New LA Stadium Already in Trouble

It’s been a long wait for the NFL in Los Angeles.  It appears that wait might be just a little longer.

It’s no secret the NFL is looking to get back into the Los Angeles area with a team.  The last time the NFL had a team in LA was in 1994 when both the Raiders and Rams were in the city.  Since then the second largest television market in the league has been without a team.

Movement is on the horizon though.  It has been reported three parties were involved in a September 6 meeting at the NFL offices in New York.  During that time NFL Commissioner Roger Goodell was impressed with a proposal from Los Angeles Councilwoman Jan Perry and political aide Bernard Parks, Jr.   However it is apparent the city needs to go further.

Goodell was not happy with the proposal brought forward by Anschutz Entertainment Group.  AEG is a private company working with Los Angeles to build and operate a retractable-roof stadium, named Farmers Field, on the site that is currently part of the Los Angeles Convention Center.

A measure signed by Governor Jerry Brown eases many of the legal burdens to getting the stadium done. The developments have been impressive, but the NFL and team officials have been focused on how the plan would work for a franchise that relocates to L.A.

AEG would like their NFL plan to work as it has for the Staples Center.  What AEG is proposing is a landlord-tenant relationship developed with the Los Angeles Lakers, Clippers and Kings. How the plan works for Staples is AEG sells the tickets, advertising and sponsorship deals for those teams.  Then takes their cut off the top and pays the teams. This was attractive to the teams because none had the money to build a new arena.

Now AEG is dealing with the NFL, not the NBA or NHL.  Already five NFL team executives have admitted that kind of plan is not acceptable for an NFL team.  The same 5 say there is virtually “no way” any of the owners would go for that scenario.

The NFL doesn’t need AEG’s help to build a stadium.  If they want football back in Los Angeles, the league will build their own stadium, ask for tax breaks and government help, then move a team there.  Right now AEG is just a problem the NFL doesn’t need.

Another problem is whatever team comes to LA, AEG wants to invest $250 million in exchange for 49% of the franchise.   Any team that moves to the city will see a drastic increase in value.  Say a team’s value is worth 1 Billion when it lands in Los Angeles.  That means AEG’s investment for 49% would be worth just under $500 million, when they only paid $250 million.  This isn’t a deal the NFL wants or needs.

It’s doubtful the NFL would expand into LA.  That would mean the league, in order to accomplish a balanced schedule, would have to add two teams instead of one.  Or another franchise could move to the city.  Rumored teams such as the Jacksonville Jaguars, Minnesota, Buffalo and Oakland are still looking for ways to improve value, if for no other reason than to improve resale value.

With or without AEG the NFL will be back in Los Angeles by the end of this decade.  But at who’s expense?

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