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.