Backers of a plan to build a football stadium in downtown Los Angeles are set to announce Tuesday that they have reached a naming-rights deal worth $700 million, which would be the most valuable such agreement ever and a significant step toward bringing an NFL team to Los Angeles.
AEG, the huge entertainment company that, among other holdings, owns Staples Center and the L.A. Live complex, plans to announce a 30-year agreement with Farmers Insurance. The deal would provide AEG's proposed project a crucial chunk of contractually obligated income, starting at $20 million for the first year and escalating incrementally every year after, according to individuals familiar with the negotiations but not involved in them. The stadium would be named Farmers Field.
Announcing a naming-rights deal for a stadium that has not been built, on a site that has not been approved, for a team that has not been acquired is unheard of. No money will change hands unless each of those wishes becomes fulfilled. But for AEG, making an announcement now provides a concrete benefit — providing a sense of momentum as the company, owned by billionaire Philip Anschutz, tries to persuade state and city officials to approve other crucial deal points, including a long-term lease agreement on the land for the stadium and expedited review of the environmental impact of building it.
In a display of support for their proposal for a $1-billion downtown stadium, AEG officials plan to unveil the agreement at a news conference Tuesday attended by Mayor Antonio Villaraigosa, other municipal officials, business leaders and sports stars. The mayor has a close relationship with AEG President and Chief Executive Tim Leiweke, but has so far not spoken publicly on the stadium plan.
The agreement with Farmers significantly increases the likelihood of the NFL's return to Los Angeles, but does not guarantee it, NFL leaders said. AEG will need to weather a likely litigious entitlement process lasting a year or longer. Its plan also is in competition with that of real estate magnate Ed Roski, who is proposing a stadium in the city of Industry. And, ultimately, the potential owners need to convince an existing NFL franchise to move to L.A. — a goal that has eluded several previous groups.
AEG has had discussions with every NFL team that could potentially move, Leiweke said in an interview, although he declined to list them. League officials have made it clear, however, that the L.A. vacancy will not be addressed until the current labor dispute between team owners and players is resolved. That could take months. The teams considered potentially movable because of their stadium leases are San Diego, Jacksonville, Minnesota, Oakland, San Francisco, St. Louis and Buffalo.
Leiweke said the deal with Farmers "doesn't mean that football is back tomorrow. But it means we took probably the most significant step in the last 15 years to getting football back here soon."
Two highly influential members of NFL ownership families agreed that the naming-rights deal distinguishes the downtown plan from any that has come before it.
"If I'm a fan in L.A., I have to be really encouraged," said Stephen Jones, chief operating officer of the Dallas Cowboys and son of team owner Jerry Jones. "You've got to be encouraged that there is a real chance for football there. Every owner to a man thinks that we've got to have a team in the second-largest market in the country."
Jones said he was particularly impressed that AEG had reached a naming-rights agreement on a proposed venue when there are still no deals for the NFL's two newest stadiums, the homes of the Cowboys and New York Giants and Jets.
But, "we've got to get a labor agreement before any of this happens," Jones said. "That's where our focus is."
Jonathan Kraft, president of the New England Patriots and son of team owner Robert Kraft, said a deal of the size of the Farmers agreement is "very impressive," particularly in this difficult economic climate. Kraft's family has been a partner in Major League Soccer for 16 years with Anschutz.
"When you take a naming-rights deal like that, and their history of building and running venues, nothing can compete with this," Kraft said.
Critics of AEG's plan take issue with the location of the proposed 64,000-seat, retractable-roof stadium, which would be part of the Convention Center complex at the intersection of the I-10 and I-110 freeways. They question the potential traffic and parking problems a stadium could cause and whether the project can be completed without a significant contribution of public money, as Leiweke has promised.