The prospect of coaxing the National Football League back to Los Angeles by building a new stadium downtown has a lot of people excited, and at least a few worried. (For the full story, watch our segment, "Political Football.") So how has the Anschutz Entertainment Group, which proposed the stadium, managed to win over so many city officials and celebrities in recent weeks, and what are the naysayers worried about? To help answer these questions, we take AEG's pitch and break it down for you. The full document follows.
What's the elevator pitch?
Los Angeles is a great city that deserves not only an NFL team, but also top-notch conventions to further boost the tourism industry. The west hall of the Convention Center currently needs extensive — and expensive — repairs. Why not kill two birds with one stone? AEG will tear down the west hall and build a stadium that doubles as exhibition space, replace the west hall and add parking spaces — all at no cost to the city. (Keep reading for the fine print.)
What does AEG propose to build?
- Event Center (the stadium) — Would accommodate football and soccer games, concerts, trade shows and exhibitions, providing an additional 285,000 square feet for use by the Convention Center.
- New Convention Hall — Unclear from the proposal how much space will be provided.
- New Parking Structures — Will replace current structures adjacent to L.A. LIVE, providing an additional 1,400 parking spaces for Convention Center, Staples Center and Event Center.
Where are they going to build?
Adjacent to the Staples Center and L.A. LIVE on the current site of the Convention Center's West Hall, which is to be torn down.
Who's paying for it, and who will own what?
- Event Center — AEG pays, and AEG will retain ownership but pay rent on the land.
- New Hall and Parking Structures — The city will issue $350 million bonds to cover the costs. City retains ownership, but AEG will operate the parking structures.
So who's responsible for paying back the bonds (with interest)?
AEG claims the city won't have to use existing public funds, which is literally true. Instead, the plan calls for the city to devote future project-related revenues to service the debt. AEG would make up any annual shortfalls in meeting the city's debt obligation, but in essence Los Angeles would forfeit whatever extra money it would have earned from such a project for the life of the bonds.
What are those sources of revenue?
- Rent paid by AEG for the land on which the Event Center is built.
- Admission fees, which amount to a city tax on ticket sales.
- Revenues from the parking structures.
- Tax revenues related to the event center — property tax, construction sales tax, retail sales tax, parking tax, business license tax, utility tax.
- Revenue from signs on and around the event center and convention center.
- Operating revenues generated specifically from enhancements to the current Convention Center.
AEG's proposal, only six pages long, leaves a lot of questions unanswered. For instance, how much does the city stand to lose from a decrease in Convention Center activity during the two or three years of construction, and what plan might AEG offer to help offset the cost? Is there an opportunity cost associated with placing three major event centers right next to each other, when it's unlikely if not impossible to run major events at the same time? What is the impact of the increased traffic in what is already one of the most congested parts of the city? Find out what other observers are saying:
- L.A. Weekly
- KCET's SoCal Focus
Text of the Proposal