Thursday, April 17, 2008

Dreaming the big Los Angeles NFL dream

The National Football League is heading back to Los Angeles – at least that’s what developer Edward P. Roski Jr. would believe is going to happen in the not too distant future. Thursday, Roski announced an ambitious plan to build a state-of-the art stadium in downtown Los Angeles. The stadium which could be ready in time for the 2011 season would anchor an ambitious real estate development.

According to published reports the proposed stadium will be built located east of downtown Los Angeles at the junction of the 60 and 57 freeways. Almost 12 million residents live within a 25-mile radius of the site and it's close to a Metrolink public transportation station.

Roski‘s dream aside when the 2008 season begins this fall Los Angeles will be without an NFL franchise for the 14th consecutive season. All one has to do is look at NFL’s history in Los Angeles to understand wanting a team in America’s second biggest city and having a team in Los Angeles are two very different realities.

The St. Louis Rams won the NFL championship in 1946, moved to Los Angeles and became the Los Angeles Rams. On April 2, 1979 Rams owner Carroll Rosenbloom died and ownership of the Rams was turned over to his widow Georgia Frontiere.

On Christmas Eve 1994, less then 30,000 fans showed up as the Rams lost their final game at Anaheim Stadium 24-21 to the Washington Redskins. After some initial resistance the move wouldn’t be approved by NFL owners, ending the Rams 49-year history in Los Angeles, Frontiere a St. Louis native moved the Rams back to St. Louis.

Al Davis successfully brought a suit against the National Football League, winning the right to move the Raiders from Oakland to Los Angeles in 1982. The National Football League lost its legal battle for the right to prevent member teams from moving from city to city on November 6, 1981.

The Supreme Court refused to hear the N.F.L.'s appeal from a lower court's ruling that the league's effort to block the Oakland Raiders from moving to Los Angeles in 1980 violated Federal antitrust law. After the owners of the league's 27 other teams had barred that move, the Raiders brought a successful antitrust suit against the N.F.L. in Federal District Court in Los Angeles. A jury agreed with the Raiders and the Los Angeles Memorial Coliseum, also a plaintiff in the suit, that the ''location agreement'' in the league's bylaws was a conspiracy among economic competitors to restrain trade, in violation of the Sherman Antitrust Act.

A dozen years later, on June 23, 1995, Davis signed a letter of intent to move the Raiders back to Oakland. This time the NFL didn’t fight Davis’ decision.

In less then six months the City of Los Angeles went from being home to two NFL franchises to not having an NFL franchise. The challenges that drove the Rams and the Raiders from Southern California wasn’t only questionable fan support, but the stadiums that Davis and Frontiere believed weren’t good enough for their NFL teams. Davis’ Raiders played their home games in the Los Angeles Coliseum, initially built for the 1932 Olympics and then renovated for the 1984 Games. The Coliseum is in a terrible area, fans became afraid to attend games. The Rams played their games at Angels Stadium in Anaheim a terrible facility for football located 45 miles from downtown Los Angeles.

As early as 1996, then NFL commissioner Paul Tagliabue addressing the media at his Super Bowl press conference made it clear Los Angeles was very much in the picture when it came to NFL expansion.

''I've said several times already we have to take a hard look at expansion to deal among other things with Cleveland and Los Angeles,'' Tagliabue said, emphasizing he doesn't consider moving current franchises to those cities as an acceptable option.

''Our first goal, and one I think we made a lot of progress on, is team stability. We solved very difficult problems in the last 12 months in Tampa and Cincinnati and Detroit and we made a considerable amount of progress in Seattle. We accomplished our goals in Cleveland under the agreement we struck early last year.

''Hopefully, we can accomplish the two goals together: team stability, no more moves, and teams in Cleveland and Los Angeles.

''Earlier this week, Mayor Thomas White announced all the goals have been met, that the Browns will be in a new stadium on the lake front playing as the Browns in Cleveland in 1999. That plus the LA situation requires us to look at expansion.''

The NFL awarded an expansion franchise to Al Lerner in September 1998. Lerner paid $540 million. That left the NFL with 31 franchises. Historically the NFL doesn’t like to have an odd number of franchises. While the league has continued bye weekends for teams (initially created when the Cleveland Browns returned to the league in 2000), the NFL wants every team to play the first few and last few weekends of each years’ NFL schedule.

After awarding Cleveland the league’s 31st franchise, the league made it clear it wanted to award their 32nd franchise to Los Angeles. The NFL considered the Coliseum in 1998 and stadium projects in Hollywood Park and Carson. After then California Governor Gray Davis opted not to deploy $150 million in taxpayer money to build new parking garages, suggesting taxpayers had more important priorities, the NFL’s plans to expand to Los Angeles began to fall by the way side. The NFL’s Los Angeles stadium suggestions died on September 15, 1999.

Former Disney president Michael Ovitz and the grocery chain executive Ron Burkle emerged as the leading candidates interested in owning an NFL team using land around Hollywood Park. Six weeks later Ovitz and Burkle were on the outside looking in, as was billionaire Marvin Davis who didn’t believe he could make it work.

It was only then; the NFL began to seriously consider Bob McNair. McNair was ready to pay an expansion fee and had a $310 million stadium plan in place for Houston. He was ready, Los Angeles wasn’t.

''We should give Houston the team, and look forward to another day in Los Angeles,’’ the late Robert Tisch, the co-owner of the Giants and a member of the league's finance committee told The New York Times on September 29, 1999.

Greg Aiello, a league spokesman, told The Times only expansion would be discussed at a meeting the following week in Atlanta. ''We're looking at the possibility of expanding by a 32nd team,'' he said. ''But long term, we'd like to be in both cities.''

The NFL awarded their 32nd franchise to Bob McNair for a then record expansion fee of $700 million the following week at meetings in Atlanta. At the dawn of a new century, the NFL accepted that America’s most important entertainment center would be without an NFL franchise for the foreseeable future.

Not a great deal happened, until ten months ago, when now retired NFL commissioner Paul Tagliabue met with California Governor Arnold Schwarzenegger in November 2005. The two focused their discussions on being able to bring an NFL expansion plan to NFL owners in March.

At his last Super Bowl press conference on February 3, Tagliabue addressed where the league was as far as expanding back to Los Angeles.

“I think we're making the kind of progress that I anticipated in November when I was out there to meet with the mayor and the governor. At that time I said we were looking to have two clear-cut alternatives, focused on the Coliseum and Anaheim to bring to our membership at the March meeting and I think we're on track to do that. As to which one is in the lead, I think is something we'll be talking about at our March meeting,” Tagliabue answered that day as part of his state of the NFL question and answer period.

On March 28 NFL staff offered the league’s 32 owners a 30 minute presentation regarding two potential locations for an NFL Los Angeles expansion franchise, a new stadium beside the Coliseum and a new stadium in Anaheim, located near Angels Stadium. Each facility would cost more then $800 million to build.

"My guess is that we will be going forward with those presentations on behalf of the Coliseum and Anaheim so that we can make some decisions in Denver," Tagliabue told The Los Angeles Times, referring to the league's spring meetings May 21 to 24.

Asked what those decisions would entail, Tagliabue said, "To select one of the stadium projects and to go forward with the process of identifying a team and building a stadium."

Tagliabue led the 11-member Los Angeles Stadium Working Group to California for a series of meetings in early May. The end result – the league announced they would invest $10 million in feasibility studies for both ($5 million for each) interested location.

"I do believe the sooner we do it, the better," said the New England Patriots' owner, Robert K. Kraft, a member of the 11-member Los Angeles Stadium Working Group in a New York Times report a week before the NFL’s May meetings. "We all realize this is important for our future. In the end, we need to have a team there."

Steve Tisch, the Giants' chairman and executive vice president and a member of the Los Angeles working group, told The New York Times, "We think it is important to have a team in Los Angeles, but the conditions have to be right, the economics have to work, and the business community has to be strongly involved."

As for interest in Los Angeles, it was lukewarm at best, when the New York Times spoke to several Los Angeles based business people to gauge the level of interest.

"It's not a mandatory part of the culture here, like it is in other places where it's the dominant part of civic pride," said Kevin Roderick, a lifelong Angeleno and the editor of LAObserved, a Web site about life in Los Angeles. "You have an entire generation of kids growing up without football."

Of the new team, Roderick added: "They just better win. They better have a charismatic person on the team, a Kobe or Shaq or a Sandy Koufax, who can be the face of the team."

"It's like your wife left and 12 years later you say, 'I don't care,' " Jack McGrath, a Los Angeles based public relations executive told the New York Times. "We're getting along quite well without them. What are you going to do, keep crying? They left.

"But that gets rekindled again. If you know you have a stadium and you know you'll have a team, you'll start getting pretty excited."

Ten days later the NFL moving at a snail’s pace ‘tabled’ any definitive plans to expand to Los Angeles. The owners met on May 23, and quickly realized putting a team back in Los Angeles was a political and economic minefield. A stadium had to be built. An expansion fee had to be paid. And whoever owned the team had to have the capital to operate the franchise. If you take a moment to consider all of the financial obligations the owner of an NFL franchise could be expected to secure, it easily tops $2 billion, an impossible financial number for anyone to seriously consider.

"The L.A. thing is hard to get your hands around," Dallas Cowboys owner Jerry Jones said in a Los Angeles Times report. "We don't have an owner. We don't have a team. We've got some leadership that we haven't had before. We've got a L.A. market that's better than it's been the last seven years. We got viability out there."

"Every constituent involved has to be willing to overdo here and be willing to have an area where you don't have the answers," Jones said. "That's why I use the example of buying the Cowboys. When I bought them, I did not have all the answers. I thought I had all the answers. I thought I had a way to keep from going broke, but I wasn't sure. I don't know an owner who has come into this league knowing he's is going to come into this league thinking he's going to make money owning a football team."

"We are looking at an investment of multiple hundreds of millions of dollars and a partnership that hopefully will extend over most of the next century. The emphasis is to do it right and do it thoroughly and not set deadlines that turn out to be meaningless," Tagliabue told The Orange County Register.

"We need to be a lot more reliant on something called value engineering, and to understand what are the best ways of monitoring stadium construction costs," Tagliabue said. "We've got to work really hard on the costs. There is not money to be wasted there. I think the committee and I emphasized to the membership that we have to be looking in the analysis of each of the new stadiums to be looking for two teams."

As The Washington Post suggested in a report two years ago, the NFL still doesn’t understand how Californians feel about paying for sports facilities for members of the Billionaire’s Boys Club.

Ever since state California Proposition 13 passed in 1978, changing how taxpayer money is spent, California cities have regularly rejected attempts to extract public funds for new stadiums, which is why three of what are widely considered to be the worst stadiums in the NFL are in San Diego, San Francisco and Oakland.

"It's impossible," said Bernard Parks, the city's former police chief who is now a City Council member representing the 8th District, which includes Memorial Coliseum in
The Washington Post report. "There is no stomach here to change and cave on public funds."

"The voters have made it clear they are very suspicious of how public officials spend their money," Parks said.

"I've never been involved in a deal like this," said Mark Ridley-Thomas, a member of the state assembly from Los Angeles who used to represent Parks's district and is a longtime advocate of bringing football back to the coliseum. "Periodically they create competition -- Carson one day and Pasadena the next. They tell us Carson is the first choice and then it's Pasadena, they're constantly moving the ball on us. They're always trying to leverage one venue against the next. There's something about Los Angeles that makes them drive up the price and that impedes the deal."

As successful as Paul Tagliabue was in nearly every facet of the NFL’s business affairs during his 17 years as NFL commissioner it was under his watch two NFL franchises left Los Angeles. Tagliabue put a great deal of effort into trying not once, not twice, but three times to bring the NFL back to Los Angeles before he retired last week, he just couldn’t make it work.

Roski’s proposed stadium would cost $800 million. Thursday’s announcement was made without the support of the National Football League.

``Los Angeles Stadium is the project that will bring the NFL -- and the Super Bowl -- back to Southern California,'' said Roski in a statement Thursday ``It is time to put the stadium debate behind us. We have a great stadium site that can serve the entire region, and we have the ability to get this done. This project is exciting, viable and in process.''

``We're aware of it and we will monitor developments,'' Greg Aiello, a spokesman for the NFL, said of Roski's plan.

Roski thinking makes perfect sense. The NFL needs at least franchise (if not two) in the Greater Los Angeles market. Reality paints a very different picture. The NFL needs two add two franchises in the next five years. Those sentiments aside – the NFL will command close to $1 billion in expansion fees for anyone wanting the right to join the NFL. If Roski’s is facing upfront costs in excess of $1.8 billion what business argument can he make for the project to be financially viable?

Taxpayers in Houston and Cleveland built stadiums when their cities where awarded expansion franchises. Roski’s concept, his big picture, build an $800 million stadium toss in 1.5 million square feet of office buildings, 833,000 square feet of retail shops, 162,000 square feet of restaurants, a 5,000-seat live theater, and movie theaters with 1,200 seats – a developers dream come. Paying for the dream – a taxpayer’s nightmare. Take this to the bank – billions will be spent before the NFL returns to Los Angeles.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: Bloomberg News

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