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Newton: L.A.'s downtown football follies

The deal may bring benefits, but many observers lack confidence that city government can hold its own when negotiating with a savvy company.

June 27, 2011|Jim Newton

In the debate over whether to build a downtown football stadium, there's a gnawing, vague and understandable public apprehension that the city may be getting snookered. It's not an entirely formed idea — those who advance it cite a variety of qualms, many at odds with one another. But in the deliberations of the City Council, in public meetings and especially in private conversations, there's a drumbeat of dread.

When The Times' editorial board endorsed most aspects of the stadium proposal eight days ago, the reaction of some readers reflected that unease. A few cheered the idea, but others complained that it was a giveaway to billionaires (Phil Anschutz is the Denver magnate behind AEG), or that the city was in no position to be subsidizing a big project, or that the developer was ducking environmental review.

Much of that is wrong. Under the terms of this deal, the city would give up some potential tax revenue but not any existing taxes; rather, it forgoes a portion of the taxes that would be generated by the new project, so it's not putting cash on the table. Moreover, AEG is performing an environmental review (though it's asking for some special protection from lawsuits), and the city gets the potential to revive its moribund Convention Center by renovating and adding space at AEG's expense.

But this discussion isn't entirely about the deal points. Many smart residents and longtime observers of L.A. politics are troubled not because of what's on the table but because of what's beneath the table: They no longer trust the city government to hold its own when negotiating with a savvy company, especially one that is a big campaign contributor and a fixture of city politics.

AEG has given thousands of dollars in contributions to city and state officials over the years, and Tim Leiweke, its chief executive, has given thousands more. Those contributions usually monetary, but AEG has lots of ways to reward its friends. Even City Atty. Carmen Trutanich, who has sparred with the company, got tickets to see Lady Gaga last year.

A poll commissioned by AEG highlights some of the distrust. Nearly 60% of city residents surveyed supported the stadium, but their confidence in the project is not matched by confidence in their government. More than half said they think Los Angeles is on the "wrong track" (compared with just 33% who said it is headed in the "right direction"), and those surveyed ranked the influence of big money at City Hall as a larger public problem than crime, gangs and drugs. Those are not the signs of a contented electorate.

All this is notably in contrast to the last time AEG came calling on City Hall. It was the late 1990s, and the mayor was Richard Riordan. AEG proposed to build what became Staples Center, and the city vigorously debated the idea. City Councilman Joel Wachs, a veteran watchdog of public spending, led an intense scrutiny of the financing plan.

All the right questions were asked: Was it right for the arena to capture much of the tax revenue that it was expected to generate? Should the operators be required to pay living wages to their workers? Did the city really need new homes for the Lakers, Kings and Clippers? In the end, even the deal's critics had to acknowledge that the city had excellent negotiators on its side.

At the helm of that team was Riordan, a corporate attorney and successful takeover artist before becoming mayor. Few doubted that Riordan matched up well against Anschutz.

Riordan faced an unusual conflict in that he owned the Original Pantry, the 24-hour restaurant that stood to benefit from construction of the arena. So he had to recuse himself from some aspects of the process. But he was surrounded by associates who understood deal-making: His closest friend and advisor was Bill Wardlaw, an enormously successful investment banker, and his deputy for the project was Steve Soboroff, another successful businessman who lately was tethered to the McCourt sideshow over at Dodger Stadium but who in those days was untainted by that mess.

The council, meanwhile, was represented by John Ferraro, the longest-serving member of that body, and its wily chief legislative analyst, Ron Deaton. Those were tough advocates, seasoned in politics and in their lifelong defense of the city's interests.

That's not so true today, in part because term limits have eliminated veterans from our political leadership. Mayor Antonio Villaraigosa occasionally shows flashes of negotiating brilliance — he helped persuade city workers to begin chipping in to their healthcare and retirement costs — but his specialty is labor negotiations, not big-ticket deals. Councilman Bill Rosendahl, the football stadium's most outspoken critic, isn't even really opposed; he told me last week he's just doing "due diligence."

The football stadium could do some good for the city, and it offers a port in a storm for the Convention Center. But the debate also is a reminder that Los Angeles has lost something. It no longer fields the kind of seasoned political leadership that inspires confidence. That's a loss far greater than a football team.

jim.newton@latimes.com

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