Deep in the mysterious heart of the deal for Los Angeles’ downtown sports arena is a critical but confidential document that we taxpayers probably will never see.
Too bad. This is one document that should be examined in detail. For it contains the only guarantee that counts in the city-backed enterprise. That’s a promise that the arena’s prime tenants, the Lakers and Kings, won’t abandon the arena if a more beguiling and generous landlord beckons, leaving us holding the bag.
Without the National Basketball Assn. Lakers and the National Hockey League Kings, the arena is likely to be a gigantic money loser, incapable of generating the ticket revenue needed to repay the $70 million in bonds the city of Los Angeles will float to help finance the deal. The arena builders, Kings owners Philip Anschutz and Ed Roski, will finance the rest with $200 million of their own.
I feel like a rat for bringing up these details. I love going to sports events and think a new arena would be great for L.A., a sign we’re out of our civic funk and ready to party.
But reading the sports pages lately has made me nervous. The Indianapolis Colts of the National Football League, which had moved from Baltimore, are now threatening to take off for Cleveland, which recently lost the Browns to Baltimore, unless their stadium is refitted with more luxury suites and high-priced premium seats. I covered the Rams’ departure, the Raiders’ arrival, then watched those carpetbaggers take their silver and black uniforms back to Oakland.
We don’t need another stab in the back from a money-grubbing sports entrepreneur.
Seeking reassurance, I first called a behind-the-scenes powerhouse, Steve Soboroff, who, as a top advisor to Mayor Richard Riordan, helped put together the arena deal. Soboroff is also in the property development business.
He scoffed at my fears. Anyone who knows property understands there’s no risk, he said.
The implication was clear: I was too ignorant to appreciate what a good deal this is. “It’s like falling out of an airplane, or winning the lottery,” he said. “It’s that kind of risk.”
People occasionally win the lottery, I thought. And they make you wear seat belts on airplanes.
So I pressed on. Just what, I said, would prevent the Kings or Lakers from abandoning ship, or arena, if the fans become turned off for any number of other reasons. Is the city, a $70-million stakeholder, assured the teams will stay?
Assurances that the teams will remain in the new arena for 25 years, Soboroff said, are contained in leases the Kings and Lakers signed to play in the arena.
The leases were signed with the arena builders, Anschutz and Roski. This gets complicated since the two men also own the Kings. In other words, they’re signing leases with themselves.
But with all the complications and interlocking relationships, I could see that these leases were tremendously important. In fact, in my limited grasp of the scheme, they seemed to be the very heart of the deal. I wanted more details.
Soboroff said I would have to talk to the lawyer for Anschutz and Roski, George Mihlsten. This wasn’t too surprising. I end up with Mihlsten for the details of most major deals at City Hall. He’s a big-time lobbyist there, with huge clout on anything dealing with land development.
I called Mihlsten and asked if I could see the leases so I could examine the assurances that the Kings and Lakers are bound to the arena for 25 years. I also asked if the City Council will study these leases before voting on the final arena contract later this year.
No on both counts, he said. “The terms of the leases are confidential, although the city has reviewed them subject to a confidentiality agreement and they are satisfied. . . . [The] terms have been reviewed by the city attorney and two sets of outside counsel for the city,” he said.
“The teams are irrevocably bound to play here for 25 years. We have gone through a very thoughtful process to assure that. They are stuck here to play no matter who owns them. They are committed, they are required to play here.”
Mihlsten’s probably right. No doubt, fans will flock to the arena and, in the process, revitalize the shabby neighborhood at the intersection of the Harbor and Santa Monica freeways. It may also turn things around for the nearby money-losing convention center, allowing it the capacity to host really big events, such as national political conventions.
All the same, I’d feel better if they had given me a peek at the leases. More important, the City Council should get one too.
I don’t want to be played for a sucker, as has happened to sports fans in other cities.
We should know what to expect if there is a downside to the deal. What if we build an arena and nobody comes?
Keep in mind, this isn’t a private development. Public money--$70 million worth--is at stake. If the arena is such a good deal, what have they got to hide?