KPCC's business analyst Mark Lacter talks about latest on the proposed NFL stadium in downtown L.A; he also talks about what kind of economical impact will Cirque du Soleil have in Hollywood.
Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Looks like the Los Angeles City Council is getting closer to an agreement for a football stadium and convention center project in downtown LA. Mark, is it needed?
Mark Lacter: Well, the folks from Anschutz Entertainment Group, which want to develop the downtown complex, insist that it is needed - that it's going to attract a dozen or more conventions each year - and with it millions of dollars in additional tax revenue for the city (that's based on a study AEG commissioned). That kind of projection is guesswork, maybe wishful thinking, but it's certainly getting the attention of the City Council, which is expected to approve some sort of stadium plan in another couple of weeks.
Julian: What will that take?
Lacter: The council has to first look at a draft agreement that lays out the financial details. In better economic times, this would be an easier sell, but it does involve a major investment and a questionable return. For years now, L.A. has been thirsting for additional conventions, but it's still considered a second-tier convention city, and that’s even after AEG received tax breaks several years ago for its convention center hotel. The larger conventions are really tough to attract because L.A. is just not an obvious convention city, the way, say, Las Vegas is - or even New York. And even if there is interest, the lead times for these conventions are at least several years, so I wouldn't hold my breath on those additional tax revenues.
Julian: As it stands, how are the downtown hotels doing?
Lacter: Occupancy is running about 64 percent, which is slightly better than last year, it hardly compares with, say, Santa Monica, which is routinely in the 80-90 percent range. That’s really the point: Just because L.A. is short on conventions doesn't mean that it's short on visitors. This is shaping up to be a strong summer - the Economic Development Corporation expects 600,000 more overnight visitors this year than in 2010, LAX passenger traffic is way ahead of last year, and L.A. County has almost 5,000 more jobs in the leisure and hospitality industry than it had a year ago, and of course you have the tour buses - all these are indicators that people are somehow finding a reason to visit Southern California, without having to put up a football stadium.
Julian: Speaking of tour buses, the Kodak Theatre in Hollywood has transformed itself to host Cirque du Soleil's new show. How big an impact will that be?
Lacter: It could be substantial. Normally, a single show in a city as large as L.A. wouldn't be that big a deal for the overall economy, but in this case you have an extremely popular entertainment troupe that's going to take up residence at the Kodak Theater for eight shows a week over the next 10 years. That's huge. Previews started last week; the actual premiere will be in late September. They're talking about 700,000 tickets a year, and that has business owners along Hollywood Boulevard pretty excited. They want a piece of the action - and unlike what’s going on downtown, this involves minimal participation by the city.
Julian: The folks at Cirque say not one of their shows ever lost money.
Lacter: Already, there are all kinds of packages being offered by nearby hotels; restaurants and shops are also hoping to bring in folks, either before or after the performances. (The show will only go down for about a month each year around the time of the Academy Awards - and that's not a busy period for tourists anyway.) The Kodak Theater is world famous because of the Academy Awards, but it's been considered kind of a white elephant for the rest of the year – it’s not well configured for many kinds of shows. But it apparently works pretty well for the Cirque du Soleil acrobatics. The trick is turning this into a broader economic event for Hollywood.
Julian: And tickets for a Cirque du Soleil show... start around a hundred bucks, if not more, in Las Vegas.
Lacter: Yeah, they’re pretty pricey here, too, which is another reason the Hollywood businesses are looking forward to well-heeled audiences.
Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.