AEG Jumps into Race for NFL Team in L.A.
Meanwhile, the NFL has done just fine without L.A. It has added teams in Houston and Cleveland, national TV ratings have soared, franchise values have skyrocketed and the league even beat Al Davis in court to acquire the "relocation rights" to the L.A. market, so any club that wants to move here will have to pay fellow NFL owners a tidy sum for the privilege. And those scorned L.A. fans? They've managed to survive – and get to watch more games than ever before without a hometown NFL club.
But here's the unlikely newsflash: the stars appear to be aligning – no, really -- for a pro football's return to Hollywood. A confluence of developments, ranging from aging owners in several NFL markets to real estate gentrification in L.A., has changed the landscape and reinvigorated discussions about pro football's future in the country's No. 2 media market. The biggest momentum boost: a recently-unveiled plan by Anschutz Entertainment Group to erect a privately-financed, $725 million stadium in downtown L.A. next to Staples Center, the wildly successful arena it built and opened a decade ago.
AEG -- which owns the NHL's Los Angeles Kings, the MLS' Los Angeles Galaxy and has a non-controlling stake in the NBA's Los Angeles Lakers -- recently sent architects a "request for proposal" to design the venue, which would be built on a parcel that includes a large section of the city's existing convention center. AEG's plan, which calls for opening the stadium by the summer of 2015, would raze the west end of the convention center and replace it with a 72,00-seat stadium featuring a retractable dome and 218 luxury suites.
The dome is necessary, even in warm-weather L.A., because the facility would be utilized as an "events center" for large meetings. The stadium design is also expected to give the venue flexibility to host international soccer matches, high-profile boxing bouts and college basketball's Final Four. A spokesman for AEG declined to comment on the proposed stadium or its design.
The stadium is far from a done deal. AEG, backed by Denver billionaire Phil Anschutz, still needs to reach a deal with the city to acquire the land, and is unlikely to begin seeking funding for the stadium without a commitment from an NFL team to move – or without the support of league insiders. Any franchise relocation would require approval from 75 percent of the NFL owners, as well as a payment to the league – which could be as much as $100 million -- for rights to the Los Angeles market.
Further complicating matters: the NFL is facing a possible work stoppage when the league's collective bargaining agreement with its players expires in March of 2011, making it unlikely that any team would commit to moving until there's a decision about the league's future business model. "I don't think there's much any team can do until (the NFL) gets the labor situation resolved," said Rob Tillis, founder of Inner Circle Sports, an investment banking firm that specializes in sports transactions. It would be next to impossible, he says, to raise private financing for a stadium without an NFL tenant – especially given the questions about revenue sharing and player compensation. "You can't quantify that risk," said Tillis
Nonetheless, AEG president and chief executive Tim Leiweke told the Sports Business Journal that his company has been in talks with several NFL clubs and league commissioner Roger Goodell. "The one thing I am certain of is the NFL owners would like to be back in L.A.," said Leiweke, who has called the lack of an NFL franchise in L.A. an "embarrassment" for the city. NFL owners "do not want to take a chance here, they can't. They have to be perfect this next time in L.A."
AEG's proposal is hardly L.A.'s first optimistic stadium plan, of course – and it's got competition. Ironically, AEG's chief foil is Ed Roski, the L.A. real estate baron who teamed with AEG to build Staples Center and also owns a stake in the Kings and Lakers. Roski has secured the land and drawn up plans for an $800 million stadium in the city of Industry (below), a suburb located 22 miles east of downtown L.A. The site is accessible from several freeways, but is at least an hour's drive from West Los Angeles, where many of the city's wealthiest and most influential residents – i.e. the potential luxury suite and premium seat owners – reside.
To combat questions about location, Roski's company Majestic Realty has been trumpeting the stadium's "green" design, its 600 acres for "all day tailgating" and its purported ability to generate 18,000 jobs in a region that's been hit hard by unemployment. Last month, Majestic Realty also said it was "tweaking" the design of its venue to comply with FIFA's guidelines for World Cup soccer venues. The move was widely seen as jockeying by Roski in advance of a possible stadium announcement from AEG. Leiweke and Anschutz are heavily involved in the U.S. bid for the 2022 World Cup, and Leiweke has already said he envisions AEG's new downtown stadium hosting the World Cup championship game (FIFA is scheduled to announce the hosts of the 2018 and 2022 World Cups in Zurich on Dec. 2).
But in Los Angeles and the sports-business world, AEG's proposal is perceived to be the more favorable and realistic option. AEG has bet big on facilities that don't yet have pro sports tenants, erecting new arenas in London, Kansas City, and most recently, Shanghai. It also has considerable sway in L.A., where AEG built Staples Center and L.A. Live, an adjacent entertainment district that has transformed a formerly moribund section of downtown L.A.
David Israel, a member of the Coliseum Commission, which oversees the historic L.A. Coliseum, USC football's home, has seen multiple stadium efforts rise and fall in L.A. over the last 15 years, but believes AEG's proposal has legitimate promise. "This is the closest L.A. has been since the Raiders and Rams left," said Israel, a longtime newspaper columnist and TV producer who was Peter Ueberroth's chief of staff for the 1984 Summer Olympics in Los Angeles. "The NFL has lost nearly two generations of children who've grown up without a football team in L.A. – they're getting to the point of no return. It's not an accident that the most popular teams in town are the Lakers, the Dodgers and USC football, and they all play downtown. That's why I believe this will happen."
It's not clear whether AEG is interested in buying out an existing NFL team outright, or would be content with a minority investment and a long-term tenant, similar to its deal with the Lakers. Any AEG effort to purchase a team would likely be joined by Casey Wasserman, the sports entrepreneur and grandson of noted Hollywood mogul Lew Wasserman.
There are several NFL franchises that are candidates for relocation. The most-often discussed team is the San Diego Chargers, largely because the team has the easiest route out of its current stadium deal. The Chargers are literally just a check away from leaving Qualcomm Stadium: between February 1 and April 30 of every year from now through 2020, the Chargers can get out of their lease by writing a check to the city of San Diego – this year, the amount is about $26 million, and it decreases annually.
Alex Spanos, who became the club's majority owner in 1984, is now 87 years old and reportedly in poor health. He and his wife now own 36 percent of the club, while each of his four children have 15 percent stakes, and they have hired Goldman Sachs to sell a minority share in the team. Representatives from Goldman have met recently with several wealthy individuals in L.A. about the Chargers' stake, according to people familiar with the matter. (The team, founded by hotel mogul Barron Hilton, actually came into existence as the Los Angeles Chargers and played its inaugural 1960 season at the L.A. Coliseum. Hilton moved the club to San Diego the following year.)
Mark Fabiani, who has been leading the Chargers' efforts to develop a new stadium, told FanHouse that the Spanos family is looking to sell a stake in the team solely for "estate-planning purposes." Greg Carey, a managing director at Goldman and its point man on stadium and sports deals, confirmed that the company is working with the Chargers but has not been retained by the NFL or AEG to find partners for a potential L.A. ownership group. "Things in L.A. are very early stage, there's nothing concrete," said Carey, who is currently working on the San Francisco 49ers' stadium plan and arranged the financing on new venues for the New York Yankees, Minnesota Twins and Orlando Magic.
Aside from the Chargers, other possible relocation candidates include the Jacksonville Jaguars, who've struggled with attendance and sponsorship woes, as well as the Buffalo Bills and Minnesota Vikings, both of whom play in older facilities. The Los Angeles Times recently speculated that Rams owner Stan Kroenke, who's based in Denver, could swap franchises with ailing Broncos owner Pat Bowlen, who would in turn sell the Rams to L.A. investors who would bring the Rams back to the area.
And there's always the Oakland Raiders, who moved to L.A. in 1982, won L.A.'s only Super Bowl in the 1983 season, moved back to Oakland in '95 – and are still dissatisfied with their stadium, which is one of the NFL's smallest and oldest venues. In an interview for a recent ESPN documentary, Davis, whose physical condition has deteriorated considerably in recent years, conceded that he had not ruled out moving back to Southern California.
"As L.A. knows, if they can get a stadium, they can knock on the door," he said.