Carson Emerges as No. 1 in Area's NFL Bid

By ALAN ABRAHAMSON

Oct. 20, 1998 12 AM PT

TIMES STAFF WRITER

With the city of Carson considering a municipal contribution of as much as $100 million, a proposal led by famed deal-maker Michael Ovitz has emerged as the leading contender to bring pro football back to the Los Angeles area.

Ovitz wants to merge a Mission-style stadium with a new mall in a 157-acre sports and retail complex--creating a Southern California entertainment destination just southeast of the intersection of the Harbor and San Diego freeways.

With just days to go before a key NFL owners meeting, the South Bay city intends to “do everything possible to make this work out,” one Carson official said.

The city’s willingness to spend millions in public money to convert an abandoned landfill into a premier sports and shopping venue has transformed the Ovitz proposal from a longshot to the local front-runner, say NFL officials, eclipsing a rival plan to lure the league back to a refurbished Los Angeles Coliseum.

An NFL insider said Monday that Ovitz has made “significant progress,” adding, “particularly if they get the $100 million, [owners] start to look at this differently.”

Ultimately, the Carson deal still hinges on a number of financial contingencies--among them, the hundreds of millions of dollars it will cost to buy the NFL’s next expansion franchise, its 32nd team. Money aside, Ovitz faces fierce competition from the Coliseum and from the city of Houston.

NFL Commissioner Paul Tagliabue has called the Houston package attractive, but pointed out that Los Angeles is “a mega-city” that can be “the key to how the NFL is presented and perceived and how much excitement it generates on the West Coast.”

Nonetheless, said the NFL insider, “It’s still early in the game to be drawing any final conclusions.”

At a meeting next Tuesday in Kansas City, NFL owners will entertain proposals for Carson, the Coliseum and Houston. After those presentations, owners may set a specific timetable for expansion. A franchise is likely to be awarded in 1999, for play to begin in 2001 or 2002.

In the Carson proposal, fans will have to walk by or through the mall to reach the stadium from the parking lots. Six giant mission bells will ring out from the stadium’s north end every time the home team scores a touchdown.

“The concept,” Ovitz said of his proposed stadium--the Hacienda--”is to try to blend the sporting events with a great experience, where you can go with your family and your friends or a group of people and have a great day and not have to rush in or out of the venue, not have to be worried about any kinds of issues except for having fun.”

A day at the stadium should be like seeing a great film, said the former talent agent and Disney executive.

“Let’s say you go see a picture that’s brilliant, like ‘Private Ryan,’ that Steven did,” referring to Steven Spielberg, a former client. “You’re whipsawed from one end of the emotional curve to the other. You get historical reference, you get education, you get your emotions moved. You go to a great football event, you get . . . the same emotional swing.”

In keeping with his high-concept project, Ovitz has put together an ownership group made up of the wealthy and the famous. Among his partners: Kevin Costner, Earvin “Magic” Johnson, Jerry West and Shaquille O’Neal. The NFL likes that star power.

Ovitz appears to have neutralized the threshold hurdle to development at the abandoned landfill--the toxics issue. For about $35 million, the site can be made usable and safe, according to a plan approved by the state Department of Toxic Substances Control.

A senior NFL source said last week that it appears the environmental issue “won’t be a problem.”

There is even something for conspiracy buffs. For a dozen years, Al Davis and his Raiders played in the Coliseum, leaving before the 1995 season. Now back in Oakland, Davis is nonetheless engaged in litigation with the league over who “owns” the Los Angeles market.

It would not strain the imagination to see the league use the next expansion franchise as a preemptive strike to try to keep Davis from returning to Los Angeles.

Finally, Carson officials very much want a deal to happen and are willing to put up between $50 million and $100 million in public money.

“We don’t anticipate having a problem coming up with [up to] $100 million,” said Councilman Daryl W. Sweeney, a banker who has led the city’s dealings with Ovitz.

Why such a hefty public subsidy from a city with a general fund of $40 million? Officials say they see the stadium as an opportunity to reclaim a landfill, enhance the value of surrounding properties, stimulate tax revenues and tap into new jobs.

Last week, Ovitz--accompanied by aide Peter Levin, his point man on the project--held informal closed-door meetings with council members. The council is due to take up the issue publicly at a City Hall meeting tonight.

Two issues dominate discussion with Carson officials: toxic substances and money.

The stadium site has been “vacant, abandoned and polluted” since the mid-1960s, a “blight on the urban landscape,” as it is described in court papers. From 1959 to 1964, it was used as a landfill for household trash and industrial waste.

What is mostly visible now are weeds. The trash is underground, a stew of petrochemicals, paints, solvents, dyes, pesticides and herbicides. The site contains about 6 million cubic yards of trash and waste--about 4% of which is hazardous, according to a 1995 study.

One threat, according to Daniel P. Weingarten, an attorney for the Department of Toxic Substances Control, is underground water contamination. In addition, he said, decomposing waste generates gas, primarily methane, that needs to be safely released.

The department approved a three-step plan in 1995 to clean up the site for development. It will require sealing off the waste with a cap made of earth and clay. Engineers also will have to dig separate wells to release escaping gases, as well as retrieve any toxic liquids seeping up from below ground.

“This is a reasonable, cost-effective remedy that provides environmental protection while at the same time making the land available for productive use,” said Weingarten, who has been overseeing creation of the $35-million cleanup plan, which would take about a year.

“It’s just time and money,” said Ovitz.

Last week, Weingarten sent a letter to Ovitz’s lawyers, giving approval to build a stadium and mall on the site--as long as the cleanup plan is followed.

“At this time,” the senior NFL source said, “the league doesn’t think the environmental issues are going to be an issue for Ovitz.”

That leaves the money issue. It, too, is complex--and complicated by the fact that Ovitz and the city are still negotiating.

Besides the cleanup, the major costs are perhaps $300 million for the stadium, about $250 million for the mall, plus the NFL franchise fee.

Cleveland’s fee for joining the league as its most recent expansion team was $530 million. By comparison, Rupert Murdoch’s Fox Group paid $311 million earlier this year to buy the Los Angeles Dodgers.

The NFL might want more than $530 million, and common sense says that Ovitz is likely to want to pay less. “If they get tough and try to go for the highest price,” he said, “they’re going to make it that we can’t do it.”

Ovitz declined to discuss financial specifics.

It is known, however, that BankAmerica Corp. President David Coulter will accompany Ovitz to the owners meeting in Kansas City. Ovitz also hopes to bring financial guarantees from the city of Carson.

A few years back, the city had set aside $18 million in redevelopment funds, when the 157-acre site was being considered for a mall. That money, said city officials, is available now.

The rest, Sweeney and others said, would probably be financed by selling bonds.

One plan being discussed calls for the bonds to be backed by what is known as tax increment financing. A stadium and mall would dramatically enhance the value of the site, currently assessed for tax purposes as a landfill.

State law allows a city redevelopment agency to keep the increased property taxes from designated projects, a source of revenue that can skyrocket when a parcel is transformed from, say, a landfill to a stadium and shopping mall.

City officials also are considering other forms of municipal bond financing, backed by utility or hotel taxes, for instance. They can also raise money by imposing surcharges on admission and stadium parking.

“We will not ask Carson taxpayers to fund this,” City Manager Jerry Groomes said.

The city, meanwhile, has yet to reveal its demands.

The league has suggested that a state-of-the-art stadium could play host to multiple Super Bowls, with each game generating an estimated $200 million to $300 million in sales in the region. The city certainly expects to make money when 80,000 or so visitors drop by for each game during football season.

Carson’s chief concern, Groomes said, is to avoid becoming another Irwindale. That city gave Raider owner Davis a nonrefundable $10-million deposit a few years ago in hopes he would relocate the team there.

When city officials found that they could not build a 65,000-seat stadium, Davis kept the money.

Carson has hired a consultant whose specialties include the finances of stadium deals, John Stainback of E&Y; Kenneth Laventhal. He is national director of the firm’s public-private development practice. All hands have been carefully studying several recent stadium deals around the country “to know what municipalities have given up, what they’ve gotten,” Sweeney said.

“We absolutely, positively will not be Irwindale,” Sweeney said.

From the NFL’s perspective, the Houston proposal has lots to like--$190 million in public funds for a new stadium and a city-county partnership with a local millionaire.

The Coliseum remodeling plan would turn the venerable facility--built for the 1932 Olympics--into a 67,000-seat stadium, expandable to 80,000.

A group headed by real estate executive Ed Roski--who is building the Staples Center downtown for the Kings, Lakers and Clippers, the hockey and basketball teams--proposes to spend about $350 million to remake the Coliseum.

Of that, according to New Coliseum Ventures Executive Vice President John H. Semcken III, $20 million would be public subsidies provided by the Community Redevelopment Agency and $20 million more would come from a surcharge on tickets to Coliseum events.

The Coliseum, however, comes loaded with baggage: Memories of parking hassles, security concerns and the perception among many in the NFL, that it is--yes--a political football.

Ovitz, meanwhile, positively exudes confidence. Asked if he foresees any serious obstacles as he heads into the meeting in Kansas City, he went on at length about the obvious: The NFL owners need to believe that his proposal is the real deal.

Any worries aside from that?

“Nope,” Ovitz said.

* COLISEUM PLAN UNVEILED: The finance plan for the New Coliseum got favorable reviews from NFL owners. D1

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Hacienda Proposal

* Mall size: approximately 1.5 million square feet

* Parking: wraps around stadium and mall to the west and south

* NFL logo: displayed above main entrance

* Big-screen TV: visible from the San Diego Freeway

* Stadium size: approximately 1.96 million square feet. Entire site occupies 157 acres

* Mission bells: ring for home-team touch-downs

* Football statues: at entrances