AEG pulls plug on Farmer's Field

http://www.ocregister.com/articles/nfl-653629-stadium-aeg.html

SPORTS

AEG pulls plug on Farmers Field, leaving two potential NFL stadiums for L.A. area
March 9, 2015 Updated March 10, 2015 8:44 a.m.

The Anschutz Entertainment Group’s unsuccessful bid to bring the NFL back to Los Angeles by building a $1.5 billion downtown stadium was doomed from the outset, first by a flawed plan and later by AEG officials’ failure to adjust their plans even after it was clear league owners and officials had serious reservations about it, according to persons familiar with the bid.

AEG on Monday pulled the plug on its five-year quest to build Farmers Field, a 72,000-seat, 1.7 million square foot stadium adjacent to Staples Center, having already spent at least $50 million on a project that also included a major overhaul of the Los Angeles Convention Center.

Under the terms of AEG’s 2012 deal with the City of Los Angeles, construction on the stadium could not begin until the sports and entertainment giant secured an NFL team for the venue. AEG, having already received a six-month extension from the City Council last October, acknowledged Monday it was unable to lure a franchise back to the nation’s second-largest market.

Although AEG in recent weeks had taken a series of high-profile steps to cast doubt on St. Louis Rams owner Stan Kroenke’s plans to build a $1.86 billion stadium in Inglewood, there were suspicions around the NFL that AEG had given up on the Farmers Field project when the company missed a series of scheduled appointments with NFL officials in recent weeks.

“We are no longer in discussion with the NFL or any NFL team. Our focus is on the continued development of the L.A. LIVE district, and assisting the City of Los Angeles with development of its Convention Center and the downtown core,” said Ted Fikre, AEG’s vice chairman, in a statement. “We have advised the city that we will not seek a further extension of the April 17 deadline for our Convention Center/stadium deal with the City.”

Company and city officials now turn their attention to renovating the convention center without the stadium.

“I continue to believe that the NFL should have a home in Los Angeles, and know that the Farmers Field proposal was by far the best put forward, but I understand AEG’s decision to shift focus,” Los Angeles City Council member Curren D. Price Jr. said. “We will continue to move full speed ahead with the much needed expansion of the Los Angeles Convention Center. I look forward to a thorough review process of all design plans in the coming months as we work to secure the best possible project for the City.”

The AEG decision comes in the wake of the Inglewood City Council last month approving plans to build an 80,000-seat stadium at Hollywood Park by a development group that includes Kroenke. It also follows last month’s announcement by the San Diego Chargers and Oakland Raiders that they will pursue building a $1.7 billion, 75,000-seat stadium in Carson while also seeking stadium options in their current markets.

The Inglewood and Carson projects contain a major element missing from previous attempts to bring the NFL back to the Los Angeles-Orange County market after a 20-year absence – NFL owners in control of sizable property in Southern California and with stadium leases that would enable their teams to relocate. But more than the looming threat of the Inglewood and Carson projects, Farmers Field was ultimately the victim of its ill-conceived original plan that called for AEG to own the stadium as well as backstop the funding of the renovation of the Convention Center’s West Hall, according to veterans of NFL stadium projects and leading sports business analysts.

“That project in downtown Los Angeles was doomed right from the outset with a plan that made no sense to the NFL,” said Marc Ganis, a sports business consultant who was involved in the deals that led to the Raiders and Rams leaving Southern California after the 1994 season. “And they were irrational in sticking with that strategy even when they couldn’t get a team or the league to say it was viable for years. It was delusional to push the same plan that was fatally flawed from the beginning.

“There’s never been a situation where a third party, for-profit group owns an NFL stadium that the NFL plays in.”

Another major complication was that in order for the AEG plan to work financially the company had to own part of an NFL franchise relocating to Los Angeles. While the project was able to land a 30-year, $700 million naming rights deal with Farmers Insurance, it failed to secure a team. Ownership discussions stalled when Philip Anschutz, the company’s billionaire owner, tried to lowball teams against the advice of New England owner Robert Kraft, a longtime Anschutz friend, among others.

“For the longest time they had these discussions where Phil wanted a team at a discounted rate,” Ganis said. “Why would anybody give that up, especially given the current market (for NFL clubs). It doesn’t make any sense.”

USC sports business professor David Carter also questioned “whether there was enough reality behind the deal.”

But Carter said the stadium project was also presented with a series of obstacles unique to Los Angeles and California.

“Farmers Field I think was always challenged because of the big L.A. body politic, term-limited out council members, the economic (issues) that you have here” that don’t exist in other markets, Carter said. “The complications have always been somewhat large.”

The project also lost momentum when AEG CEO Tim Leiweke was forced out of the company in March 2013, Carter and others said. Leiweke successfully navigated the stadium project over a series of political hurdles and even Anschutz’s decision to put the company up for sale in the fall of 2012. Anschutz took the company off the market the following March.

“Tim Leiweke was this master salesman who knew how to open doors,” Carter said. “He was able to get so many people to fall in line behind the deal.

“I do believe Tim Leiweke believed he could sell it and once he was gone it made it that much more difficult. You’ve got a guy like Leiweke, a pied piper and then he’s gone and things don’t happen and then people get skeptical whether it’s politicians or the NFL.”