Los Angeles NFL Deal Down to Brass Tacks

by John M. Curtis
(310) 204-8700

Copyright July 26, 2011
All Rights Reserved.                                         

              Sixteen years after the Raiders left Los Angeles, Staples’ Center Developer, Anschutz Entertainment Group [AEG], are getting down to brass tacks of bringing the Nation Football League back to LA.  Announcing a new $1.2 billion NFL stadium and convention center, AEG made Los Angeles Mayor Antonio Villaraigosa and the City Council an offer they couldn’t refuse.  In the Memorandum of Understanding released Monday, the City is shielded from any financial risk, despite issuing a series of revenue bonds to help fund the new stadium and convention center.  Holding public hearings the next two days, the Los Angeles City Council is expected to approve the MOU, enabling AEG to move swiftly to break ground.  Returning to Los Angeles, NFL Commissioner Roger Goodell looks ahead to reopening the nations’ second largest media market in Southern California.

             Over the last 15 years, City officials have been reluctant to commit any public funds to a new stadium, believing there’s plenty of future profit to induce any major player, like AEG, to assume the risk.  While the City stands to gain from a new downtown stadium, AEG has a real opportunity to develop one of the most profitable franchises in the NFL.  Because the MOU outlines the specific location and building plans for a new stadium called “Farmers’ Field,” there’s few details omitted in the proposal.  Moving the project forward, AEG agreed to assume all the risk for the new $275 million convention hall.  AEG’s MOU asked the City to issue $195 million in bonds backed by the City’s general fund.  All the debt and future expenses, including property taxes, would be repaid by AEG rent.  City officials insisted that AEG pay any shortfalls from less than future revenue.

            While real estate developer Ed Roski Jr. has a competing NFL stadium proposal for a City of Industry, the mayor and City Council prefer to AEG’s plan to build the project out around Staples Center.  Known as “LA Live,” the area around Staples’ Center already has considerable 5-star hotel space, upscale restaurants, bars and shopping, all contiguous to the highly anticipated “Farmers Field.”  With the Ritz Carlton and J.W. Marriott, multiplex cinemas and fine dining around LA Live, the City anticipates augmenting traffic to downtown Los Angeles.  Once a dilapidated inner city, LA’s gentrified core boasts some of the best bars and restaurants in the city.  Remaining construction costs for the new exhibit hall would be funded by $80 million in bonds backed by LA Live and Staples Center.  When the City Council convenes public hearings Wednesday and Thursday, AEG has provided plenty of fiscal reassurance.

            Now that the stadium deal’s taking shape, speculation swirled over possible NFL teams interested in coming to LA.  While rumors keep flying about the disgruntled Minnesota Vikings, St. Louis Rams and Oakland Raiders, the more likely prospect looks like the San Diego Chargers.  Featuring into any move to Los Angeles, Laker Hall of Fame great and LA businessman Magic Johnson announced July 26 on ABC’s “Jimmy Kimmel Live” that he’s partnering with AEG to bring an existing NFL franchise to the City.  While the new stadium and convention hall isn’t expected until 2016, it’s possible a relocated NFL team could play sooner in the 88-year-old Los Angeles Memorial Coliseum.  Opened in 1923, the Coliseum has hosted two Olympic Games, a World Series, two Super Bowls and was recently updated in 2010 by the University of Southern California, home of the USC Trojans.

            Overwhelming public support and prospects of continuing the gentrification of downtown Los Angeles, puts pressure on the mayor and City Council to back AEG’s MOU.  If AEG’s project goes forward, it doesn’t exclude Ed Roski Jr. from moving ahead with his City of Industry plan that could draw heavily from parts of Los Angeles and Orange Counties.  If Los Angeles can support two National Basketball Association teams, it could also handle two NFL franchises.  Only 15 miles from downtown LA, Roski has the NFL’s permission to build his stadium and pursue his own franchise.  However the LA market shakes out, there’s plenty of potential TV revenue to support two franchises in Los Angeles, compared with the low population densities of other small media markets.  While there’s a drought today of NFL teams, it could start pouring if the City Council approves AEG’s deal.

            No time since the Raider’s bailed out in 1994 have the conditions been more ripe for the NFL’s return to Los Angeles.  Mayor Villaraigosa and the City Council are committed to expanding the gentrification of downtown LA.  Nothing would bring more business and excitement to downtown than an NFL stadium.  Whatever risks to the City, AEG has bent over backward reducing LA’s exposure, creating a win-win for the City.  “Those revenues we’re using (to make bond payments) are measurable.  They’re not variable.  They are consistent, and they are reliable,” said City Administrative Officer Miguel Santana, backing AEG’s proposal.  “We’re in the process of reviewing this,” said the City Council’s biggest skeptic Bill Rosendahl, hinting that he’s finally coming around.  Building a new downtown stadium and bringing the NFL back to LA, will pay rich dividends to the City.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He's editor of OnlineColumnist.com.and author of Dodging the Bullet and Operation Charisma.

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