The fate of a new NFL stadium in downtown L.A. — and the return of pro football to Los Angeles — has been called in doubt by AEG's decision to put itself up for sale.
That's the implication from today's L.A. Times' man-on-a-wire profile of AEG CEO Tim Leiweke, which depicts the executive as furiously trying to sustain support for an NFL stadium in downtown L.A. as the company he effectively built goes on the block.
It's starting look as though Phil Anschutz — the Colorado billionaire who owns AEG — has been tangling with the NFL over just how much it would cost him to get the critical element of the stadium project in place: the team. This is from the LAT:
Anschutz, 72, risked billions of dollars backing AEG's Los Angeles developments starting with Staples Center in the late 1990s, and he insisted on being rewarded with a piece of a football team at below-market value, some observers said. Team owners have been clear, however, that they believe a discount sale would devalue all their franchises at a time when team prices have been dramatically rising.
Colony Capital and its Chairman, Tom Barrack, are reportedly among the bidders for sports and entertainment giant AEG.
Anschutz Entertainment Group, lovingly referred by every sport and concert fan in the Southland as AEG, has put itself up for sale. This is potentially a true humdinger of a deal for Phil Anschutz, the reclusive Denver billionaire who started AEG a decade-and-a-half ago and has — with this considerable assistance of Tim Leiweke, who has run AEG day to day — build the enterprise up into a giant that could be worth anywhere from $4 to $8 billion, according to various reports, speculations, and back-of-the-envelope math on the privately held and somewhat secretive company.
The bidders are lining up, led by the richest man in L.A., Patrick Soon-Shiong, who took a shot at the Dodgers earlier this year and already owns a small stake in the Lakers (AEG owns a third of the team). His $7-billion-plus net worth wasn't enough to get to the finish line, however, even in partnership with $8-billion-plus-net-worth hedge funder Steve Cohen.
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.