• Lessons of an earlier AEG battle — LA Observed
• Deal is key play for football stadium — LA Daily News
Don't forget Ed Roski
Rick Orlav, Daily News
August 7, 2011
The Los Angeles City Council is expected this week to approve the memorandum of understanding with AEG, clearing the way for the developer to proceed with plans to build a $1.2 billion football stadium. More importantly, it clears the way for AEG to ramp up negotiations with the National Football League in an effort to bring a team to Los Angeles.
However, also not idle is Ed Roski and Majestic Realty, who wants to build his own stadium in the City of Industry.
John Semcken, senior vice president at Majestic and the front man on football issues, said he is more confident than ever that they stand to have a better chance than AEG in winning a team.
"I know the finances of both stadiums and we are the only site that makes sense to provide a profit for a team and the NFL," Semcken said.
Also, he said, fans should not expect an announcement on a team moving to Los Angeles until after next year's Super Bowl.
"No team is going to announce in the middle of the season that they are moving. Nothing will happen until the season is over."
Once a team is announced, Semcken said he believes it will take 30 months to build the Majestic stadium.
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Lessons of an earlier AEG battle
Bill Boyarsky, LA Observed
August 7 2011 2:16 PM
Greg Nelson was chief aide to then City Councilman Joel Wachs, who stiffened the city’s back during negotiations over Staples Center in the mid 1990s and improved the deal. I asked Nelson what was difference between then and now, when the city is negotiating a much bigger deal with the Staples Center developer. AEG, for a downtown Los Angeles National Football League stadium.
“The Staples deal opened with AEG wanting to float $70 million in bonds to buy up the land that would later be used for L.A. Live,’ Nelson said in an e-mail. “It offered no guaranty that the bond payments would be made. It asked the city to take a chance with them. After Joel threatened an initiative, a guaranty was accepted by the city and the developers.”
Substantially more city bonds are required for this project, which involves tearing down a convention center building to make way for the stadium and putting up another one. The bonds would total $275 million, with 73 percent to be repaid by AEG and 27 percent by the city. The city’s share would come from AEG lease payments and taxes generated by the stadium, such as parking taxes.
The kind of concern Wachs expressed over bond repayment in the Staples deal is now being voiced by city officials and a private consultant to the city in the current project.
The consultant, Convention Sports and Leisure International, said that the profitability of a National Football League team “may fall short of expectations.” The CSL report urged the city to protect itself from shortfalls by insisting the AEG share of repaying the bonds is guaranteed by a company “with stronger assets not tied directly to the stadium.” That would be AEG’s big guy, Phil Anschutz, a billionaire whose web of holdings could more than guarantee repayment. AEG is just part of his empire and the consultant indicated that other holdings should back up bond repayment.
City Administrative Officer Miguel Santana and Legislative Analyst Gerry Miller in a report to the council said a NFL team might face financial difficulties. They said the National Football League might impose a relocation fee to any team, such as the San Diego Chargers, that wants to move into a new Los Angeles stadium. “The fee could exceed $500 million,” they said. “If such a fee is assessed, the team could be forced to operate at a loss for a number of years. “ AEG would be a part owner of the team, so the relocation fee could be another threat to its ability to pay off the bonds.
As Nelson pointed out to me, “This is something being discussed behind closed doors in the negotiations.”
In the original Staples deal, Councilman Wachs, an intelligent, skeptical former tax attorney, pried opens the secrecy doors that had enveloped the negotiations. I was writing a column for the Times during this period, crusaded against the secrecy and followed Wachs’ efforts every step of the way. We need some of his smart skepticism now.
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.
Deal is key play for football stadium
Dakota Smith, Daily News
August 6, 2011
Stuck in traffic on the way to a hearing in the San Fernando Valley last week on the proposed downtown Los Angeles football stadium, Councilman Bill Rosendahl suddenly heard his name called out.
A Carvel Ice Cream truck in the next lane eased up, and a man leaned out the window. "He said, `Councilman, make sure that the stadium has a roof or cover so you can ... use it for the convention center,"' Rosendahl recalled.
Still in its early stages, the debate over the $1.3 billion stadium and renovated convention center has sparked only moderate - and mostly positive - feedback from the public, with opinions sometimes popping up in unorthodox settings.
But with the City Council expected on Tuesday to OK a preliminary financial deal with Anschutz Entertainment Group, public opinion may grow louder as the city's political leaders next dig into stickier details like traffic and revenue sharing.
"Now the work begins," said Rosendahl, a Westside councilman who served on the subcommittee for the stadium deal and was one of its early critics. "This is the beginning of going forward."
The memorandum of understanding calls for the city to issue $275 million in bonds for a new wing of the Convention Center, while AEG privately funds the 75,000 seat stadium. (And yes, to answer Mr. Carvel Driver, the stadium will have a roof so it can also be used for conventions.)
The bonds will be repaid by AEG from revenue streams from a variety of taxes, including a new one on property in the Staples Center area.
For the city, the nonbinding MOU lays out the framework for the next year. A final cost agreement will be reached with AEG, while numerous city departments will work on traffic issues, stadium design guidelines and infrastructure costs.
AEG officials declined to comment on the MOU.
But sports industry experts say the agreement is important for two reasons: It shows the NFL that Los Angeles has strong political backing for a football stadium in downtown, and it helps bring in corporate sponsors.
The deal should help AEG lure advertisers to finance the stadium, and ink deals across its platforms - be it Home Depot or Nokia - that already have an advertising presence at the company's other real-estate holdings. Already, AEG is looking for 8 to 10 "founding partners" for its stadium, according to Don Muret, who covers stadium financing for the Sports Business Journal.
Those deals are necessary to finance stadiums, particularly in instances where private capital, rather than taxpayer money, is used. At the New Meadowlands Stadium, companies pay roughly $9 million a year each so fans can walk through the Pepsi Gate or the Bud Light Gate to see a game, according to Muret.
"You try and come up with as many creative ways as possible to finance," says Muret, adding that lucrative licensing deals, suite sales and concessions will also help finance the stadium.
As part of its agreement with the city, AEG must have a multiyear signed lease with a team before any deal can go through, a necessary step for city leaders worried a football team will pull up and depart amid slow sales or a more lucrative offer in another city.
The developer is looking to buy part or all of a team (which could cost up to $1 billion, according to sports experts), and open Farmers Field stadium by 2016.
After the MOU, the next major hurdle for AEG is an environmental impact report.
The EIR, expected to be thousands of pages, will illustrate the physical effects of the stadium, outlining anticipated traffic on the Harbor Freeway during Monday Night Football, and noise impacts on the nearby condo towers in the South Park neighborhood.
The EIR will get its first test in two weeks. State Sen. Kevin de Leon, D-Los Angeles, who represents the area, is holding a public hearing Aug. 19 to discuss the project's impact on the local community.
"We know there are well-heeled people who want this to go through," said Greg Hayes, spokesperson for de Leon. "We want to know how the community will be impacted by this project. If you live in Long Beach, this may not affect you. But what if you live in Pico and 61st?"
De Leon's office has been approached by AEG to discuss legislation to protect it from lawsuits to block the project. Suing over EIRs has proven an effective way for opponents to successfully block projects.
"They want, generally, frivolous lawsuits dismissed," said Hayes, of AEG's requests. "More specifically, we don't know what they want."
As for the NFL, the league has been "monitoring the events in Los Angeles in the last week," said NFL spokesman Brian McCarthy, adding the recently reached collective bargaining agreement with players means that stadium development can go forward.
Leigh Steinberg, a former sports agent who now runs his own Los Angeles-based consulting firm, believes AEG's LA Live campus gives its Farmers Field stadium an edge over Majestic Realty's competing plan for one in the city of Industry.
"AEG has an advantage at this point ... because of the related economic activities downtown, and what it does for the convention center," Steinberg said.
Equally important to the league is the "unified political leadership" behind the development.
"This is the best opportunity to complete a stadium that we will ever have," says Steinberg, who was involved in earlier efforts to bring a football team back to Los Angeles since the Rams and Raiders left in 1995.
But Marc Ganis, president of Chicago-based SportsCorp, which has helped develop dozens of sports facilities, including the new Yankee Stadium, says he's skeptical about both the NFL's commitment to L.A., and the tentatively approved MOU.
"A MOU is nice to have, but no one should start planning a tailgate party," said Ganis. "Until you have a deal with the team, you can't project what the return will be."
He questions the 6.7 percent internal rate of return that AEG predicts it will receive over the next 30 years.
"It's all irrelevant until you actually sit down and work it out," he said. "It's all numbers and no reality."
Rosendahl agrees that some of the financials in the MOU could change, as the city finalizes its financial agreement with AEG in the next year.
The City Council's ad hoc stadium committee will continue to explore revenue-sharing from the expected advertisements on the convention center, an idea that Rosendahl has repeatedly pushed. Like other observers, he suspects that AEG owner Phil Anschutz's real investment return will come from buying part or all of a football team.
"That's the investment deal for him," Rosendahl said. "Not only will they get their investment back, they will make a tremendous amount of money with the TV revenues. That's why I don't want to give up the notion of getting a profit back."
But in the short term, more mundane questions, like paying for sidewalk upgrades near the stadium, will be considered as the city wrestles with the idea of the NFL returning after a two-decade hiatus.
"It will be, how much will all this cost, and who will pick up the tab?" said Rosendahl.