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Blitzed and Sacked by a Mean Recession

August 30, 1992

Plans to renovate the Los Angeles Memorial Coliseum have hit so many snags over the last 14 years--political, legal and financial--that one wonders whether each new blow will be the last. How much longer can the venerable facility be buffeted before we are left with a very big, very dead white elephant draining local tax coffers?

Last week an ambitious private financing plan designed by Spectacor Management Limited Partnership, the company that operates the facility under contract with the Coliseum Commission, fell through. That revelation was particularly frustrating, and even a little scary. That's because it is only the latest evidence, if any more were needed, of how badly the local economy is going.

Spectacor Management, which has run the stadium profitably since taking over day-to-day operations in 1988, agreed in 1990 to take on an additional role as a private developer to oversee the Coliseum's remodeling. It was a formidable undertaking with an original cost estimate of $240 million and requiring the cooperation of the stadium's two main tenants, the Raiders pro football team and USC.

Early architect's renderings were appropriately grandiose, involving a new upper deck around the stadium rim, a lowered playing field and 282 luxury suites to generate additional revenue. In a bow to preservationists, even the facility's historic facade was maintained.

The whole deal might have come together in the free-wheeling 1980s. But few could have predicted that the Southern California economy would take a prolonged nose dive as the 1990s began. In the end, it was the recession more than anything else that forced Spectacor to give up.

The management company has formally notified the commission that it cannot complete the original plan. It has offered a scaled-down version, with a longer construction timetable. That plan might still work, and certainly bears serious consideration by the commission. But one conclusion in Spectacor's notification letter must not go unchallenged. The firm concluded that a for-profit developer cannot complete the task "because of current economic conditions."

Under "current economic conditions" that may be so, but it doesn't mean the concept of private financing should be abandoned. Indeed, it may be the only hope, given the sorry state of finances for all three levels of government--the state of California, the city and county of Los Angeles--that have a say in how the Coliseum is run. None is in any position to provide help these days. And taxpayers, concerned about paying for necessities like police and schools, are unlikely to approve bonds or other funding measures, either. So despite this latest setback, private financing is probably still the way to go.

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