2 NFL stadium plans complicate L.A. landscape
The dreamer salesman and the life-long builder each share a vision of the NFL returning to Los Angeles. Will their competing ideas fail, further delaying the nation’s second-largest market from having a team again?
Tim Leiweke, the president of Anschutz Entertainment Group, and Ed Roski, a billionaire developer and owner of Majestic Reality, once partnered to turn one of Los Angeles’ ugliest neighborhoods into a thriving, up-and-coming entertainment center. Now, they sit in competing camps over where a new stadium should be built.
Leiweke, who many people have called an uncommon salesman in a town filled with deal brokers, has put a seemingly improbable three-month deadline on his idea to shoehorn a 65,000, retractable-roof stadium into the lot of land where the Los Angeles Convention Center’s historic West Hall currently sits in the city’s downtown area. Leiweke talks about gigantic concepts with major events, like three Super Bowls in a decade and NCAA Final Fours on a regular basis. He even threw the 2022 World Cup out there before Qatar stole the show earlier this month.
The problem with the project is the details. Simple details, such as where will fans park in one of L.A.’s most congested sections? How will they tailgate in the parking garages and underground lots that surround the spot? If you’re the NFL, where will you set up shop with all those TV trucks and temporary buildings you need for the Super Bowl?
And the most important question of all for a city and state that sit on the brink of financial collapse: How much will it really cost?
By contrast, Roski has the details down cold for a stadium in the City of Industry, located about 20 miles east of downtown Los Angeles. As he points at the model of his proposed 75,000-seat stadium at the end of a 45-minute presentation that comes complete with a slideshow of the economic and population changes in Southern California over the past 15 years, Roski has even set up a special celebrity pathway in and out of the stadium.
“Stars want that convenience, that special treatment and we’re going to give it to them,” Roski said, a sincerely knowing smile flashing across his face. He is so ready to turn a shovel that he rolls his sleeves up as he talks. His 600-acre, barren site is limitless with possibilities, from a 22,000-spot parking lot to a sandy area resembling a beach located at one end. The website Roski’s company created for the stadium claims to have already received 11,450 suite requests, 351,522 club seat requests and 553,500 season tickets.
That’s enough to fill 10 stadiums.
After 10 years of sorting out many sites, including the one Leiweke is trying to sell now, Roski settled on this area and has worked diligently to get everything in order, including two environmental impact reports and even a rare exemption from the state senate from nuisance lawsuits.
The problem for Roski is location, at least from an abstract sense. Roski’s plot of land is located at the elbow of highways 57 and 60 in a “city” that has been the butt of SoCal jokes for years. Johnny Carson made places like Industry and Rancho Cucamonga famous as punch lines.
It’s not that Industry is a bad place, it’s just not really a city in the classic sense. Featuring more storage facilities than residents (913), Industry’s name is meaningful – a town that was created for business.
Then again, for that very reason, it might be perfect for a league that just played its most recent Super Bowl on unincorporated land in South Florida, is about to play its next title game in a suburb that sits equidistant between Dallas and Fort Worth, and features other stadiums (New Meadowlands, Gillette) located on the outskirts of major cities.
Sadly, Los Angeles’ indecision on where to put a new stadium is a big factor in the delay of the city again having an NFL franchise. Los Angeles has gone 16 years without the NFL. That’s a generation of football fans lost or at least comfortable with the idea that the NFL is something to be watched from a living room chair.
With the economy at a point where building a stadium might not be cost-prohibitive, can L.A. come to a consensus on how to bring football back? Or will a city that is so often caught up in the latest Lindsay-Kim-Paris scandal be unable to pay attention long enough to decide?
As people in and around the NFL listen to Leiweke’s recent remarks and plans, the reaction is varied forms of amusement. As impressive as Leiweke’s résumé may be in the sports and entertainment business, NFL types are beginning to wonder if he knows what he’s doing.
Leiweke, the latest in a string of people who have been trying to return the NFL to Los Angeles since it left in 1995, essentially gave the league and some yet-to-be-identified team a three-month deadline two weeks ago to move there. That’s not to mention him saying he expects an agreement from the city to build on a site where more than $500 million in bonds must be paid off or renegotiated before anything can be done.
Last Wednesday, AEG unveiled three renderings of plans for the stadium. But Leiweke made only a cursory stop at the unveiling. Leiweke also admitted to the Los Angeles Times that AEG owner Phillip Anschutz is not on board with the plan as of yet, despite the fact that Leiweke indicated at other times that Anschutz and AEG would invest $1 billion on a new stadium.
In fact, two sources close to Anschutz, who has partnered with Roski on many real estate deals, said Anschutz personally told Roski that he is not part of Leiweke’s downtown stadium idea. That has made some people wonder if Leiweke’s seemingly impossible deadline to get such a complicated deal done is just a way of backing out.
“There’s no way he can get all of this done with the city by March and he knows it,” one of the two aforementioned sources said. “This way, when the deadline comes, he can say, ‘Oh, we tried, but the city just wouldn’t do it’ and he can blame someone else.”
Leiweke and downtown stadium proponent Casey Wasserman haven’t returned numerous interview requests from Yahoo! Sports over the past six months.
Considering that Roski has spent a decade trying to work this out, Leiweke’s timeline seems incredibly ambitious.
“I applaud [Roski] for his 10 years worth of this vision but we’re not going to hang around for 10 years,” Leiweke told ESPN Los Angeles. “We’re going to try to get this done in the next three months. If we can get an agreement with the city and if we can get an agreement with the NFL and if we can identify a team, we’ll take risks on the vote of the [NFL] owners a year from now or two years from now on whether that team can move here. That’s a risk we’ll take. But if we can get the first three – an agreement with the city, an agreement with the league and at least an understanding of the team we’re going to do this.”
Aside from the local political issues (Leiweke and AEG have yet to even start an environmental impact report), the practicalities of moving a team to Los Angeles make that timeline almost impossible. In fact, to some people in and around the NFL, Leiweke’s statements are almost comical.
“What do I think?” a prominent owner of one NFL team said. “Well, it’s good to dream. But there’s a difference between dreaming and hallucinating.”
At last week’s meeting of the league’s owners in Fort Worth, Texas, NFL commissioner Roger Goodell kept the entire idea of returning to Los Angeles at a stiff-arm’s length.
“The No. 1 thing for us to make the economics work in Los Angeles is going to be a new collective bargaining agreement,” Goodell said. “I don’t think it is a coincidence that we have not had a new stadium built since we had an end to this collective bargaining agreement in 2006. The Giants and Jets stadium, the Dallas stadium and [the renovation in] Kansas City were all far along in the process or at least along in the process that they couldn’t be reversed.
“The economics of being able to build a stadium in the Los Angeles market are challenging. Part of that challenge is the collective bargaining agreement. We have to get that resolved. … I’m not focused on the team [that might go to Los Angeles].”
While Goodell’s focus may be elsewhere, the L.A. issue won’t go away. The Minnesota Vikings, who have long lobbied for public funding to get a new stadium in the Twin Cities, admitted earlier this month that they were approached by Roski and Leiweke’s groups about moving to Southern California. The Vikings have seemingly become more of a target after being forced to play their final two home games away from the Metrodome because of structural damage after a major snowstorm on Dec. 11.
Though such a development would appear to create an opening for Leiweke, getting a team to commit to Los Angeles in three months is borderline absurd, said Marc Ganis, the president of sports consulting company SportsCorp.
“The Rams’ deal took seven or eight months. The Raiders’ deal went more quickly, but that was because the initial discussions had occurred five years earlier for relocation,” said Ganis, who was involved in both situations. “It was that same deal, they just revived it. What [Leiweke] is talking about is unrealistic.”
Beyond that, there would be difficult negotiations between the owner who wanted to move his team and the other 31 team owners over the cost of the move. In 1995, for instance, a source familiar with the deal says the Rams’ move cost the franchise $80 million in direct payments and forfeited fees. The Rams didn’t get any of the expansion money doled out when Cleveland and Houston re-entered the NFL.
For a team to move to Los Angeles now, where Dallas Cowboys owner Jerry Jones has said that an NFL team could be worth as much as $2 billion, expect the costs to be much higher. People such as Ganis, NFL executives and owners haven’t blinked at the idea that the relocation fees for a team could approach $200 million.
Some might argue that Leiweke has blind ambition, an outgrowth of his superior qualities as a salesman and dealmaker. In addition to his involvement with L.A. Live, he created London’s O2 Arena and brokered a deal with the NBA to run a string of sports arenas in China.
Last January, Leiweke talked to Yahoo! Sports, supporting Roski’s plan to build a stadium in Industry. Also at that time, Leiweke sat in on meetings trying to help sell other companies on sponsorship deals for Roski’s stadium. Days after those meetings, Leiweke shocked Roski by announcing plans for the downtown stadium. Leiweke then avoided Roski for weeks until Roski finally demanded a meeting to see where Leiweke planned to build, according to two sources in Roski’s group.
It turned out to be the same spot where Roski concluded a stadium couldn’t possibly work.
“You can’t build what you need on that site,” said Roski, who remains a partner with Anschutz and AEG on the Staples Center/L.A. Live development that is across the street from where Leiweke wants to build.
That’s telling, since having a stadium downtown would theoretically enhance the value of L.A. Live and the Staples Center, yet Roski still doesn’t think it can work.
And Leiweke isn’t selling simply a stadium with a retractable roof (another cost that seems far-fetched by those who understand construction of this magnitude). The stadium is part of a massive plan to enlarge the L.A. Convention Center from its current 770,000 square feet to 1.2 million square feet. The stadium will be part of the whole operation, the hub of an “entertainment center,” as Leiweke has called it. With the retractable roof, the center could host not only Super Bowls and Final Fours, but would be space for the mega conventions that Los Angeles doesn’t get because the current convention center is too small.
The problem is that, like Leiweke’s timeline for an NFL commitment, a lot of things don’t add up. Moreover, Leiweke has said AEG would need an agreement from the city to take over management of the convention center (an idea that even his opponents on the stadium think is good) and he has made convoluted statements that seem to hint at the need for public funding for the project.
What will it cost?
The cost of building what Leiweke has proposed will likely exceed $1 billion. In fact, $3 billion might be closer, particularly when factoring in the cost of adding on to the convention center. That’s in a city and state that are essentially bankrupt and have refused for years to pay for a new stadium. One high-ranking Los Angeles source said that the chance of getting public funding for the project is “almost zero.”
“The city didn’t pay for anything for the  Olympics when we hosted and now the situation is even worse,” the source said.
That’s to say nothing about the cost of putting up the stadium. Getting that part done for $1 billion, even without the roof, seems ludicrous. By comparison, the New York Giants and New York Jets recently opened the new Meadowlands Stadium, a 2.5 million square foot building that has no roof and was built on a relatively clean construction site (the parking lot of the old Giants Stadium) for $1.6 billion.
When asked about the idea of building a stadium in Los Angeles for $1 billion, Giants owner John Mara smiled politely and said, “Having just gone through it, I would say that sounds challenging.”
While the intricate costs of building a stadium are best left to construction experts, there are some simple “back of the envelope” charges that are easy to figure with Leiweke’s proposal. For instance, there is the matter of the more than $500 million in bonds that would have to be paid off or renegotiated on the West Hall of the convention center. A source close to Leiweke said the bonds could be paid off via whatever money AEG paid the city for rights to run the convention center. Perhaps, but that would still require a settlement of some kind with the bondholders. That’s likely to drive the cost up.
Then there’s the 4,000-space parking lot below the West Hall and another 700-space surface lot that adjoins the convention center. That parking is primarily for Staples Center and L.A. Live, making it necessary to replace or preserve. Both ideas are expensive.
Below-ground lots and parking garages generally cost $40,000 per parking spot to build. Surface parking is roughly $25,000. That’s approximately $175 million. The alternative would be to reinforce the below-ground lot enough to put a stadium on top of it.
Skanska USA Building vice president Steven Arsht, whose company built the new Meadowlands Stadium for the Jets and Giants, said it was hard to estimate the cost of such a project. However, his company did an estimate in 2005 for the cost of reinforcing the foundation of the nearby L.A. Coliseum when another group was trying to bring the NFL back to that site. Arsht said the estimate was $60 million and there was no below-ground structure. In the case of Leiweke’s project, is $100 million far-fetched?
“That’s as good a guess as any without seeing it,” Arsht said.
Leiweke has also said that expansion of the convention center before the stadium is built is necessary. By Leiweke’s estimate (backed by Arsht), the cost of a 500,000 square foot expansion of the convention center would be $350 million.
Finally, there’s the retractable roof Leiweke needs if he’s going to pull off the idea of hosting a Final Four or any convention-type business on the stadium floor. Jets owner Woody Johnson initially wanted to build a retractable-roof stadium on Manhattan next to the Javits Convention Center. Like Leiweke, Johnson’s plan would have expanded the convention center.
Johnson said the roof alone would have cost $400 million.
“And you really can’t ever make that money back,” Johnson said, explaining that the number of stadium-type events where the roof would be useful are limited and not really profitable.
“With concerts, because there are so few acts that can fill a stadium and there are so many stadiums where they can go, you’re really at their mercy,” Johnson said. “You’re not really charging them any money to host a concert. You’re just getting your costs covered.”
Johnson said he backed away from the Manhattan stadium/convention center project as it became clear to him that the price tag “would be somewhere in the $3 to $4 billion range.”
Just jotting numbers on an envelope for Leiweke’s idea, that kind of cost gets apparent. Start with the $500 million for the bonds, add a minimum of $100 million to deal with the parking, throw in $350 million for the convention center expansion and $400 million for a roof and you’re at $1.35 billion.
And you don’t even have a blade of grass growing on a playing field or a seat in the stands yet.
“The bottom line is, if you use the Meadowlands as a benchmark, their baseline budget seems to be pretty low,” Arsht said.
Ganis said that those kinds of financial burdens could make it hard for a team to survive in Los Angeles.
“You’re talking about having to make another $125 or $150 million above what you’re already making in order to pay the debt service and other expenses of moving into a new stadium,” Ganis said. “If you’re talking about one of the lower-revenue teams, one that’s maybe making $225 or $250 million at their stadium right now with everything: ticket sales, television, sponsorship, you’re talking about that team having to become one of the top revenue teams just to keep up. It’s possible, but it’s a risk.”
That said, if Roski is able to build his stadium for the $800 million he claims it will cost (his steel costs are substantially less because he plans to use a hill as the foundation for one side of the stadium), that issue becomes less of a burden for any incoming team.
How does the AEG partnership work?
Ganis’ point leads into another critical issue for anyone who is building a stadium in Los Angeles with the idea of a team being a tenant. The complexity of a deal with an NFL team would be, at the very least, problematic because Leiweke said AEG and Anschutz have no intention of owning the team. In the NFL, teams in newer facilities get almost every dollar generated from the building, from ticket sales to concessions to parking to sponsorship.
By contrast, AEG’s deals at the Staples Center with the NBA’s Lakers and Clippers, and NHL’s Kings are much different. AEG manages the building, takes its cut and then hands a cut over to the teams.
Beyond that, there’s the issue of scheduling when all four teams are in season (that’s to say nothing of the fact that some people envision Los Angeles having two teams in one facility at some point). Would the Lakers, Clippers or Kings be barred from playing Sunday home games if the NFL is in town? Would the NFL, which has rules against cross-ownership, want to get involved with a company like AEG that has such a strong interest in teams from the NBA and NHL?
One of those problems also exists under Roski’s plan. Roski has offered to build his stadium in exchange for a cut of the money for expenses and equity in any team that moves there. While that idea has been met with laughter in some NFL circles, Roski has a solution.
“If that doesn’t work, I’ll buy a team,” Roski said without hesitation in November 2009. That would require Roski to sell his interest in a Las Vegas casino he owns, something he said he’d do.
Beyond the question of how Leiweke’s plan would work with a team, it also doesn’t address the lost revenue for the city, both public and private, for the two to three years it will take to build a downtown stadium. Or as one L.A. city councilman admitted privately: “You’re talking about a massive disruption in that area of downtown. We haven’t come close to doing any kind of real cost-benefit analysis. There are a bunch of legitimate questions, like, how long is it going to take for us to make up what we lose? What happens if the economy doesn’t bounce back for a long period of time?”
Again, lots of questions that Leiweke seems to skate right past. Likewise, some people in the NFL haven’t considered the deeper questions of what a downtown L.A. project will take, not only in terms of cost, but political clout and ultimately pressure on any team that goes there. That’s because, according to people in Los Angeles, the NFL executives who sit in New York don’t understand how Los Angeles works.
“To the NFL, Los Angeles starts at the Pacific Ocean and ends at the Peninsula Hotel in Beverly Hills,” said a former high-ranking city official who has worked with the league on numerous occasions. That comment also echoes similar remarks from other Los Angeles officials. “They hear about something in downtown and they think that’s where they need to be. They look at Roski’s site and they hate it because they think it’s not even really in Los Angeles. If it’s not 10 minutes from Santa Monica, they don’t get it.”
What does L.A. need?
While there are also plenty of people in Los Angeles who consider Roski’s site to be in the boonies, they all seem to be ignoring one obvious trend about Super Bowl sites:
Most are in the boonies.
Sitting a few miles south of the Dallas-Fort Worth Airport, Cowboys Stadium rises high above the skyline, dominating the landscape. Jerry Jones’ football wonderland is a three million square-foot monument to Texas’ dual beliefs that bigger is better and that football is God’s sport.
There are a couple of other things that make the stadium, which will host the Super Bowl in February, an ideal venue. It is flanked by freeways on three sides, making access simple. Its location is almost a perfect midpoint between the dueling wealth of Dallas and Fort Worth.
Finally, as you drive around the stadium, you notice one thing that makes it a perfect location for football’s grandest event: Huge tracts of land.
The parking lots around the stadium are acres upon acres of prime open space, the kind of blank canvas where the NFL can imagine all sorts of money-making enterprises, from the popular NFL Experience to concession and souvenir stands to corporate parties. There’s ample room for the numerous trucks and temporary offices that also are required for staging the NFL’s biggest event.
Then again, this is typical of sites that have become part of the current Super Bowl rotation. From Miami to Tampa to Dallas to Houston to Arizona, the stadiums are surrounded by open space. Only New Orleans is anything close to what Leiweke is proposing in Los Angeles. Prior to renovations in the Superdome, there was talk in NFL circles that the league might never return there for a Super Bowl after the title game for the 2001 season was played there.
In fact, what Leiweke is proposing has a more ominous resemblance to the Georgia Dome in downtown Atlanta. Leiweke has tried to sell people on the idea that parking won’t be a problem because there are so many above- and below-ground garages in the downtown area. In Atlanta, the Georgia dome is adjoined by a seven-story parking structure.
On a recent Sunday this season, a group of four work buddies were enjoying some beers and cold sandwiches before heading into the game. There is no cooking allowed in the garage, for obvious reasons.
“It’s convenient because I can just pull up and walk to my seats,” said Brett Conway, one of the four men. “But the atmosphere isn’t really all that great. You’d like to walk around and visit with people in the morning before the game, see what everybody is doing, make it more of an event.
“Really, it’s like tailgating in your basement,”
An unfinished basement. Project this to Los Angeles, where tailgating in December, January and February would be pure joy, and you have a clear loss of ambiance.
“Part of what the NFL is about is that event feeling,” said Indianapolis Colts owner Jim Irsay, who has a downtown stadium with some outdoor parking. “You want it that people make it a tradition to come to the game with their friends and family and enjoy it more than just the three hours for the game. You want that whole-day experience and I think that’s something we’ve really worked hard to emphasize over the years.”
Worse, imagine trying to leave a game in downtown Los Angeles and being on the bottom floor of an underground lot or the top floor of a parking structure, fighting to get onto one of the two freeways near the location. Tack on some traffic from a show at the convention center or from a Lakers, Clippers or Kings game and the nightmare gets worse.
That’s to say nothing of playing on Monday or Thursday night, when rush-hour traffic would be at its worst.
Like the Georgia Dome, Leiweke’s proposal faces a space squeeze that doesn’t exist for Roski’s proposal in the City of Industry, where there is ample room for parking and other amenities. While a downtown location might be acceptable without some of those amenities in the regular season, the question is whether the league would want to deal with it for a Super Bowl.
How that all applies to Los Angeles is that the NFL wants to make sure that the next stadium built there is a combination of the perfect site. Roski’s group has argued that its site is actually better for the Los Angeles region because it can pull from the deep pockets of Orange County more easily. Sitting near the confluence of highways 57 and 60, Roski’s site is roughly 15 miles from downtown Anaheim.
In addition, Roski’s group argues that there has been a drastic shift in the distribution of wealth in Southern California since the NFL was here in the 1990s.
“You look at the communities to the east and there has been a huge migration of population and money to these areas,” said John Semcken, the vice president of Majestic Realty, using a video presentation that highlights both population and income levels from the 1990s to now.
While that’s all well and good, the bottom line is this: As of today, Los Angeles may be closer than ever to having a team ready to return once the labor deal is done. Without a coordinated, well-conceived plan for how to do it, the opportunity may slip away.