AEG unveils $700-million stadium naming rights deal as L.A. sports legends, power brokers celebrate
With a display of fanfare that included a hot-air balloon, a simulated football field and endless bottles of complimentary Veuve Cliquot Champagne, entertainment giant AEG formally unveiled its plan Tuesday morning to build a $1-billion football stadium and event center in downtown Los Angeles.
The centerpiece of the announcement was the news that AEG has reached a naming rights deal worth $700 million -- the most valuable such agreement ever -- with Farmers Insurance for the yet-to-be-built stadium to host a yet-to-be-named team.
Despite the obstacles to getting the stadium built, a who's who of L.A. power brokers in sports, business, labor and politics stood up and insisted it will happen -- and that it will happen without Los Angeles taxpayers footing the bill.
"We can make this happen for real," Earvin Magic Johnson declared.
Tim Leiweke, president and chief executive of AEG, which also owns Staples and the LA Live Complex, pledged that the stadium would be "driven by the public sector but paid for by the private sector, mayor, I promise," referring to Mayor Antonio Villaraigosa.
Villaraigosa followed him onto the stage, informed him that his promise was being broadcast on live television and then pledged his support, saying the stadium plan is really about jobs and "revitalizing the city center."
NFL leaders have said the agreement with Farmers significantly increases the likelihood of the NFL's return to Los Angeles, but does not guarantee it. Los Angeles has been without a professional football team since 1994, when the Raiders and Rams departed.
Two groups are vying to bring it back, AEG in downtown Los Angeles and Ed Roski, who has a competing proposal to build a stadium in the City of Industry.
The Industry proposal is significantly ahead of the downtown bid because it is shovel ready with a piece of land that already has the necessary zoning and an environmental exemption. AEG is seeking a similar exception. But AEG's proposal is far more complicated.
Though AEG will build the stadium, Leiweke is asking the city of Los Angeles to float $350 million in bonds to cover the cost of tearing down and rebuilding the Convention Center's West Hall and parking, and pay off the remaining debt on the hall. The stadium would be built in its place, and the convention center relocated.
Leiweke said new revenue the city would get from the site, mostly from ticket taxes, would be enough to pay off the bonds, and AEG would cover any shortfalls.
AEG's proposal calls for the stadium to be used not just for 10 football games a year, but other events such as NCAA Final Fours, major soccer games and conventions.
Farmers has been promised at least 50 events per year, with an attendance of at least 40,000 per event.
Critics of AEG's plan object to the location of the proposed 64,000-seat, retractable-roof stadium, which would be part of the Convention Center complex at the intersection of the I-10 and I-110 freeways.
They fear potential traffic and parking problmes and question whether the project can be completed without a significant contribution of public money, as Leiweke has promised.
But there were few naysayers at Tuesday's event, and before scores of supporters and members of the press were released from the auditorium and sent out onto a faux football field to sip Champagne and eat chocolate-covered strawberries, Leiweke issued a challenge to his critics: "What I say to the skeptics [is] … it's easy to shoot darts, but let me tell you, the economic development of Staples and LA Live is a fact."
-- Jessica Garrison
Image: AEG Digital Group