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Will Football Save Downtown L.A.?

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Downtown giant AEG plans to either get a downtown football stadium moving, or give up, within months. But experts doubt whether that plan will guarantee anything good for downtown's economic health as a whole.

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Downtown News has the details on AEG CEO Tim Leiweke's plans:

Leiweke said 12 architects have submitted designs, including some from Los Angeles...Leiweke said AEG expects to conduct interviews with the architecture firms next week and to cut the list to about two designers. He said the company plans to make a decision in January.

Leiweke's vision involves building a new West Hall of the Convention Center, which would attach to the existing I.M. Pei-designed structure fronting Figueroa Street. Once the approximately $350 million convention wing is ready, he said, the current West Hall would be torn down. The new stadium would rise on land bounded by Pico Boulevard, 11th Street, the Cherry Street parking garage and Staples Center.

If Leiweke can work out all the necessary business deals with the city of L.A. and the NFL, teams rumored to be targeted by AEG for an L.A. move are the San Diego Chargers, Minnesota Vikings and Jacksonville Jaguars. Simultaneously, Ed Roski, who helped develop the Staples Center with AEG, is pursuing a separate plan to bring pro football to the City of Industry.

L.A. Observed reports that three finalists are already in place for the architects for the potential new stadium--sports architects HKS and HNTB and L.A. Live designer Gensler. They also reiterate Leiweke saying if all the business deals aren't done by March, the plan will die.

Which might be just fine, if you ask a couple of experts in downtown development, writing in the L.A. Times. Don Shea and David Feehan insist that L.A. should think carefully before making any giveaway deals to AEG to get a stadium built:

Cities almost always help finance new stadium and arena construction, sometimes with additional funds from county and state government. Some cities own them or create a quasi-public entity to own and operate them. Often, the sports team has a "sweetheart" lease based on the notion that the very presence of the team in downtown will create so much other taxable activity -- and jobs -- that it is in the city's interest to charge little or no rent. Cities have also been willing to negotiate additional subsidies as leases expire.

Over the years, owners frequently showed operating losses, but the real money is to be made when the franchise is sold, so an owner can "lose" money for several years, then sell the team and recoup all operating losses and much more.....

...additional pressure persists for cities with aging sports complexes or with teams not among the elite in their leagues to rebuild or lose out, even when evidence is slim that public spending will generate an equivalent public return. From a public policy point of view, elected and appointed officials, business leaders and local residents first need to ask these questions:....

"¢Downtown sports facilities take up large amounts of scarce land, sometimes as much as 100 acres in the case of football stadiums and associated parking. Aren't there better uses?

"¢Football stadiums host a very limited number of games, and in cold-weather cities are useless for a third of the year unless domed. Why should they be downtown?

"¢With cities increasingly strapped for funds, should public money subsidize downtown sports facilities?

"¢How effective an economic development strategy is a downtown sports facility?...

"¢Is there sufficient evidence that the purported economic benefits (jobs, tax revenues, spinoff effects) will materialize?

Writing in City Watch, Greg Nelson wonders about those benefits:


The media loves numbers, so developers toss out wild income and job creation numbers when announcing their project. The media, usually sportswriters who have an interest in the presence of a new team, repeat them without question. After being repeated enough times, the numbers are accepted as fact....

In 1997 more than a dozen sports fans/economic professors from our nation's top universities reported their findings in book entitled "Sports, Jobs & Taxes: The Economic Impact of Sports Teams and Stadiums."

Their bottom line finding was that professional sports teams and facilities, especially professional football teams, have a negligible, and sometimes a negative effect on the economy of the neighborhood and city in which they are located.

The billionaires behind the Los Angeles area plans boast that a new team would create in the range of 18,000 new jobs, $762 million in economic benefits, and $322 million a year in salaries. Anyone hearing such grandiose numbers should remember the buyers' golden rule: if it sounds too good to be true, it probably is.

The authors/economists found that in 1996 the average gross revenue from all sources for a professional football team was about $75 million per year. Account for inflation, and that's still about the same as a department store.

The authors point out that more than half the revenue of a sports team goes to the players, few of whom live and pay taxes in the city. Nearly all the rest goes to the owners and executives. A pittance goes to the part-time ticket-takers, ushers, parking lot attendants, and concession workers who work the eight home games.

Past City of Angles blogging that touches on downtown stadium economics.

Image taken by Flickr user Kla4067. Used under user Creative Commons license.

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