• L.A. officials endorse deal for NFL venue — ESPN
• LA Officials Endorse Framework Deal for NFL Venue — AP
• L.A.'s NFL stadium financing plan clears key City Council panel — LA Times
Consultant: Price for NFL in L.A. could hit $3 billion
SCOTT M. REID / THE ORANGE COUNTY REGISTER
August 3, 2011
LOS ANGELES – The Anschutz Entertainment Group’s plan to land an NFL team for a proposed downtown Los Angeles stadium could cost the company between $2 billion and $3 billion, according to a consulting firm hired by City of Los Angeles.
The Los Angeles City Council is scheduled to vote Tuesday on an AEG plan to build a privately financed $1 billion retractable roof stadium on the current site of the Los Angeles Convention Center’s West Hall. AEG president
Tim Leiweke told the Register in June that the company is willing to buy a share or even majority ownership in a team in order to bring the NFL back to Southern California after a nearly 16-year absence.
But an estimate by Conventions, Sports and Leisure, the Dallas-based consulting firm hired by the city to examine the economic impact of AEG project, said the final price tag on the NFL’s return to Los Angeles could reach $3 billion for AEG. CSL has been involved in a number of major sports venue projects including the new Giants Stadium in New Jersey and the renovation of the Georgia Dome. The firm has worked with AEG on Staples Center.
“We agree that it is likely that AEG will purchase a percentage of the team and possibly the entire team,” CSL director of sports services Bill Rhoda wrote to Gerry Miller, the Los Angeles chief legislative analyst, in a July 29 letter obtained by the Register.
In doing so, Rhoda wrote, AEG “would be required to pay a major relocation fee, purchase the team and pay for the stadium. Those total costs could easily exceed $2.0 billion and could reach $3.0 billion.”
When all costs are figured in AEG getting a team to relocate in Los Angeles would yield a 6.5 percent return on the company’s investment.
A competing NFL stadium project proposed for a City of Industry site by Majestic Reality would generate $100 million in annual profits, Majestic officials said.
Majestic officials also confirmed that they have met with NFL officials since the league reached a new labor agreement with its players.
AEG officials declined to comment on Wednesday.
The AEG picked up a key endorsement on Wednesday when Los Angeles City Council member Bill Rosendahl said he would vote in favor of the city agreeing to a non-binding memo of understanding with AEG. Rosendahl has been the most aggressive council member in seeking answers from AEG on key parts of the proposal.
Rosendahl joined the other three members of the ad hoc committee Wednesday night in recommending that the full council vote to approve the MOU.
“It’s non-binding,” Rosendahl said of the MOU. “So if a big issues does give us some concern we have the opportunity to (revisit) all these major issues.”
An Aug. 2 memo from Miller to the city council’s ad hoc committee on the downtown stadium project, an Aug. 2 letter from Miller to councilman Rosendahl and Rhoda’s letter address a series of key issues regarding the AEG proposal.
While AEG will pay for the cost of constructing the stadium, Miller in his letter to Rosendahl acknowledges “However, neither AEG nor our offices have asserted that there would be no public money used to build the New Hall” to replace the convention center’s West Hall.
“As stated previously, the transaction will move forward only if the public money reinvested in the public project amount to no more than 50 percent of the net new direct General Fund tax revenue generated by the project,” Miller continued in the letter. “ … Accordingly, while there would be net new public money invested in the New Hall, the Ad Hoc Committee is also requiring substantial private funding for the public project.
“The financial terms of the proposal are a subject of the negotiations. Details relative to the proposed financing and an assessment of the risk, if any, to taxpayers will be reported to the Council at the conclusion of the negotiations.”
CSL estimates that the stadium and an expanded convention center would result in $133.3 million in indirect tax revenue. Replacing the West Hall will require $275 million in bonds. Of that amount, $195 million will be a city obligation. Fifty-six percent of the debt service on the city’s $195 million in bonds will be covered by AEG’s ground lease for the stadium. The remainder will be paid for from new tax revenues.
“It will flush itself out as we go forward with this project,” Rosendahl said Wednesday referring to the public funding issue.
A report by CSL said the stadium project would recreate 6,320 permanent jobs, most of them in the service industry, well below estimates by AEG and several labor unions.
“However,” Miller wrote to Rosendahl, “it is important to note that this projection includes only those jobs directly created by the project. It does not include indirect job creation from the overall economic impact of the project.”
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L.A. officials endorse deal for NFL venue
Arash Markazi, ESPNLosAngeles.com
August 4, 2011
LOS ANGELES -- Yet another hurdle to the NFL's potential return to Los Angeles has been cleared.
A Los Angeles council committee voted unanimously Wednesday to endorse the financial framework of an agreement between Anschutz Entertainment Group and the city to build a new $275 million wing of the Los Angeles Convention Center and the attached Farmers Field, a $1.2 billion football stadium and events center.
The full city council will vote on the proposal Tuesday morning. The nonbinding agreement would need only a simple majority to pass and the deal's biggest critic expects it to be passed unanimously.
Councilman Bill Rosendahl, who was the most vocal committee member when it came to raising concerns and questions about the project, said he finally endorsed it after his questions were answered Tuesday night ahead of Wednesday's meeting.
"I would be surprised if (the upcoming vote is) not unanimous," Rosendahl said. "Unless there are questions that I didn't come up with, I don't know. ... I played the critic and they answered my questions and the deal moved in the right direction. I played the bad cop and the tightwad on this."
An actual deal with the city is still about a year from becoming a reality, with the completion of an environmental impact report not expected until the spring. AEG is hoping to begin construction on the project in June 2012, with Farmers Field opening in September 2016.
The biggest concern early in the process for Rosendahl, who was one of the four committee members to endorse the deal Wednesday, was any potential risk to taxpayers and the city's general fund. After negotiations between the city and AEG as well as a handful of public hearings, his concerns were addressed.
"I was the one asking all the questions and playing the role of the skeptic through this whole process," Rosendahl said. "I was the one who put all my questions out there and the deal changed from what it was proposed way back when. I was pleased with the progress we'd made in the last four months. It's a less risky deal for the city."
In January, AEG president and CEO Tim Leiweke had hoped the city would float $350 million in bonds to help finance the reconstruction of the Convention Center, with AEG promising to repay the funds with revenue from the stadium. After negotiations with the city, the cost has now been whittled down to $275 million, which will be paid for by tax-exempt bonds. Approximately 73 percent of the bonds would be covered by AEG and the other 27 percent would be covered by new tax revenues generated by Farmers Field.
Chief legislative analyst Gerry Miller and city administrative officer Miguel Santana negotiated the basic term sheet with AEG and went to great lengths to make sure all the risks associated with the project are on AEG's end, rather than the city's.
The agreement requires AEG to extend a series of financial guarantees over the course of the project as a safeguard against shortfalls. It also calls for AEG to break $80 million of the $275 million into a special bond financed with tax on already-established AEG-owned properties Staples Center and LA Live instead of a stadium five years away from potentially opening.
"To be very clear, there is no public money in the stadium, none," Miller said. "We are not financing the stadium, we're not giving any land breaks on the stadium and they're going to pay a market-rate land lease. There's no public money in this stadium."
There is a competing stadium project spearheaded by real estate developer Ed Roski's Majestic Reality Co. to build a 75,000-seat stadium in the City of Industry, about 15 miles east of Los Angeles. The project has had permits in place to begin construction for nearly two years but the group, as is the case with AEG, has yet to secure an NFL team.
"This is a giant leap forward," said councilwoman Jan Perry, the committee chair on the proposed stadium and events center. "Today was a vote of confidence in this project to move forward and begin the negotiations in earnest. It shows a great recognition that we as a city are pulling ourselves out of a recession and that we're directing and designing on our new future. This project will take us light years (ahead) of where we are and most people recognize this is a once-in-a-lifetime opportunity."
LA Officials Endorse Framework Deal for NFL Venue
JACOB ADELMAN Associated Press
August 4, 2011 (AP)
A Los Angeles council committee voted Wednesday to endorse a tentative framework agreement with a private developer that wants to build a 72,000-seat NFL stadium on the city's convention center campus.
The 4-0 vote by members of the council's special temporary committee on stadium-related issues sends the non-binding memorandum of understanding with Anschutz Entertainment Group to the full council for a final vote next week.
Councilman Bill Rosendahl said before the vote was taken that the agreement was the result of tough negotiations with AEG, which had originally proposed a plan that would have required the city to take on more risk.
"The partnership is moving in the right direction," said Rosendahl, who co-chairs the committee.
The agreement calls for the issuance of $275 million in tax-exempt bonds for the relocation of a convention center hall to accommodate the proposed $1.2-billion football venue.
AEG agreed in the proposed framework to break $80 million of the $275 million in debt into a special type of bond that is financed with a tax on its nearby properties such as Staples Center and the LA Live entertainment complex and puts the facilities on the line if the company doesn't pay.
The agreement also requires AEG to extend a series of financial guarantees over the course of the project as a safeguard against shortfalls and other risks.
If the full council approves the framework deal, members will vote later on separate definitive stadium-related agreements, such as its development and financing deals and its clearance under state environmental regulations.
Most council members have voiced guarded support for the stadium proposal in previous hearings.
AEG spokesman Michael Roth had no immediate comment after the vote.
AEG's stadium plan is one of two competing proposals to bring professional football back to Los Angeles some 16 years after the Rams and Raiders left the nation's second-largest market.
Warehouse magnate Ed Roski's Majestic Realty Co. has permits in place to build a separate 75,000-seat stadium about 15 miles east of Los Angeles, in the city of Industry.
Neither proposed site has secured a team.
L.A.'s NFL stadium financing plan clears key City Council panel
David Zahniser, LA Times
August 3, 2011
A plan for luring an NFL stadium to downtown Los Angeles cleared a major hurdle Wednesday, with a City Council panel throwing its support behind the financial framework proposed for the project.
On a 4-0 vote, the council’s Ad Hoc Committee on the Downtown Stadium and Convention Center recommended approval of an agreement with developer Anschutz Entertainment Group to build a $1.2 billion stadium and replace a $275 million wing of the Los Angeles Convention Center.
A vote by the full council is scheduled for Tuesday. Approval of the nonbinding agreement sets the stage for another nine months of talks between the two sides. “This is the table setting, not the meal,” said Councilwoman Jan Perry, who voted for the plan and heads the stadium committee.
AEG has promised to finance the stadium, tentatively named Farmers Field, on its own. For that to happen, however, the city would need to tear down the West Hall of its Convention Center -- and issue $275 million in tax-exempt bonds to pay for demolition and relocation of the exhibition area. Those bonds would be repaid largely from new tax and lease income generated by the two projects, according to the proposal.
Committee members Tony Cardenas, Ed Reyes and Bill Rosendahl voted for the proposal. Of the three, Rosendahl had been the biggest skeptic, firing off a series of letters asking about the stadium’s impact on city finances and convention center bookings. In their response, the city’s negotiators told Rosendahl that AEG has promised to reimburse the city for any convention business lost as a result of stadium construction. The company also will cover any shortfalls in tax and lease revenue needed to cover the bond repayment, officials said.
“I’m delighted to see all these answers to my questions,” Rosendahl said shortly before voting for the plan.
As part of its vote, the committee also recommended that the city retain Nixon Peabody, a law firm hired to analyze the project’s bond financing, even though the company disclosed that it has three potential conflicts of interest. One is that it represents Regal Cinemas, a tenant of AEG’s LA Live entertainment complex, which is near the stadium site. Philip Anschutz, chairman of AEG, is also an investor in Regal, according to city officials.
A second conflict involves Nixon Peabody's representation of Anschutz Exploration Corp., another Anschutz company. A third is that a lawyer with the law firm previously worked for Majestic Realty, which is backing a competing stadium plan. Deputy City Atty. Marilyn Garcia said those client relationships would not compromise Nixon Peabody’s work on the stadium deal for the city.
Fewer than 50 people showed up for the evening committee meeting. The session was a sharp contrast to Friday’s council meeting, when hundreds of union members, business officials and high school football players packed the council chamber to push for approval of the deal.
Nevertheless, the proposal drew criticism from Quentin Fleming, a Pacific Palisades-based management consultant who said he believes that AEG’s financial return on the stadium will be more than triple the amount projected by the city’s economic consultants. Fleming also said those consultants should have independently verified the numbers submitted by AEG.
“It would be beneficial if we could have an independent person, someone without a vested interest, perhaps even a city employee themselves, take a look at the numbers,” he said.
The unanimous support for the project drew criticism from Venice resident David Ewing, who compared the stadium discussion at City Hall to the run up to the Iraq war in the U.S. Congress eight years ago. “It’s all flag waving and rah rah rah,” he said.