ANAHEIM : City, Builder Strike Tentative Arena Deal

The city of Anaheim would be liable for up to $2.5 million a year if its proposed 20,000-seat indoor arena operates at a loss, according to a proposed agreement with the facility’s developer and operator.

Ogden Corp. of New York also would be granted the concession contract at neighboring Anaheim Stadium beginning next year under the agreement scheduled to be considered by the City Council on Tuesday.

“It’s done, I think,” Neil Papiano, the Los Angeles attorney representing the developer, said Friday of the oft-delayed negotiations between Ogden and the city.

“I hope construction will begin at the end of October (or) the first of November,” Papiano said. “It’s just a function now of drawing the architectural plans, getting an agreement with the (building) contractor and start building.”

Councilman Tom Daly said he was “very confident” that the arena would succeed, and that the potential financial liability to the city was “limited.”

“I am very pleased with the proposed package. I am ready to support it,” Daly said. “I have no doubt that this arena will be a huge success, and I’m absolutely confident that in a few short years, the Anaheim Arena will be one of the busiest and most profitable arenas in the country.”

Other City Council members, most of whom were at a mountain retreat with City Manager James Ruth, could not be reached for comment Friday.

Meanwhile, a nearly identical arena proposed in Santa Ana has been stalled by a lawsuit challenging the Santa Ana City Council’s approval of it. Most observers believe the Orange County market can support only one arena.

The completion date of the Anaheim Arena is now projected to be October, 1992, in time for the beginning of the National Basketball Assn. and National Hockey League seasons, Papiano said. He said negotiations to attract professional sports franchises to play in the arena are continuing, but he declined to identify which teams may be involved.

Among the agreements recommended for Anaheim City Council action on Tuesday are the final approval of a complex series of land purchases and relocation agreements to provide property for the arena on Douglass Road, north of Katella Avenue.

The negotiations between Ogden and the city began in September, 1988, and appeared to be on shaky ground several times. The greatest risks to the project were an unexpected increase in construction costs from $85 million to about $100 million, and the delay of several months because of lawsuits challenging the project on environmental grounds.

But the lawsuits, filed by the Los Angeles Rams, Anaheim Stadium Associates and the owner of a neighboring mobile home park, were settled out of court in May. And city officials are now apparently agreeable to footing more of the bill should the arena operate at a deficit.

“Everybody’s risk has gone up substantially,” Papiano said. The increased risk stems from higher construction costs and early estimates that “were a little optimistic,” he said.

The Anaheim Arena would be owned by the city, but operated by Ogden Corp. and the Nederlander Group, which will book entertainment acts to appear there. The agreement would provide the city with as much as 30% of the net arena profits after 15 years.

As part of the arena agreements, Ruth, the primary negotiator for Anaheim, is recommending that Ogden take over the concession agreement for Anaheim Stadium, which is now operated by ARA Leisure Services of Philadelphia.

Spokesmen for ARA Leisure Services could not be reached for comment Friday. But ARA officials have said they hoped their contract, which they described as one of the most lucrative in the nation, would be renewed when it expires at the end of 1990.

The agreement calls for Ogden to pay the city a “grant” of $5 million and extend a loan of $2 million to be used for improvements to concession stands and other areas of the stadium.