Cracking the Shell Game on Arena Deal

Patricia V. Tubert has faced many a complicated deal in 20 years with the city attorney’s office, but none as formidable as the challenge before her now: penetrating the legalese around the proposed $240-million Los Angeles sports arena.

It’s her duty, as senior assistant city attorney in charge of real estate litigation, to analyze the arena contracts for the Los Angeles City Council, which wants to put $70 million in taxpayer money into the project.

Now that the council has finally come to its senses and decided to demand the details of the deal from the secretive promoters, she is the public’s point woman. Her special charge is to get to the bottom of provisions that are supposed to provide an ironclad guarantee that the Lakers and Kings will play in the arena for 25 years.

So under the council mandate and the glare of publicity, Tubert’s job has become a high-pressure, high-stakes effort to protect the public’s money--and its right to know how it’s spent.

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On Wednesday, I walked through the dingy lobby of City Hall East and rode the clunky elevator up to the

17th floor, where Tubert works. It was a contrast to the well-appointed downtown high-rise housing the arena’s attorneys, the firm of Latham & Watkins, Los Angeles-based and, as their letterhead reminds you, with offices in Chicago, London, Moscow, Newark, New York, San Diego, San Francisco, Costa Mesa and Washington.

Tubert’s corner office was spacious but simply furnished. She looks quietly in charge, conservatively dressed, with a firm manner mixed with an air of restrained cynicism, the result of having represented the city in some of the past decade’s most politically charged development battles.

I wanted to know what she had already learned, particularly about the guarantee that the teams will remain in the arena for 25 years. If these two teams, the prime tenants, leave before that, the city’s $70-million investment in the project will be in trouble.

What if the Lakers or Kings--or both--are lured away by a better offer? How can the city enforce the guarantee that the teams will stay?

Well, said Tubert, we start with the Los Angeles Arena Development Co., the firm that would build the arena. The city will have a contract with the development company.

The development company, she explained, has a contract with another firm, the Los Angeles Arena Co. This company will operate the new arena. The Los Angeles arena company has contracts with the Kings and Lakers, in which the two teams pledge they will play in the new facility for 25 years.

Sounds complicated, I thought.

If one of the teams leaves, which company does the city sue to enforce the guarantee?

“We would have to sue the development company to force the arena company to enforce the contract,” she said.

As our conversation continued, I could see it was much more complicated than that.

For the arena construction company and the arena operating company are both owned by the same men, billionaire Philip Anschutz and wealthy real estate developer Edward Roski. These two also own the Kings. They’d be suing themselves. “It makes it much more difficult,” Tubert said. “If we had contracts directly with the teams, it would have been much better.”

Tubert also told me she had learned that the arena company had given money--she didn’t know how much--to the Kings for moving from the Forum to the new arena. This was interesting. Anschutz and Roski are paying themselves for moving their hockey team to their new arena.

I was unsure about the implications of all this. My last experience with a real estate deal had been when we bought our fixer-upper house 20 years ago.

I called a couple of people in the real estate community.

They said Anschutz and Roski paying themselves to move is probably shifting money from one pocket to another. More important for the city, they said, are the layers of corporate identities involved.

What if, for example, the Los Angeles Arena Development Co. was closed down after its job, building the arena, was completed. Who, then, would the city sue if the deal goes awry?

Arena developer Ed Roski told me I was making this too complicated. “One company is a subsidiary of the other and it was for tax reasons,” he said. The fact is, he said, the two teams “can’t get out of the 25 years. It is absolute. There is no way out.”

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I hope so. As I’ve said before, I want the downtown arena. Last weekend, I was in Seattle and walked from my downtown hotel to the Kingdome, not far away, for a baseball game. The streets were crowded with fans. I passed busy restaurants, bars and shops. The place was full of life. That’s what L.A. needs and I don’t mind us taxpayers putting up part of the cost.

But we need an arena based on full disclosure, with nothing hidden.

From talking to Tubert, I saw this deal is more complicated than originally advertised. “There may be more agreements out there affecting these clubs, but we haven’t seen them,” Tubert said.

Her job is to peel them away, layer by layer. She’s a public lawyer, modestly paid by corporate standards, up against an international law firm representing rich, powerful and sophisticated businessmen who understand the sports business better than anyone in City Hall.

The ball is in your court, Assistant City Atty. Tubert. Now win one for the taxpayers.