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The Artless Deal: Why Billionaire Phil Anschutz Is Getting Richer and LA Is Going Broke

It doesn’t take a brilliant sleuth like Sherlock Holmes to solve the Case of the Bankrupt City.

It’s not a mystery. You just have to look at the record of City Hall’s artless deals, its giveaways public money to unions, billionaires, developers, Hollywood, contractors and a lot of other special interests with few, if any, benefits to the general public.

The biggest giveaway of all is now on the table: Turning over the LA Convention Center to billionaire AEG’s Phil Anschutz to tear down half of it and build an NFL stadium.

Two years in the making in back rooms, the deal is up for its first formal public hearing on Wednesday before Janice Hahn’s Trade, Commerce and Tourism Committee — an important first step since Leiweke has only given the city two more months to provide him with full approval of the whole deal.

The hearing is just for show, for public consumption, a public relations exercise that has been orchestrated for months by Mr. Big, AEG’s LA operative Tim Leiweke who has been rolling out piecemeal his grand scheme to add the Convention Center to Staples Center and LA Live — both thriving thanks to the generous gifts of public money bestowed on them by City Hall.

Leiweke started putting the deal together nearly two years ago in private meetings with the mayor and his staff to work out details of the Convention Center takeover.

All the while he was lining up a deal for a stake in an NFL team, undoubtedly the San Diego Chargers whose owners, the Spanos family, are desperate to get out of town since that city won’t build them a beautiful new stadium.

And he has been negotiating with companies for $20 million a year in naming rights to his new stadium — formerly known as the city-owned LA Convention Center. You can imagine how big the sign will be lighting up the freeways and downtown whether it says Farmers Insurance or Evergreen Kush.

Leiweke has told us his boss, owner of stadiums and entertainment venues all over the world,  has been very reluctant to get involved in this deal but now — surprise, surprise — he’s getting very excited.

“He’s very enthusiastic about the project,” Leiweke told Howard Fina at the LA Business Journal in an article Monday, adding that
the Denver tycoon has discussed the matter with some of his friends who
own National Football League teams and is ready to put up $150 million for his stake in a team.

Anschutz didn’t get to be a billionaire without without knowing how to make a deal so Leiweke said he has conditions:

• Agreements with various corporations for naming rights and other
sponsorships that would bring in tens of millions of dollars in annual
revenue.

• A commitment from Los Angeles city officials for speedy approvals
and $350 million in bonds to replace the West Hall of the city-owned Los
Angeles Convention Center that would be torn down to make way for the
stadium.

• A commitment from an NFL team to move to Los Angeles.

• A commitment from the NFL itself to approve an L.A. team.

In other words, it’s a done deal. All those conditions are already met except for the formality of signing the papers and announcing the details.

We get a clue to what the city’s position on this is from the two motions under consideration by Hahn’s committee Wednesday.

With the innocence of a lamb being led to slaughter, Hahn’s own motion backed by Jan Perry merely asks for “an update on the private management RFP (request for proposal to run the Convention Center) and how it may be impacted by plans for a new downtown stadium.”

How indeed?

She does set up a series of premises that indicate what this is about:


“With tourism ranked as the number one industry in Los Angeles,
convent
ions
p
rovide a
critical role, generating tremendous revenue to the City by bringing in sales tax and hotel tax revenue, as well as creating jobs in the hospitality sector. Over the
past yea
r, the
C
ity has been considering the possibility of private management of
the
Convention
Center
in
t
he hopes
of
increasing revenues to help address
the
budget
shortfall, including the $46 Million paid annually out of the General Fund to cover debt service on the Convention Center.”

Tourism, sales and hotel taxes, jobs, general fund money to hold the city together without solving the budget problem, unloading $46 million in debt payments — AEG is going to save LA.

Jan Perry, the queen of downtown development, has her own motion backed by Greig Smith and Eric Garcetti that answers questions rather than asking them, suggesting that in “these difficult economic times,” the deal will yield “temporary and permanent jobs necessary to build and operate the facility” and upgrade the Convention Center.

LIke Anschutz, she’s got conditions:

“Any such project would have to be funded solely from new revenues associated with the project, must protect the City’s tax payers and the City’s general fund, and must generate revenues above and beyond those currently generated by the site.

“Because this project involves the Convention Center, protections must be in place to ensure continued attraction and growth of national conventions to the City and revenues associated with that activity.”

Leiweke couldn’t have said it better, actually he has.

We have his guarantee this won’t cost the public a dime. AEG will put up $1 billion, now raised to as much as $1.5 billion, a figure that is at least in the ballpark of what it costs to build a 72,000-seat stadium with a retractable roof

But the phrase funded solely from new revenues associated with the project” comes close to admitting for the first time that AEG will keep all the taxes generated.

The protections to the taxpayers amount to nothing more AEG’s promise to back the city bonds needed for this project and how could the stadium doubling as the revamped Convention Center generate less revenue than what is a white elephant burdened with $500 million in debt.
 

There is only one thing that can go wrong with this whole deal: Emergence of opponents who could delay or derail the project, Leiweke told the Business Journal.

“The only thing that keeps me up at night is someone throwing grenades at the project for their own personal agenda.”

Now that’s a statement that belongs in the Hall of Fame of Quotations.

Anyone raising questions about this deal has a personal agenda but Leiweke’s goal of enriching Phil Anschutz’s investments in Staples, LA Live and other projects has no other purpose than the public good.

On that basis, it’s going to be very hard if not impossible to find out about the real costs to the public for road, freeway and infrastructure improvements, to require a full environmental impact report, to question the gift of tax revenues from tickets and parking to AEG, to question how who’s paying off the existing debt on the Convention Center, the costs of demolition of the West Hall, the loss of revenue during the four-year construction period.

What’s so hard to understand about how City Hall does business is if this is such a good deal is why they won’t put all the facts on table, all the memos, emails, contracts and open it up to public scrutiny and debate.

In this case, there just isn’t time. Leiweke has seen to that with his March deadline for completion of the deal even though the NFL with tough negotiations looming with the players will like likely take a lot more time to approve bringing a team to LA.

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8 Responses to The Artless Deal: Why Billionaire Phil Anschutz Is Getting Richer and LA Is Going Broke

  1. Anonymous says:

    If it is such a great deal for the city, why not have an open bid. We may get a better deal. This deal stinks so bad that someone should go to jail.

  2. Sandy Sand says:

    Ditto 11:11 a.m.
    Every resident should become a “grenade” or monkey wrench, since we’re supposed to tone down the explosive rhetoric, to stop this deal that will only benefit a few very wealthy people.
    And the “there’s no time to send the city all the memos and emails is bull-oney! A couple of secretaries and a good copy machine and they could do it in a couple of days — if they wanted to.
    Lack of cooperation and openess on their part just proves what a sour deal this is for L.A. taxpayers.

  3. Stzlyee says:

    How about that! A NFL Football Team. I’m proud of Perry. She helped bring a football team. Wonderful!
    God Bless America. I hope the Stadium and NFL will provide the City with an Annual Fee to help support the City that helps the NFL and those RICH RICH RICH men. God help them and pray they also pay a fee as part of the side of Jan Perry necessary as a Representative of the City of Los Angeles. In that capacity, she owes it to bring in money to the City not only to private parties.

  4. Anonymous says:

    I think the stadium should go to the City of Industry.

  5. Noel Weiss says:

    The stadium and/or any NFL Team should be owned by the people. . . 100,000 people at 10K per person is $1 Billion. . . . It works for the Green Bay Packers (ownership of the team, that is). . . It can work for Los Angeles.
    Noel Weiss

  6. Can Sinners Go To HEAVEN? All Sinners Have the Choice to End Up either in HEAVEN or HELL. It’s Your CHOICE. Make the Right Choice, CHOOSE CHRIST! TTC John 14:6

  7. Bitter Betty says:

    Dear NFL,
    Please don’t come back to Los Angeles. Please don’t bring your NFL team. Please don’t bring your millions of dollars in construction jobs to Los Angeles. Please don’t bring your permanent stadium jobs to our city. NFL, we don’t want your economic impact. We’re doing just fine.
    Please don’t bring your corporate sponsorship. Please don’t bring your $500 million down-the-road Superbowl to LA. Please just stay away NFL. The second biggest audience in the United States doesn’t want your entertaining product.
    Every last citizen of LA is anti-AEG, anti-NFL, and anti-business. Just read the Ron Kaye blog and reader comments and you will understand our life-long discomfort with your heavy handed tactics to boost the local economy. Boo!
    Go to San Antonio. Build a second team in Houston. Take your product to Oklahoma City. We want you to always use Los Angeles as bait. Dangle us in front of irritating city officials who won’t pony up for a new stadium. We don’t mind. We like being treated as a second rate City.
    Yours,
    Bitter Betty

  8. Heyho, interesting article! I will keep surfing your homepage ;)

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