The who, what, where, when,
why — and why not — of L.A. sports
Hopes of seeing an NFL team return to the Los Angeles area got a big boost this morning.Gov. Arnold Schwarzenegger signed a bill allowing a development group to begin construction on a 75,000-seat stadium in the City of Industry. Officials involved with the project hope to lure an NFL team to the area with the stadium, which is expected to create 18,000 jobs and an estimated $762 million in economic growth.
Developer Majestic Realty Co. said it plans to approach seven NFL teams about moving to Industry. The company said the San Diego Chargers, Oakland Raiders and San Francisco 49ers are among the teams they plan to contact.
The bill, which dismissed a lawsuit filed by local residents regarding the stadium’s environmental impact, was approved by state senators last week.
Be sure to check back later at latimes.com/sports for Sam Farmer’s take on what a new stadium could mean for football in Los Angeles.
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— Austin Knoblauch
Photo: An artist’s rendering of a proposed stadium in the City of Industry. Credit: Mike Amaya / Meis Architects
March 4, 2009
Plan for Industrial City football stadium wins approval
Council members in Industry City have unanimously approved a proposal to build pro football stadium intended to lure an NFL team back to the Los Angeles area.
The vote helped clear the way for developers of the US$800-million venue to begin talks with NFL teams about a possible move to the industrial and warehousing city east of Los Angeles.
Majestic Real Estate Co. managing partner John Semcken said the company would begin shopping for a team on April 1, the deadline for opponents of the project to file a lawsuit.
At least eight franchises, including the Oakland Raiders, Buffalo Bills and Minnesota Vikings have been identified as possible targets for relocation, he said.
Developers are confident the NFL would approve a move by a team, he said.
“They understand the stadium, they understand the economic opportunity,” Semcken said. “All they want is certainty.”
NFL spokesman Brian McCarthy said the league was monitoring potential stadium developments in the Los Angeles area but declined to comment on specific sites.
Stadium holds many benefits for Industry
INDUSTRY – City leaders will move mountains to bring a pro football stadium to Southern California.
They’ll also build sewers, construct streets and install utilities, according to a contract at City Hall.
And they’ll give developer Majestic Realty Co. free use of $600 million to $800 million in public land for 65 years.
In return, the city will get half the profits.
It’s a deal that makes sense for both sides, said John Semcken, a vice president of Majestic Realty Co. and lead for the stadium project.
“We get a big reduction in up-front risk, and the city gets a lot of revenue over a very long period of time,” he said.
Majestic’s 40-year relationship with Industry has proved the
company knows how to turn a profit, officials said.
“Hell yeah we’ll get our money back,” Mayor Dave Perez said. “Think about it. We still own the land. And think about how high rent is going to be in 50 years. We’re getting paid back and them some.”
Majestic’s proposal to build a $800million stadium and retail complex by 2011 has been called an “interesting possibility” by NFL officials. Majestic Chairman Edward Roski Jr. said he hopes to have an environmental review report on the project wrapped up by the end of this year.
That the city will ever recoup its cost from such a huge project is far from a sure thing, sports economic experts say.
“Wow. That’s a big chunk,” said sociologist Rick Eckstein, author
of “Public Dollars, Private Stadiums: The Battle over Building Sports Stadiums.
“This sounds like one of those kind of hidden subsidies where money does not change hands but some other kind of assistance is provided,” he said.
Eckstein and other sociologists and sports economists say data from most sports-complex developments show the projects often do not earn back public subsidies.
But Roski has a track record of making profits on similar deals.
Staples Center and surrounding developments, which Roski built with Philip Anschutz, will earn back in taxes the $71 million Los Angeles used to subsidize the deal, plus $49 million in profit, according to a study by a sports economist Rob Baade.
In Industry, the city is already collecting income from Majestic’s Grand Crossing business park adjacent to the proposed stadium site, which also had a “50-50” land-use deal and was completed in 2006.
The value of the stadium parcel is hard to quantify, because there is nothing to compare to a 65-year lease on 600 acres in the San Gabriel Valley, said Christopher Bonney, president and chief financial officer of the Industry office of Lee & Associates.
The land, if offered for
sale, would probably fetch about $25-$35 per square foot, he said.
Six-hundred acres would cost about $784 million at $30 per square foot. But the land in question is hilly and large, so the price could vary, experts said.
Since the city’s redevelopment agency acquired the land in the early 1980s, it has been usedfor cattle-grazing by late Mayor John Ferrero, who died in 1996. His son still grazes cattle on part of the property.
The land has been under Roski’s control since April 2005, when his company and Industry’s redevelopment agency approved the 50-50 style lease in hopes of building a business park, according to city documents.
A redevelopment agency is a branch of city government that uses court findings to create a law that allows cities to keep part of the property tax generated from an area – tax that would usually go to other agencies, such as the state or county. The city typically uses the money to spur economic development, such as buying land or providing businesses with subsidies.
Roski approached the city to change the allowed use last year, and city officials say they would be willing to alter the agreement to work with Majestic Realty.
The project would include the stadium, retail areas, a sports medicine clinic and a training complex, according to information from Majestic.
Professional sports complexes have a long history of getting public assistance, even in Los Angeles, where voters and politicians have resisted using public money to assist billionaire developers, experts say.
Dodger Stadium, for instance, was built on land owned by Los Angeles and the federal government and was steeply discounted for the Dodgers’ owners.
“That was part of the deal at the Chavez Ravine,” said Baade, the sports economist who wrote the report on Staples Center. “In the case of Dodger Stadium, it was ballyhooed as private financing, but there was a major land subsidy. Almost all of these things are subsidized in for one thing or another.”
Perez said he “totally confident” the city will make money.
“We had to develop that land anyway,” he said. “It wasn’t going to stay hills forever.”
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