It looks grand, loaded with extras, big and expensive, and comes complete with this stop-you-in-your-steps welcome mat: The most complicated sports arena deal in the country.
Most any way you pour it, this is a strange brew.
Start with elaborate maneuvers by the two businessmen intent on building a new arena. They buy the Los Angeles Kings hockey club and announce that they'll no longer play in the Great Western Forum. The gambit gives them the leverage to convince the owner of the Forum--who also is majority owner of the Lakers--that the Forum has no future. They not only persuade him to move to the arena they plan to build, but also extract a price of admission: a chance to buy one-quarter of the Lakers, which happens to be L.A.'s most successful sports franchise.
Next this twosome shops for a place to put the arena. After a messy public dispute with Los Angeles officials, they finally settle on a site downtown, even though the city is comparatively stingy in providing public money for the venture. They then sell off a share of the arena to Fox Group to ensure a strong media presence and begin trying to balance the egos, interests and schedules of what will be the busiest arena in the United States--the only one that's home to three major professional franchises.
Complicated enough? Add this: The arena comes freighted with the hopes of civic leaders that it will revive downtown Los Angeles, which has been on life support for decades. And it exposes the owners to more economic risk than owners of most arenas elsewhere.
"There's no question the developers have borne the brunt of the economic load to put this thing together, but it's one of the most extraordinary sports developments in the country, if not the world," says Dean Bonham, president of the Bonham Group, a Denver-based sports and entertainment marketing consulting company. "I think you are looking at the ownership model of the next millennium." Philip Anschutz, principal owner of the Staples Center, is trying to "put together a synergistic package that includes a TV component, facility, development and team components," Bonham says. "We're looking at something in sports that's no longer an ego play, but an economic play . . . . I don't think there's any doubt it's going to be successful, but given the complexities of this deal, not without some operational headaches."
All that, and you thought it was just a big building requiring a second mortgage to buy a ticket. And it will--with the arena's 160 luxury suites going for as much as $307,500 a year. Three hundred and seven thousand and five hundred dollars--a year. It's a number worth lingering over, for it is one of three lucrative reasons the owners of the Staples Center and its resident teams--the Lakers, Kings and Clippers--would endure the arabesque jockeying needed to build it. Combined with the whopping $116 million that Staples paid for the rights to post its name on the arena and the potential to build an entertainment district nearby, the payoff could be enormous.
Seen from another perspective, of course, sports fans now have an arena that, more so than any other in America, celebrates the difference between the haves and the have-nots. The former can afford the expensive premium seats or suites; the latter will have to scrape to get in the door for the oxygen tank seating--all in the name of one of the most highly centralized businesses on the planet. Most of the earnings go to a handful of wealthy players and owners.
What's in it for Los Angeles, besides a palace for sports and entertainment? "This building is the beacon for many of the hopes and aspirations of the city as to the economic rejuvenation of our downtown area," says Tim Leiweke, president of the Staples Center. "So we are out there taking the leadership position on things like the Democratic convention--you don't always see that out of other arenas. Combine that with the land we own around the building and the master plan for that land, and we believe we must be a leader in this city and utilize this asset as a major piece of the economic engine for L.A."
Looking at it all now, this has been a massive undertaking, one that will require a corporate scorecard to better understand how this mishmash of talent will work. But first, some history on how this mega-deal fell into place, and why this month's grand opening is happening in downtown Los Angeles rather than the little burg of Inglewood.
Planting the Seed