Raiders Are Key Factor in Proposed Coliseum Rental Pact

The proposed private management contract for the Los Angeles Memorial Coliseum complex calls for the management firm to pay at least $500,000 a year in rent if the Raiders remain in the stadium, but possibly nothing at all if they leave.

Under other provisions of the lengthy agreement, a copy of which was obtained by The Times Friday, the private manager--a business partnership of MCA Inc.’s Music Entertainment Group and Spectacor Management--would invest $10 million initially in improvements to the facilities, mainly at the Sports Arena next to the Coliseum.

But the business partnership would be paid interest on its investment--up to 10% or about $1 million a year, to come out of stadium profits. If the agreement were terminated early, the Coliseum would pay the partnership all it was still owed on the investment minus the interest sums already paid.

In addition, MCA/Spectacor would receive a $200,000 annual “management fee” out of the net revenues.

The 10-year agreement also calls for the Coliseum Commission to put $3 million of its own funds into overdue maintenance on the facilities, and to hold sufficient revenues in a savings account to reimburse the private managers in case of termination.

Plans call for MCA/Spectacor to invest $3 million and the Coliseum Commission $10 million in a “second wave” of improvements to be undertaken before 1995. The commission would also be responsible for financing any more substantial improvements to the facilities.

The commission would retain all revenues from Coliseum and Sports Arena parking. And the agreement guarantees it protection from any losses the private managers might incur in managing the facilities.

These appear to be the most salient features of the 64-page, single-spaced agreement, the results of three months of negotiations.

Ratification by the commission of the agreement remains in some doubt. Even before it was released, former Commission President Alexander Haagen, a shopping center developer, had criticized the rent provisions as giving no more rent to the Coliseum “than I would get if I were leasing out a Vons grocery.”

A two-thirds voting majority of the nine-member commission is required to ratify the private management pact. The commission has tentatively scheduled an April 6 public hearing on it.

Beyond the minimum rentals called for, with or without the Raiders, there is a schedule of higher rental payments to the commission should the operation of the Coliseum and Sports Arena prove more than minimally profitable.

But in the most likely scenario, a Coliseum without the Raiders, the private managers would have to turn a $1.2-million annual operating profit before any rent would be paid at all.

Raiders owner Al Davis has vowed to move the professional football team to suburban Irwindale as soon as a stadium can be constructed there. If the team leaves, up to the first $1.2 million of any operating profits would go to pay interest on the private management firm’s initial $10-million improvement investment and its management fee.

The commission and the private managers would split 50-50 the next $1 million of profits, the next $150,000 would all go to the managers and any further profits (above the level of $2.35 million) would be split 30% to the commission and 70% to the private managers.

Actually, an MCA official said Friday, nowhere near this level of profit is anticipated by the parties to the agreement.

Marc Bension, president of MCA Concerts, said that the business partnership’s “mid-case scenario” projects annual profits to MCA/Spectacor of only $375,000 to $425,000, even with the Raiders in the Coliseum. Of course, with the team there, the first $500,000 of net profits would be paid to the commission.

The agreement is unclearly worded in spots, and it was not 24 hours old before parties on the two sides were airing their differences over how to present it.

Coliseum Manager Joel Ralph said that commission representatives had decided not to go along with issuing a proposed joint summary of the agreement that was prepared by MCA attorney Tom Houston.

Ralph said it was felt the summary “hit the high points that favored them” (the private managers), while not mentioning negatives that could possibly adversely affect the Coliseum Commission.