The City Maven spoke with ESPN’s Lester Munson today about the National Football League and the business of building football stadiums. As a senior writer and legal analyst for ESPN.com, Munson has reported on the Congressional hearings on steroid use in baseball, the prosecution of football player Michael Vick on dog fighting charges and the prospect of an NFL work stoppage. Munson can be found on the web at lestermunson.com and on Twitter @lmunson2.
First, a quick refresher: The president of Anschutz Entertainment Group yesterday presented the company’s plans to build a football stadium in the heart of downtown. The $1 billion proposal calls for a 64,000-seat stadium. AEG President Tim Leiweke said the stadium, which would sit on land leased from the city, could be the catalyst for the largest economic development in the history of downtown Los Angeles.
To build the stadium, AEG wants to tear down the West Hall of the Convention Center. Through the issuance of $350 million in municipal bonds, a new convention hall and additional parking would be constructed.
Munson, who has spent almost 20 years covering the business of sports, talks about the financing of sports stadiums:
“The rule of thumb with the building and financing of a stadium is that the larger the market, the smaller the amount of public money. If they want to build a billion-dollar stadium in Los Angeles, asking for public money of $350 million is definitely on the high side.”
“They should be able to finance a stadium almost entirely with private money. They don’t want to because they would make more money themselves if public money were invested in the stadium … They are making a demand that is beyond the usual ratio of public to private money in one of the biggest American markets.”
The University of Phoenix Stadium in Glendale, Arizona is cited by Munson as one of the best stadium deals in recent memory. In Glendale, the stadium was built with bond money approved by voters through a referendum:
“Because they knew they had to have a yes vote, they had to make it reasonable, they had to make sure they were protected, they had to make sure the public money was invested in the right amount.”
“If local politicans ram it through without a referendum, it’s going to be a bad deal.”
AEG is proposing to lease land from the city. This is a common practice, Munson says, however it is usually difficult to get the fair market value of the land, which means city leaders go into negotiations looking for the highest price they can get. The lease agreement should also lock in a team or require them to pay the remainder of the lease if they leave the city. Munson points to the deal the Minnesota Twins have in Minneapolis:
“Ordinarily, what happens is the team wants the property. They’re willing to pay a certain amount of rent, (but) it’s almost never enough.”
“In addition to the amount of rent, they must make sure that the team is locked in and must pay the rent even if 10 years from now, or 11 years from now, the team decides to move out of Los Angeles to some other market. The city of Los Angeles has to get the right amount and it must make sure in the terms of the lease that, even if the team leaves, they still have to pay the money.” (ed: The Raiders left Los Angeles in 1994; the Rams left following the 1979 season.)
Speaking before the Trade, Commerce and Tourism Committee yesterday, Leiweke said if AEG builds the stadium, it will get an NFL team to Los Angeles. Munson questioned the league’s enthusiasm for L.A.:
“I’m not convinced that the NFL has a burning desire to be in Los Angeles. Things are going very well; they’re setting records for profits, without Los Angeles. I don’t really see that they need another market. They’re making money on televised games going into Los Angeles. I think that the National Football League would move into Los Angeles only with a team that is failing very badly somewhere.”
AEG’s proposal to have 64,000 seats available for regular season games, with the ability to increase capacity to 78,000 for Super Bowl and Final Four games, is unlikely to be sufficient, Munson said:
“What (city leaders) have to do is set aside the excitement of spending Sunday afternoon at the stadium, watching a football game and make sure they spend as little public money as possible and that they get a stadium of proper size. It has to fit 80,000 or 85,000 people.”
“They need more seats for NFL games. There would be 10 NFL games every year and they need 75,000 or 80,000 people for each game.”