Does Los Angeles really need a new football stadium?

By Helen Jeong

farmersfield
(Credit: Farmersfield.com)

When the Anschutz Entertainment Group wished to improve the infrastructure and facilities near the aging Los Angeles Memorial Coliseum in 2005, Mayor Antonio Villaraigosa made it known that he supported the five-year plan.

He wore a “Coliseum 2010” T-shirt and rallied for the entertainment giant — owners of the Staples Center and the adjoining LA Live entertainment complex –  to convince the Los Angeles City Council to approve a bill to spend $25 million on improvements around the venerable Coliseum, home of the 1932 and 1984 Olympic Games.

Fast forward to 2011. The outgoing mayor is still on AEG’s side in an attempt to expand its empire and build a new football stadium across the street from Staples and the Los Angeles Convention Center.  The plan has triggered a debate over whether the city really needs a football stadium.

“It’s my job to advocate for LA,” the mayor said at a February press conference announcing the name of the new stadium, Farmers Field.

“It’s my job to make a case to bring football back to Los Angeles.  To be the city’s cheerleader, so I have participated in all those initiatives [to build the stadium.]”

As the Los Angeles city government is gearing up to approve the Anschutz Entertainment Group to expand its current property to build a professional football stadium, Angelinos are divided over the financial benefits of having the new sports area.

Most of the Los Angeles city council members whose districts are near the downtown district welcome the possibility of a new football stadium, noting that construction will boost the city’s economy.

Understanding the concerns about launching a big project that could have an impact on the city’s economy, LA City Council President Pro Tempore Jan Perry and Assistant President Pro Tempore Dennis P. Zine led the creation of an Ad Hoc Committee on the Downtown Stadium in February 2011.  Those who support to the plan said it will be good for the city’s economy, especially when California boasts a staggering 12 percent unemployment rate. Job creation is one of the city’s top priorities.

“The downtown stadium proposal has the potential of creating upwards of 20,000 new jobs for our workforce and of generating new tax revenue for the city,” said Council President Prop Tempore Perry.

The Los Angeles Downtown Neighborhood Council, a quasi city entity to represent residents and business owners and make recommendations to the city government, is one of the local groups that support the lawmakers’ decision to push ahead with the plan to debut the new stadium.

LA Downtown Neighborhood Council President Patti Berman said having an additional tourist attraction in the area could boost the city’s economy and revitalize downtown.

“As more tourism comes in, shops, restaurants and bars, it’ll be good for us. It’ll stimulate the economy,” Berman said.

Listen to Berman:
Berman.wav by Helensjeong

And because it will take nearly two years to complete the project, the plan is expected to create a lot of temporary construction jobs. The potential boost in the number of construction jobs has pushed labor unions like the Los Angeles and Orange County Building and Construction Trades Council to embrace the plan.

“The unemployment rate in the city ranges somewhere between nine to 12 percent, but for construction, we have up to 40 percent unemployment,” said Ron Miller, chairman of the construction workers’ union.

“Half of my members are out of work. They want to get up in the morning and work. They need jobs.  And if they go back to work to build the stadium, they pay taxes.  And the city gets the more tax money. Everybody does better.”

Listen to Miller:
Miller.wav by Helensjeong

Despite high hopes of creating more jobs and boosting the local economy, the plan to install the new football field has caused concerns that the city, which is already experiencing a $26 billion deficit, will have to share the financial burden.

As noted in the Los Angeles City Council Ad Hoc Committee on the Proposed Downtown Stadium and Events Center report (Los Angeles City Document File No. 11-0023), AEG pledged the construction of the new football stadium will not cost LA taxpayers a penny.

As part of the AEG proposal, the first bullet point said “City’s existing General Fund base will be fully protected.”

It also specifically promised that there will be “no public money for the NFL stadium.”

In spite of AEG’s vow to raise its funding, skeptics like Councilman Bill Rosendahl question whether it will ultimately affect city finances.

“How is it possible to contend that no public money will be used while at the same time ask the city to sell bonds?” asked Rosendahl.

“Since taxes on tickets normally would flow into the general fund to help pay for services such as police officers, wouldn’t the use of ticket taxes to pay off the bonds be defined as a public subsidy?”

Responding to critics that even issuing a bond could be burdensome for the city,  Mayor Villaraigosa said he is confident that the new revenue generated through the new project will enable AEG to pay for the bond,  eliminating the possibility of using public funds for the project.

“We won’t put a dime in building the stadium. AEG said they will build the stadium,” Villaraigosa said.

“They will build the stadium in the West Hall where the convention center is currently located. That west hall is 40 years old.  It has been remodeled or replaced.  We will replace that with a bond. They are saying ticket sales will pay for the bond. And they will pay with what the ticket sales generate.”

Watch Villaraigosa’s Interview on ABC7:

Critics also find it troubling that AEG wants to lease prime downtown property for $1 a year.

In the three-page transaction outline submitted by AEG, the entertainment group does not specify how much would be derived from a long-term lease of the land. But rent “to be determined” was the first item listed in a repayment plan for the $325 million to $350 million in city bonds that would be issued to tear down and relocate part of the Los Angeles Convention Center.

As the rumor circulated that the city could allow the low rate of rent because of the potential economic benefits that the new stadium could bring, it earned more criticism.

In response, Villaraigosa said in an interview with ABC7 that the city will not allow the $1 rent.  “It’s not going to be one dollar a year. They’re going to have to pay the rent. We will negotiate that,” he said.

It is yet to be clear how much AEG will pay for using the land where the new stadium will be built. In response to criticism and doubt that the project is superfluous as the city is struggling to recover from the recession, the city council is also in the process of creating a working group to analyze the plan and address the concerns.

Villaraigosa also emphasized that he would not let his close relationship with AEG to blur his judgment on studying the impact of the new stadium. “We’re putting lawyers together. We will look at every little part of the agreement to make sure,” Villaraigosa said.

“This isn’t just about football. This could be a game-changer. You have to ask tough questions but we can’t just reject it. This could be transformative,” he said.

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One Response to Does Los Angeles really need a new football stadium?

  1. LA needs a football team. It is one of the largest markets in the world, and it needs to be involved in the most popular American sport. Obviously, there are issues that could arise with putting a stadium in downtown LA. There is already a lot of traffic in downtown, and there are also worries about the financial implications of the stadium. However, when an opportunity like this presents itself, the only logical decision is to follow through and put a stadium in LA.

    This is going to create a lot of jobs for our economy, which is desperately needed, and LA will have a team again! AEG shouldn’t get off easy with only paying $1 for rent, they should pay a regular rate just like any other tenant in the city. This gives LA the chance to be an even more important sports city. With this NFL team, there will be 4 professional franchises located in downtown LA. That is undeniably going to create a lot of jobs (not only building the stadium, but working in the stadium as well), and there will be even more publicity for the area. All of this additional foot traffic to the area will undoubtedly bolster the economy so that the city is back on its way to financial stability. All risks should be considered, but the decision makers also need to remember that there is always a certain amount of risk that comes with reward.