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Analyst casts doubt on economic benefit of downtown L.A. stadium

California official says developer AEG probably overstated the financial boost. He speaks at a hearing on the fiscal effect and a possible bill to let AEG curtail legal challenges on environmental issues.

August 27, 2011|By David Zahniser, Los Angeles Times
  • Former NFL player Michael Strahan greets Contreras Learning Complex football players, including Luis Orellana, 17, center, before speaking about the need for pro football in downtown Los Angeles during a state Senate hearing in Los Angeles.
Former NFL player Michael Strahan greets Contreras Learning Complex football… (Christina House / For the…)

The office that advises the California Legislature voiced doubts Friday about the level of economic benefit that would come from an NFL stadium in downtown Los Angeles, saying studies commissioned by the project's developer "likely overstated" the financial boost it would deliver.

Speaking to a state Senate panel reviewing the plan by developer Anschutz Entertainment Group, policy analyst Mark Whitaker warned that football stadiums typically have a minimal effect on a region's economic growth, largely because they become a magnet for household entertainment dollars that were already being spent elsewhere in the area.

In many cases, families that have bought tickets to events at the Home Depot Center in Carson, the Los Angeles Memorial Coliseum and other local venues would probably shift those same dollars to the proposed Farmers Field in downtown Los Angeles, said Whitaker, who works in the Legislative Analyst's Office.

"This wouldn't be the case with all events.... There's no NFL team in L.A. right now, so that would be new economic activity," he said.

Whitaker gave his testimony during a three-hour hearing of the Senate's Select Committee on Sports and Entertainment, which was reviewing the economic benefits of the project and the potential for a bill that would allow AEG to curtail legal challenges to the project on environmental grounds. The written report received by the committee was even more blunt, with analysts saying the state and region would see "minimal" economic benefits from the project.

"The overall economic activity across the region would not necessarily increase but instead shift to Los Angeles … with little net benefit to the region or state," it said.

Tim Leiweke, AEG president and chief executive, also appeared and said his company "will not move forward" with its stadium plans unless a bill is passed. And he criticized "those who occasionally come out of classrooms and question whether or not sports facilities have an economic impact," saying his company provides $100 million a year in tax revenue.

"Not only have we been an economic juggernaut for the state, the city and the county, but this organization has given back almost $80 million in charity and through our foundations, back to this community," said Leiweke, whose company owns Staples Center and the L.A. Live entertainment complex across from the stadium site.

The committee's chairman, Sen. Kevin De Leon (D-Los Angeles), arranged the order of the speakers so Leiweke would immediately follow Whittaker. Although he would not divulge his legislative plans, De Leon sympathized with AEG's fears that the stadium would become a target for out-of-state litigants, such as a Texas businessman who is at odds with the company and cities upset over possibly losing their NFL team to L.A. "They could abuse this process," he said.

Still, the proposal drew opposition from county Supervisor Michael D. Antonovich, who said state officials should rewrite environmental law in a way that benefits government construction projects, not just AEG. He sent letters to lawmakers Friday urging them to oppose AEG's request.

The question of the statewide benefit from a stadium could influence questions about the rationale for altering the California Environmental Quality Act, long a target of business interests and chambers of commerce, exclusively for AEG.

Whitaker, the state analyst, said he expected some benefit to the city of Los Angeles from the stadium and the accompanying remodeling of the Los Angeles Convention Center, which would have its West Hall demolished and rebuilt to make room for the NFL facility. He also said the city's review of the two projects was "probably a little more realistic" than the report for AEG.

"But we found that both of them likely overstated the benefits," he said.

The city's report found that the stadium and Convention Center projects would attract, at minimum, an additional five major conventions a year. AEG's report put that number at 14. Whitaker said those additional events would benefit California only if Los Angeles were luring conventions away from out-of-state destinations — not competitors like Anaheim, San Diego and San Francisco.

Also Friday, Leiweke used the committee hearing to lash out at Majestic Realty, which is pursuing a competing stadium plan in the City of Industry. In remarks to the media, he said the Majestic team, including company Vice President John Semcken, had gone on the attack in Sacramento and left legislators "shocked" at how they "trashed" AEG verbally.

"They've questioned our character, including me personally," said Leiweke, adding that he assumed from such behavior that Majestic would sue over the L.A. stadium.

In 2009, lawmakers gave Majestic a separate waiver from state environmental law, shielding it from legal challenges to its stadium project.

Semcken responded with a statement that said, "In over 70 years Majestic Realty has never sued a competitor and has no plans to sue a business partner. We are 100% committed to returning the NFL to our region and have shown the league … the tremendous economic upside of our project."

david.zahniser@latimes.com

Los Angeles Times staff writer Corina Knoll contributed to this report.

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