Stadium's financial returns seen as too slim to share with city
A downtown developer cannot share the profits of its proposed football stadium with taxpayers because the financial return from the $1.2-billion project will be too low, officials told the Los Angeles City Council on Friday.
During the full council’s first public review of the stadium’s financing plan, economic consultant Bill Rhoda told the City Council that Anschutz Entertainment Group will see a 6.7% rate of return from the project over 30 years. Projects of a similar size typically generate a return of 15% to 20%, he said.
"You really can’t take any more revenues out of this entity because then [the deal] won’t be financeable," he said.
Chief Legislative Analyst Gerry Miller, who advises the council, offered a similar take, saying AEG’s return will be "less than half" the amount that such deals normally produce.
The city has struggled through a series of budget crises in recent years and Rosendahl has asked whether city coffers could benefit from a cut of the revenue from stadium-naming rights.
Nevertheless, Rosendahl said he was not disappointed by the explanation, which was delivered both by AEG and by city negotiators. He and the council’s two other stadium skeptics –- Paul Koretz and Paul Krekorian –- all said they are now warming to the stadium financial plan.
"I’m not there yet. But I’m getting close," Rosendahl said.
The council is expected to vote Aug. 9 on a draft agreement with AEG. Even though no vote was held Friday, hundreds of supporters -- construction workers, business leaders, union activists and high school football players -- filled multiple rooms at City Hall to show their support for AEG.
"This project brings hope to the city in a time that the city needs hope," said Los Angeles Laker-turned-entrepreneur Earvin "Magic" Johnson. "And the main thing it’s going to be bringing is jobs."
Although the crowd at City Hall was tilted heavily toward AEG, a handful of residents stepped forward to criticize the project, saying it would increase traffic on nearby streets and lead to a barrage of new signs on downtown's doorstep. AEG has expressed interest in installing 41 signs on the Convention Center, a majority of them facing the 110 and 10 freeways.
Dennis Hathaway, president of the Coalition to Ban Billboard Blight, said tourists and convention-goers would find "an unbroken field of advertisements and logos from the freeway interchange all the way past LA Live" if the deal is approved.
"What is the face of the city we will be presenting to them?" Hathaway asked. "A huge Bud Light bottle. A huge Coke bottle."
-- David Zahniser at Los Angeles City Hall