Tuesday, April 3, 2012
Construction could start by March '13
By Arash Markazi
LOS ANGELES -- Construction on Farmers Field, the $1.1 billion proposed football stadium in downtown Los Angeles, could begin as early as March 2013 but if there is no movement on the project within two years of that date, plans for the stadium will likely be abandoned, the developer told ESPNLosAngeles.com Tuesday.
AEG president and CEO Tim Leiweke said plans for Farmers Field are currently on track and that a 10,000-page environmental impact report (EIR), which cost $27 million, will be released Thursday. The EIR will be subject to public comment for 45 days after it is released and if city officials approve the EIR and the project, there will then be a 30-day window for legal challenges, which will be resolved within 175 days.
If everything goes according to plan, Farmers Field would be shovel-ready by March, similar to a competing stadium proposed by real estate magnate Ed Roski in the City of Industry, which has been ready to push dirt since 2009.
The biggest difference between the two groups once they're both shovel-ready, however, is AEG will not wait around for three years for a team to move to Los Angeles.
There are multiple reasons why AEG has set a deadline for acquiring a team and beginning construction on Farmers Field. First, there is a sunset clause on the senate bill and the assembly bill passed last year to expedite legal challenges to Farmers Field that expires in January 2015. Also, if construction on Farmers Field doesn't begin by that time, Farmers Insurance Exchange could back out of their naming rights deal which is reportedly worth $700 million to $1 billion over 30 years.
"We have clauses in our agreement with Farmers that if we don't have a team playing in the stadium by a certain date, they are no longer obligated on that naming right deal," Leiweke said. "More importantly, with (AEG head) Mr. (Philip) Anschutz, when you tie up that kind of capital and resources that we're tying up, when you spend $27 million on the environment report and another $45 million in design drawings, what you're not going to do is chase this for the next two years. It distracts from our organization and it distracts this city and everything we're doing here."
Leiweke said if a deal can't be made to move a team to Los Angeles and begin construction on Farmers Field in two years, AEG's focus would shift to remodeling the Los Angeles Convention Center without the stadium. Instead of tearing down the current West Hall of the convention center and building a new hall connected to Farmers Field, he would look at other ways to revitalize the convention center and make it more competitive with other cities. When Leiweke first stated plans for a downtown football stadium and convention center expansion two years ago he said, "I'm a huge fan of (NFL commissioner) Roger Goodell but we believe in the event, convention and tourism business even more."
It was a feeling he reiterated on Tuesday.
"Every convention that comes to town now, they come meet us and they're petrified about what will happen to the West Hall and what will happen during construction," Leiweke said. "They want to know when we're going to be done. We won't have a cloud of uncertainty over our heads for the next two years and chase this. Phil has made it clear to me it is not his lifelong ambition to own an NFL team so we're going to do the best we can to try and get this done in the next year or two. We're not the kind of company that will be sitting here five years from now chasing this dream; we have other things need to go do."
NFL bylaws state that the NFL commissioner must receive written notice from a team wishing to relocate and that the notice must be filed no later than Feb. 15 of the year in which the move is scheduled to occur. Leiweke said that date over the next two years will be critical to the fate of Farmers Field and the return of the NFL to Los Angeles.
"So February 2013 is going to be a moment in time for this city and then February 2014 is going to be another moment," Leiweke said. "What I'm going to tell you is we won't be sitting here in February 2016 still chasing Farmers Field."
It is also important to note that even when a team does commit to moving to Los Angeles, construction on Farmers Field could take as long as four years to complete while the team plays in either the Rose Bowl or the Coliseum in the interim.
|Construction on Farmers Field, pictured above, could begin by March 2013, if everything goes according to plan.|
"No one is going to push dirt until they know they have a team," Leiweke said. "If we have a full environmental impact report approved by the end of this year, we're in the same place the City of Industry is. The difference is we have a set of design drawings we've taken a risk on so we'd be a little further ahead there. In the best case scenario, no matter which site you look at, if you move a team next March and you go to design drawings and pushing dirt, figure that it's probably about a four-year process to build the stadium. So I think the earliest any of us could be in a new stadium is 2017. Maybe there is a way financially to get that going a little quicker but I doubt it."
The key to Farmers Field beginning construction hinges on AEG purchasing a minority or majority stake in an NFL team and moving the team to Los Angeles. The biggest hurdle AEG has encountered and will continue to encounter in this process is they want to buy into an NFL team for what it is currently valued at while teams don't want to sell to them for anything less than what the team will be valued at once they actually do move to Los Angeles.
"I understand NFL teams have a perception of the value of their franchises and we respect that," Leiweke said. "I also understand that for us to make some rate of return on a $1 billion private investment, something that only one other owner has done in the history in the NFL, we have to own a piece of the asset. If you go to (New England Patriots owner) Bob Kraft and you ask him why he privatized Gillette Stadium, what he'll tell you is he owned the team and the increase in value of the team made that risk worthwhile. We're not saying we have to own 100 percent of the team but we have to own a substantial piece of the team and we have to buy it at a valuation before the risk, not after the risk or else there is no upside to compensate us for the risk we took on the $1 billion stadium. That's all this is about. Period. That's the entire issue we will be facing here once we get the EIR done."
Leiweke said whatever back-and-forth there has been between AEG and the NFL has been nothing more than the early stages of a negotiation that cannot fully commence until AEG is past the EIR process and has a deal with the city. Once that happens, perhaps as early as the end of this year, they will then be in position to sit down with teams and properly negotiate a deal.
"There is going to be a point in time where we are going to have to negotiate a deal," Leiweke said. "That has never been easy in the 16 years of trying to bring the NFL back to L.A. The City of Industry has been approved for a very long time. It's not because Ed doesn't want to get it done. It's because getting a team and finding an economic deal that makes sense is tough. The difference is Phil is willing to spend $1 billion on the stadium. I don't think anyone else in this market is talking about a $1 billion privately that he can write a check for tomorrow. We are prepared to do that. In addition to do that we will buy a piece of the team and Mr. Anschutz is prepared to own a significant piece or all of it."
Although Leiweke has said AEG will not wait around for Farmers Field to become a reality, he said the company's $72 million investment over the past two years on the project shows their commitment to it and believes the stadium will eventually be built.
"We don't spend that kind of money unless we truly believe there is a strategy here to get to the end game and be successful and I think we will be," Leiweke said. "I think those that think that the deal is dead don't understand the NFL. There is no deal to be done yet. There is no owner in their right mind that's going to go out there and enter into a deal and be a lame dunk for two years in their current market.
"So who would enter into a deal today? They can't. They can't even apply to the league to relocate until February 2013. The NFL also isn't going to discount or eliminate an option in L.A. because they need and use the ability to leverage sites against one another. They keep City of Industry alive and they keep Farmers Field alive, we're both alive."
February 2013 is going to be a moment in time for this city and then February 2014 is going to be another moment. What I'm going to tell you is we won't be sitting here in February 2016 still chasing Farmers Field.
-- AEG president and CEO Tim Leiweke