Explaining Southern California's economy

Why we need NFL football back in LA – even if we don't want NFL football back in LA

There are currently two competing proposals to build new stadiums and bring the NFL back to L.A. (I've blogged about this a bit already). AEG, developer of the Staples Center, is behind the one that would install our gridiron heroes Downtown. Majestic Reality would build in City of Industry, to the east of the city. In order for either of these plans to get off the ground, an NFL team needs to commit to moving in. And if one does, we'll need to figure out where it will play while the stadium is being constructed.

The Rose Bowl is often mentioned, but there's resistance on that front. There's also a potential problem with using the Coliseum. The Pasadena Star-News nicely summarizes the conflicts

The Patt Morrison Show did a segment this week about whether a new L.A. NFL stadium would live up to economic expectations, in response to a review by the Legislative Analyst's Office that concluded that Los Angeles won't realize the promised benefits of the AEG project. I'm skeptical that any new stadium will really add up to a jobs bonanza -- entertainment spending isn't powerful enough to move the needle on an unemployment rate in L.A. County that's at 12.4 percent. But there are other reasons why we might want to go with the Downtown stadium (and I hasten to point out that I'm not picking sides here, just laying out what would happen if AEG gets the thumbs up):

  • We need to renovate the Convention Center. As Andrew Zimbalist, a Smith College economics professor, pointed out on the Patt Morrison Show, the stadium wouldn't generate a huge amount of new activity: maybe a dozen NFL games and some concerts. But part of the AEG deal entails the demolition and reconstruction a chunk of the Convention Center, with the work to be organized by AEG and financed by a tax-exempt city bond issue. AEG would cover the lion's share of the bonds, but the issue would be backed by the city's general fund. With yields at historic lows, this might be a good time to borrow money, if we can fix the unloved Convention Center and rev up the convention business in L.A. Zimbalist isn't sure that more conventions would ultimately help the city -- and neither is the Brookings Institution, which has studied the matter -- but they'd probably bring in more revenue than an NFL home-game schedule alone.
  • The Downtown LA revival needs a second wind. The recession clonked the Downtown renaissance, which was heavily reliant on residential development (Ah, the housing downturn! It even clobbered stylish loft living!). Keeping the area hopping for more of the year will get money flowing into the city. Already, the local hotel industry is seeing an uptick in Downtown business. It could obviously use more, and improving the Convention Center would be an investment in that outcome.

You can see how this sets up. We kinda sorta want the NFL back, but it's been gone for a while and we don't seem to miss it too badly. We have the Lakers. We have the Dodgers. We have USC football. It's not clear that the masters of the Rose Bowl or the Coliseum really want to host an NFL franchise while it awaits a new home. But we could definitely use an improved Convention Center -- even if the convention racket is lousy, L.A. should benefit from raising its degraded status as a convention destination.

That might make the Downtown stadium project worth the risk.

Photo: AEG

blog comments powered by Disqus