Renovation of Coliseum Put in Limbo
Blaming the poor economy and “disappointing” advance sales of elite club seats, the private managers of the Los Angeles Memorial Coliseum said Monday they have put the $175-million Coliseum renovation on hold.
Fewer than 1,000 of the planned minimum of 10,000 club seats--whose $3,600-per-seat annual price for Raiders and USC games was to have provided vital financial underpinning for the project--have been sold to the public, said Richard Schulze, chief executive officer of the Spectacor Management Limited Partnership, which holds the contract to manage the Coliseum.
“As a result of that and concern about the overall financial outlook, we are in the process of reviewing all parts of the deal, from top to bottom,” Schulze added.
All plans are being suspended and subjected to a three-month review, after which Spectacor will decide what to do. Renovation was scheduled to begin in early 1993, but the preliminary studies to allow the work to begin on time are already under way.
Schulze said the Coliseum Commission has been advised to withhold release of a draft environmental impact report on the project until the review is complete. The report, a key to the project, is several months behind schedule.
Two expert outsiders, the accounting firm of Deloitte & Touche and the investment bankers Morgan Stanley, have been retained to expedite the review, he added.
As for deposits already collected on the planned club seats and luxury boxes, priced at $90,000 a year, Schulze said, “At this point, all we’re doing is reviewing, so the money will be held until some definitive decision not to do the project. Everybody’s money will be kept in the escrow accounts bearing interest until our future decision is clarified.”
Schulze said the current economic slump has definitely contributed to poor sales of the club seats.
“The timing is difficult,” he said. “Everyone is aware of the deepening recession. Also, we learned from our marketing efforts there was resistance to the ($3,600) price, which we need to reconsider. Perhaps there are ways to package the seats which could improve their appeal.”
Renovation plans released in September called for maintaining many of the historic features of the Coliseum while adding state-of-the-art elite seating and a 19-row upper deck. The seating capacity of the stadium was to be lowered from 92,500 to 70,000, and the stadium floor lowered by 11 feet to allow seating closer to the field.
Officials with the Raiders, the Coliseum Commission and Mayor Tom Bradley’s Administration all expressed confidence that the renovation will proceed.
“Recently, the Raiders were assured by the principals that while there were certain negative factors, such as the economy, there are so many positive factors that this project will go forward and will be seen through to fruition,” said Amy Trask, an attorney for the Raiders.
Coliseum Commission President N. Matthew Grossman said, “There’s been no indication to me that the project can’t be done.” But he said release of a draft environmental impact report would “not be propitious unless and until Spectacor indicates they are ready to proceed as the EIR indicates.”
Speaking on behalf of Bradley, Deputy Mayor Mark Fabiani said, “The exact details of the renovation as well as the financial contributions of each party may need to be adjusted, but we’re confident that the renovation project is still feasible.”
Fabiani said none of the parties has asked the city for public money “and in this tight fiscal environment in which the city is living, the likelihood of such funds becoming available is slim.”
USC Athletic Director Michael McGee was not available for comment.
The sales were going on during the worst USC football season in many years and during a Raiders season that ended in the first round of the playoffs. But Schulze discounted team performance as a factor.
“The Raiders had a good season,” he said. “We were disappointed by the playoff results, but they were in the playoffs and had a very strong record.”
Outside observers have pointed to a recent change in U.S. tax laws as discouraging the purchase of elite seats. Under the present law, only 80% of the top ticket price--$33 this year--is deductible as a business expense, meaning that the lion’s share of the surcharge for expensive club seating or luxury boxes is not deductible.
Raiders’ owner Al Davis had explored the possibility of moving the team back to Oakland, or to Sacramento or Irwindale, before reaching a deal last year to keep the team at the Coliseum, contingent on renovation of the 63-year-old facility. There was no indication in Raider statements that Monday’s announcement had revived any interest in moving.