Yahoo! Sports’ Jason Cole wrote last night that the NFL is souring on AEG’s Farmers Field stadium plan for downtown Los Angeles. That may sound revelatory, but in reality the landscape hasn’t changed much since he wrote an article in October 2011 claiming that the NFL doesn’t like AEG’s terms for hosting a team (or two) at Farmers Field. With AEG’s future up in the air pending a possible sale, Farmers Field appears to be stalled. But this was to be expected with the sale, so why is this news? It isn’t. That shouldn’t stop us from trying to understand the NFL’s misgivings.
First, let’s start off with the supposition that Farmers Field is to be operated similarly to Staples Center. AEG wants as many tenants as possible using the stadium, taking up dates on the schedule. It also wants the flexibility to hold non-football events, hence the desire for a retractable dome to make the stadium an enormous exhibit hall for the LA Convention Center. There’s the potential for numerous sports events outside of a regular season NFL slate, such as the Super Bowl, NCAA Final Four or regionals, a bowl game, fights, soccer and rugby matches, plus motocross and monster truck raillies. Add a bunch of conventions and the schedule should be full, right?
The problem is that the Staples Center model isn’t congruent with the uses of a large stadium. Staples is famous for being able to hold two events in a single day thanks to its seating flexibility and existing infrastructure. For football, hosting a game takes a full day, and the Saturday and Monday surrounding a game can be expected to be blocked out because of the time required to install and remove a football field. Since the venue will be positioned to go after the largest, most lucrative events, prep time may not be that big a deal. Still, it’s indicative that the Staples model doesn’t exactly scale.
AEG has advertised for some time that the now-$1.8 billion stadium would be fully privately funded, the most expensive stadium ever built. Assuming that AEG would build the stadium without the benefit of low interest, tax-free bonds, the onus is squarely on AEG and its tenants to ensure that the place is paid for. AEG’s model takes a cut of a team’s stadium revenue instead of requiring a rent payment. AEG has apparently backed off its demands of a percentage interest in any team looking to move to Farmers Field. Either way, they’re getting their money upfront or at the back end. Essentially, AEG is taking the place of a large public subsidy, and unlike municipalities they need to make a profit. That’s understandable for everyone except the NFL and interested owners. Roger Goodell’s memo from last summer detailed the process for any team applying for relocation to LA in 2013, suggesting that two teams call the stadium home in order to defray the cost. Again, that would be compatible with what AEG is looking for, but as long as AEG and the NFL are in a stalemate over the terms of the revenue split, there’s no deal.
A stalemate downtown should create better chances for the other LA stadium plan, Ed Roski’s City of Industry stadium. However, Roski is mired in a dispute with the state over TIF that’s earmarked for $180 million worth of improvements to the undeveloped hillside stadium site. The state says that because the project didn’t finalize contracts and measures that were to be taken to fulfill environmental requirements, the deal doesn’t fall under the category of an “enforceable obligation” and didn’t need to be honored by the state. There’s no reason to think the state will lose that debate, so it’s a mystery how that infrastructure will be paid for.
The NFL is actively looking for other potential partners and stadium sites, pursuing the Dodger Stadium site through Guggenheim Partners and Frank McCourt. A discussed site swap to build a new ballpark downtown and a football stadium at Chavez Ravine seems like even more of a pipe dream due to the complexity and cost. That leaves a few sites in further out locales such as Carson. Roger Goodell would prefer more competition and more lucrative bids before seriously entertaining a franchise relocation or expansion (or both). The problem is that as rich as the LA area is, a stadium is so expensive that if there aren’t enough huge money stakeholders to carry some of the weight, that stadium can be termed in a similar state to so many other Hollywood projects: development hell.
For cities with old or “outdated” stadia and teams trying to get better stadia, LA’s struggles represent a bit of a reprieve. St. Louis, still reeling from arbitrators siding with the Rams, doesn’t need to fear the team pulling up stakes immediately. San Diego area interests can go back to working on yet another stadium proposal. And the Raiders and Oakland/Alameda County can continue to try to get on the same page. For the Oakland/Alameda County, the impact is different. If a retractable dome/convention center concept doesn’t work in LA due to the cost, why would it work in Oakland? AEG already operates the Coliseum complex, and if they were to partner on this they’d want the same deal in Oakland that they were offering in LA. If anything, this development is great for the Raiders since they can try to shift the discussion to a new outdoor stadium, which is what they and the NFL really want. The financing part is still severely problematic, but at least the parties could hone in on a singular vision they could all agree on moving forward. The big question is whether the public side (Oak/AC) decides the most cost-effective option is a renovated Coliseum as opposed to an entirely new stadium. If so, they’re all back at square one.