NFL is back and so is the business of football
TUESDAY, 26 JULY 2011 16:41
http://www.newjerseynewsroom.com/professional/the-nfl-is-back-and-so-is-the-business-of-football
BY EVAN WEINER
NEWJERSEYNEWSROOM.COM
THE BUSINESS AND POLITICS OF SPORTS
To the relief of a great many beers distributors, snack food vendors, per diem workers who are employed 10 days a year by NFL teams, fantasy football players, bookies, rather office pool organizers, casino operators in Nevada and those who cannot move from their couches for up to 12 hours at a time on Sunday because they are too busy watching football, the National Football League is back in business.
FOX's Rupert Murdoch, CBS' Sumner Redstone, General Electric's Jeffrey Immelt (NBC’s head prior to the Comcast takeover of the Peacock Network), The Walt Disney Company's Robert Iger and DirecTV executives don't have to explain to anyone including a federal judge in Minnesota why they were willing to underwrite the NFL owners lockout. Iger heads up Disney and one of Disney's companies is ESPN. That cable network would have put up money for the 2011 NFL season using subscribers’ money. Only about a tenth (and that is being generous) of ESPN subscribers watch football yet 100 percent pays and that is permissible thanks to the 1984 Cable TV legislation passed by Congress and signed into law by President Ronald Reagan. People who have no interest in the NFL would have helped support the owners lockout. That law allowed cable TV multiple systems operators to choose what networks they wanted on a basic expanded tier and sell them as one. The legislation probably saved ESPN, CNN, MTV and others from financial ruin.
The NFL owners lockout—which may have been prompted by some owners whose teams play in old facilities like New Jersey's Zygi Wilf's Minnesota Vikings who could not keep up with a salary floor—is over. It is unclear whether the new collective bargaining agreement will address that issue. With the end of the lockout, NFL owners can go back and demand new taxpayers assisted stadiums where needed. The NFL owners as part of the lockout ploy told the San Francisco 49ers ownership not to look for money to pay off the 49ers share of the costs a planned Santa Clara, California stadium because the league owners wanted the players to pay for part of the construction costs.
The players trade association, formerly known as the National Football League Players Association, never helped out broken down old players so it might have been a bit much to expect them to hand over money to owners to help build football facilities. The NFLPA didn't recognize in many cases that some of the retired players with very serious injuries that were sustained during their NFL careers ended up in government social safety nets long before their 65th birthdays such as Medicare and Social Security.
NFL owners and the NFLPA should have collectively bargained long term health care for players but that was not an important issue in the past for the NFLPA. The new CBA seems to have some provision to take care of the health of players but until the CBA is fully digested by all, including the retirees, it is unclear how much help those players may get.
The National Football League and by extension—the players—depends on government subsidies and handouts. The deal with the players is done and now it is time for the league to get new facilities in San Diego, Santa Clara, Oakland (the San Francisco Bay Area), Los Angeles, Minneapolis or Ramsey County, Minnesota and see what can be done with the Buffalo Bills franchise. Arthur Blank is seeking a new facility for his Atlanta Falcons franchise as 19 year old domed stadium that houses his team is quickly becoming antiquated and New York realtor Stephen Ross is stuck with a 24 year old, although updated, facility which is no longer suitable for a Super Bowl outside of Miami.
The mayor of Toronto, Rob Ford—who seems to fit in with the United States Tea Party movement in that he wants to slash services to the bone but not raise taxes for those who can afford a slight increase—may be open to finding public funding to build a National Football League state of the art facility in Canada's financial capital. Ford seems to be like a lot of politicians. Slash spending, cut public jobs and don't raise taxes on the very rich and if you can give the very rich tax breaks for sports facilities go for it. Political leaders in both parties in Minnesota are trying to build Wilf a taxpayers funded facility in some sort of public-private partnership. In Santa Clara, hundreds of millions of public dollars have been set aside for the 49ers planned facility. Louisiana is still giving New Orleans Saints owner Tom Benson cash handouts and New York is doing likewise for Buffalo's Ralph Wilson while cutting services. Florida politicians are seeking a way to help Ross and the NFL’s sad plight.
The 1986 changes in the tax code altered American sports. President Reagan's signature gave owners who played in taxpayers built facilities after 1986 an opportunity to get up to 92 cents on every dollar generated in the building with just as little as eight cents going to pay down the facility's debt. It was great news for owners and a massive expansion of American sports would ensue.
Since the changed occurred, the National Basketball Association has grown from 23 to 30 teams, Major League Baseball has added four teams and in 1990, Major League Baseball signed a new deal with minor league baseball operators which forced cities to renovate or build new minor league parks or risk losing the minor league team. The National Hockey League went from 21 to 30 teams and some franchises were relocated. The 28 team National Football league also expanded and ended up with 32 teams. Major League Soccer was formed and MLS owners are also at the public trough claiming their fair share of tax dollars for stadium construction.
The NFL expansion process started in 1991 and started a chain reaction of events that included creating four expansion teams (Carolina, Jacksonville, Cleveland and Hpuston) and the movement of the Anaheim-based Los Angeles Rams to St. Louis and Art Modell's Cleveland Browns to Baltimore. There was also the transfer of the Houston Oilers franchise to Nashville, Tennessee and Al Davis' Los Angeles Raiders to Oakland. The most eye opening franchise-government deal that evolved out of the 1991 expansion was the $186.5 million 2001 agreement between Louisiana and New Orleans Saints owner Tom Benson that assured Benson would keep his team in the Superdome even though he had an existing long term contract that bounded him to the building. Benson got $186.5 million from cash strapped Louisiana to stay in the city between 2002 and 2010.
In 1991, Baltimore, St. Louis, Memphis, Charlotte and Jacksonville decided to go after an NFL expansion franchise. The NFL never really expanded in the "modern" era (1956-present) because league owners like Chicago's George Halas, Pittsburgh's Art Rooney, and the Mara family's New York Giants had no inkling as to how to market and grow the NFL. Instead expansion was always a reaction to market pressures. When Lamar Hunt was unable to purchase the Chicago Cardinals or get an NFL expansion team in Dallas in 1959, he decided to start the American Football League. The NFL responded by expanding to Dallas and Minneapolis. In the mid-1960s, the NFL went into Atlanta to deny Hunt's league an opportunity to establish a team in that city. In 1966, the NFL granted New Orleans a franchise in exchange for Congressional approval of the AFL-NFL merger and in the 1970s, the NFL expanded to Seattle and Tampa to take potential markets out of circulation for the fledgling World Football League There was no outside pressure to expand in 1991 except there was money on the table and other owners could see what cities were willing to do to get an NFL team.
The NFL found out in a hurry that cities would be willing to pay a ransom for a team.
The league liked Charlotte and the possibility that a former player—Jerry Richardson—would own the franchise. Richardson didn't need much public money because the team was going to get ticket buyers to pay twice for seats and that would pay for the construction of the facility. Richardson's "personal seat licensing" scheme required ticket holders to buy a stadium seat over a set amount of years and then pay for a football game. NFL owners were impressed by the pricing mechanism and awarded Richardson a franchise but the NFL wanted two expansion teams and the 28 owners would split up $280 million with each owner getting a $10 million payment.
Boogie Weinglass and the author Tom Clancy pursued a Baltimore franchise. Weinglass presented a proposal that Maryland would build a stadium and the team would be well supported even though Robert Irsay moved out of the city in 1984 and NFL Commissioner Paul Tagliabue soured on the city that was more interested in building libraries than a football stadium.
"The problem was that the fans loved the (former team) Colts too much," said Weinglass in 1991. "And when we began to have the reverses (the team wasn't winning), they reacted very badly (attendance dropped) and the underlined feeling was that it was impossible that we would lose the team. In fact we did.
"They (the owners) said that it wasn't a factor (the team moving)."
Weinglass was competing with two other Baltimore groups for the franchise. They all failed but the Baltimore/Maryland stadium bid was circulated within the NFL. Baltimore was offering a stadium complete with the requisite state of the art luxury boxes, club seats, restaurants, concessions with major revenue streams. The stadium would be paid through a combination of municipal resources including proceeds from the Maryland lottery.
The NFL said no to an expansion team but the terms of the Maryland deal was too good for Art Modell to pass up. In 1995, Modell took the offer (which included a multi-million loan to Modell) and made Weinglass a bit of a prophet.
"The fact of the matter is, the primary basis the league is going to make its decision is what city can make the most money for the league and I think Baltimore can make more money for the league than any other town (in 1991, Memphis, Jacksonville, St. Louis and Charlotte),” said Weinglass. “ (Baltimore) is a bigger city. It's bigger than Charlotte, bigger than San Antonio (which wasn't a serious bidder), we have done all the surveys that show we can fill a 70,000 seat stadium, we have a great big television market, one of the biggest in America. We got all the buttons pushed."
Baltimore has succeeded despite the fact that the market is surrounded by Philadelphia and Washington. The team is looking to expand market share and co-exist with the Redskins in a shared market status like the Giants and Jets in New York and the 49ers and Raiders in the San Francisco Bay Area market. Because of NFL rules not every Ravens game is seen on Washington TV which is 40 miles away nor is every Redskins game is shown on Baltimore TV.
Redskins and Ravens ownership would like to get same market status which would include no scheduling of home games at the same time in both cities. Major League Baseball has given Baltimore and Washington same market status and the United States Olympic Committee considered Baltimore-Washington one market in the bidding for the 2012 Summer Olympics.
It was thought that NFL marketing partner Anheuser Busch would be the deciding factor in St. Louis landing an expansion franchise in 1993. That was a concern for other bidders given AB's cozy relationship with the city of St. Louis and the NFL. But St. Louis was a failed NFL market. Bill Bidwill left town after the 1987 football season and went to Tempe, Arizona. That was a black mark against the city because St. Louis refused to build Bidwill a new football facility. After Bidwill left, Missouri, St. Louis County and the city of St. Louis socked away $258 million for a 70,000 seat domed football facility. The city was willing to help pay some of the costs for an expansion team. Some of the money was going to come from a motel-hotel sales tax hike.
"Central to our application was the stadium," said Jerry Clinton. "The others things that are naturally inherent are the size of our television market. We are the 18th largest TV market in the country. Our market is larger than 35 percent of the markets that currently possess National Football League teams. The, of course, all those things we inherit because of our location and population. We are nearly two a half million people, our location is exactly the population center of the United States, we are accessible, we fit expansion and division realignment in any direction, north, south, east or west, we are always compatible with NFC or AFC plans. On top of them we have a very solid ownership with Walter Payton and Jim Orthwein (the great grandson of AB's founder Adolphus Busch). I think that has to be considered very heavily too.”
Anheuser Busch didn't have much sway over the NFL owners. St. Louis failed. Charlotte was an area that the league really wanted and got the 29th franchise. But number 30 was a fight between Baltimore, St. Louis and Jacksonville. Memphis was not seriously considered.
Wayne Weaver got involved in the Jacksonville bid before the NFL solicited interested people in what amounted to an auction for two franchises. Jacksonville was looked upon as a huge growth city by football people including Robert Irsay who thought about moving his Baltimore Colts to the town as well as Houston's Bud Adams. Neither did but Jacksonville remained attractive.
"We had our mayor with us, Mayor Ed Austin," said Weaver knowing that political support was a major component of any bid back in 1991. "We had our city council president, Warren Jones, we had the gentleman who will renovate our Gator Bowl, the biggest contractor in the southeastern United States, Preston Haskell, and our president David Seldin.
"We have three qualities that we think we set us apart from the other candidate cities and that's what we talked about today. We think we have the best football fans in America. The second thing we talked about and what sets us apart from the competing candidate cities is that we have the only game in town. We have no competition from other major league franchises. I am not sure anybody can make that statement. We have no competition from college sports which Memphis has. We have no competition from other major league franchises and we think the only game in town aspect is an important ingredient. Finally and most importantly was the local ownership group issue. We have the financial credentials to qualify for an NFL expansion team and we made that very clear."
"It is very true that Florida is a very proactive sports state. One of the presenters today (in 1991) in our video is Governor Lawton Chiles, he is truly a supporter of NFL football in Jacksonville. Jacksonville is Florida's city of choice for the NFL. Simply put, the state of Florida is a partner in this quest. The state legislature has put together legislation that encourages and financially supports stadiums for sports in the state of Florida. The (baseball) Marlins are the latest example. We think Jacksonville will be the latest example of why we can compete because we have, among other things, the state of Florida as a financial partner. There are no tax dollars involved, it is a sales tax abatement there is no general revenue taxes involved in the state of Florida."
Jacksonville won the race and got a franchise. But it has been very tough sledding in recent years with rumors that Weaver is ready to pick up and move elsewhere. The stadium seating capacity has been cut and the rough northern Florida economy is not helping the franchise. Still Weaver has made it clear he wants to remain in Jacksonville. But Los Angeles interests have targeted Weaver and plan to try and entice him to move.
Neither Los Angeles nor Anaheim has had an NFL team since the end of the 1994 season. Georgia Frontiere did her 15 years in Anaheim and when a better stadium deal did not develop, she opted to take the St. Louis offer that was still on the table after the NFL gave Charlotte and Jacksonville teams. Raiders owner Al Davis could have had the LA market to himself but negotiations between the NFL, Davis and Hollywood Park racetrack in Inglewood broke down after a deal looked to be coming together.
Davis and the league were going to be what can best be described as partners in the deal. The NFL would award the stadium five Super Bowls in 10 years to get back some of the money Davis and the league were going to put up for the facility. Davis would get revenues from luxury boxes, club seats and concessions. But the NFL decided that five Super Bowls in 10 years was too much for LA and scaled back to three and then just one. Davis would only be the sole tenant for one year with another team moving in and sharing revenues from luxury boxes, club seats and concessions. Those were deal breakers and Davis moved back to Oakland. The NFL is more responsible for having no team in LA than Al Davis.
The LA area lost both teams but unlike Cleveland, they didn’t threaten to sue and replace a team. The NFL expanded into Cleveland after getting a deal done for a new stadium and the new Cleveland Browns started play in 1999. Los Angeles was given a 2002 condition expansion franchise if a stadium was built. There was no available funding for a building like Houston had, so the NFL gave the fourth expansion team to Bob McNair and Houston.
Davis is looking for a new stadium deal as Oakland has not been a panacea for the team money-wise. His Oakland deal is up after 2013.
Los Angeles' Anschutz Entertainment Group (AEG) has told LA city officials they better sign off on a deal to help finance a new football stadium by July 31 and cash strapped Los Angeles seems to be ready to make a deal.
AEG has a list of targeted owners including Stan Kroenke who has the St. Louis Rams. There was a provision in the Georgia Frontiere-St. Louis 20 year contract (which is done in 2014) that probably will come back and haunt the city, county and state. The Rams franchise has to be in the upper quarter or top eight in stadium revenue generation. A 20-year-old facility cannot compete with new places like the New Meadowlands Stadium or Jerry Jones' Dallas Cowboys Stadium in Arlington, Texas. St. Louis may run into the Louisiana problem of 1999 and 2000 when Benson complained that the Superdome was no longer in the top 4 of NFL revenue generators and had fallen to the bottom and needed help or he would have to move.
Ironically it was new stadiums in St. Louis, Jacksonville and Baltimore that helped cause Benson's woes. The new stadiums were cash cows for owners; those owners spent money for scouting staffs and coaches. Baltimore and St. Louis won Super Bowls; Jacksonville was a Super Bowl contender. Benson went to the state house in Baton Rouge and find willing partners in both houses of the legislature and Governor Mike Foster. The Rams franchise may need a handout or might be available for some new facility in 2015.
The NFL is back, although it never went anywhere. No games were missed, the three day draft was held in April and people had to pay for their seats on time or risk losing them. That's the way NFL business operates and the business operations will soon be on display in Santa Clara, Oakland, Los Angeles, San Diego, Toronto, St. Paul, Minnesota and maybe in Jacksonville, South Florida, Atlanta and Buffalo with one certainty: the billionaire owners will be looking for tax breaks for their football businesses which really don't do all that much for the economy.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition" is available at bickley.com, Barnes and Noble or amazonkindle.
Showing posts with label Los Angeles football stadiums. Show all posts
Showing posts with label Los Angeles football stadiums. Show all posts
Tuesday, July 26, 2011
Sunday, December 26, 2010
Why Los Angeles May Not Get an NFL Team
By Evan Weiner
December 26, 2010
http://www.examiner.com/business-of-sports-in-national/why-los-angeles-may-not-get-an-nfl-team
(New York, NY) -- There seems to be a lot of momentum in the “Bring the NFL Back to Los Angeles” campaign, but is the push for an NFL team in downtown LA or the City of Industry just an illusion? It is a question worth pondering even if soon-to-be former New York Governor David Paterson thinks the Buffalo Bills franchise could end up in the Southland in 2014.
Under Governor Paterson’s scenario, Buffalo Bills owner Ralph Wilson’s estate tax will be so high that his heirs will have to sell the team to the highest bidder and that someone will scoop up the franchise and move the team elsewhere. Governor Paterson doesn’t think Toronto will support an NFL team and that Los Angeles is the logical alternative once the Bills lease in Orchard Park expires in 2013.
But will there ever be an NFL stadium built in downtown LA? That is a huge question mark. AEG (Anschutz Entertainment Group) is behind the construction of a stadium near LA Live, a congested area that might not be able to handle the traffic flow of 70,000 people per game. But the traffic congestion may be just window dressing for the real problem.
There are some holes in the LA story that need to be addressed. AEG President and CEO Tim Leiweke is talking about building a stadium near the LA Live property for the past couple of months. His vision is building a 65,000-seat facility and getting an NFL owner (presumably Minnesota’s Zygi Wilf, Jacksonville’s Wayne Weaver, maybe San Diego’s Spanos family) to commit to moving his franchise to Los Angeles by perhaps the NFL annual spring owners meeting in March.
Wilf is going before the Minnesota legislature after the first of the year and asking for a new stadium. Red McCombs sold the team to Wilf in 2005 after failing to get the Minnesota legislature and Governor Jesse Ventura on board in his attempt to get a new stadium. Minnesota has built a new baseball stadium and college football stadium since McCombs sold the team.
Here are the problems Leiweke will encounter. He might be too full of himself. His boss, Phil Anshutz is not on board with the stadium plan. The NFL is going to do absolutely nothing in helping Leiweke in terms of paying for a stadium until the league’s owners and players agree to a new collective bargaining agreement. There is a reason that the San Francisco 49ers owners, the York family, have not gone ahead with the construction of a facility in Santa Clara even though voters gave the project the go ahead last spring. The NFL’s stance though might have to change before Minnesota elected officials in the statehouse in St. Paul to help Wilf. The Vikings-Metrodome lease ends after the 2011 season.
NFL owners want the players to help finance the cost of a new facility and plan to get in writing as part of a new Collective Bargaining Agreement.
Leiweke’s recent track record is not good when it comes to arena projects or getting a major league team as a client in an AEG building. Harrah’s and AEG agreed to build an arena in Las Vegas in 2007, that never happened and AEG has been unable to convince an NHL or NBA owner to relocate his franchise to an AEG-run, new facility in Kansas City.
Leiweke thinks the stadium will cost about a billion dollars and AEG will finance the place. The NFL’s two newest venues in Arlington, Texas and East Rutherford, New Jersey cost more than that and neither Cowboys Stadium nor the New Meadowlands Stadium have a corporate sponsor. That means the actual financing for the facility has to be questioned.
There is the timetable that Leiweke has laid out. He wants to get a deal done, get tax breaks, maybe a payment in lieu of taxes or a tax incremental funding or some other sleight-of-hand economic gimmickry (which politicians love to approve even though there are financial consequences down the road—just look at Hamilton County, Ohio and the fiscal plight of the Cincinnati Bengals facility and how Cincinnati-area politicians totally underestimated revenues and failed to understand basic stadium financing) from Los Angeles elected officials. The problem this time around is simple.
Los Angeles has nothing to give and California is broke (the University of California because of the state’s perilous financial conditions has dropped five sports teams including men’s baseball at Berkeley) although you would never know it looking at Oakland’s reaction to Lew Wolff’s threat of moving his Major League Baseball Oakland A’s to San Jose. Oakland wants to keep the team in town even though Wolff wants greener pastures like San Jose.
California also has some very tough environmental provisions that need to be met by stadium planners.
Leiweke is selling the stadium as part of a grand plan that includes a convention center with the thought of making downtown Los Angeles a convention destination. That would put Leiweke and AEG in competition with Las Vegas and Orlando and other cities for an industry that is drying up---conventions. The competition for conventions also includes cruise ships. One line built two super- sized vessels with the thought of going after conventions and having conventions taking place on a cruise ship.
That has not worked out as planned.
Leiweke also has a competitor to the east. Ed Roski wants to build a football facility for some NFL owner at a plot of land in the City of Industry. Roski has floated the idea for about two years and nothing much has happened. Roski’s proposal doesn’t make sense for an NFL owner looking for greener pastures.
Roski’s stadium was supposed to cost $800 billion when the City of Industry City Council approved the plan in February 2009. The $800 million figure seems out of line and too conservative when compared with Jerry Jones’s Arlington, Texas venue for his Dallas Cowboys and the East Rutherford, New Jersey stadium that is being funded by the owners of the New York Giants and New York Giants. Both stadiums price tags are estimated at well over a billion dollars.
The National Football League used to have something called the G-3 program which loaned up to $150 million to owners who built stadiums. Money went to Denver’s Pat Bowlen, ($50 million) in 1999, New England’s Bob Kraft ($150 million) in 1999, Philadelphia’s Jeffrey Lurie ($150 million) in 1999, Detroit’s William Clay Ford ($100 million) in 2000, Seattle’s Paul Allen ($50 million) in 2000, Chicago’s McCaskey Family ($100 million) in 2000, the Green Bay Packers Board of Directors ($100 million) in 2001, Arizona’s Bill Bidwill ($50 million) in 2001, Dallas’ Jones ($76.5 million) in 2005 and Indianapolis’s Jim Irsay ($34 million) in 2005 to fund new facilities or to renovate old venues.
Even though the G-3 program was running out of money by 2006, the Giants Mara-Tisch families and the Jets Woody Johnson did get $300 million for their new Meadowlands facility from NFL owners in 2006 and the Kansas City Chiefs Hunt family ended up with $42.5 million for renovations at Arrowhead Stadium.
The loans helped fill a shortfall between public financing of projected final costs of stadiums in Denver, Philadelphia, Detroit, Seattle, Chicago, Green Bay, Glendale, Arizona, Arlington, Texas and Indianapolis. All the facilities including Foxboro, Massachusetts and East Rutherford, New Jersey received various tax breaks whether they were privately or publicly funded.
Roski’s Majesty Realty plans to pursue Buffalo’s Ralph Wilson or Jacksonville’s Wayne Weaver initially. Wilson’s lease in Orchard Park ends following the 2013 season. Wilson is 92 years old and he has leased a number of home games to Toronto through the 2012 season. Toronto, Ontario is 90 miles from Buffalo and there is enough money in Toronto to support an NFL team should Wilson or his heirs decide that small market Buffalo is not for them.
Jacksonville does not have the wherewithal to support an NFL team in the 21st century as there are not enough well heeled fans or corporate dollars around to sell out the stadium. Demographers were wrong in estimating the city’s growth and potential when the NFL awarded Jacksonville a franchise in 1993. The Jaguars owner Wayne Weaver has won lease concessions from the city but has been unable to sell naming rights at the Jacksonville stadium and the team has not be able to sell out the stadium which means home games are not seen in the Jacksonville market. This despite cutting down the capacity of the stadium by covering seats.
Majesty Realty has decided that Buffalo and Jacksonville are not NFL markets by whatever arbitrary means they have created. The company will not go after San Diego’s Alex Spanos, Minnesota’s Zygi Wilf or San Francisco’s York family because those owners are attempting to find financing in those markets although the Yorks have their eyes set on Santa Clara which is 40 miles south of San Francisco with Oakland as a fallback position.
The NFL would like to see the York family and Oakland’s Al Davis to find common ground and work on a new stadium together to solve a potential Bay Area problem. Davis lease in Oakland ends in 2013.
St. Louis is another franchise that might be in the City of Industry mix. The Rams franchise lease ends in 2014.
Roski and his company want to develop a football village in the City of Industry complete with a stadium and other businesses. Roski doesn’t want to outright own an NFL team but would like a piece of the action and is trading the right to help fund the Roski stadium for the right to making lots of potential revenues generated in the LA market and in his stadium village and to be an owner in LA.
In other words, Roski wants an NFL owner to become his partner in a real estate venture. In the real world of the NFL, cash on the barrelhead is the preferred way of doing business. Roski ought to know this by now; he witnessed it first hand when the NFL gave LA an expansion team. All LA and Roski needed to do was to put up a stadium.
That never happened and Robert McNair and Houston got the team. Houston and Harris County approved a publicly financed stadium.
With no G-3 revenues available, with California in dire financial shape, with Jerry Jones and the Mara/Tisch/Johnson East Rutherford, NJ group still looking for a naming rights partner for their stadiums, with ticket prices far, far too high and in the City of Industry’s scheme, there would have to be a heavy Personnel Seat Licensing fee and then high prices for those buying the licenses, Roski’s deal doesn’t look like much of a bargain for Wilson or Weaver or both.
Roski might not have any lawsuits to worry about that would slow down the project and lame duck California Governor Arnold Schwarzenegger has waived environmental laws because the stadium and the other part of the construction project would in theory create jobs with Majestic estimating that the project will put 6,700 people into jobs that would create $21 million in new tax revenue and have a $762 million impact on the area.
Based on other deals that developers have cut with municipalities, it is unlikely that those figures have any accuracy. Because of various tools such as payment in lieu of taxes (PILOT), tax increment financing (TIF) and others, the City of Industry won’t be getting full property taxes assessment on the land.
If Roski and the City of Industry think that a Los Angeles market stadium will get them a Super Bowl, they are probably correct, the NFL will put the stadium in the rotation but there needs to be a history lesson here. Back in 1994-5, the NFL was trying to help Al Davis land a new stadium for his Los Angeles Raiders near the Hollywood Park racetrack in Inglewood.
The NFL, trying to sweeten the deal, offered five Super Bowls over a ten-year period to get the stadium built. The deal was scaled back to three over 10 years then one, then the NFL decided LA should be a two team marketing and another team (after Georgia Frontiere moved her Anaheim-based Los Angeles Rams to St. Louis) and that Davis team would share the stadium with another franchise and share all of the revenues generated inside the building.
Davis went back to Oakland.
The Super Bowl does not guarantee that the corporate community will take a look at the area hosting the game and move some of their operations to that area. The corporate community knows Los Angeles. If that type of thinking---that corporate leaders will open up facilities in an area because it was good enough for the Super Bowl was true --- then Jacksonville should be a burgeoning area.
Jacksonville hosted the Super Bowl on February 6, 2005.
Where is the great deal that Roski and Majestic have offered? Unless they offer hundreds of millions of dollars and it might be closer to a billion dollars to buy out an owner, there is no great deal. An owner will not sell off a piece of his franchise in exchange for development rights in a bad economy in a financially downtrodden state with a high rate of foreclosures. It does not make sense.
If Roski has to spend a billion for a team, then another billion for the stadium, what does that do to a franchise’s finances? On top of that the NFL might impose a relocation fee and furthermore, there is no collective bargaining agreement in place after March 3, 2011, so owners have no clue about future budgets.
Because the stadium is privately financed more than eight percent of the stadium-generated revenues will go off to pay down the debt unlike those that get public monies.
Getting a franchise back in Los Angeles is a dream shared by NFL owners, Leiweke, Roski and the LA business community. But the reality is that there is not enough money around right now to get a facility built and there is an array of other factors including getting the approval of the Los Angeles Coliseum Commission, a group that doesn’t want competition in the Southland. All of these factors can be a momentum killer for Leiweke, AEG and Roski.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition is available at www.bickley.com, xplana.com or amazonkindle. He can be reached at evanjweiner@yahoo.com
By Evan Weiner
December 26, 2010
http://www.examiner.com/business-of-sports-in-national/why-los-angeles-may-not-get-an-nfl-team
(New York, NY) -- There seems to be a lot of momentum in the “Bring the NFL Back to Los Angeles” campaign, but is the push for an NFL team in downtown LA or the City of Industry just an illusion? It is a question worth pondering even if soon-to-be former New York Governor David Paterson thinks the Buffalo Bills franchise could end up in the Southland in 2014.
Under Governor Paterson’s scenario, Buffalo Bills owner Ralph Wilson’s estate tax will be so high that his heirs will have to sell the team to the highest bidder and that someone will scoop up the franchise and move the team elsewhere. Governor Paterson doesn’t think Toronto will support an NFL team and that Los Angeles is the logical alternative once the Bills lease in Orchard Park expires in 2013.
But will there ever be an NFL stadium built in downtown LA? That is a huge question mark. AEG (Anschutz Entertainment Group) is behind the construction of a stadium near LA Live, a congested area that might not be able to handle the traffic flow of 70,000 people per game. But the traffic congestion may be just window dressing for the real problem.
There are some holes in the LA story that need to be addressed. AEG President and CEO Tim Leiweke is talking about building a stadium near the LA Live property for the past couple of months. His vision is building a 65,000-seat facility and getting an NFL owner (presumably Minnesota’s Zygi Wilf, Jacksonville’s Wayne Weaver, maybe San Diego’s Spanos family) to commit to moving his franchise to Los Angeles by perhaps the NFL annual spring owners meeting in March.
Wilf is going before the Minnesota legislature after the first of the year and asking for a new stadium. Red McCombs sold the team to Wilf in 2005 after failing to get the Minnesota legislature and Governor Jesse Ventura on board in his attempt to get a new stadium. Minnesota has built a new baseball stadium and college football stadium since McCombs sold the team.
Here are the problems Leiweke will encounter. He might be too full of himself. His boss, Phil Anshutz is not on board with the stadium plan. The NFL is going to do absolutely nothing in helping Leiweke in terms of paying for a stadium until the league’s owners and players agree to a new collective bargaining agreement. There is a reason that the San Francisco 49ers owners, the York family, have not gone ahead with the construction of a facility in Santa Clara even though voters gave the project the go ahead last spring. The NFL’s stance though might have to change before Minnesota elected officials in the statehouse in St. Paul to help Wilf. The Vikings-Metrodome lease ends after the 2011 season.
NFL owners want the players to help finance the cost of a new facility and plan to get in writing as part of a new Collective Bargaining Agreement.
Leiweke’s recent track record is not good when it comes to arena projects or getting a major league team as a client in an AEG building. Harrah’s and AEG agreed to build an arena in Las Vegas in 2007, that never happened and AEG has been unable to convince an NHL or NBA owner to relocate his franchise to an AEG-run, new facility in Kansas City.
Leiweke thinks the stadium will cost about a billion dollars and AEG will finance the place. The NFL’s two newest venues in Arlington, Texas and East Rutherford, New Jersey cost more than that and neither Cowboys Stadium nor the New Meadowlands Stadium have a corporate sponsor. That means the actual financing for the facility has to be questioned.
There is the timetable that Leiweke has laid out. He wants to get a deal done, get tax breaks, maybe a payment in lieu of taxes or a tax incremental funding or some other sleight-of-hand economic gimmickry (which politicians love to approve even though there are financial consequences down the road—just look at Hamilton County, Ohio and the fiscal plight of the Cincinnati Bengals facility and how Cincinnati-area politicians totally underestimated revenues and failed to understand basic stadium financing) from Los Angeles elected officials. The problem this time around is simple.
Los Angeles has nothing to give and California is broke (the University of California because of the state’s perilous financial conditions has dropped five sports teams including men’s baseball at Berkeley) although you would never know it looking at Oakland’s reaction to Lew Wolff’s threat of moving his Major League Baseball Oakland A’s to San Jose. Oakland wants to keep the team in town even though Wolff wants greener pastures like San Jose.
California also has some very tough environmental provisions that need to be met by stadium planners.
Leiweke is selling the stadium as part of a grand plan that includes a convention center with the thought of making downtown Los Angeles a convention destination. That would put Leiweke and AEG in competition with Las Vegas and Orlando and other cities for an industry that is drying up---conventions. The competition for conventions also includes cruise ships. One line built two super- sized vessels with the thought of going after conventions and having conventions taking place on a cruise ship.
That has not worked out as planned.
Leiweke also has a competitor to the east. Ed Roski wants to build a football facility for some NFL owner at a plot of land in the City of Industry. Roski has floated the idea for about two years and nothing much has happened. Roski’s proposal doesn’t make sense for an NFL owner looking for greener pastures.
Roski’s stadium was supposed to cost $800 billion when the City of Industry City Council approved the plan in February 2009. The $800 million figure seems out of line and too conservative when compared with Jerry Jones’s Arlington, Texas venue for his Dallas Cowboys and the East Rutherford, New Jersey stadium that is being funded by the owners of the New York Giants and New York Giants. Both stadiums price tags are estimated at well over a billion dollars.
The National Football League used to have something called the G-3 program which loaned up to $150 million to owners who built stadiums. Money went to Denver’s Pat Bowlen, ($50 million) in 1999, New England’s Bob Kraft ($150 million) in 1999, Philadelphia’s Jeffrey Lurie ($150 million) in 1999, Detroit’s William Clay Ford ($100 million) in 2000, Seattle’s Paul Allen ($50 million) in 2000, Chicago’s McCaskey Family ($100 million) in 2000, the Green Bay Packers Board of Directors ($100 million) in 2001, Arizona’s Bill Bidwill ($50 million) in 2001, Dallas’ Jones ($76.5 million) in 2005 and Indianapolis’s Jim Irsay ($34 million) in 2005 to fund new facilities or to renovate old venues.
Even though the G-3 program was running out of money by 2006, the Giants Mara-Tisch families and the Jets Woody Johnson did get $300 million for their new Meadowlands facility from NFL owners in 2006 and the Kansas City Chiefs Hunt family ended up with $42.5 million for renovations at Arrowhead Stadium.
The loans helped fill a shortfall between public financing of projected final costs of stadiums in Denver, Philadelphia, Detroit, Seattle, Chicago, Green Bay, Glendale, Arizona, Arlington, Texas and Indianapolis. All the facilities including Foxboro, Massachusetts and East Rutherford, New Jersey received various tax breaks whether they were privately or publicly funded.
Roski’s Majesty Realty plans to pursue Buffalo’s Ralph Wilson or Jacksonville’s Wayne Weaver initially. Wilson’s lease in Orchard Park ends following the 2013 season. Wilson is 92 years old and he has leased a number of home games to Toronto through the 2012 season. Toronto, Ontario is 90 miles from Buffalo and there is enough money in Toronto to support an NFL team should Wilson or his heirs decide that small market Buffalo is not for them.
Jacksonville does not have the wherewithal to support an NFL team in the 21st century as there are not enough well heeled fans or corporate dollars around to sell out the stadium. Demographers were wrong in estimating the city’s growth and potential when the NFL awarded Jacksonville a franchise in 1993. The Jaguars owner Wayne Weaver has won lease concessions from the city but has been unable to sell naming rights at the Jacksonville stadium and the team has not be able to sell out the stadium which means home games are not seen in the Jacksonville market. This despite cutting down the capacity of the stadium by covering seats.
Majesty Realty has decided that Buffalo and Jacksonville are not NFL markets by whatever arbitrary means they have created. The company will not go after San Diego’s Alex Spanos, Minnesota’s Zygi Wilf or San Francisco’s York family because those owners are attempting to find financing in those markets although the Yorks have their eyes set on Santa Clara which is 40 miles south of San Francisco with Oakland as a fallback position.
The NFL would like to see the York family and Oakland’s Al Davis to find common ground and work on a new stadium together to solve a potential Bay Area problem. Davis lease in Oakland ends in 2013.
St. Louis is another franchise that might be in the City of Industry mix. The Rams franchise lease ends in 2014.
Roski and his company want to develop a football village in the City of Industry complete with a stadium and other businesses. Roski doesn’t want to outright own an NFL team but would like a piece of the action and is trading the right to help fund the Roski stadium for the right to making lots of potential revenues generated in the LA market and in his stadium village and to be an owner in LA.
In other words, Roski wants an NFL owner to become his partner in a real estate venture. In the real world of the NFL, cash on the barrelhead is the preferred way of doing business. Roski ought to know this by now; he witnessed it first hand when the NFL gave LA an expansion team. All LA and Roski needed to do was to put up a stadium.
That never happened and Robert McNair and Houston got the team. Houston and Harris County approved a publicly financed stadium.
With no G-3 revenues available, with California in dire financial shape, with Jerry Jones and the Mara/Tisch/Johnson East Rutherford, NJ group still looking for a naming rights partner for their stadiums, with ticket prices far, far too high and in the City of Industry’s scheme, there would have to be a heavy Personnel Seat Licensing fee and then high prices for those buying the licenses, Roski’s deal doesn’t look like much of a bargain for Wilson or Weaver or both.
Roski might not have any lawsuits to worry about that would slow down the project and lame duck California Governor Arnold Schwarzenegger has waived environmental laws because the stadium and the other part of the construction project would in theory create jobs with Majestic estimating that the project will put 6,700 people into jobs that would create $21 million in new tax revenue and have a $762 million impact on the area.
Based on other deals that developers have cut with municipalities, it is unlikely that those figures have any accuracy. Because of various tools such as payment in lieu of taxes (PILOT), tax increment financing (TIF) and others, the City of Industry won’t be getting full property taxes assessment on the land.
If Roski and the City of Industry think that a Los Angeles market stadium will get them a Super Bowl, they are probably correct, the NFL will put the stadium in the rotation but there needs to be a history lesson here. Back in 1994-5, the NFL was trying to help Al Davis land a new stadium for his Los Angeles Raiders near the Hollywood Park racetrack in Inglewood.
The NFL, trying to sweeten the deal, offered five Super Bowls over a ten-year period to get the stadium built. The deal was scaled back to three over 10 years then one, then the NFL decided LA should be a two team marketing and another team (after Georgia Frontiere moved her Anaheim-based Los Angeles Rams to St. Louis) and that Davis team would share the stadium with another franchise and share all of the revenues generated inside the building.
Davis went back to Oakland.
The Super Bowl does not guarantee that the corporate community will take a look at the area hosting the game and move some of their operations to that area. The corporate community knows Los Angeles. If that type of thinking---that corporate leaders will open up facilities in an area because it was good enough for the Super Bowl was true --- then Jacksonville should be a burgeoning area.
Jacksonville hosted the Super Bowl on February 6, 2005.
Where is the great deal that Roski and Majestic have offered? Unless they offer hundreds of millions of dollars and it might be closer to a billion dollars to buy out an owner, there is no great deal. An owner will not sell off a piece of his franchise in exchange for development rights in a bad economy in a financially downtrodden state with a high rate of foreclosures. It does not make sense.
If Roski has to spend a billion for a team, then another billion for the stadium, what does that do to a franchise’s finances? On top of that the NFL might impose a relocation fee and furthermore, there is no collective bargaining agreement in place after March 3, 2011, so owners have no clue about future budgets.
Because the stadium is privately financed more than eight percent of the stadium-generated revenues will go off to pay down the debt unlike those that get public monies.
Getting a franchise back in Los Angeles is a dream shared by NFL owners, Leiweke, Roski and the LA business community. But the reality is that there is not enough money around right now to get a facility built and there is an array of other factors including getting the approval of the Los Angeles Coliseum Commission, a group that doesn’t want competition in the Southland. All of these factors can be a momentum killer for Leiweke, AEG and Roski.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition is available at www.bickley.com, xplana.com or amazonkindle. He can be reached at evanjweiner@yahoo.com
Wednesday, November 10, 2010
Issa, Brown and California’s Stadium Problem
By Evan Weiner
November 10, 2010
http://www.examiner.com/business-of-sports-in-national/issa-brown-and-califronia-s-stadium-problem
(New York, N. Y.) --Sometime in January, perhaps Darrell Issa will find time in his busy schedule as a Congressman in Washington and start a recall campaign of the new California Governor Jerry Brown. Congressman Issa, a Republican from Southern California, probably will head up the House Committee on Oversight and Government Reform -- a fitting committee for someone who has had a couple of brushes with the law in the past -- and his plans are to call members of the Obama Administration to discuss all possible areas of corruption during the first two years of the Obama presidency.
Issa was one of the architects of the 2003 recall of California Governor Gray Davis. He contributed $1.6 million to get enough names on a petition that ultimately forced the recall of Davis and forced an election. The former body builder and actor Arnold Schwarzenegger won a special election in 2003 and California voters returned Schwarzenegger to Sacramento in 2006.
The Schwarzenegger years didn't exactly turn out well and the state is still grappling with massive debt. Jerry Brown now has to deal with California fiscal problems. Meanwhile Issa will probably go about calling people before his committee, wasting time and money in the process because that is what politicians do so well in Washington.
Brown's priority will be to get California back to fiscal solvency and more than likely that means that Ed Roski and AEG will not get that much help from the state in their attempts to build new football facilities in the City of Industry and Los Angeles. Brown's record as California governor from 1976 through 1982 is empty when it comes to the stadium game although Los Angeles Rams owner Carroll Rosenbloom took his team south to Anaheim and Raiders owner Al Davis also went south from Oakland to Los Angeles. As Oakland mayor between 1999 and 2007, Brown did little to help of two Oakland A's ownership groups who were looking for a publicly funded baseball park.
Brown was governor when Los Angeles landed the 1984 Summer Olympics but that was more Peter Ueberroth's baby and Ueberroth did not depend on the state to build facilities for the Games although the Coliseum did get a facelift.
Schwarzenegger was in favor of building a Los Angeles football stadium and had hoped to attract two franchises in that facility.
In sports, the National Football League has a California problem. The football facilities in San Francisco, Oakland and Sand Diego need to be replaced. The league has not had a team in the Los Angeles area since 1994. Georgia Frontiere moved her Anaheim-based Los Angeles Rams to St. Louis and Raiders owner Al Davis left the Los Angeles Memorial Coliseum for Oakland.
Davis might have remained in Los Angeles had the NFL not changed the terms of a deal that would have seen Davis moved his team from the Coliseum to a stadium in the parking lot of the Hollywood Park racetrack in Inglewood. The details of the broken down agreement have come out over the past 15 years although Los Angeles reporters never really report how the deal fell apart.
Davis and the NFL were going to put up money to erect the facility. Davis was promised that five Super Bowls would be played in the building over a 10 year period to help pay down the debt and his team was going to be the only franchise in the facility which meant that Davis would have been able to get lucrative revenue streams like luxury boxes and club seat sales. But the NFL started changing the details of the contract. The promise of five Super Bowls in the facility was gone; the NFL offered three in a ten year period, then one. Davis also found out that his team would share the facility with another NFL team one year after the stadium opened and while he would sell the luxury boxes and club seats, he would have to start sharing revenues with another franchise.
The proposed deal became untenable and Davis took an offer from Oakland and left Los Angeles in the spring of 1995.
The National Football League gave Los Angeles a conditional expansion franchise in 1999 but the state didn't have the money to build a facility on a toxic waste site in Carson and lost an opportunity to secure the team. Houston, whose voters approved a referendum to build a stadium after Bud Adams took his Houston Oilers to Nashville, ended up with the franchise.
Phil Anschutz's AEG eventually built a soccer stadium in the Carson area.
While Los Angeles business people like Roski and the Anschutz Entertainment Group scramble to get financing for a facility, the state of California is cutting back on sports. The University of California, Berkeley will drop five of its intercollegiate sports programs, baseball, men's and women's gymnastics, women's lacrosse and rugby at the end of the 2011 academic year with the hope of saving $4 million annually. Cal's athletic program has been losing more than $10 million annually over the past few years. Sports losses though a just part of California's large fiscal problems.
Roski is hoping to build his $ 800 million stadium along with a retail facility with private money. The project appears to be dormant at the moment. Roski's group claims that seven NFL franchises have been targeted as potential tenants in his stadium including Zygi Wilf's Minnesota Vikings, Ralph Wilson's Buffalo Bills, Wayne Weaver's Jacksonville Jaguars, the York family's San Francisco 49ers, Stan Kroenke's St. Louis Rams, the Spanos family’s San Diego Chargers and Davis' Oakland Raiders. Roski's $800 million price tag may be just a dream considering the cost of the new stadiums in East Rutherford, New Jersey and Arlington, Texas, the New Meadowlands Stadium and Cowboys Stadium cost well over a billion dollars.
The Spanos family has been seeking a new facility in San Diego since 2000 and could leave San Diego at any moment if someone had a new stadium ready somewhere else. That has not happened. Wilf's lease in Minnesota ends after 2011. Wilson's lease in Orchard Park expires in 2012. Jacksonville's business community has offered the Jaguars franchise lukewarm support partially because the Jacksonville business community is not very big. Davis' Oakland lease ends in 2013. Kroenke's St. Louis lease ends in 2014. The York family has an agreement to move to Santa Clara but no one knows when a stadium will be built there. Denise York's brother Eddie DeBartolo had an agreement to build a new San Francisco stadium in 1997 when he ran the 49ers. The facility was never built. DeBartolo lost control of the franchise and the York family is running things. The franchise remains in Candlestick Park.
AEG wants to build a football stadium near the arena-entertainment-hotel complex that the company has built in downtown Los Angeles.
Schwarzenegger, in October 2009, signed an environmental exemption bill that waived an environment study of the project. One of California's major obstacles in building stadiums has been environmental studies. One question that should be explored though, can California justify sports spending when the California education system is scaling back?
While business titans in the Los Angeles areas figure out a way to build an NFL facility, up the 101 freeway in Santa Clara is supposed to build a private-publicly funded stadium in that city after voters last June approved by referendum. But the project seemingly has been halted until NFL owners and the National Football League Players Association sign off on a new Collective Bargaining Agreement. Santa Clara has committed $444 million dollars to the stadium, the York family is supposed to provide the rest of the funding. Here is a question that should be asked. Do the Yorks have that money which might be more than $500 million to get the construction started?
Any delays in stadium building will hike the construction cost.
The NFL wants stadiums built in San Diego, Los Angeles, Santa Clara and Oakland. The National Basketball Association Commissioner David Stern allegedly is washing his hands of trying to build a new basketball arena in Sacramento for the Maloof brothers' Kings franchise after striking out repeated in the Sacramento arena game since 2006. Stern has put contraction on the table as a negotiating point in the NBA owners-players association on-going collective bargaining agreement talks. Stern's ploy gets the players attention as the association doesn't want to lose jobs and also puts cities like Sacramento on notice that they better play ball with him or the league will take the franchise away without a new arena.
Oakland A's owner Lewis Wolff has struck out in his attempts to get a new baseball stadium built in Oakland (Brown apparently didn't pursue that with any vigor while he was Oakland's mayor) and down the I-880 in Fremont. There may be a deal in the works for Wolff to move his A's to San Jose but Major League Baseball Commissioner Bud Selig's crack committee on the A's relocation to San Jose and how that might impact the San Francisco Giants franchise has still not reporting the results of the study.
San Francisco ownership may have territorial rights to San Jose despite the fact that two referendums to build stadiums in the South Bay failed and the distance between San Jose and San Francisco is considerably larger than the distance between the two ball parks in San Francisco and Oakland. The two baseball teams share the over-the-air and cable TV market where big money is made. Wolff is getting a San Jose stadium for his Major League Soccer franchise in the city.
Oakland is looking into building a football stadium that would host Davis' Raiders and perhaps the York family's 49ers if the Santa Clara option fails.
Issa may be too busy to start a Jerry Brown recall drive in January considering how many investigations he wants to start on the Hill. Brown may have other more important items on his desk than supporting a Los Angeles area stadium and National Football League Commissioner Roger Goodell may not care about getting stadiums built until the league gets an agreement with the players on a new collective bargaining deal and that may not be easy. The players association might disband and head to the National Labor Relations Board, a group that is friendlier to workers with a Democrat sitting in the White House, and that is a messy process that could take a while to settle down.
All of this means that it might be another five to eight years before the National Football League plays another game in Los Angeles or stadiums are built in Santa Clara or Oakland or San Diego. The California problem is not going away anytime soon.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition is available at www.bickley.com or amazonkindle. He can be reached at evanjweiner@yahoo.com
By Evan Weiner
November 10, 2010
http://www.examiner.com/business-of-sports-in-national/issa-brown-and-califronia-s-stadium-problem
(New York, N. Y.) --Sometime in January, perhaps Darrell Issa will find time in his busy schedule as a Congressman in Washington and start a recall campaign of the new California Governor Jerry Brown. Congressman Issa, a Republican from Southern California, probably will head up the House Committee on Oversight and Government Reform -- a fitting committee for someone who has had a couple of brushes with the law in the past -- and his plans are to call members of the Obama Administration to discuss all possible areas of corruption during the first two years of the Obama presidency.
Issa was one of the architects of the 2003 recall of California Governor Gray Davis. He contributed $1.6 million to get enough names on a petition that ultimately forced the recall of Davis and forced an election. The former body builder and actor Arnold Schwarzenegger won a special election in 2003 and California voters returned Schwarzenegger to Sacramento in 2006.
The Schwarzenegger years didn't exactly turn out well and the state is still grappling with massive debt. Jerry Brown now has to deal with California fiscal problems. Meanwhile Issa will probably go about calling people before his committee, wasting time and money in the process because that is what politicians do so well in Washington.
Brown's priority will be to get California back to fiscal solvency and more than likely that means that Ed Roski and AEG will not get that much help from the state in their attempts to build new football facilities in the City of Industry and Los Angeles. Brown's record as California governor from 1976 through 1982 is empty when it comes to the stadium game although Los Angeles Rams owner Carroll Rosenbloom took his team south to Anaheim and Raiders owner Al Davis also went south from Oakland to Los Angeles. As Oakland mayor between 1999 and 2007, Brown did little to help of two Oakland A's ownership groups who were looking for a publicly funded baseball park.
Brown was governor when Los Angeles landed the 1984 Summer Olympics but that was more Peter Ueberroth's baby and Ueberroth did not depend on the state to build facilities for the Games although the Coliseum did get a facelift.
Schwarzenegger was in favor of building a Los Angeles football stadium and had hoped to attract two franchises in that facility.
In sports, the National Football League has a California problem. The football facilities in San Francisco, Oakland and Sand Diego need to be replaced. The league has not had a team in the Los Angeles area since 1994. Georgia Frontiere moved her Anaheim-based Los Angeles Rams to St. Louis and Raiders owner Al Davis left the Los Angeles Memorial Coliseum for Oakland.
Davis might have remained in Los Angeles had the NFL not changed the terms of a deal that would have seen Davis moved his team from the Coliseum to a stadium in the parking lot of the Hollywood Park racetrack in Inglewood. The details of the broken down agreement have come out over the past 15 years although Los Angeles reporters never really report how the deal fell apart.
Davis and the NFL were going to put up money to erect the facility. Davis was promised that five Super Bowls would be played in the building over a 10 year period to help pay down the debt and his team was going to be the only franchise in the facility which meant that Davis would have been able to get lucrative revenue streams like luxury boxes and club seat sales. But the NFL started changing the details of the contract. The promise of five Super Bowls in the facility was gone; the NFL offered three in a ten year period, then one. Davis also found out that his team would share the facility with another NFL team one year after the stadium opened and while he would sell the luxury boxes and club seats, he would have to start sharing revenues with another franchise.
The proposed deal became untenable and Davis took an offer from Oakland and left Los Angeles in the spring of 1995.
The National Football League gave Los Angeles a conditional expansion franchise in 1999 but the state didn't have the money to build a facility on a toxic waste site in Carson and lost an opportunity to secure the team. Houston, whose voters approved a referendum to build a stadium after Bud Adams took his Houston Oilers to Nashville, ended up with the franchise.
Phil Anschutz's AEG eventually built a soccer stadium in the Carson area.
While Los Angeles business people like Roski and the Anschutz Entertainment Group scramble to get financing for a facility, the state of California is cutting back on sports. The University of California, Berkeley will drop five of its intercollegiate sports programs, baseball, men's and women's gymnastics, women's lacrosse and rugby at the end of the 2011 academic year with the hope of saving $4 million annually. Cal's athletic program has been losing more than $10 million annually over the past few years. Sports losses though a just part of California's large fiscal problems.
Roski is hoping to build his $ 800 million stadium along with a retail facility with private money. The project appears to be dormant at the moment. Roski's group claims that seven NFL franchises have been targeted as potential tenants in his stadium including Zygi Wilf's Minnesota Vikings, Ralph Wilson's Buffalo Bills, Wayne Weaver's Jacksonville Jaguars, the York family's San Francisco 49ers, Stan Kroenke's St. Louis Rams, the Spanos family’s San Diego Chargers and Davis' Oakland Raiders. Roski's $800 million price tag may be just a dream considering the cost of the new stadiums in East Rutherford, New Jersey and Arlington, Texas, the New Meadowlands Stadium and Cowboys Stadium cost well over a billion dollars.
The Spanos family has been seeking a new facility in San Diego since 2000 and could leave San Diego at any moment if someone had a new stadium ready somewhere else. That has not happened. Wilf's lease in Minnesota ends after 2011. Wilson's lease in Orchard Park expires in 2012. Jacksonville's business community has offered the Jaguars franchise lukewarm support partially because the Jacksonville business community is not very big. Davis' Oakland lease ends in 2013. Kroenke's St. Louis lease ends in 2014. The York family has an agreement to move to Santa Clara but no one knows when a stadium will be built there. Denise York's brother Eddie DeBartolo had an agreement to build a new San Francisco stadium in 1997 when he ran the 49ers. The facility was never built. DeBartolo lost control of the franchise and the York family is running things. The franchise remains in Candlestick Park.
AEG wants to build a football stadium near the arena-entertainment-hotel complex that the company has built in downtown Los Angeles.
Schwarzenegger, in October 2009, signed an environmental exemption bill that waived an environment study of the project. One of California's major obstacles in building stadiums has been environmental studies. One question that should be explored though, can California justify sports spending when the California education system is scaling back?
While business titans in the Los Angeles areas figure out a way to build an NFL facility, up the 101 freeway in Santa Clara is supposed to build a private-publicly funded stadium in that city after voters last June approved by referendum. But the project seemingly has been halted until NFL owners and the National Football League Players Association sign off on a new Collective Bargaining Agreement. Santa Clara has committed $444 million dollars to the stadium, the York family is supposed to provide the rest of the funding. Here is a question that should be asked. Do the Yorks have that money which might be more than $500 million to get the construction started?
Any delays in stadium building will hike the construction cost.
The NFL wants stadiums built in San Diego, Los Angeles, Santa Clara and Oakland. The National Basketball Association Commissioner David Stern allegedly is washing his hands of trying to build a new basketball arena in Sacramento for the Maloof brothers' Kings franchise after striking out repeated in the Sacramento arena game since 2006. Stern has put contraction on the table as a negotiating point in the NBA owners-players association on-going collective bargaining agreement talks. Stern's ploy gets the players attention as the association doesn't want to lose jobs and also puts cities like Sacramento on notice that they better play ball with him or the league will take the franchise away without a new arena.
Oakland A's owner Lewis Wolff has struck out in his attempts to get a new baseball stadium built in Oakland (Brown apparently didn't pursue that with any vigor while he was Oakland's mayor) and down the I-880 in Fremont. There may be a deal in the works for Wolff to move his A's to San Jose but Major League Baseball Commissioner Bud Selig's crack committee on the A's relocation to San Jose and how that might impact the San Francisco Giants franchise has still not reporting the results of the study.
San Francisco ownership may have territorial rights to San Jose despite the fact that two referendums to build stadiums in the South Bay failed and the distance between San Jose and San Francisco is considerably larger than the distance between the two ball parks in San Francisco and Oakland. The two baseball teams share the over-the-air and cable TV market where big money is made. Wolff is getting a San Jose stadium for his Major League Soccer franchise in the city.
Oakland is looking into building a football stadium that would host Davis' Raiders and perhaps the York family's 49ers if the Santa Clara option fails.
Issa may be too busy to start a Jerry Brown recall drive in January considering how many investigations he wants to start on the Hill. Brown may have other more important items on his desk than supporting a Los Angeles area stadium and National Football League Commissioner Roger Goodell may not care about getting stadiums built until the league gets an agreement with the players on a new collective bargaining deal and that may not be easy. The players association might disband and head to the National Labor Relations Board, a group that is friendlier to workers with a Democrat sitting in the White House, and that is a messy process that could take a while to settle down.
All of this means that it might be another five to eight years before the National Football League plays another game in Los Angeles or stadiums are built in Santa Clara or Oakland or San Diego. The California problem is not going away anytime soon.
Evan Weiner, the winner of the United States Sports Academy's 2010 Ronald Reagan Media Award, is an author, radio-TV commentator and speaker on "The Politics of Sports Business." His book, "The Business and Politics of Sports, Second Edition is available at www.bickley.com or amazonkindle. He can be reached at evanjweiner@yahoo.com
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