Explaining Southern California's economy

The New Yorker says that AEG's Philip Anschutz owns LA

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AEG

Thanks to LAObserved for pointing to this summary of Connie Bruck's big profile of Philip Anschutz and AEG, in the current issue of The New Yorker. The title says it all: "The Man Who Owns L.A." And for the man who owns LA, it's all about getting an NFL team to betray its current fans and commit to the Southland:

Anschutz, who lives in Denver, is intensely private and does little to publicize his ownership of A.E.G. or any of his other business activities. [AEG President Tim] Leiweke wants to create what he calls “the final piece of the puzzle for L.A. Live”: an N.F.L. stadium, to be built adjacent to Staples Center. With a deployable roof, the stadium is intended to house—in addition to football games and Super Bowls—concerts, international soccer games, wrestling and boxing matches, N.C.A.A. Final Fours, and major religious gatherings. Los Angeles has not had an N.F.L. team since 1995, when the Rams and the Raiders, tired of playing in antiquated stadiums, left the city. Leiweke began his campaign last February, with a lavish public event to announce a deal he had made with the Farmers Insurance Company: in exchange for a reported seven hundred million dollars over thirty years, the planned stadium would be named Farmers Field. It was the largest naming-rights deal in sports. The next step will be the most challenging. Anschutz has pledged to spend more than a billion dollars to build the stadium, but he and Leiweke must reach a deal both with the N.F.L. and with one or two teams to move to L.A.

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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):

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NFL Stadium Watch: You don’t mess with Mark Fabiani

Famers-Field-AEG

The Great NFL Stadium Wars of 2011-12 are heating up. Just for a refresher, there are two competing plans that would bring the Big Boys back to L.A. AEG, the owner of the Staples Center, just secured framework approval to build a new $1.2 billion stadium in Downtown LA. while also demolishing and rebuilding a section of the Convention Center. It’s kinda sorta not publicly funded (but it kinda sort is, and more on that in some future posts). 

Majestic Reality is ready – champing at the bit, in fact – to break ground on an $800 million stadium in City of Industry. The funding here is decisively and calculatedly all-private. Unfortunately, it's not clear anyone would actually go to Industry to watch games (although New Yorkers certainly have shown that they will trek out to New Jersey to see their beloved Giants and Jets).

Meanwhile, there’s a signficant hurdle for both AEG and Majestic to overcome: Neither developer can do squat without a commitment from an NFL team to relocate to LA. 

So who are the candidates? ESPN.com lays them out. The Jacksonville Jaguars and the Minnesota Vikings come up often, as do the St. Louis Rams and the Oakland Raiders. But a lot of handicappers are betting on the San Diego Chargers, who are currently trying to use the threat of an L.A. return (yep, back in the day they started out here) to get a new stadium. Everybody who wants a new stadium uses L.A. as leverage, because there’s been no pro football here since the 1990s.

Understandably, San Diego doesn’t want this to happen. And while AEG’s Tim Leiweke is making plenty of noise about how rapidly the Downtown stadium could be putting local plutocrats in luxury boxes to enjoy L.A. Chargers football, the still-San Diego Chargers’ semi-legendary special counsel, Mark Fabiani, is doing his best to smash that agenda into many tiny pieces. Then grind it into dust. Then scatter it to the four winds.

He did it like the champion debater he was in high school [hat tip to Mark Lacter at LAObserved for pointing to this at the Chargers’ website]. He lays out eight counterarguments, but let’s focus only the last one:

The entire multi-billion dollar project, which envisions not just the construction of a stadium but the replacement of hundreds of thousands of feet of convention space at private expense, must be financed in capital markets that are under enormous stress because of the ongoing world financial crisis.

This is an excellent example of Fabiani going for the AEG jugular. When L.A. announced the tentative deal with AEG, the city was at pains to point out that the finance involved NO PUBLIC MONEY! Completely untrue, as the city will have to float bonds backed by the general fund to cover a significant part of the construction expense. But something that needed to be said, given that the Majestic project involves zero public money of any sort. Citizens have become skeptical that sports stadiums are a good investment, due perhaps to economic studies that prove they aren't.

In fact, the AEG Downtown deal could be beneficial, particularly because it continues the renovation-by-demolition of the unloved Convention Center that was started with the Staples Center. But with city budgets bursting into flames from coast to coast, politicians and city bureaucrats have to tread carefully in these matters.

At any rate, Leiweke isn’t going to catch any breaks from Fabiani -- even if he could compellingly counter-argue that San Diego has about as much chance of lining up its own financing for a new venue to replace aging Qualcomm Stadium as it does of seeing Godzilla rise from San Diego Harbor.

This is only going to get more lively in the coming months, as the race will be on to seduce a team away from its current market to the NFL-deprived environs of L.A.

Photo: AEG

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