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The Lies That Blind: The Truth about AEG’s Stadium, the Convention Center and City Hall

UPDATE 2:10 p.m.: John Semcken, Vice President Majestic Realty and the man in charge of the alternative NFL stadium plan in the City of Industry, just released a statement about the City Council’s decision: “Our
stadium proposal will generate more money, jobs and long-term success
for the region and the NFL. We are more active than ever and are
currently working with the league, owners and teams to bring a franchise
back to Los Angeles.” 
Also, listen to Which Way L.A.? with Warren Olney at 7 p.m. tonight where Rick Orlov, Jan Perry and me will be talking about the downtown L.A. stadium.

EDITOR”S NOTE: The City Council approved AEG’s stadium/’Convention Center deal on Tuesday without asking any new questions or seeking to add any new terms. It was unanimous with Dennis Zine and Tom LaBonge absent. The city’s documents and consultant’s reports can be found by clicking here. You can also read some of the concerns raised by community activist and researcher Joyce Dillard (JOYCE DILLARD.docx) and by USC Adjunct Professor Quentin Fleming (fLEMING-submission.pdf) and (QFleming Aug9.pdf)
Under City Council rules imposed by President Eric Garcetti, a quorum must be present by 10:15 a.m. or the meeting will be cancelled. 
Garcetti made an exception Tuesday when not even 10 members could bother to show up on time. The reason for the exception was that AEG’s Tim Leiweke had laid down the law that he wanted the Memorandum of Understanding for the NFL stadium/Convention Center project approved and in hand without further delay since it already nine days past the deadline he had set in his ultimatum months ago.
As the clock clicked past 10:30 a.m., the glibly deceitful Garcetti declared he would wait longer “out of courtesy” to the public in attendance in the Council Chamber — not out of subservience to Leiweke.
On the scale of all the grand lies that have been told about this deal, it was a minor fib.
Start with the claim, the MOU is “non-binding.” It is only in the sense the city could walk away from the deal. But the MOU provides the controlling terms, the framework that “guides the development of definitive agreements that will establish contractual obligations for the project,” city documents say. Or as the LA Times said in endorsing the deal Tuesday despite numerous misgivings, the MOU does not bind the city “entirely” — substantially but not entirely or it wouldn’t be worth the paper it’s printed on.
Then, look at the city’s unalterable demand that any Convention Center deal create one million square feet of contiguous space so L.A. can attract the biggest conventions.
The MOU actually provides for less Convention Center space (down from 750,000 to 720,000 square feet) than now exists although it would be contiguous with the West Hall torn down and rebuilt at a cost $275 million.
The city’s consultant CSL implies that the price tag is actually going to be much higher and the stadium with a retractable roof cost will run far more than $1.2 billion being discussed when the Meadowlands Stadium in New Jersey cost $1.6 billion without a roof, without needing to be safe in earthquakes. 
The deceit is compounded by claiming the football stadium itself will push the available space over the one million mark when CSL points out that space will only come into play in two possible events a year at most.
The whole theory that sinking this kind of money into the Convention Center when the old West Hall could be modernized for $50 million is doubtful. The Convention Center has been a white elephant financial disaster for the city for 40 years, bleeding $45 million a year from the general fund in the best of times, far more in the worst of times, more than $1 billion over time.
The revenue the city actually expects to get for the general fund from this whole deal over and above debt service on the rebuilt wing of the Convention Center is estimated at $210 million over 30 years — $7 million a year, leaving the general fund still losing $38 million for debt service on the main hall.
Then, there’s the problem of what it takes for the city to attract even five more large conventions on top of the 23 it now gets.
L.A. now has only 1,700 hotel rooms within a half mile of the Convention Center and needs to build 5,500 more rooms to support those additional conventions. That’s five more Ritz-Carlton/JW Marriott skyscrapers nearby.
AEG’s financial figures used by the consultants claim Phil Anschutz, the right-wing owner of AEG, wants to gamble on a $1.2 billion stadium in hopes of earning a 6.7 percent profit. Trust me Phil Anschutz is a gambler, an oil and gas wildcatter who never invested a penny in something producing such a low profit.
The consultants only looked at revenue from one football team playing at Farmers Field, not two which is clearly the NFL’s intent, and they badly underestimated the revenue from the dozens of digital billboards — revenue that AEG gets all of just as they get all $700 million from naming rights and hundreds of millions from secondary sponsors.
That’s all gravy for AEG but what about the two NFL teams. Can they really sell out 74,000 seats every Sunday from August to January with the average price running somewhere between $200 and $300 — that’s average, not top prices.
This is a 14-acre city-owned property that AEG is leasing for $5 million a year. They call it a “fair market” price yet a property around the corner just sold at a price that would make the land for the stadium worth well close to $300 million —meaning  AEG is getting the land at a fraction of what it’s worth, a gift of public money if ever there were one.
How will the month-long Auto Show in November or any other fall conventions operate when football games with huge crowds are going on every Sunday? 
How will football games and their huge crowds impact all the Lakers, Clippers and Kings games on Sunday?
Non-answer answers were enough to satisfy the Council’s only critic of this deal, Bill Rosendahl. But they won’t stop the controversy that swirls around it as long as the city officials leave hundreds of millions of dollars on the table and fails to face the truth of the upsides and downsides.
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21 Responses to The Lies That Blind: The Truth about AEG’s Stadium, the Convention Center and City Hall

  1. Anonymous says:

    This is a terrible place for our city and all
    of us to be.
    I am not a pol, nor a lawyer, are there any
    readers out there who can put us on the right track to help ourselves. We cannot allow our-selves to be used in this disgraceful manner.
    Thank you for sharing my request with your
    friends who might be able to set this straight.

  2. Zuckerkhan says:

    Hello Ron, well, I knew you weren’t going to be happy with the vote, yet there are still lots more to be done for this to go through. AEG first needs to get one team (which they should, the Chargers and Rams both have easy leases to break. The Vikings can also leave if they don’t pass their stadium vote). Two teams is likely in the future (as the NFL likes the new stadium model of the Jets/Giants in New Jersey and possible two teams in the Bay area with the 49ers/Raiders). They also need to do an EIR study. Now this will be interesting as the Majestic project did an EIR (yet it wasn’t for a stadium, but another kind of development. They “somehow” – thanks former Gov Arnie – transferred it to the stadium. They are exempt from lawsuits). Basically, there is more to be done.
    I do find some of your input interesting.
    1. So if this wasn’t some “right wing owner”, would you approve? Once again, personal attacks is a bad way to argue. Would it be better if it was Warren Buffet with the same exact deal?
    2. Yes, DTLA and the South Park Area needs more hotel rooms. And this is a bad thing? Its an urban area. More development and more jobs. Wow, what a crazy idea: Jobs. And these are all kind of jobs, from union to non-union, to full and part-time. Cities and “downtown’s” do have “skyscrapers”. They are not building upwards in Santa Monica, Woodland Hills, Carson, Torrance, etc…this is the “CITY”. DTLA already has the US Bank Building (over a 1,000 feet), AON, and Two California Plaza just to name a few. Our Downtown Skyline needs improvement (for various reasons). I hope the city extends and allows new development towers the need not to build helicopter landings. We can really develop a great skyline. This is called: opportunity.
    And there is already development of a dual Marriot tower across the street on Olympic Blvd from LA Live that is going to start to build in early 2012. Don’t forget the new/rebuilding of the Wilshire Grand Hotel Development. Also, the new Target at 7th and Fig, Developers are ready and ahead of the game.
    3. And when it comes down to selling out the new Farmers Field, AEG does a very nice job of filling Staples Center for major sporting events (and concerts). The Lakers, of course do well and sell out all the time, yet look at these stats for LA’s two other teams: Kings and Clippers.
    The Kings, in a non-Hockey City, averaged 99.8 seats filled (AEG owns and operates them). http://espn.go.com/nhl/attendance
    The Clippers (yes, the horrible Clippers that have to play in the same building as the Lakers) averaged 93.1. They rank 14th in a league of 30.
    http://espn.go.com/nba/attendance
    4. And AEG’s plan actually has this great thing called: Mass Transit. The Redline (Valley and Hollywood), Purpleline (K-Town), Blueline (Long Beach), Goldline (Pasadena, 210 area, East LA), and the new Expoline (Culver City 2011/2012, Santa Monica 2015).
    Metrolink and Amtrak have easy access to the red/purple line transfer. Or AEG can set up shuttle service. AEG has already begun a partnership with Metrolink, by allowing people to buy tickets to both an AEG event and a Metrolink travel at one pay point.
    It would be interesting to see what kind of development we can get AEG to commit in terms of helping fix up the Pico Blueline (future Expo) stop. This is something I would agree that the city needs to push for.
    Also, the City, shareholders, and residents, should see this as an opportunity to move forward with the Downtown Streetcar. This will help the DTLA area spur more smart and balanced development down Broadway and towards the Civic Center.
    AEG should also look into developing a bus system like the Hollywood Bowl uses. This seems like it works well.
    Thank you for letting me visit your forum.
    Best regards,
    Zucker

  3. Anonymous says:

    The AEG deal is so corrupt that it is not even worth fighting cause we can’t win against a corrupt Council & Mayor that if not for a lax DA & AG would be behind bars. However, I urge everyone to read this article by Stephen Box in Citywatch about how the average person in this city is being ripped-off. Fight this and don’t let this corrupt City Hall rob you of your hard earned money.
    http://www.citywatchla.com/lead-stories/2080-city-halls-parasitic-cost-recovery-scheme

  4. Anonymous says:

    Ha-ha-ha
    Even your stooge Krekorian voted with the other thieves and whores.
    You people are screwed. I’m so glad i am out of this money pit. Enjoy paying for more free tickets for Villar.

  5. Anonymous says:

    4:12, I also left LA but have not abandoned it cause it is a major US city, which cannot be left in the hands of crooks & thieves. LA’s demise hurts the entire regional economy just as its revival is a boon to the area. So everyone’s future to some extent is affected by this 800 pound gorilla amidst them. We all must work to clean this pit or it will take us all down with it.

  6. Anonymous says:

    4:12 pm – you probably made the correct decision to move. Remember when the Convention
    was the future of Los Angeles? Now in the same
    boat, we are building hotels, arenas, redoing
    what was once a dream and is now a nighmare – these politicians and business men are doing
    us all the favor of building and they do not even
    have a commitment fromn the NFL!
    Reminds me of the convention center.

  7. Jim says:

    I would have hoped that Grand Crossing would be successful just to prevent the negatives of building a stadium in Downtown LA.
    But it looks like Grand Crossing and Majestic Real Estate don’t have a chance according to this interesting article: http://www.footballphds.com/2011/07/15/stack-ranking-the-proposed-stadium-projects-in-california/
    Jeepers, Majestic Realty even used their own corruption of paying off the State legislature and Governor for CEQA protection, and they don’t have any leg up on Downtown LA and AEG.
    Grand Crossing isn’t even a contender.
    Where is OCBear??

  8. Jim says:

    Enough with the foolish Downtown Street Car. You have the DASH, just expand the hours of operations to serve the area in question.

  9. Anonymous says:

    But how will Huizar make his money without the downtown street car?

  10. david J barron says:

    If there was a profit to be made here, maybe Warren Buffet would have invested in this project…just like the $34 billion he just invested in Burlington Northern, to haul coal for the next millinneum years. And we thought coal was going to be phased out!?!
    I’m all for a beautiful skyline, development, and opportunity. But not funded with taxpayer revenue. Opportunity? Isn’t that where venture capitalist, see a good deal, and invest for a profit? With AEG being able to fill 99.8 seats, and operating it’s asset’s so successfully, why haven’t they been able to raise revenue from those professional private investors? Afterall, Rosendahl, Reyes, Cardenas and Perry who voted ‘yes’ last week, seem to think it’s a beautiful deal for them personally!!!
    As for light-rail, isn’t that when lots of auto-train accidents occur? And, where they also block traffic as they cross intersections?
    What about a monorail? Verticle columns need only a small foot-print. The horizontal rail goes up as fast as you can build the columns. And, since it’s elevated, it blocks no traffic, and can be privately operated.
    And, in the meantime, do Jim’s idea; expand Dash/bus/routes, and operating hours.
    Here’s another way of creating jobs, jobs, jobs; abolish the AEG stadium project, and tell City Hall to keep their hands out of businesses, and people’s pockets. Stop giving away our tax millions to their politically connected supporters, and allow entreprenuers to do what they do best; create businesses and hire!
    As a city union member, I don’t want my union dues supporting any elected official who doesn’t put the public trust first.
    Zucker and Jim, pleased to meet your acquaintance.
    I’m David Barron, a civil servant who cares.

  11. Wayne from Encino says:

    FINAL NFL JEOPARDY QUESTION:
    “The Clown who has raised $500,000 to run for D.A. even though he promised to serve only 2 terms as City Attorney, has a big fat head, and has a passion for free Lady Gaga Tickets from AEG?”

  12. 2-Good 2-Be true says:

    The reason why Rosendahl approved of the deal was because it was said this would not cost the City of Los Angeles, one-red cent. Is this promise in writing?
    Can the City of L.A. bill (Leagally) AEG for any cost they incur over the life of the Contract? If it’s not in writing the risk exist there may be hidden costs, unexpected costs, indirect costs ect.,
    LADWP is going to love the night games. I hope our utilities (Water/Electricity don’t go up to subsidize AEG)
    AEG & the City can’t predict what is going to happen moving forward. The hope is #win #win. But get it in writing, in the event 2-5-7-10-15 years from now… you get the POINT (if its not in writing, if they are just saying it won’t cost anything; it’s too good to be true)
    If this fails City Councilmen should be held accountable, each one who voted YES. Nothing is wrong with voting NO if U believe based on the facts, but in the END, the JOBS this will produce does not save the City if this Agreement is not financiall sound.
    Good luck.

  13. Anonymous says:

    This city is so corrupt it reminds me of old time Chicago. Yes, folks, LA has gotten just as bad as Chicago in its dealings and corruption. If you read the dumb ass Police “Political” Protective League’s newsletter today, the spin is its a great deal for the city. Remember its Harvey Englander’s company (huge fan of AEG) who does their newsletter and 1/2 the time board members don’t even bother reading it themselves. To give you an idea how political police league has gotten on their upcoming Eagle & Badge gala the committee board members consist of: IBEW Brian D’Arcy, Former DM Austin Beutner, Gerry Miller-CLA, Michael LoGrande,Ron Nichols DWP, and about 7 of the corrupt City Council members. And then they wonder why the rank and file are looking for the teamsters to rep them now.

  14. Monty says:

    I smell Marquez in these comments.

  15. Anonymous says:

    What is shocking is the fact that the City will not receive the revenue profits anywhere close to the profits AEG will. If this deal is so great why didn’t Anshultz guarantee the bond? This means if AEG doesn’t pay up guess who has to? Taxpayers. I think everyone should contact Majestic Realty and let them know we support their proposal. We should also contact NFL Committee and say NO TO LOS ANGELES. Can you imagine if we get a team like the Raiders? You can bet all the gangsters will come out like bees. I find it appalling none of the local media reported all the campaign money from AEG at least 7 council members have received. I’m researching and will post soon.

  16. FRANK says:

    as Jan Perry said last night on the radio in a very excited voice. ” the city will see 230 million in revenue over 30 years ” . The stadium will bring in 7 million dollars a year.this is not an asset it is a liability. The cost of police overtime for all those phantom events will far exceed this incredible low number..how can those fools pretend this is a good deal ?

  17. Anonymous says:

    “IBEW Brian D’Arcy, Former DM Austin Beutner, Gerry Miller-CLA, Michael LoGrande,Ron Nichols DWP, and about 7 of the corrupt City Council members”.
    Collection of crooks.

  18. Anonymous says:

    I’m surprised at the report on this story Rick Orlov has in the Daily Breeze. What type of bullshit made up crap did he have printed? ITs all nothing but pr spin for AEG. C’mon Rick, you’re a veteran and should know better. He didn’t report not one point on the other side of this issue and the same goes for all the idiot reporters. I’m shocked David Z although a little better job, still misses on the great investigative reporting he use to do. Could the huge turnover make him nervous? Ron, you should start your own newspaper and put out these stories.

  19. Anonymous says:

    Great idea, except that newspapers are on their way out. I’ve no idea why I continue to subscribe to LA Times, a worthless paper. One of these days, I’ll cancel. Blogs are the future.

  20. Zuckerkhan says:

    Hi david J barron,
    Monorail? Like the private one in Vegas that is bankrupt? Monorails are sexy and fun, yet they are better off in Theme Parks.
    I wonder what the stats are from people getting hurt in car accidents (car alone, car against car, etc) against car versus light rail accidents? Metro needs to do a better job in creating safer passages, yet people and drivers need to be more aware as well. Before you think you can beat that train, please remember, the train will always win–
    I actually like a lot of your platform, less government spending. Actually less Government in general would be great.
    All and all, since I have lived in LA (mid 90′s) downtown LA was not a place to go to. Now, with Staples Center, LA Live, (and Future Farmers Field), and nightlife (away from LA Live, for example the Old Bank District), Art Walk, Museums, Cafe’s and Coffee shops, downtown LA is not only a place to visit, yet a place to live (if you like “urban” areas). Is it perfect? No and needs a lot of improvement. But bringing in more conventions (more visitors) is nice. Ask all of LA (not only DTLA) yet all of LA (yes, the Valley included) about how was the Microsoft Convention with 15K visitors for four days spending about 38-40 Million. At the same time the Espys were taking place. More visitors. LA Live helps bring in guests/visitors to our City. E3 anyone? Shall I go on? AEG in ten years brought two NBA all star games (a few days of various events). How many other arenas has done that?
    I am also glad Ron added the Majestic group here. Love this quote: John Semcken, Vice President Majestic Realty and the man in charge of the alternative NFL stadium plan in the City of Industry, just released a statement about the City Council’s decision: “Our stadium proposal will generate more money, jobs and long-term success for the region and the NFL. We are more active than ever and are currently working with the league, owners and teams to bring a franchise back to Los Angeles.”
    Well, the City of LA will get nothing if Majestic gets built. Its in the City of Industry. And talk about corrupt project? Some how their environmental review is not even for a stadium. Aren’t they suppose to build a football stadium there? Former Gov gave them a full pass. I think the plans look great, yet its a one trick Pony: Football games and maybe Soccer.
    AEG’s plan, NFL football, soccer, concerts, NCAA Basketball, Boxing, trade shows, corporate buy-outs, etc…The roof will be open btw for football/soccer. Closed for conventions/NCAA basketball, Boxing.
    And the four or five other hotel towers that will be built and from private money. That doesn’t include Wilshire Grand Tower. What about the new Target at 7th and Fig (great).
    If done correctly, the Streetcar can be nice. Once again, if done correctly. One thing the City should make sure is AEG does fix up the Pico/Chick Hern Light Rail station. AEG has already set up a good partnership with Metrolink which is a nice start.
    The only time I am personally worried about traffic is a Monday Night game. AEG will need to come up with a plan for this. Most games will be played on Sundays when DTLA is a ghost town. DTLA can easily handle 68K visitors on a Sunday. You know over 400K visitors come (according to DTLA News) into the area on an average work day (week day).
    Best regards,
    Zucker Khan

  21. Anonymous says:

    ZK is an AEG stooge. The arguments aren’t worth a response. Commenters have addressed those arguments so many times on this blog. How many times do you respond to the same BS?

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