Business Update with Mark Lacter

The future of downtown LA; television deals with local sports teams

KPCC's business analyst Mark Lacter discusses the possibility of a football stadium in downtown LA, and TV deals with LA sports teams.

Steve Julian: Mark, as we’ve been reporting, the LA Kings are Stanley Cup champions, and the area around Staples Center was in full celebration mode last night. But what about the downtown football stadium?

Mark Lacter: The biggest problem, Steve, is that there's still no NFL team in sight. One of the leading candidates had been the Minnesota Vikings, but the state legislature recently agreed to help fund construction of a new stadium. So, that's not going to happen. Another prospect had been the San Diego Chargers, but there's been a big push down there to develop a new waterfront stadium, and if that comes through, the Chargers won't be going anywhere either. Matter of fact, several NFL owners appear to be using the L.A. stadium as kind of leverage in getting local and state governments to provide incentives of one sort of another.

Julian: Like what?

Lacter: It’s usually a tax break of one kind or another or tax revenues that funnel back to the team owner. So, getting a team in L.A. might be tough - and without a team, there's no downtown stadium. There's also been some pushback among environmental groups about the stadium plans that were prepared by the developer, Anschutz Entertainment Group. One of the big complaints involves too many car trips to the stadium on game days.

Julian: Aren't the environmental groups talking to AEG about some sort of accommodation?

Lacter: They are, but none of this involves actual court challenges because legislation was passed last year that gives AEG special treatment in getting this plan approved. Now, there's no indication that the City Council is going to vote against the plan later this year - even with all the doubts being raised. But it’s a public relations problem for what’s supposed to be the most environmentally-friendly stadium ever built.

Julian: And one of the big trade shows is threatening to leave L.A.?

Lacter: Yes, the organization that puts on the annual E3 video game show has concerns about stadium construction near the convention center, whenever construction ever gets started (remember that along with the football stadium, AEG wants to overhaul the convention center). The show is a big piece of business for downtown -- 45,000 people were in attendance last week, and they filled up 30,000 hotel rooms. And when it comes to L.A. conventions, it really doesn't get much better than that.

Julian: But back to the Kings -- they cut new deal with Fox Sports West...

Lacter: The agreement is worth at least $250 million, which is about the biggest local cable contract for a hockey franchise (even though the Kings have some of the lowest ratings for any team). And in case you're wondering, it didn't have anything to do with the Kings being in the Stanley Cup Final. It's more of an insurance policy for Fox Sports West.

Julian: They're about to get some competition…

Lacter: That’s right – starting next fall, Time Warner Cable will be launching two cable sports channels that will feature the L.A. Galaxy soccer team, the L.A. Sparks woman's basketball team, and most importantly, the Lakers.

Julian: And this covers all Lakers games - KCAL Channel 9 is out of the picture?

Lacter: Yes – and the Time Warner channel could get even bigger if it cuts a long-term deal with the Dodgers. The Dodgers contract with Fox will be expiring at the end of next season, and the question is whether the team will renew its deal with Fox, move over to Time Warner, or maybe even start its own Dodger Channel. Sports remains the most lucrative type of programming, and by cutting long-term deals, cable channels are guaranteed both advertising revenues and subscription revenues. Of course, all this is going to cost the local sports fan. Expect your cable bill to go up.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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