KPCC business analyst Mark Lacter talks about the possible return of a football team to LA; he also talks about much does the Rose Bowl helps the local economy.
Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, we'd thought the City of Industry was in line for the next NFL stadium. Is downtown L.A. going to get it?
Mark Lacter: Hard to tell at this point Steve, but it's certainly a story you'll be hearing a lot about. What's happened is that AEG, the company behind the Staples Center, L.A. Live, and the big hotel high-rise right next door, is proposing to build an NFL stadium downtown, right where a portion of the Los Angeles Convention Center now sits. The idea is to convert the stadium into a convention hall when it's not being used to play football, which is most of the time. Now, this won't be much of a plan until an NFL team actually decides to move to L.A., but they’re betting that if it gets built, any number of NFL owners would be interested.
Paid for by...?
Well, AEG, which is owned by Denver billionaire Phil Anschutz, says it'll bankroll the whole thing, which is supposed to cost around $1 billion. But it's a good bet that some sort of public participation will be requested. Not an outright subsidy - because L.A. taxpayers wouldn't go for that - but perhaps a tax break (that was the deal cut on the convention center hotel a few years ago). We really don't know at this point. The basic pitch is that L.A. has been without pro football since 1994, which some folks consider to be a civic disaster, and that the new stadium and team would provide a significant economic boost.
Steve Julian: That’s what you’d expect them to say.
Lacter: No question. The problem is that, first of all, you don't exactly see anyone storming City Hall because there hasn't been an NFL team here since 1994. And secondly, there's very little evidence that a sports franchise does much of anything for the local economy, aside from temporarily boosting the number of construction jobs when the stadium is being built. Here's the thing - most any revenue coming from football is simply a substitute for other kinds of entertainment, whether it's going to the movies or a concert, whatever. That's especially true in an area that's as large as Southern California, where there are lots of things to do.
Julian: And jobs?
Lacter: Not a whole lot Steve, which means there won’t be much of a ripple effect to other areas of the economy. And as you mentioned, this isn't the only stadium plan floating around. Billionaire Ed Roski, has been making plans for several years now to build a stadium in the City of Industry - and the Roski people aren't very happy about the downtown proposal. Kind of makes you wonder whether there's much in this for the rest of us.
Julian: The Rose Bowl will feature Wisconsin and TCU - Texas Christian University - in a few weeks. How much does the Rose Bowl help the local economy?
Lacter: Well, hotels and restaurants in Pasadena, L.A. - even Santa Monica will do well. Actually, quite well since fans coming in from Texas and Wisconsin will stay more days and spend more money than during a typical Rose Bowl because they're coming from long distances. That's better than teams coming from, say, Northern California where fans might be here just a day or two. And it's also a big plus that both teams are coming from out of town; the years when USC or UCLA play are really a killer because businesses are losing out on half the potential fan base.
Julian: Sounds like there’s a “but” in there someplace.
Lacter: The “but” is that the economic benefit has been estimated at around $30 million, which is certainly nice but it's barely a blip on the screen for a local economy that's produces around $900 billion worth of stuff each year. And next to no effect on the area's job situation – all this activity is pretty fleeting. Nothing against the Rose Bowl - just the idea that sports can provide some sort of easy answer for the economy because in most cases, it really doesn't.
Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes business blogs at LA Observed.com and at kpcc.org.