LA WATCHDOG-Last week, the Los Angeles City Council approved a six month extension of its September 2012 Implementation Agreement with the Anschutz Entertainment Group (“AEG”) involving relocating an existing National Football League franchise to a new, privately financed state of the art stadium in Downtown Los Angeles. It also includes plans (photo) for the modernization of our outdated Convention Center by replacing the 43 year old West Hall with a new $250-$300 million facility, all at no out of pocket cost to the City.
Over the last two years, AEG has been unable to obtain a commitment from an NFL team to relocate to Los Angeles, the second largest media market in the country. But that is not unsurprising given the greed of the billionaire oinksters that control professional football.
While the NFL is right to be concerned about cost overruns for the proposed $1.2 billion stadium, the owners want to commandeer all of the $700 million in naming rights revenue from Farmers Field, but assume none of AEG’s liability associated with the cost of the stadium. They are also demanding a hefty relocation fee, rumored to be in the range of $500 million. At the same time, the owners are demanding that AEG pay a full price even though it is buying a minority, non-controlling interest in the relocating team.
Over the next six months, AEG will continue its efforts to secure a team on acceptable terms, and if successful, will granted another six months to close the deal.
Importantly, the extension to the Implementation Agreement calls for the City and AEG to develop “Plan B” alternatives to expand and modernize the Convention Center if AEG is unsuccessful in securing a pro football team.
To facilitate the “Plan B Design Process,” AEG will contribute $750,000 to the City, $600,000 of which will be used to pay three architectural and design firms that have been selected by the City to develop alternative designs for the Convention Center, including analyzing the “connectivity” between the Convention Center, the Sports and Entertainment District (Staples and LA Live), the South Park community, and greater DTLA. The remaining $150,000 will be used to pay for the City’s retention of financial analysts, design professionals, and other experts to evaluate the alternative development plans.
While AEG has bought itself another six months to a year, the odds of an NFL team playing in a new stadium in DTLA are slim given the financial resources (and risks of cost overruns) imposed by the urban location compared to the availability of low risk alternatives in Inglewood and City of Industry.
But the City has the opportunity to create a world class Convention Center by working with AEG, a well-capitalized company which has invested billions in DTLA. It owns LA Live, Staples, and the Stanly Cup Champions, the Los Angeles Kings, and a minority interest in the Lakers.
More importantly, AEG, the current manager of the Convention Center, is an experienced and successful manager of venues throughout the world who appears willing to commit significant management and financial resources to the development of the Convention Center and the surrounding area.
Rather than focusing on a pro football team, the City should consider entering into a 99 year lease with AEG for the Convention Center, the surrounding 54 acres, and the air rights. This would include a development agreement that requires that AEG operates a world class destination.
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Such an arrangement would allow the City to pay off over $300 million in Convention Center debt which would free up about $50 million a year for the General Fund. The City would also benefit from lease payments, increased real estate taxes, especially when the area is developed in a tasteful manner that respects the surrounding neighborhoods, and higher sales tax revenue, allowing it to eliminate the Structural Deficit and begin the repair of our streets and sidewalks.
The modernization of the Convention Center and the development of the surrounding area represent an excellent opportunity to not only revitalize turn Downtown Los Angeles, but turn it into a world class neighborhood and destination.
So the message to City Hall is very simple: The hell with the NFL. And yes to Plan B and AEG.
This is a win-win situation where everybody benefits. Don’t blow it.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, The Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at: [email protected].)
-cw
CityWatch
Vol 12 Issue 85
Pub: Oct 21, 2014
