times:

Senators acknowledged that the broader measure would probably have to pass if they are to approve the AEG stadium bill. Its principal co-author, Senate President Pro Tem Darrell Steinberg (D-Sacramento), said it was justified by the state's 12% unemployment rate.

"This is a recession," Steinberg said. "People are hurting, and we have to use every tool in our disposal to help people get back to work, and do so in a way that does not undermine our very important environmental laws."

The bill, AB 900, would allow a wide variety of projects — residential, commercial, sports, cultural, entertainment, renewable energy and recreational — to apply to the governor for expedited treatment. They would have to be located on an under-utilized property in a developed area.

This would make Steinberg, for one, happy because it could potentially be applied to the Sacramento Kings arena; the senate leader is co-chair of Sacramento's Think Big committee trying to get that built. Less happy, though, are the environmentalists who'd endorsed the AEG-specific bill: National Resources Defense Council attorney David Pettit had barely finished blogging about how the AEG bill was worthwhile because they'd added legally binding commitments to increase public transit use by fans when he was telling the Times that the broader bill was problematic because it could apply to so many projects:"There are a lot of projects that could get under the wire by 2015."

According to the Times, though, senate leaders say it's the broader bill or no bill at all. Looks like you can listen live here (and possibly watch live here) if you want to follow the play-by-play of today's final senate session.

September 06, 2011

California legislature mulls bill to fast-track AEG stadium

As expected, two California legislators on Friday introduced a bill to fast-track AEG's planned downtown Los Angeles NFL stadium, forcing any environmental challenges to be resolved within six months. The twist: With just four days left in the legislative session, some legislators said they'd barely have time to read the bill before having to vote on it.

Defense against what it considered frivolous lawsuits was one of AEG's main demands, especially after its stadium competitors in City of Industry got an even more sweeping get-out-of-lawsuit-free card two years ago. It looks like this one could see some opposition, though, particularly from legislators who don't see why their cities' stadium and arena plans shouldn't be similarly fast-tracked: San Diego assemblymember Nathan Fletcher declared, "I oppose this effort unless it's amended to apply to the entire state. Los Angeles isn't the only city to undertake this kind of effort, and if the process is broken, the fix should apply to the entire state." And Senate President Pro Tem Darrell Steinberg of Sacramento suggested that he'd prefer to see a statewide change to environmental laws as well, presumably so that the Kings could take advantage of it as well, if their arena plan ever gets off the ground.

All of which seems like a lot to untangle in the next four days, but if nothing else it could certainly lay the groundwork for a broader exemption next session.

In other Kings news, meanwhile, Mayor Kevin Johnson's arena task force is set to turn in its final financing plan this Thursday, which means it's time for the spin attempts to begin. First up: Developer David Taylor, who promised on Thursday that "if the arena is a go, there will be private investors, big-time investors" will build other projects — why, he might even build a hotel himself. Taylor, of course, is one of the developers hoping to build the arena itself — but a developer would never lie about the likely benefits of development just to win public subsidies, would he?

August 27, 2011

Convention cites L.A. stadium as reason to avoid L.A.

It's only one event, but the irony is still pretty delicious:

A national medical group has cancelled its 2014 convention in Los Angeles, citing concerns about the construction of a proposed downtown stadium, according to a Los Angeles Convention and Visitors Bureau memo.

The Society of Critical Care Medicine had planned to book more than 9,000 room-nights at 10 downtown hotels for its February 2014 convention, according to LACVB documents. The convention was projected to bring 5,000 visitors to Los Angeles. But SCCM has decided to move its convention to another city "due to the uncertainty surrounding construction plans for the LACC," an Aug. 24 LACVB memo said.

Part of the rationale for the new stadium, of course, is that rebuilding part of the convention center would make it more attractive to conventions, which would create a windfall for L.A. That's arguable to start with — most convention center expansions only end up throwing good money after bad — but it's also important to factor in that some conventions may steer clear during the construction period, an impact that could stretch on for years given that no one knows when construction will begin or end.

In other L.A. stadium news, AEG president Tim Leiweke warned that the project could be derailed if the state legislature doesn't give him a get-out-of-lawsuits-free card in the next two weeks, though it's hard to picture him complaining if he gets legislation a week late. Meanwhile, the state legislative analyst's office has reiterated that the economic impact analysis of the AEG stadium overstates its benefits, in particular noting that most spending at the stadium would just be cannibalized from elsewhere in the state:

[Economist Mark] Whitaker gave his testimony during a three-hour hearing of the Senate's Select Committee on Sports and Entertainment, which was reviewing the economic benefits of the project and the potential for a bill that would allow AEG to curtail legal challenges to the project on environmental grounds. The written report received by the committee was even more blunt, with analysts saying the state and region would see "minimal" economic benefits from the project.

"The overall economic activity across the region would not necessarily increase but instead shift to Los Angeles … with little net benefit to the region or state," it said.

August 11, 2011

L.A. stadium benefits rely on crazy number of events, nonexistent taxes

In yesterday's item on the AEG stadium, I almost called out the Los Angeles Times for its unquestioningly rosy depiction of the project's economic benefits, which it said "gave city leaders a rare chance to seize on a major economic development after years of slashing payrolls, scaling back services and watching helplessly as the real estate market dried up." I didn't have time to do a full evaluation of the project's likely impact, though, so I skipped it.

Fortunately, last night the Associated Press did it way better than I could:

A close reading of an economic study that AEG released last month shows that the promise of a sales and property tax windfall appears to be overblown. ...

The study released by AEG sees some $22.1 million in city taxes being generated, including $11.6 million that would come from hotel room taxes.

Yet, two of the largest hotel offerings in the area got breaks on those taxes to spur their development. The JW Marriot and Ritz-Carlton hotels in AEG's adjacent LA Live entertainment complex get to keep their respective room taxes until 2035, unless better-than-expected business gets it to a maximum rebate of $246 million before that.

AEG chief operating and financial officer Dan Beckerman said new stadium and convention business would help the hotel reach the rebate cap faster, so the city would begin collecting the taxes sooner.

Also unlikely to materialize are the $3.1 million in property tax and $1 million in parking taxes that the study says would go to the city, since the deal approved this week would earmark that cash for the repayment of a loan taken out to move the convention center building.

Beckerman defended the inclusion of that cash in the tally.

"The purpose of the study is to identify the universe of new taxes and then the city will identify the portion of those new taxes that are going back into the project," he said.

The AP story also questions whether an AEG stadium could really host 38 events a year, as the report promises: Supposedly this would include 12 NFL games (which would require an L.A. team to make the playoffs every years and for the players union to accept an extended regular season), the Pac-12 Championship (which currently goes to the school with the best record), an annual boxing match ("If you look back in the history of professional boxing in the United States, you could probably put on one hand the number of championship fights that drew 50,000," fight promoter Roy Englebrecht told AP), and one "Super Bowl-sized event," whatever that might be in the years when the Super Bowl inevitably went elsewhere.

Coincidentally, I went to a presentation yesterday on the mathematical models used to draw up these kinds of economic impact reports, and one of the comments from an economist in the audience was that the model itself matters a lot less than the assumptions that go into it — it's easy to get pretty much any Excel formula to spit out a positive number if you can put in any inputs that you like. So, kudos to the AP in vetting what sounds like a patently ridiculous study by AEG; but was there really nobody on the L.A. city council staff who knew that the NFL season is only 16 games long?

August 10, 2011

L.A. council okays AEG stadium — what now?

And it's on: The Los Angeles city council last night unanimously approved AEG's preliminary deal for a $1.5 billion downtown NFL stadium, including $275 million in public tax and lease kickbacks. If the plan gets final approval, construction could begin next June, though the stadium wouldn't be complete until 2016.

There are still a few hurdles to be crossed, though, before "Los Angeles" starts showing up in the NFL standings again. Among them:

• The council still needs to vote on several environmental and other approvals, which is expected to take place over the next few months. Given last night's unanimous vote, though, it's pretty unlikely that these will present much of a roadblock.
• Lawsuits and the threat of lawsuits. AEG president Tim Leiweke made a preemptive move to head off any legal challenges yesterday, saying he'd ask for legislation exempting the project from environmental lawsuits; or as Leiweke put it, "We're going to need some protection from the crazies."
• Some NFL owner needs to decide he wants to play there — or to sell the team to someone who does. (Leading candidates are the San Diego Chargers, the Minnesota Vikings — oh, just go look at Leiweke's target list.) This could be the trickiest part, given that AEG is going to have a $1-billion-plus mortgage to pay off, and so is presumably going to need to get either a mammoth yearly rent or a hefty share of stadium revenues, either one of which would cut into an NFL team's profits. Two possible mitigating factors: If the NFL throws a bunch of money towards an L.A. stadium (or a team that moves there — same difference), that would reduce the amount of debt that would have to be paid down; and if Ed Roski keeps pushing his City of Industry stadium, there's the slim chance of a bidding war for a team.

That said, it's still an awful lot of money to raise while still providing an NFL owner with the kind of profits he'd be looking for, meaning you shouldn't be surprised if the search for a team goes on even longer than the search for a stadium.

August 04, 2011

AEG stadium wins first L.A. council vote

AEG's $1.5 billion plan for an NFL stadium in downtown Los Angeles cleared its first hurdle yesterday, as the city council's Ad Hoc Committee on the Downtown Stadium and Convention Center voted 4-0 to recommend approval of the city's memorandum of understanding with AEG.

Significantly, one of the four votes came from Bill Rosendahl, previously one of the strongest skeptics of the deal. "I'm delighted to see all these answers to my questions," Rosendahl said before his yes vote. (One key answer provided by AEG: It promised to cover any shortfalls in tax and lease revenue generated by the project, though it didn't address the fact that some of this tax revenue could end up cannibalizing existing tax revenue.)

The full council is expected to approve the MOU on Tuesday. After that, it will sit down with AEG to negotiate an actual lease. "This is the table setting, not the meal," stadium committee chair Jan Perry told the L.A. Times. It's possible that new hurdles — or new compromises — will emerge at that point, but right now it sure looks like the reason the council is setting the table is that it intends to eat the meal.

At that point, the biggest obstacle will be landing a team — and there you might actually have some problems. In the NFL, where local TV and ticket revenue is a drop in the bucket compared to the national TV contract, playing in a big market like Los Angeles isn't a huge advantage for an owner. (This is in part why L.A. lost its two teams in the first place to smaller markets in St. Louis and Oakland.) A new stadium is a draw — but only because of the new revenue streams it would create, and in an AEG stadium, much of that would be dedicated to paying off the stadium costs.

In the end, then, the question will be whether an AEG stadium can be lucrative enough to pay for itself and generate extra cash for both its owner and an NFL franchise. It's certainly possible — it did work in New Jersey for the Giants and Jets, on more or less the same model (mostly private funding, leavened with tax kickbacks). But just because L.A. gets a new stadium deal is no guarantee that it'll get a new team.

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.

July 28, 2011

L.A. council hears latest AEG stadium finance plans

Amidst all the excitement about the new NFL labor deal and what it means for stadiums, AEG and the city of Los Angeles on Monday announced a revised stadium financing plan, which was the subject of a city council hearing yesterday.

The new plan is being sold as shifting more of the cost to the developer, but it's not actually clear that it would do that. In the old deal, the city would have sold $350 million in bonds to demolish and rebuild part of its convention center to make way for the new stadium; in the new one, the city would only sell $195 million in bonds, while AEG would sell another $80 million. However, the revenue to repay the bonds would still come from the same place: lease and tax revenue generated by the stadium project, including property tax revenue that would normally go to the city. In other words, it's still a TIF.

The advantage of the new deal is that the $80 million wouldn't be on the city's books, so if the money didn't come in and the bonds went into default, it would be AEG on the hook, not taxpayers. Still, it's more a case of putting a cap on a subsidy than eliminating one entirely.

At yesterday's hearing, predictably, no one could agree on what the new plan meant: Councilmember Jan Perry said the plan would not "cost the taxpayers a dime," while her colleague Bill Rosendahl warned that it was "very risky." The Contra Costa Times reports that most of those who spoke were in support of the project, though it's not clear whether they mean members of the council as well.

Meanwhile, Sam Mellinger of the Kansas City Star is taking all this L.A. activity as a sign that AEG doesn't love Kansas City anymore and isn't going to work to bring them an NBA or NHL team. Which would be news, maybe, if not for the fact that AEG's lease means it already has no real incentive to bring a sports franchise to Kansas City to begin with.

July 26, 2011

The NFL's new stadium fund explained (sort of)

With the NFL lockout finally over, the blogwaves are afire with talk of how the league's new collective bargaining agreement will affect various teams' stadium campaigns. We've already seen a report that the San Diego Chargers could get up to $150 million in NFL stadium funds, another that the San Francisco 49ers and Raiders could pool their stadium credits to get $300 million for a shared stadium, and still others that AEG's planned Los Angeles stadium could get a cut. (The Minnesota Vikings could also be in line for funds, though apparently they've already been counting that particular chicken before it hatched.)

So how much money is really available, and where is it coming from? The press reports are maddeningly incomplete and contradictory, but this is, to the best of my knowledge, what's going on:

• Back in olden times, the NFL had a program called "G-3," which allowed home teams to keep the visitors' share of club seat revenues to use to help pay off new stadium costs. Initially implemented to help convince NFL teams to remain in large markets — it was originally concocted, in fact, by New England Patriots owner Robert Kraft, who limited it to the top six media markets, of which he just happened to play in #6 — it was eventually expanded to the whole league. Then the program ran out, and the flow of funds stopped.
• The successor to G-3 — which, sadly, won't be called G-4 — instead takes a 1.5% cut off the top of NFL revenues, and allocates it to stadium projects. (Sources disagree over whether this comes entirely out of the players' share or the owners would contribute as well.) At $9 billion a year in total league revenues, that would imply $135 million a year in stadium credits — though apparently the math isn't nearly so simple, which may explain why this article says only $95 million. Still, that's a huge amount of money, enough over ten years pay off about $734 million in stadium bonds. (It's not $950 million in stadium bonds because payments ten years from now aren't worth the same as payments now.)
• That huge number notwithstanding, scuttlebutt is that only three teams will be allowed to tap the new stadium loan fund, with rumors putting a cap at $150 million per team. That'd mean that from among the 49ers, Raiders, Vikings, Chargers, any team moving to L.A., and maybe the Jacksonville Jaguars, at least a couple of teams would get left out in the cold. Unless the NFL expanded the program again, which it seemingly would have the money to do.

All in all, this is a good thing for both teams wanting to build stadiums and for taxpayers not wanting to put their own money into stadiums, as this is the NFL recognizing that — because of its weird status as a league where the vast majority of revenue comes from national TV contracts — if it wants to encourage teams to stay in big markets and avoid killing the Fox golden goose, it needs to subsidize stadiums with its own money. Of course, it also could end up helping grease the wheels for some otherwise stuck stadium projects that would still involve some taxpayer money — $150 million per stadium doesn't go all that far — so in that sense, not so good. But in the grand scheme of things, billionaires voting to spend some of their own billions on projects to increase their billions is nothing to sneeze at.

June 28, 2011

AEG reshuffles taxes for repaying L.A. stadium bonds

AEG's Tim Leiweke "tweaked" his company's Los Angeles NFL stadium proposal (in the universal assessment of headline writers) yesterday at a Los Angeles town hall meeting. The main new elements in the latest AEG pitch look to be:

• Instead of the city building parking garages, a private operator would, cutting the amount of city bonds needed from $350 million to $300 million.
• Instead of garage revenues going toward paying off the debt, the city would use AEG's ground lease payments on the stadium plus property tax kickbacks (the previously discussed TIF) and existing ad revenue from AEG's ad boards around the convention center. A ticket tax would still be used for the rest of the bond payments.

Leiweke said the new revenue streams would be less risky than parking revenues, and at least it would avoid something akin to the New York Yankees parking garage bond fiasco. It also seems to be mostly taxpayer money, though, albeit much of it money that taxpayers might not receive without the project. Still, the upshot is that AEG wouldn't be paying taxes that other developers normally would have to — or more to the point, would be getting to take their tax payments and use them to pay off their construction costs — which is very much like the Yankees deal.

The new bond payment plan is clearly designed to calm the jitters of L.A. city councilmembers who'll be voting on the deal; L.A. Observed's Bill Boyarsky, for his part, thinks it will do the trick. We should find out more on Thursday, when AEG formally submits the plan to the council, but it sure would be nice if somebody reported on this with more than an AP story so we could have half a clue now.

June 14, 2011

AEG short list for L.A. NFL relocation actually a long list

No sooner was it reported that AEG president Tim Leiweke had narrowed the list of teams targeted for a move to a new Los Angeles stadium to five than unnamed AEG officials declared that they're actually in touch with more than five teams:

AEG president Tim Leiweke told The Orange County Register on Thursday that his group has been in contact with the Rams, Raiders, Jaguars, Vikings and Chargers, to gage interest in attracting a team to Los Angeles.

An AEG source indicated on Friday that the group is actually in contact with more than the five teams cited by Leiweke. Those clubs are getting monthly briefings from AEG on the progress of the downtown project.

At a certain point, AEG's target list is just the entire NFL — especially when "getting monthly briefings from AEG" could just mean that the company is spamming owners' in-boxes with news about their stadium plans. (It doesn't help the story's credibility that it was reported by a site that can't spell the word "gauge.") Still, it'll no doubt get people freaking out in more cities than the original five now, which is no doubt why AEG rushed to leak the news after Leiweke left out teams like the Buffalo Bills in his original statement.

June 13, 2011

AEG outs five NFL teams as L.A. relocation targets

AEG president Tim Leiweke, not content to be dropping arbitrary deadlines for his company's downtown Los Angeles stadium plan, let loose another media salvo on Thursday by declaring that his boss, Philip Anschutz (the "A" in "AEG"), was prepared to buy an NFL team to move it to L.A. — and then naming names about which teams he was considering:

"St. Louis, Jacksonville, not extensively, certainly Oakland, San Diego, Minnesota are still in the mix," Leiweke said listing the teams AEG has met with before adding: "We're not packing any [moving] vans right now."

Now, "met with" doesn't necessarily mean the current team owners are actually considering AEG's offer (or that there's a solid offer to consider). Still, it was enough to set off media mayhem in the listed cities. A San Diego Chargers blog declared that "The Hit List Is Out"; Oakland Raiders CEO Amy Trask issued a statement denying that her team was for sale; and Minnesota Vikings execs insisted that their only meetings with AEG were over possibly operating the new stadium they want built in Minnesota.

Meanwhile, though the St. Louis Rams probably aren't for sale, ESPN noted this would give their owner welcome leverage in his own stadium campaign. And that's the main upshot here: For Leiweke to come out with a statement like this is a win-win for all the bigwigs involved — AEG gets a carrot to dangle alongside its July 31 deadline stick, and the owners of all the rumored move targets get a threat to use against their own localities, plus plausible deniability against being blamed for threatening a move.

And as for us? We get to play the home version. (Currently leading: The Jacksonville Jaguars, by a sizeable margin over "nobody" and then the Raiders.)

June 03, 2011

AEG issues two-minute warning on L.A. stadium

When last we left AEG's plan for a new NFL stadium in downtown Los Angeles, it was under fire for not including guarantees on repaying public stadium debt, facing a possible need for county approvals, and under attack by lobbyists for Majestic's competing stadium plan in Industry. It was already enough to make AEG president Tim Leiweke get publicly cranky, and now he's crankier still, issuing an ultimatum to get the deal approved by July 31 or he'll take his ball and go home:

While saying he's "optimistic" that the city has approached negotiations in a purposeful way, Leiweke said billionaire Philip Anschutz is prepared to pull the plug if the uncertainty drifts into August, thereby opting not to spend an estimated $45 million over the next year on an environmental impact report, designs for the stadium and replacement hall, and pursuing an NFL team.

"Will we get to the right place? I think so," Leiweke said. "But I'm OK if we get to July 31 and we don't get a deal done, and we move on, and I didn't spend $45 million of Phil's money."

There's a long tradition of setting arbitrary deadlines in the stadium biz, though there's just as long a tradition of re-setting them when it looks like you're going to lose. (Or if you prefer a more recent citation, try this one.) From the sound of things, Leiweke is mostly just trying to light a fire under the city council to step things up with deciding on the stadium bill — though given recent events in L.A., perhaps that isn't the best choice of metaphor.

May 05, 2011

McCourt sale to spur Dodger Stadium demolition, NFL land flip-flop?

This is so far into rumor-land that I don't even know what to do with it, but here it is, courtesy of Yahoo! NFL writer Jason Cole:

Out of all the places in L.A. available to build an NFL-quality stadium (the Los Angeles Coliseum site is out of the running with USC in charge of it), the Dodger Stadium site in Chavez Ravine is the one most coveted by the NFL. That's not new information, but the critical obstacle the past eight years has been [Dodgers owner Frank] McCourt, who the NFL has been leery of working with for the financial reasons Major League Baseball is now addressing...

There are some who see even bigger ideas with the Dodgers potentially in play. The idea of moving the team from Chavez Ravine to the downtown site where Anschutz Entertainment Group president Tim Leiweke has been proposing a football stadium has been met with some interest among people inside baseball and the L.A. sports scene...

If someone with extremely deep pockets (such as Anschutz) could buy the Dodgers, build a football stadium next to Dodger Stadium and then buy a football team, the marketing possibilities could be endless. ... Or, there's this idea: Anschutz, who NFL people think just wants another professional team to help build the traffic and convention business downtown, could buy the Dodgers and basically flip the stadiums. He could use the convention center space for a state-of-the-art baseball stadium, tear down Dodger Stadium and build a football paradise in Chavez Ravine. Of course, the cost would be problematic, but the idea for someone like Anschutz isn't farfetched because it would build the value of the downtown area.

That's all a heck of a lot of hand-waving speculation, and Cole provides exactly bupkis in terms of numbers making the case that this would cost out. (Or quotes from any named sources, for that matter.) Still, McCourt has explored the idea of an NFL stadium at Chavez Ravine in the past, so it's not entirely crazy. Unless you consider anything to do with McCourt as inherently crazy, which probably isn't a bad assumption.

April 22, 2011

Majestic hires L.A. lobbyist to fight AEG stadium plan

Long article in the L.A. Weekly this week on John Ek, a powerful Los Angeles lobbyist who's been hired by Ed Roski's Majestic Realty to lobby for his City of Industry stadium plan — and against AEG's competing downtown proposal. In fact, the paper notes, Ek sent the L.A. city council a list of 44 questions to ask AEG during hearings, and chief AEG critic Bill Rosendahl ended up reading them nearly verbatim:

Majestic: "Will the stadium developer agree to never sell/refinance the project until the bonds are paid off?"

Rosendahl: "Will the developer agree to never sell/refinance the project until the bonds are paid off?"

Majestic: "The L.A. Auto Show controls the entire convention center nearly the whole month of November; will we have football or the L.A. Auto Show?"

Rosendahl: "The L.A. Auto Show occupies the entire Convention Center nearly the whole month of November, which is football season. How will the two coexist?"

Majestic: "Given the passing of Prop. 26, would a 'ticket tax' require voter approval?"

Rosendahl: "Does the new Proposition 26 require that the proposed ticket tax be approved by voters?"

As the Weekly concludes: "Those are fine questions, deserving of answers. But that was even finer lobbying." And it's an indication that the AEG plan could have a rougher road ahead than some might have anticipated — as we've seen before, it's a lot easier to stop a stadium deal when there's a major local corporation in your corner.

April 18, 2011

AEG in L.A. development-rights grab?

Part of AEG's proposal for an NFL stadium in downtown Los Angeles includes having the city hand over control of a valuable 2.4-acre downtown parcel 10 years earlier than otherwise planned, according to an Associated Press report:

AEG now says the city no longer needs access to the parcel, which experts said could be developed into retail and office space worth millions to the company each year in leasing revenue, because a new convention center building would be built along with the 72,000-seat stadium it has proposed.

The request is part of a so-called transaction overview that AEG sent to city officials in February.

"If the city is not going to use it, then there's no need to hold it for them," AEG spokesman Michael Roth said of the parcel, stressing that the company would need to go through a formal entitlement process with the city to have anything built there.

Okay, but still, handing over a piece of property for nothing represents an additional public subsidy for the project. (Absent this deal, AEG would have to make an offer to pay the city if it wanted to use the land before 2021.) A local real estate expert told AP that AEG could lease out the space for $6.75 million a year, which over a decade would be worth roughly $50 million in present-day dollars, though presumably you'd have to factor in the costs of financing developing the land as well. So, not a tremendous giveaway, but something else to add to the pot of this "no public money" project.

April 14, 2011

AEG's Leiweke to stadium critics: Be "cheerleaders," not "professors"

It seems the pressure of having people actually looking at the specifics of his downtown L.A. stadium proposal is getting to AEG president Tim Leiweke. After previously sticking with the soft sell of insisting that no public money would be involved (despite the project requiring $350 million in public money that might or might not be recouped), on Tuesday Leiweke lashed out at critics of the stadium plan during his keynote speech at the Stadia Design and Technology Expo, saying among other things:

• Elected officials should be "a cheerleader for the private sector" in development deals.
• Economists who say that stadiums just siphon money from one part of the economy to another are "professors in classrooms that have never built anything in their lives."
• If the government doesn't want to build stadiums, and private developers are faced with "someone who not only attacks you but puts fear in the hearts of the citizens that the project is going to cost them money," then the private sector might just take their ball and go home and you'd have no new stadiums at all.

The best part of Leiweke's "cheerleader" quote is that it appears to be a (conscious or otherwise) to this Los Angeles Times editorial, which specifically called on local electeds not to be mere cheerleaders for a stadium, but to do due diligence. I suppose there are stranger ways to respond to negative press coverage than by extending a raised middle finger to your city's largest media outlet, but the examples are few and far between.

As for Leiweke's prospective cheerleader recruits, they responded about as you'd expect: Los Angeles City Councilman Bill Rosendahl, a stadium critic who is on the council committee investigating the plan, told the Times: "I'm not a cheerleader, I'm a player. The city is a quarterback or a tight end, it's one of the major roles in the team. And I hope Tim Leiweke is on our team." And not, presumably, this kind of teammate.

April 11, 2011

L.A. county could have say over AEG NFL stadium

Hey, lookit, investigative journalism! The Los Angeles Times, having (in its words) completed a "review of records spanning nearly half a century of financial and development issues involving the Los Angeles Convention Center," uncovered something unexpected today about the proposed AEG NFL stadium: It would likely require county approval, not just city, because of a joint powers agreement that goes back to the 1960s.

There's no particular sign of opposition to the project from the L.A. County Board of Supervisors, but this could still present a wild card, if only because AEG's lobbying machine hasn't yet approached the county. The Times reports that AEG president Tim Leiweke told the paper earlier this year: "We're not asking anything out of the county because we don't want to deal with them." Surprise!

March 31, 2011

AEG hasn't actually pledged to repay L.A. stadium bonds

AEG has been touting the success of its Staples Center as precedent for its proposed downtown Los Angeles NFL stadium, but it's not using the arena as a model in at least one way: Unlike in the Staples deal, the company won't sign any guarantees that it will pay off $350 million in public bonds for the stadium deal. Reports Bloomberg News:

Without such assurance, Los Angeles taxpayers may be on the hook if stadium and convention-center proceeds to the city come up short of what's needed for the bonds. Anschutz Entertainment Group President Tim Leiweke has said the company will make up any shortfall servicing municipal debt needed to finance the convention-center portion of the $1.35 billion project.

"With no bank, corporate or municipal insurance, you are possibly looking at the city having to make the payments," Jeffrey Appelbaum, an attorney who specializes in stadium finance at Thompson Hine LLP in Cleveland, said in an interview.

L.A. City Councilmember Bill Rosendahl, one of five members appointed Tuesday to look into the stadium plan, says the lack of a bond guarantee is one issue the committee intends to investigate.

Meanwhile, the first scoping meeting for AEG's proposed L.A. NFL stadium induced about 150 Los Angelenos to make public comments on the plan, though the L.A. Times only bothered to report on a couple — the most specific of which was from the owner of a taxi company who likes that the stadium wouldn't have much parking nearby.

March 28, 2011

Four out of five L.A. realtors say: Buy land near new NFL stadium!

Yesterday's Los Angeles Times business section has a long article headlined "L.A. football stadium plan has firms scoping out the neighborhood." So sports stadiums really can be economic catalysts for underdeveloped neighborhoods! Let's see, how many local business owners did the Times interview for their story?

The answer, it turns out, is zero. The only evidence for its story is a single commercial real estate broker, who claims that several large chain stores are "looking at downtown L.A." thanks to the prospect of an NFL deal.

Now, this guy may be right — though "looking at" isn't the same as "buying," needless to say. But the larger point is that a realtor who's looking to make his money by selling downtown properties to chain stores has a vested interest in making it seem like downtown is a hot locale for chains to relocate to. Not that that usually stops major newspapers from basing entire stories on what these guys say, but we can always hope.

In other AEG NFL stadium news, the first public hearing has been set for this Wednesday at 4 pm, at the convention center hall that would be demolished and rebuilt to make way for the new arena. Expect the realtors to be out in force with their testimony.

March 11, 2011

The facts on AEG's Los Angeles stadium plan

KCET has a great FAQ on the AEG stadium proposal for downtown Los Angeles, laying out exactly who's paying for what. In particular, it makes clear that AEG's "no existing public money" promise is, indeed, a TIF dodge: "in essence Los Angeles would forfeit whatever extra money it would have earned from such a project for the life of the bonds," including rent on the stadium land, parking and ad revenues, and property and sales taxes at the stadium. Since at least some of the money spent at the stadium is currently being spent elsewhere — Los Angelenos aren't bottomless pits of disposable income — this means that, on the whole, L.A. would likely end up losing some tax revenue in the deal.

Other issues raised by KCET:

AEG's proposal, only six pages long, leaves a lot of questions unanswered. For instance, how much does the city stand to lose from a decrease in Convention Center activity during the two or three years of construction, and what plan might AEG offer to help offset the cost? Is there an opportunity cost associated with placing three major event centers right next to each other, when it's unlikely if not impossible to run major events at the same time? What is the impact of the increased traffic in what is already one of the most congested parts of the city?

There's a link to the AEG proposal document, all six pages of it, as well. One-stop shopping for all your L.A. stadium research needs!

March 07, 2011

AEG: "New" city revenues would help fund stadium land

AEG testified before a Los Angeles city council subcommittee on Friday and, in the words of the Los Angeles Times, "repeated pledges that no taxpayer funds would be expended on the $1-billion project." Or, if you read the fine print in the AP article on the hearing, repeated pledges that taxpayer funds would be used for clearing land for the project:

AEG planned during negotiations to ask the city to allow it to use ticket taxes and new revenue from city-owned parking lots to service up to $350 million in bonds the city would issue to relocate a convention center building from the site of the planned stadium, chief legal and development officer Ted Fikre said.

The company would also ask to use some of the new revenue as credit toward the rent it would pay on the land where it would build the $1 billion venue, Fikre said

The city would benefit from taxes paid on hotel rooms, restaurant meals and other purchases by visitors drawn to the area by the new stadium, he said.

So the AEG plan would use city revenue (parking revenue at the last, and possibly hotel and other tax revenue in the stadium district, though that part is harder to parse), it just would only use new revenue. Which is exactly what AEG has said in the past. You can fool some of the journalists some of the time...

March 03, 2011

Majestic gives stadium site its own 1980s nighttime soap opera name

I don't even know what to say about this:

At the request of the NFL, planners of a proposed football stadium are no longer using the City of Industry when referring to the location of their 75,000-seat venue. The $800-million project is now being referred to as "Grand Crossing," said John Semcken, vice president of developer Majestic Realty Co.

"I was specifically asked if I could change the name of the city by the National Football League, and I said yes and I did it," Semcken told the Associated Press. "It's an impression that they have, which was a negative impression, and there's no reason to have it. You just get rid of it."

I guess if nothing else, Semcken managed to get back in the news for a day, at a time when it seems like all the coverage is about AEG's competing stadium project in downtown L.A. As for me, I plan on continuing to refer to the city where the stadium would be built by its proper name — though if they consider changing it to Crazy Town, then we can talk.

February 19, 2011

L.A. deputy mayor: We don't need to know AEG's finances

The Los Angeles Times ran its first analysis of the AEG stadium proposal yesterday (or maybe today — who can tell with these kids today and their crazy web publication times?), and concluded that it's hard to evaluate the plan when we don't know what the company's internal finances would look like. "You need to understand the finances [and] make sure the split for the costs and the split for the revenues are fairly equitable," said some guy who's studied stadium deals for 16 years (points to self, clears throat). "[City officials] can at the very least use [their] leverage to demand information."

Actually existing city officials seem not so much interested in that course of action. "I think it's more than fair that [AEG] earn a return on that investment," city Blue Ribbon Commission chair Austin Beutner told the times after meeting with AEG officials on Thursday. As for how much of a return they get, he said, "I don't know that that's necessarily relevant to this exercise." And this is the one guy on the panel without previous ties to AEG.

Anyway, if you're not convinced by the notion that those who get the lions' share of the benefit from a stadium should put up an equal percentage of the costs, there's the opportunity cost argument: "Just because it's the government doesn't mean they shouldn't be thinking, 'What are the alternative uses? What is the real value of using that land?'" economist Dennis Coates told the Times. "Government should be very dubious of companies coming and saying, 'We're going to give you all this stuff and it won't cost you a penny.'" But how could that possibly go wrong?

February 17, 2011

AEG offers to be "to be determined" rent on stadium land

Well, this is kinda sorta interesting: AEG submitted its official transaction outline for its proposed $1.35 billion stadium project last night, and included among the potential city revenues was "rent from a proposed ground lease," according the L.A. Times. How much rent? Well, whereas previously it was thought that AEG would only pay a token $1 a year, now the company is offering to pay ... an amount "to be determined"! Woo?

AEG president Tim Leiweke also wrote in an accompanying letter that the stadium would not "divert existing tax revenues," which is usually code for tax-increment financing — in other words, diverting new tax revenues. Which is, in fact, exactly what Leiweke wants to do to help pay off the city's $350 million share of the project:

Although few new details and numbers were included in the proposal, AEG said the city bonds would be repaid using the land lease, fees on stadium tickets, fees on Staples Center tickets, new parking revenue and new advertising revenue from signs that would be installed on the convention center.

The bonds also would be repaid with increased revenue from sales taxes, business licenses taxes, utility taxes and property taxes generated by the stadium and the new, more marketable convention center operation, according to the plan.

In other L.A. stadium news, the city's Blue Ribbon Panel met for the first time today, and immediately set to work insisting that isn't a problem that almost the whole panel is made of up people who've done business with AEG. "Just because they've known someone in the past, I don't think prejudices them in any way shape or form," deputy mayor Austen Beutner told the Associated Press, before insisting that AEG didn't have a hand in picking the panel. Which, you know, hadn't even occurred to me until he suggested it, but now...

February 16, 2011

AEG fiddles with stadium plan while news columns burn

Little action but much talk on the AEG L.A. NFL stadium front:

• AEG reps and union leaders met with Governor Jerry Brown yesterday to, in the words of Maria Elena Durazo, the executive secretary-treasurer of the Los Angeles County Federation of Labor, "make the case for why this project is so important to help put working families back to work in good jobs." Brown, according to the L.A. Times, "was noncommittal."
• Times sports columnist T.J. Simers says he's "turned off" by AEG's "arrogance" in trying to "jam a new stadium down everyone's throats because he says it will be good for L.A." and getting "huffy and dismissive" about its own potential for profits. All of which may well be true, but it leaves the impression that Simers would be happy to let AEG have $350 million in public if he just asked more politely.
• ESPN's Mark Kreidler writes that the NFL will miss the leverage that having an empty L.A. market has given to other teams in demanding stadium deals from their hometowns.
• The oddly named USC journalism school site Neon Tommy thinks that AEG should pay attention to the lessons of the Sprint Center in Kansas City, which AEG also operates, and which has been unable to lure an anchor sports tenant. Of course, in K.C. this doesn't matter much to AEG thanks to its sweetheart lease, but in L.A., notes Neon Tommy, "to pay off [its] massive investments, AEG would need to make $50-60 million per year from the stadium and surrounding L.A. Live complex," which is more than the vast majority of NFL teams turned in operating revenue last year. Also, "AEG made off like bandits in keeping much of the sponsorship and suite revenue from Sprint Center, but it may have to share a good portion of its $700 million Farmers Insurance naming rights deal with potential teams if it wants a tenant on Sundays." Remind me why they're doing this again?

February 09, 2011

L.A. council, AEG go toe-to-toe over downtown stadium

Lots of fireworks yesterday in AEG's ongoing campaign for a new Los Angeles NFL stadium:

• City councilmember Paul Krekorian submitted a resolution to "oppose any legislation that would subvert or accelerate the CEQA process for a proposed NFL stadium in Downtown Los Angeles." (CEQA is the environmental review process that Ed Roski's City of Industry stadium successfully evaded in 2009.) The resolution doesn't actually have any teeth, but would at least send a message to the state legislature that the council doesn't want to let AEG off the hook in this regard.
• AEG CEO TIm Leiweke promised that "the city's never going to have to pay a penny [for a downtown stadium] — and we're going to guarantee it," adding, "Will everyone just take a deep breath and have a little faith that we're not going to lie to people? We're going to do the right thing. Calm down." And: "This is people trying to scare people. And it's a shame. Because we have a 30% unemployment rate in this city, for the construction industry. And if people think that's going to be solved by sitting here and throwing rocks, they're wrong." And: "Almost every other community in the world would be throwing parades. But here we shoot."

It wasn't clear whether Leiweke's "not one penny" pledge applied to the $350 million convention center reconstruction that would be necessary to make way for the new stadium. Or how exactly AEG proposes to pay off the convention center bonds legally. But if you prefer heat over light, it was a great day to be reading the L.A. papers.

February 08, 2011

L.A. stadium panel packed with AEG pals

Now this is a lede:

The seasoned local business leaders picked by the mayor to analyze plans for a downtown NFL stadium on the public's behalf seem to have one thing in common: deep financial, political and civic ties with the company promoting the venue.

The article, by the Associated Press' Jacob Adelman, goes on to describe how six out of Los Angeles Mayor Antonio Villaraigosa's eight picks for the panel investigating AEG's downtown L.A. stadium plan has received campaign contributions from AEG or otherwise done business with them in recent years. Asks Robert Stern, president of L.A.'s Center for Governmental Studies in Los Angeles: "The question is: Is this commission designed to watch out for taxpayers, or is it designed to make sure the stadium gets built?"

To be fair, it's hard to be a major player in L.A. without having crossed paths with AEG, whose long tentacles reach into every corner of the entertainment industry. But that just points up one reason why stadium deals, which typically involve a major local developer or business titan, often get a less-than-jaundiced analysis from the local political classes: When you've done lunch with pretty much everybody who's anybody in town, you don't have to worry all that much that your golf buddies are going to look that hard at your financials.

The alternative, of course, would be to appoint somebody from outside the usual political sphere who has a track record of analyzing economic benefits. But that'd be crazy talk.

February 03, 2011

Los Angeles council approves AEG stadium study group

The Los Angeles city council approved taking the first steps toward an AEG-built downtown stadium yesterday, voting to form a working group to open negotiations with the developer, while — my favorite — "accept[ing] $250,000 from the company for an independent financial account of the potential deal." Because nothing says "independent" like a check from the project's main sponsor.

So far the council seems fairly positive about the plan, if you don't count the one councilmember who worried that "one wrong step and we could push the city into bankruptcy." Man, who invited that guy to the party?

February 01, 2011

AEG stadium to get $1B, 30-year naming rights deal?

That rumored naming-rights deal for an AEG-built Los Angeles NFL stadium is now ... well, still rumored, but now rumored to be done instead of "close." According to the Associated Press, Farmers Insurance will pay $700 million over 30 years for naming rights to the as-yet-nonexistent stadium, plus an additional $300 million if it plays host to two NFL teams.

AP calls this "a stadium deal worth up to $1 billion," which isn't really right: $1 billion would be the maximum nominal value (adding up all the yearly payments), but that isn't the same thing as present value. (Using the nominal value is like saying the value of your mortgage to the bank is the total of all your monthly payments over the next 30 years.) If my Excel skills can be trusted at this time of the morning, the actual value of the naming-rights deal in terms of "how much of the up-front stadium construction cost could this pay off?" is around $500 million max, $350 million for a one-team deal — still far from chicken feed, but not enough to pay for the whole thing as the headline might lead you to believe.

Nonetheless, this would be the largest naming-rights deal in history by a fair margin, which if nothing else indicates that the naming rights bubble has reinflated. Whether the curse will be restored with it remains to be seen.

January 28, 2011

Downtown L.A. NFL stadium: How would the bonds work?

Bill Boyarsky of L.A. Observed has an interesting take on how an AEG stadium in downtown Los Angeles could be financed:

Several years ago, the city's Convention Center and Exhibition Authority borrowed $450 million through the sale of tax-exempt revenue bonds to build an addition to the convention center, West Hall. It's the green building you pass on the Harbor Freeway. The city leased the convention center from the authority and is paying off the bonds with city funds. In the current budget, $48.8 million is set aside for the yearly payment of this debt, which is now down to $445 million. It will take 30 more years to repay it, city officials said.

Under the NFL stadium proposals that have been aired in the press, the $350 million bond issue for the football facility would probably be added to the convention center authority's existing $445 million debt, bringing total indebtedness to $795 million. This would boost debt repayment, or service, payments by $25 million or possibly $30 million a year, officials said. In other words, more than $70 million a year would come from the city treasury to repay the combined debt of the convention center and the football stadium.

Now, AEG has previously promised it would pay off the $350 million in new convention center bonds. However, it's questionable whether this would be legal: If a private entity pays for public bonds, that converts them into private activity bonds, which aren't tax-exempt. (And before anyone asks, the Yankees loophole is closed now.)

The only way around this would be to argue that no more than 10% of the bond proceeds were for the benefit of a private party; I guess if you squint you can pretend that tearing down a convention center hall and then rebuilding it is for the benefit of the public convention center, not the football stadium that the hall would be moved for. That'd be up to the IRS, though, and as we've seen before, they're sometimes willing to bend the law for the right people.

January 24, 2011

Brown's RDA plan would hit Chargers funding, too

I was so focused on what California's Gov. Jerry Brown's death-to-RDAs proposal would do to the Oakland A's stadium plans, I neglected to consider what it would mean for the San Diego Chargers' stadium plans. Fortunately, Tim Sullivan of the San Diego Union Tribune is on the ball:

"We're done, finished (if Brown's proposal becomes policy)," Chargers spokesman Mark Fabiani said Friday. "Redevelopment money is an essential part of the downtown concept and without it, the project is dead."

Both Brown and [AEG exec Tim] Leiweke have hurdles left to clear — for the governor, there's the state legislature and assorted special interests; for Leiweke, there are regulatory requirements and L.A.'s labyrinthine politics — but the success of either man's initiative would significantly raise the risk of the Bolts relocating.

"We will look at every other possible option if the redevelopment dollars go away," said Darren Pudgil, spokesman for San Diego Mayor Jerry Sanders. "But that certainly doesn't bode well for a new stadium ... We don't want to overreact, but the bottom line is losing redevelopment dollars would be devastating for San Diego."

Sullivan also reports that Ed Roski, who is competing with AEG to build an L.A.-area NFL stadium, charged that AEG's plan would cost "well over a billion dollars" in taxpayer subsidies. No reference to what he was talking about, but it presumably stems from this quote, which seems to have gotten much play in the blogoverse. For now, it's probably safe to toss all three Southern Cal stadium plans in the "nobody's quite sure who'll end up paying for them" bin.

January 19, 2011

AEG will build L.A. stadium — if conditions are met

You know, this is the kind of stuff that drives me, as both a journalist and a reader of the news, completely bonkers. Headline in today's San Diego Union Tribune:

Anschutz agrees to finance LA football stadium

He does? All by himself? Well, no: What AEG owner Philip Anschutz actually did was set a series of conditions under which he'd consider building a $1 billion stadium: A naming-rights agreement and other sponsorships have to be in place, the city needs to approve spending $350 million to replace the West Hall of the L.A. Convention Center to make way for the new stadium, an NFL team must commit to moving to L.A., and the NFL itself must approve it.

Those are a lot of details, especially given that an NFL team must not only agree to move to L.A. but must agree to a lease that leaves Anschutz enough money to pay off his stadium; and that the NFL ain't approving nothing until after this fall's expected lockout. And note that there's actually nothing new here: All you have is AEG president Tim Leiweke, who's been point dude on the stadium project, passing along that Anschutz is on board with the plan — as if his boss would have let him spend the last several months talking it up if he weren't on board.

The real goal of this planted story appears to be to put time pressure on the L.A. city council — Leiweke says he hopes to have everything but the NFL approval in place by March (really? even a commitment from a team to move?), which puts the council on the clock at a time when councilmembers are pushing for an impact study on how a stadium would affect the convention center's business. We'll see if anybody folds in this game of chicken.

January 10, 2011

AEG promises "completely private stadium" on public land

Still no financing plan for AEG's proposed downtown Los Angeles football stadium, but lots of headlines:

• AEG is "close to" a naming-rights deal with Farmers Insurance, according to "sources familiar with the negotiations."
• AEG exec Tim Leiweke promised L.A. Times columnist Steve Lopez that it would be "a completely private stadium" and AEG wouldn't consider taking "a penny from taxpayers." To which Lopez points out that AEG is asking for a $1 lease on city land, plus $350 million in city-floated bonds (which AEG would pay off, but presumably at a cheaper interest rate than they could get themselves).
• There was a big piece in the New York Times on Saturday recapping everything everybody already knows about L.A.'s twin NFL stadium battle.

Note that none of the stories were prompted by actual investigative reporting, but rather by leaks and press statements by people involved in the deal. All in the service of building "momentum," no doubt...

December 16, 2010

AEG pitches $1.35B stadium project for L.A.

Last week, AEG exec Tim Leiweke announced that he'd be pushing to get a new NFL stadium approved for downtown Los Angeles in the next two to three months; yesterday, no doubt mindful of all the speculation around the Minnesota Vikings, Leiweke got the campaign rolling in earnest, releasing renderings of three proposed designs for his proposed stadium.

The L.A. Times architecture critic slagged them all as "inoffensive corporate architecture," but the more interesting bit is the price tag that they come with:

The 1.7-million square foot stadium will cost $1 billion, officials said, with the cost of replacing the West Hall running another $350 million. ...

But stadium industry insiders involved in the recent development and construction of NFL facilities said the cost of a retractable roof stadium in downtown Los Angeles would run hundreds of millions above AEG's projected $1 billion budget.

One industry source told the Register that the cost of the stadium's roof would add between $150 million and $200 million to the price.

However you slice it, that's a hefty chunk of change, and one that AEG is going to be hard pressed to pay off with team revenues, even on the off chance that they can find a corporation that doesn't realize that the naming-rights bubble has popped. (Yes, the New Meadowlands Stadium seems to be making it work, but not only did it get free land and tax breaks, it has two teams' worth of revenues.) It'll be interesting, to say the least, to see what kind of financing plan AEG presents to the L.A. city council in coming weeks.

December 10, 2010

No real news on Vikings, Raiders, L.A. stadiums; Blue Bombers, maybe a little

At the end of a busy week, you don't mind if I jam together items about four different football teams in two different leagues into one post, do you? Surely you don't, so let's get on with it:

• Now Tim Leiweke of AEG says he's not going to wait until after the lockout to start on an L.A. stadium, promising: "I spend most of every waking hour on the NFL. I'm going to tell you this; we're going to give this our best shot in the next two to three months." Apparently this solely refers to an "agreement with the city and the NFL," but not actual stadium designs, or funding plans. Which leaves... the shape of the negotiating table?
• Amy Trask, who's in charge of getting a new stadium for the Oakland Raiders, says, "There will be a new stadium for the Raiders, it's on the horizon and it's very exciting." (What else is she going to say?) She also says she's "tenacious," "tough," "my hope is that I'm fair," and "it's not my job to be lovable." She left out "vague," but that's kind of in the job description.
• The price of the new Winnipeg Blue Bombers stadium has now risen from $160 million to $190 million. The team would now be responsible for putting in $70 million of the cost, which would cut into the new revenues that were supposed to be the point of building this thing, but them's the breaks. (It's also notable that now that the team will continue to be owned by a community non-profit instead of a for-profit developer, it's considered okay to ask for a bigger team contribution.) A final plan is expected next week.
• The Washington Post considers the likelihood of the Vikings moving out of Minnesota, and concludes: We dunno.

And there we go. Now, if FoS readers can help out by devoting the comments section to discussion of World Cup soccer as usual, we'll have a perfect hash of an item. Have a great weekend!

November 09, 2010

Columnist praises nonexistent L.A. stadium as not a "dump"

Speaking of stadium pushes that never die, AEG must be doing a full-court press on L.A-area sportswriters to get behind their imaginary downtown football stadium, because now we have L.A. Times columnist T.J. Simers chiming in with an entire column saying it would be the best thing since sliced bread.

Simers' reasons? AEG built the Staples Center, and everybody loves that, right? Also, "Philip Anschutz is the NFL's kind of guy." And "The Coliseum, Rose Bowl and Dodger Stadium are dumps." Nothing, needless to say, about how an NFL stadium would be paid for, which matches well with AEG's own lack of specifics about the project.

On the other hand, we do have a YouTube video about how a downtown stadium would lead to riots. I guess that's what passes for news analysis in these days of citizen journalism.

November 05, 2010

AEG promises L.A. stadium by 2015 Super Bowl

The battle for supremacy in Los Angeles-area NFL vaportecture continues, with AEG honcho Tim Leiweke insisting that his company's nonexistent stadium would be ready in time to host the 2015 Super Bowl. Unlike Ed Roski's City of Industry stadium plan, which despite being first out of the gate now has a targeted completion date of um, we'll get back to you on that.

Leiweke admits that nothing's going to happen on the stadium front until after next season's all-but-certain NFL lockout — as he put it, "there's no team and no league that's going to vote and approve a transfer for at least a year, and probably longer." So figure starting serious work on luring a team and getting construction approval in early 2012 at best, and that gives AEG three years tops to get the thing approved, financed, and built to be ready for February 2015. Sounds crazy short to me, but presumably Leiweke is counting on that fact that nobody ever remembers promised opening dates.

November 01, 2010

Goodell: Niners stadium funds must come from players' hides

Echoing what San Francisco 49ers officials said two weeks ago, NFL commissioner Roger Goodell this weekend all but said that there will be no new stadium in Santa Clara until a new labor agreement is reached:

"It's the CBA. That's what (investors) are concerned about," Goodell said on the eve of the 49ers' game against the Broncos at Wembley Stadium. "They want to make sure that the CBA is something that will allow them to finance a stadium. And that's challenging in this environment." ...

"And then you add the economy on top of that, it's a difficult environment to get a stadium built," Goodell said. ...

"I think (new stadiums) are great for the fans, but the financing no longer comes from the public sector," he said. "A lot of these stadiums are being moved to privately run facilities. And that's fine. It's a transition. But that transition is changing the economics for the owners."

And why exactly would the NFL commissioner be publicly pooh-poohing a stadium plan that the 49ers have been working feverishly on for years? Because the intended audience isn't the city of Santa Clara, which already signed off on $444 million in stadium subsidies back in June, so doesn't need any more convincing. Rather, it's the players union, which is being served notice that owners are planning to cry poverty, despite record profits, by claiming that if owners are going to be asked to build privately financed stadiums, players will have to kick back some of their salaries to make it happen. (And no, I'm not sure how Goodell got away with calling a stadium getting $444 million in taxpayer money "privately financed" — but at the risk of blaming the messenger, that's modern journalism for you.)

In other words, Goodell's statement is a bargaining tactic, so there's no reason to believe the 49ers stadium plan is any more (or less) endangered than it was a few months ago, although that was pretty endangered to begin with. The real upshot seems to be that there will be no action on a new 49ers stadium — and possibly other stadiums, including one for the Minnesota Vikings and whatever may or may not get built in L.A., until the league has finished using the stadium issue as a bludgeon with which to smack around the union at the negotiating table. So depending on how long the anticipated 2011 lockout goes on, we could be in for a long hiatus.

October 12, 2010

Rumors and the report of rumors in California NFL stadiums

Lots of news today among the various California locales considering new or renovated NFL stadiums — though actually, "news" might be pushing it. Here, you decide for yourself:

• Majestic Realty, the developers who want to build an NFL stadium in the City of Industry, now say they'll redesign their stadium to be able to fit World Cup soccer there. "Because we're building a new stadium, we could incorporate anything FIFA could want," Majestic stadium architect Dan Meis told the Associated Press. Or to put it another way: This is still vaportecture for now anyway, but we can change it round if you like.
• The Oakland Raiders are talking to city officials about a new stadium on the site of the Oakland Coliseum that would be, according to team CEO Amy Trask, "an anchor for, or a catalyst for, an urban redevelopment that provides economic stimulus for the whole region." From the sound of it, this is code for "ballpark village," but Trask didn't provide specifics.
• NFL commissioner Roger Goodell chimed in that he's concerned about low attendance at Raiders games, and that he'd like the Raiders and San Francisco 49ers to consider a shared stadium. (Oakland claims it can build an $880 million stadium with no public money, though it apparently doesn't count property and hotel taxes as public money.) He also said that the NFL needs to do a better job selling the stadium experience compared to staying at home and watching on HD TVs,, and specifically cited how great it is to watch in person at ... a Raiders game: "It's a great experience being there feeling that passion and excitement. It's something you don't get at home." (Make your own joke about how "at home, it's more crowded.")
• The city of Pasadena, meanwhile, actually made real news, approving a $152 million renovation of the Rose Bowl to take place over the next three football offseasons. The Pasadena Star News reports that "the project is expected to generate enough revenue to cover the debt service 1.475 times," though it doesn't provide details of whether this is via a more lucrative lease with UCLA or higher ticket prices or added tax revenues or what. The project would also be subsidized by the use of federal stimulus bonds, so taxpayers across the U.S. will each be tossing in a few cents for the Rose Bowl's newly widened access tunnels.

June 25, 2010

Environmental groups vow to block exemption for L.A. stadium

There hasn't been much public action the last couple of months on that plan for an NFL stadium in downtown Los Angeles, but environmental groups are charging that there's plenty going on behind the scenes. Tina Andolina of the Planning and Conservation League emailed out a sign-on letter on Tuesday morning, saying, "We are getting word that AEG (the owners of the Staples Center in LA) would like a CEQA [California Environmental Quality Act] exemption for a new NFL stadium in downtown LA," and asking recipients to oppose it.

The similarly unbuilt City of Industry stadium plan, you'll recall, was awarded an exemption from environmental review by the California legislature last fall, something that environmental groups at the time would inspire other developers to ask for similar exemptions. AEG officials wouldn't comment on whether they'll be seeking a CEQA exemption.

This seems like a pre-emptive strike by the Planning and Conservation League, but an eminently reasonable one, since you have to figure AEG is at least thinking about asking for the same deal from the state as Ed Roski got in Industry. It looks to be only the beginning of a long, long battle to come.

April 22, 2010

Industry NFL stadium in holding pattern

As if things weren't going badly enough for Ed Roski's City of Industry stadium plan, what with two other L.A. football stadium plans rumored to be in the works, today's Whittier Daily News has an article all but saying that the Roski plan has stalled:

Lawsuits against the project, the Great Recession, and now labor issues with the NFL's players have slowed Roski's project. The two biggest problems - the economy and the NFL's labor strife - have become larger concerns since Roski's 2008 announcement, said David Carter, executive director of the USC Sports Business Institute.

"The complications that have arisen are beyond his control," said Carter, who has consulted for Roski in the past. Roski is also chairman of the Board of Trustees of USC.

Existing owners don't know what their finances are, as a new labor deal could change how much players and team owners split, experts said. And until that is sorted out - which could take a year or so, some predict - a team won't move to L.A.

To make matters worse, getting loans is tough. And sponsors and advertisers have retooled their budgets, investing less on professional sports, experts said.

Concludes Carter: "The music may not have stopped, but it's pretty slow."

April 16, 2010

Let a thousand L.A. stadium plans bloom!

What's better than a stadium plan with no team and no clear funding source? That'd be two of them, of course! According to today's Los Angeles Times:

[Los Angeles businessmen Casey Wasserman and Tim Leiweke] are investigating the possibility of building a stadium behind Staples Center, where the West Hall of the Los Angeles Convention Center now sits, with the idea of replacing that convention space elsewhere in the general area.

The Times rightly observes that "it's hard enough to build one stadium in the L.A. area, and there aren't going to be two," so any Wasserman/Leiweke plan would be in direct competition with Ed Roski's City of Industry plan, which has government approval but no team and no funding source beyond stadium revenues — which will be tough for Roski to come up with on top of paying top dollar to acquire a team.

And that's without even getting into the other other Los Angeles NFL stadium plan. Isn't this where we came in?

March 25, 2010

McCourt: The NFL so totally wants me to build a football stadium

Give Los Angeles Dodgers owner Frank McCourt (no, not that one) credit, he knows how to make headlines. When he's not talking about the bitter divorce trial he's engaged in, he's ... okay, this actually came up during his divorce trial anyway:

Court filings in the divorce case revealed that McCourt also remains active in planning for an NFL stadium in the Dodger Stadium parking lot.

"There's no question L.A. should have an NFL franchise," he said. "It's probably the worst-kept secret in Los Angeles that the NFL would love to be at Chavez Ravine. Other than that, I can't comment right now."

Yeah, that'll distract the press from your marital problems in a hurry. There doesn't seem to be any actual evidence that the NFL is working on a Chavez Ravine stadium other than McCourt's oblique hint, but that still has the NFL rumor mill a-flutter that the NFL is turning its back on Ed Roski's City of Industry stadium that's supposed to bring in two teams and somehow pay for itself and instead is looking to L.A. proper. Because this is totally different from the last time McCourt tried to woo the NFL to his land and got nowhere. Totally.

February 08, 2010

Goodell: Players should help pay for L.A. stadium

Well, this is interesting: NFL commissioner Roger Goodell, in his pre-Super Bowl press conference on Friday, departed from the usual script of league commissioners endorsing team move threats by throwing a bit of cold water on developer Ed Roski's attempts to lure an NFL team to the Los Angeles area:

"I don't think we can guarantee that a team will be there," Goodell said. "We are all working very hard to get a team back in the Los Angeles market because we know there are millions of fans there that would love to see NFL football as part of their community. I think progress is being made. The good news is clearance has been given to build a stadium." ...

Goodell, however, didn't sound as optimistic about the time frame considering the economic climate and the ongoing labor talks between the league and players' union, which could cause a lockout in 2011 after the current labor pact expires.

"The key issue is the challenges of financing a facility in this environment with the labor agreement that we have," Goodell said. "The cost of building that stadium is almost entirely on the ownership and that is a big burden to pay in this type of environment."

That last clause is the key: Roski's plan is for a team-funded stadium, albeit with lots of public money for land and infrastructure. What Goodell appears to be doing is injecting the L.A. stadium battle into the now-escalating NFL labor talks, hinting that the players union should kick back some shared revenue in exchange for getting a stadium that will increase the league's revenues. Okay, more than hinted:

"Investing in a new stadium in Los Angeles will generate more revenue that the players will share in," Goodell said. "That's the kind of investment if we work together with the players association and the clubs where we can develop a relationship and invest in those kinds of facilities that will generate new revenue and allow the game to grow and allow us to get back and engage millions of fans in Southern California and that will be good for us and that will be good for the players."

Goodell reiterated the point on Face The Nation yesterday, saying, "You have to invest in these stadiums that we're in today. ... And we need to make sure that the owners have the capital to be able to do that. And then the pie grows and everyone benefits."

No reply from the union yet that I've seen, unless you count this.

January 06, 2010

Roski: L.A. wants Bills, Jaguars

Developer Ed Roski's Majestic Realty has narrowed down its wish list of teams to relocate to its planned L.A.-area stadium, with managing partner John Semcken now saying the Buffalo Bills and Jacksonville Jaguars are at the top of the relocation list.

"Jacksonville and Buffalo are two teams in very, very small markets," Semcken told the Associated Press. "They are teams that have either outdated stadiums or are having trouble filling their stadiums or both." He added that Majestic won't contact the San Francisco 49ers, San Diego Chargers or Minnesota Vikings as long as they're pursuing stadium plans of their own — which is probably just fine with those teams' owners, as they'll only want to use L.A. as a bogeyman to help in their hometown stadium demands (or, at most, as a fallback in case those stadium plans fall through).

Of course, market size hasn't generally been a prime consideration in the NFL, since so much of its revenue comes from national TV contracts and the like, not local sources — which is how L.A. wound up with no teams in the first place, for that matter, since a revenue-packed (for the time, anyway) stadium in middle-sized St. Louis was more appealing than a less-snazzy one in the nation's second largest city. That may change a smidge under the new revenue sharing rules, but not a ton, so it's unlikely that either the Bills or the Jaguars will be leaping at this opportunity unless Roski shows them some serious coin in terms of stadium revenue that they'll be able to get at the new digs.

And that likely means luring two teams to spread out the construction costs a bit, which means getting two owners to stop just using Roski for leverage and actually agree to move to L.A., at least one of whom would have to sell majority ownership to Roski since that's what he's insisting on ... all of which is to say, just because Roski has filled out his Christmas card list, don't expect to see flying reindeer in the immediate future.

December 08, 2009

NFL stadium-grubbing notes from all over

I don't know if it's something in the water or the holiday spirit or what, but the last couple of days has seen a rash of attempts to drum up support for NFL stadium deals on pretty flimsy pretexts:

• NFL commissioner Roger Goodell reiterated his henchman's statement from a couple of months ago, insisting that Dolphin Stadium need upgrades if it's going to host more Super Bowls after this year. No word on who would pay for any renovations — which could reportedly include a partial roof to protect fans from rain and/or moving seats closer to the field — but the South Florida Sun-Sentinel did report ominously that South Florida Super Bowl Host Committee Chairman Rodney "said it will be up to the community, which is bidding for the 2014 Super Bowl, to determine the importance of hosting the NFL's championship game."
• The Los Angeles Times reports that the NFL's decision over the weekend to try to eliminate some revenue-sharing payments to low-revenue teams could be "the jab that knocks them to the canvas in the next two or three seasons" and prompts them to relocate to, say, Los Angeles. Given that this will at most amount to a few million dollars a year per team and will likely be overturned in the next collective bargaining agreement, if not sooner than that by a union challenge, this seems a bit of an overstatement.
• A survey of 550 Minnesota residents found that they were more likely to say it was important to keep the Vikings in town when the team was winning, as it is now. Though the Minneapolis Star Tribune reported this as "When Vikings win, drumbeat for new stadium beats faster," it doesn't look like the poll actually asked whether respondents wanted a new stadium; and, in fact, a higher percentage of residents said this year that the Metrodome is an acceptable home for the Vikings than in past seasons when the team was losing.

In other NFL stadium news, the Santa Clara city council is expected to vote tonight to set a 49ers stadium vote for next June. Starting tomorrow: Six months of new pretexts!

UPDATE: But first, the owners of Great America, whose parking lot the 49ers stadium would be built in, are suing the city to void the deal! The fun never stops!

December 03, 2009

L.A. Threat Watch: NFL cities hitting "panic button"

A nice rundown by San Diego Union-Tribune columnist Tim Sullivan of how the approval of a new NFL-ready stadium in Industry, California is helping NFL teams in other cities leverage new stadium demands of their own:

Every city with an NFL tenant and without an ironclad lease is feeling intensifying pressure from Ed Roski's City of Industry initiative. Every team within range of an escape clause has been wielding newfound leverage since October, when Gov. Arnold Schwarzenneger signed a bill exempting Roski's project from the California Environmental Quality Act. ...

The threat of extortion is always implicit in professional sports. Any business owner has a right to maximize revenue and to seek concessions from the landlord, rights that are obviously accentuated when that business is immensely popular and limited to 32 outlets in 50 states. Still, the shortcut granted Roski has caused a discernible shift in the balance of power, providing NFL owners a tangible relocation threat at a time when public financing is deeply problematic.

"It's not a coincidence," said David Carter, executive director of USC's Marshall School of Business. "I think it's a combination of the economic environment and the political realities that cities are facing right now (and) the Southern California option that is very real."

Sullivan goes on to note that Roski still faces some potentially steep hurdles in acquiring a team: He's part-owner of a casino, a big no-no with sports leagues, and wants to be majority owner of whatever team relocates (and, let's not forget, pay for it with development rights, not cash). Still, that hasn't stopped San Diego Mayor Jerry Sanders from suddenly devoting attention to building a new stadium for the Chargers, or the Florida Times-Union from running an editorial begging fans to buy tickets to Jacksonville Jaguars games because "Los Angeles doesn't have a pro football team and doesn't need one, but Jacksonville does."

Noting that the Chargers haven't explicitly threatened to move to Industry, Sullivan rightly proclaims one of the rules of stadium politics to be: "You don't need to announce a threat that is already perceived." Still, there are always ways of hinting...

November 18, 2009

California NFL stadiums creep forward

California may be setting records for budget deficits, but that isn't stopping it from also setting records for most NFL stadium projects all at the same time. Some recent developments:

• The city of San Diego is about to hire a stadium consultant to explore ways to pay for a new downtown stadium for the Chargers near Petco Park. Chargers stadium czar Mark Fabiani told the San Diego Union Tribune yesterday that the total cost at that site could be less than $800 million, though it's unclear if he was including land costs — the Union Trib notes that Fabiani had previously indicated that revenue from developing land around a new stadium "would play a big part" (their words) in funding construction.
• Zennie Abraham, a former economic advisor to the city of Oakland, notes that San Francisco came out with an economic environmental impact report for its 49ers stadium plan the same time as Santa Clara issued its EIR, and claims the S.F. report looks better. (Abraham derides the Santa Clara report as "written as if by a snickering, snipping bureaucrat who had no patience with questions.") Abraham further notes that with two cities in the running, "the NFL will use Santa Clara as a, well, pawn, in the creation of a deal that ultimately works for both the league and the 49ers." Of course, he could just as easily have said that San Francisco will be used as a pawn to get a better Santa Clara deal. It's how whipsawing works.
• "Walnut's most high-profile resident" came out in favor of the new NFL stadium proposal in neighborhing Industry, calling it "a great opportunity to provide a lot of jobs and to be an economic boost for the area." This famous Walnuttian? Charlie Beck, who was just appointed to be the new chief of the Los Angeles Police Department, notwithstanding that he lives 20 miles from the city limits. (Also, Lance Parrish and Taboo may argue this designation.)

November 01, 2009

Our relentless assault on both new and old media

It not every week when I'm quoted in both the L.A. Times and Deadspin. Read Dave Zirin's op-ed analyzing the Industry NFL stadium deal here, and then follow that up with Deadspin's Why Your Stadium Sucks installment on the new Yankee Stadium, where I have the honor of throwing out the first tirade. Best comment (not-by-me-or-anyone-I-know-personally division) goes to Martin Pederson of Metropolis magazine:

After the first playoff game against the Twins, Michael Kay and David Cone were speculating about the subdued nature of the crowd. Was it the 6 o'clock start? The early lead by the Twins? "Excuse me, guys," I shouted at the TV, "it's the fucking architecture!"

October 23, 2009

Has Hercules gone bananas?

In a press conference in Industry, CA, Governor Arnold Schwarzenegger announced that he has signed the environmental exemption bill for Majestic Realty's proposed stadium development. "This is the best kind of action state government can create — action that cuts red tape, generates jobs, is environmentally friendly and brings a continued economic boost to California," he added.

It is curious that such an environmentally friendly project requires an environmental exemption.

Maria Elena Durazo, head of the Los Angeles County Federation of Labor, repeated Majestic's guarantee that stadium employees, including parking attendants, will be paid middle class wages. According to payscale.com, this would mean the middle class begins at $7.65 per hour.

October 16, 2009

Industry NFL stadium gets its environmental exemption

The California state senate has approved an exemption from state environmental laws for Ed Roski's City of Industry football stadium. The L.A. Times report notes that this was after the senate president was "unsuccessful in negotiating an agreement that would have a citizens group drop its lawsuit" against the stadium — given that the exemption effectively nullified the lawsuit, this must have been one of those "jump or I'll push you" negotiations.

In any case, let the move threats begin! Er, continue!

October 06, 2009

California Senate mulls get-out-of-lawsuit-free card for Roski

The proposed city of Industry football stadium could clear its biggest remaining hurdle in the next two weeks, as the California state senate takes up a bill to allow developer Ed Roski's Majestic Realty to evade environmental laws to move ahead with the project. (A citizen group's lawsuit charges that Majestic should conduct a new environmental impact study, since the original one planned for commercial warehouses on the site, not a stadium; instead, it was amended with a "supplemental" report.) Environmental groups are now worried that if the Majestic loophole is approved, this will, in the words of one, lead to "a crop of bills in December" seeking similar exemptions from state law for other projects.

(Note, by the way, that this is different from the tax-increment financing bill proposed earlier in the year that also would have aided the Majestic stadium project. That one died over the summer.)

October 02, 2009

L.A. NFL stadium move threats spreading faster than swine flu

Forget the Dallas Cowboys' snazzy new stadium — what's really sparking renewed stadium demands across the nation is the spreading fear that a new stadium in the Los Angeles area could lure an NFL team or two to relocate. The latest team to take advantage: the Minnesota Vikings, whose VP for stadium wheedling Lester Bagley told the St. Paul Pioneer Press they're preparing a new push for $700 million in stadium subsidies, and added this only slightly veiled threat: "If the answer is no, then why would you own a team in this market?"

The Vikings have "no interest in extending our lease at the Metrodome" beyond 2011, said Bagley, who added for emphasis, in case anyone failed to make the connection: "The clock is ticking, and the lease is coming due. The state can't afford to have us become free agents."

Meanwhile, in Jacksonville, Jaguars owner Wayne Weaver is apparently attempting to develop a more home-grown move threat, saying he might move one home game to Orlando's Citrus Bowl — though he added that it would need renovations to "accommodate the kind of revenues you have to derive out of an NFL stadium." This at the same time that Weaver is trying to get additional public money from Jacksonville to renovate his team's current home. Bring out the whipsaw!

September 28, 2009

Media playing "Guess who's coming to L.A. stadium?"

With an Industry NFL stadium looking more likely, newspapers are busying themselves with the game of figuring who'd play there. The Los Angeles Times declares the San Diego Chargers the frontrunner "because the Chargers have a window each year to get out of their Qualcomm Stadium lease without the threat of a lawsuit." The Jacksonville Jaguars, who are blacking out their entire season on TV thanks to poor ticket sales, are considered next most likely, with the Minnesota Vikings, St. Louis Rams, Buffalo Bills and Oakland Raiders earning honorable mention.

Of course, the Times also notes that Industry developer Ed Roski wants to own part of whatever team moves to his new building — but wants to pay for it not with cash, but with development rights to other parcels in Industry, which is a bit dicey, considering that "California development rights" is the new "swampland in Florida."

The Chargers, meanwhile, are rushing to take advantage as their newfound belle of the ball status, meeting today with Escondido officials to discuss a new stadium there. Ironically, the team's main demand there is development rights, though a North County Times estimate shows that they'd actually want a huge swath of the city's property:

In order to generate $400 million in revenue, the ancillary development would have to be either 1,400 condos, a retail complex significantly larger than the Westfield North County mall or about 2 million square feet of office buildings, which would nearly double the amount of office space in the city.

Escondido, the paper notes, currently has two half-built condo complexes sitting empty, and a 30% vacancy rate on its existing office space. I know it's old-fashioned, but the Chargers really might want to hold out for actual cash.

September 23, 2009

Walnut to drop Industry stadium suit for cash

The city of Walnut has apparently agreed to a payoff — er, a settlement in its lawsuit against the neighboring city of Industry's planned NFL stadium. No word yet on how much boodle Walnut got for going away; an official announcement is expected tomorrow.

A group of citizens still have a lawsuit pending against the project for insufficient environmental impact studies. If that fails, developer Ed Roski can move ahead with the stadium project ... just as soon as he finds a team to play there.

July 28, 2009

California tax-kickback bill gets disappeared

Looks like that stadium-friendly TIF bill in California may not be happening after all:

The governor and legislative leaders originally included it in their compromise budget plan. But the Assembly killed it Friday during the Legislature's marathon session to close California's $26.3 billion deficit.

Some lawmakers who supported the bill weren't sure why it was pulled off the table at the last minute. Some local officials cited billionaire Ed Roski Jr.'s proposed National Football League stadium in Industry as a sticking point for legislators in the eleventh hour.

Critics, including Los Angeles County Supervisor Zev Yaroslavsky, had argued the redevelopment extensions would keep millions from counties and could benefit private interests, such as Roski, owner of Majestic Realty.

"To be honest, we're trying to figure out what happened," said Industry Mayor Dave Perez.

You just can't buy good legislators these days.

July 23, 2009

California budget to boost stadium TIFs?

The California budget deal — otherwise known as the great experiment in whether conservatives are right that we don't really need Medicare or public schools — could have an unexpected effect on stadium deals, with a provision being voted on as soon as today that would extend the life of redevelopment areas for up to 40 years. "It prevents the cuts to local government from occurring," Senate Republican leader Dennis Hollingsworth boasted of his measure.

Um, no. Redevelopment areas use tax-increment financing, or TIFs: They don't actually generate new revenue, but rather redirect new property taxes to local governments (or, more commonly, to developers promising to build projects that will hike local property tax receipts). Needless to say, this revenue shuffle has proven popular with stadium boosters, despite a compelling pile of evidence that TIFs only end up making Swiss cheese of your local tax base.

The reason the state is pushing this plan, in any case, is because as part of the deal, the state would get to siphon off 10% of future TIF revenues, and borrow against that revenue now, helping close the state's current budget hole at the expense of future state budgets. It's a common theme to the budget deal: As our old friend Stanford economist Roger Noll told U.S. News and World Report: "In the short run it gets us through this year, and in the long run the same problem comes back even worse next year because $10 billion worth of gimmicks has been used that cannot be replicated."

But enough about budgets; what does this mean for stadiums? According to the L.A. Times, it would allow the City of Industry to siphon off "hundreds of millions" of dollars in coming years for infrastructure to support Ed Roski's planned NFL stadium; it would also presumably aid teams like the San Francisco 49ers and Oakland Athletics in their stadium plans, as both teams have previously mulled TIF funding as a revenue source. Roski and his company, notes the Times, have contributed more than $1.2 million in the last six years to state politicians; when the vote comes up, we'll see if his money was well spent.

July 20, 2009

L.A. developer unveils NFL team hit list

Southern California developer John Semcken told Fanhouse.com last week which NFL teams the company is considering for its planned football stadium in Industry, California:

"Jacksonville, Buffalo, Minnesota, New Orleans, St. Louis and the three California teams. Now New Orleans just signed a lease for 25 more years, so they're out. But the other seven are still in," says John Semcken, Roski's vice president at Majestic Reality....

"You know what I think? I think the Raiders and the 49ers are eventually going to share a building in Northern California,'' Semcken says, "and two other teams are going to share a building in Southern California.

"Two teams. Then we'll have 25 weeks of NFL here. Ten preseason and regular season per team -- that's 20. Both teams will be so rich that they'll make the playoffs, that's 22. Then they'll win the second round, that's 24. Then we'll have the Super Bowl, that's 25!"

Uh, okay. You certainly can't say that Semcken isn't ambitious (Roski retained plausible deniability by declining to say which teams he'd target), but projecting two teams doesn't help his leverage any — his best shot at getting an NFL owner to cough up the rent money Majestic would need to build its stadium seems to be to get a land rush going, with the first team inking a deal getting dibs on the L.A. market. (Not that market size matters that much in the NFL, where national TV revenue is the name of the game.)

If nothing else, though, Semcken's public statement has to be stirring up headlines in the cities of teams he mentioned ... come on, anyone? Nobody?

April 08, 2009

Diamond Bar drops stadium opposition

The proposed NFL stadium in the Los Angeles-area City of Industry cleared one hurdle yesterday, when the neighboring city of Diamond Bar agreed to drop its opposition to the project in exchange for a $20 million payoff to help mitigate traffic concerns. Diamond Bar councilmember Carol Herrera enthused: "Any way you look at it, the project is going in. There's no way to stop it." (Okay, maybe "enthused" wasn't quite the right word.) The Industry plan still faces a lawsuit from another neighboring town, Walnut.

April 01, 2009

L.A. stadium on hold during legal battles

The City of Industry NFL stadium is officially on hold while lawsuits from neighboring towns are resolved, according to Majestic Realty exec John Semcken: "We can't begin the process until there aren't any lawsuits." (Yes, that's the same John Semcken who said last week, "If they think we're going to stop working on football because of little old Walnut, they've got another think coming.") Semcken also asserted that "we've designed the building to accommodate two teams," in case more than one NFL franchise wants to move there.

And before you ask: He said this Monday, so he wasn't just honoring today's date.

March 26, 2009

LA stadium developer must crack Walnut

The City of Walnut has filed suit in Los Angeles County Superior Court to block the development of a new football stadium in neighboring Industry, citing insufficient study of the environmental impact.

According to the San Jose Mercury News, stadium developer Majestic initially filed a full environmental impact study for a mixed-use development on the site, and only a shorter supplement to that when the plan was changed to radically different stadium project. The suit, if successful, will force Majestic to produce a completely new environmental study.

Majestic managing partner John Semcken was in no mood for conciliation. "If they think we're going to stop working on football because of little old Walnut, they've got another think coming."

The NFL is not answering questions on the subject, including the biggest one: which team, if any, will play in this stadium?

February 27, 2009

City of Industry approves NFL stadium, needs only NFL team

As expected, the City of Industry council unanimously approved plans for an $800 million football stadium yesterday, paving the way for the NFL's return to the Los Angeles area. John Semcken, managing partner of Majestic Real Estate, which is headquartered in Industry and would build the project, says the company would begin looking for a team on April 1, specifically mentioning the Oakland Raiders, Buffalo Bills and Minnesota Vikings as among his eight targets. (You have to guess that the San Diego Chargers and New Orleans Saints would be in the mix as well.) If nothing else, this is going to kick-start a lot of move-threat-based stadium talks in eight cities across America.

How the project is being funded, meanwhile, remains a bit of a mystery. Majestic says it will pay for construction itself with private money, though land and infrastructure is being covered by city property taxes. With no team in place yet, though, Majestic would no doubt have to pay off what could be $60-80 million a year in stadium debt through venue revenues, which is going to make the place much less attractive as a relocation target. (In the NFL, where all games are on national TV, market size is relatively unimportant; what counts is how much crap you can sell in your stadium.)

This could end up being another Kansas City arena scenario, where the requirement for a lease where the team actually pays some rent makes your building mostly useful as a stalking horse for team's demands for new buildings back at home. Though at least, unlike K.C., Majestic was smart enough not to build the building first; construction won't begin until a team has agreed to move there.

January 22, 2009

Both Industry residents vote for NFL stadium funding

Voters in the City of Industry, California, approved the sale of $500 million in bonds on Tuesday for infrastructure to support a new NFL stadium, as well as "retail and office space" and all the other stuff you throw in when you want to convince people your project is "not just a stadium." The preliminary vote count: 60 in favor, 1 opposed.

Yeah, you read that right: Industry is so named because it's almost entirely industrial property, with only 777 residents, most of whom, apparently, can't be bothered to register to vote. Ed Roski, the billionaire behind the football stadium project, has his Majestic Realty headquartered there, a stone's throw from the mall where they filmed the mall scenes for "Back to the Future."

The bonds will, according to press reports, be paid back by property taxes, and I admit I'm not entirely clear how this will work. Last April, the state legislature killed a proposal to divert county property taxes to the city last April for the project; it looks like the city will instead pass its own property-tax surcharge, but in a city with so few residents, it's trickier to determine exactly who will end up paying for this. If anyone out there has a firm grasp on California tax law, please write in.

In any case, the main thing standing in the way of the stadium project now is that Roski doesn't have a team to play in it. And the lawsuit neighboring towns have threatened over traffic concerns. And a few other things.

January 06, 2009

Mayor threatens to sue over L.A. stadium

FoS correspondent David Dyte has more on the L.A.-area NFL stadium plans:

Backers of the proposed, still teamless NFL stadium in Industry, California, have a tough nut to crack. Joaquin Lim, the mayor of nearby Walnut (population 30,000) has threatened to sue if Industry (population 777) approves a pro-stadium environmental report later this month. Industry's mayor, David Perez, was due to host Lim at a meeting yesterday to discuss the issue. No word yet on how the talks went.

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