Financing Remains the Unknown Factor

There isn’t much dispute these days about the basics of paying for a new pro football stadium:

First, try to talk local government into covering a big chunk of the cost by doing anything from footing stadium and road construction expenses to approving sweetheart lease deals.

Next, sell the rights to name the stadium and to put up advertising signs to the highest corporate bidders.

Then, persuade individual fans and businesses to purchase premium price seats. Maybe even coax them into buying what are known as personal, or permanent, seat licenses--an ingenious fund-raising tool that gives fans nothing more than the right to buy season tickets for anywhere from 10 years to the life of the stadium.

Yet even though the various groups interested in developing a football complex in the Los Angeles area would follow most of those general guidelines, their financial plans remain hazy.

At least a couple of the business proposals are either very premature or intended mainly to establish a bargaining position, rather than serve as a detailed plan to secure bank loans and National Football League approval. What’s more, several proposals--if not all of them--include financial assumptions that may be wildly optimistic.

The only hard facts are that regardless of who builds the stadium, the design and cost of the facility isn’t likely to vary dramatically. (The “hard cost” of actually constructing the stadium is estimated at around $200 million, but consulting costs and traffic improvements in the surrounding area could bring the overall price tag up to roughly $350 million.)

For ordinary games, the stadium would seat close to 70,000 people, in a combination of luxury suites, club and regular seats, probably spread over three tiers. “It’s a formula,” said Jose Luis Palacios, a Los Angeles architect working on the proposed downtown stadium site known as South Park.

The Dodgers’ preliminary financial plan was drafted a year and a half ago, just before the organization agreed to step aside in the stadium contest and give the Coliseum backers the exclusive right to negotiate with the National Football League. Still, the Dodgers’ early financial blueprint remains the basis for its stadium pitch if the organization rejoins the bidding with the NFL.

One key element of the plan is that it counts on fans paying a particularly high premium for luxury suites and club seats for the privilege of attending games at Chavez Ravine.

The plan, at least in its early form, also assumes no public funding for the stadium itself, although funds might be sought for traffic-related improvements such as new freeway ramps. Likewise, the Dodgers, unlike the other stadium groups, figure they might have to go without personal seat licenses, or PSLs, even though they have been the financial linchpin of stadium deals elsewhere.

The problem, the Dodgers say, is that Los Angeles may lack the base of die-hard football fans willing to invest in ticket licenses. “They are fairly fickle fans here,” said Bob Wymbs, the Dodgers’ director of special projects. “You don’t see people crying for football to come back because there’s so much else to do.”

What’s more, the Dodgers’ preliminary financing plan is based on an NFL franchise fee of $200 million to $250 million, far below various other estimates in the range of $400 million.

Coliseum backers are pitching their project to the NFL as the most doable financially because it would require the least private investment. Instead, it would take advantage of already-in-place public investments in land and infrastructure.

“The costs are where we have a huge advantage,” said John H. Semcken III, a principal in the Coliseum investment group and an aide to Ed Roski Jr., the Los Angeles businessman who would be the chief financial backer of the project.

“We don’t have to buy the land, we don’t have to build infrastructure, we don’t have to put in freeway offramps. Those are things we don’t need to do that everyone else has to do.”

But the Coliseum still needs to cobble together money from somewhere. And, so far anyway, that has proved daunting.

Although the financial plans remain in flux, one proposal suggests creating a state entertainment zone sales tax worth $61 million to the Coliseum, floating a tax-exempt $20-million bond through the city’s redevelopment agency and floating a $20-million revenue bond through an undetermined government agency. The city, county and state would chip in the land and utilities at Exposition Park, and the project would seek a federal tax credit for rehabilitating the historic Coliseum.

Under that scenario, total public financing was valued at $226 million. But critics are deeply skeptical, particularly regarding the political viability of the state entertainment zone tax, which would require state Legislative approval.

What’s more, the Coliseum plan is banking on selling $50 million in PSLs, along with other private investment and loans.

The PSLs could be a problem because the common wisdom in football is that not many fans will buy the personal seat licenses for renovated, as opposed to brand-new, stadiums.

Yet Coliseum backers emphasize that their plan would not be a renovation but rather an entirely new facility inside the walls of the existing stadium. Stressing that point, the formal name for their proposal is “The New Coliseum.”

The South Park proposal, based on 100% private financing, is by far the most unconventional of the financial plans that have been disclosed. It counts on fans helping finance the stadium by buying shares in a real estate investment trust. The investment would offer only a modest rate of return, along with a permanent seat license. Still, the South Park group argues that fans would buy the shares anyway out of a sense of pride in owning a stake in their hometown team.

The trouble, among various other problems, is that investors wouldn’t actually own a piece of the new Los Angeles team--they would simply own stock in the stadium.

Backers of the South Park plan say at least part of that extra cost would be made up by the higher price that its stadium could fetch for naming rights and advertising space; the theory is that a corporation would be willing to pay more because of the half-million-plus motorists who would see the name every business day while driving by on the 10 and 110 freeways.

For Hollywood Park, most of the financing details need to be worked out. In fact, at this point, Hollywood Park doesn’t even have a specified group to develop the site.

That’s because Hollywood Park Inc., at the NFL’s suggestion, recently expressed its willingness to step aside as a stadium developer and, instead, to sell 30 acres of its property to someone else to build the facility. Still, the Hollywood Park site, by virtue of having already won city approval and completing the required environmental impact report, would allow a developer to go ahead with construction quickly and avoid some of the costly delays facing competing proposals.

What’s more, the city of Inglewood, pending the outcome of a city referendum April 28, also would provide $50 million.

The newly announced effort by Hollywood superagent Michael Ovitz and his partners to develop a stadium-retail complex in Carson has already lined up a hefty $750 million in bank financing. It is still not clear, though, how solid that financing is, what kind of business plan it is based on, or exactly how much costs could be increased by a toxic waste containment project required in the area of the site. Ovitz himself is said to describe the Carson proposal as very premature.

Times staff writer Jeff Brazil contributed to this story.