Friday, March 11, 2011
L.A. NFL groups downplay lockout
By Arash Markazi
LOS ANGELES -- While NFL labor talks broke down and the player's union decertified Friday, the two groups hoping to bring the NFL back to Los Angeles watched patiently from the sidelines, waiting for the league to resolve its situation and shift its focus to bringing football back to the country's second-biggest media market.
Tim Leiweke, president and CEO of AEG, anticipated a possible work stoppage and said Friday's news doesn't affect AEG's proposal for Farmers Field, a $1 billion stadium next to Staples Center in downtown Los Angeles.
"We've said from day one that the current system needs to be fixed," Leiweke said. "We continue to support commissioner [Roger] Goodell and his efforts."
John Semcken, vice president of developer Majestic Realty Co., who is working with Majestic CEO Ed Roski to bring an NFL team to a proposed stadium on a 600-acre lot in the City of Industry, also expected a potential lockout but said it doesn't affect the group's plans to bring the NFL back to Los Angeles.
"We remain focused on our proposal to return the NFL to Los Angeles," Semcken said. "Like all fans of the NFL, we hope to see a swift resolution."
The one area of the next collective bargaining agreement between NFL owners and players that the Los Angeles groups are most focused on is a re-established stadium funding program that is no longer available.
"The biggest hurdle [in bringing the NFL back to Los Angeles] has always been the financing of the stadium," Eric Grubman, executive vice president of the NFL, said in January. "That has been a tough task, which has probably gotten tougher over the last five years. The reason it's gotten tougher is stadiums have gotten more expensive and because the willingness of the [player's] union to contribute [to the league's stadium-funding program] in a meaningful way has really declined over the years."
The NFL's G3 stadium fund dried up after the construction of the New Meadowlands Stadium and Cowboys Stadium. G3 loans were limited to $150 million per club, depending on their market and stadium cost, but the Meadowlands project received $300 million because the Giants and Jets share the stadium in a top-five television market. Los Angeles could conceivably be in line for a similar loan if the league's stadium-building subsidy program is revived.
Last month AEG and Farmers Insurance Exchange agreed on a naming rights deal worth $700 million over 30 years, making it the largest naming rights agreement. Sources also said the deal could be worth $1 billion if the stadium were to attract more than one NFL team. Despite the naming rights deal and promises from Semcken that Majestic will have no trouble securing a similar deal, both stadium's funding plans are factoring in some help from the NFL.
"The system that we have, which has run out of funding, worked but not very well once stadiums got expensive," Grubman said. "The player's union did two things. They refused to put up any investment up front and they only defined their investment as a reduced take once the thing got running. The second thing they did was cap those credits. So as the cost of the stadium escalated from $300 million to well over $1 billion, with a cap on their credits, it really just fell apart."
While both Leiweke and Semcken are confident their stadium proposals will be able to be financed, Grubman says he believes a stadium funding program will be essential for any new football stadium to be built.
"It's crucial," he said. "The union is not prepared to do its part and recognize that they need to invest in the engine of growth if they want to enjoy in that growth."
Arash Markazi is a reporter and columnist for ESPNLosAngeles.com. Follow him on Twitter.