Roski Presses Deal to Run Coliseum

Property developer Ed Roski and his New Coliseum Venture partners are pressing members of the Coliseum Commission to approve a confidential memorandum of understanding that would give them the historic facility rent-free for a period of time, and then charge them just $1.5 million annually after that.

Under the terms outlined in the memo, a copy of which has been obtained by The Times, the commission would let Roski and his partners have the property free while they renovate the stadium. Once the new stadium is opened, the rent would be charged for the remainder of the 40-year lease. That money would end up going exclusively to the state, leaving the city and county with no direct financial benefit, sources familiar with the ongoing talks said.

In return, Roski and New Coliseum Venture would agree to overhaul the Coliseum at a cost of as much as $350 million as part of their effort to bring professional football back to Los Angeles. The proposed agreement calls for Roski to build a 66,000-seat stadium, expandable to as many as 80,000 seats, with 150 luxury suites, 15,000 club seats, new locker rooms and other amenities. Sources familiar with the plans say the average price of a non-club seat at the facility would climb to $60.

“In order to attract an NFL team to the Coliseum,” according to the memo, Roski and his partners “must complete the renovation of the Coliseum by July 2002.” According to the agreement proposed in the memo, Roski and his partners would obtain total control of the Coliseum, Sports Arena and certain adjoining properties and all their revenues from whatever source for 40 years. If they are awarded the pro football franchise, they would be obliged to remain in the Coliseum for 25 years, after which they could move the team anywhere, while retaining control of the facility for all other purposes.

At a closed-door executive session last week, the Coliseum Commission--which is made up of state, county and city representatives--appointed a four-member negotiating committee to discuss the proposed understanding with New Coliseum Venture. The committee members are county Supervisor Zev Yaroslavsky, attorneys Lisa Specht and Sheldon Sloan and insurance executive Roger Kozberg.

Since then, negotiations have proceeded in private on virtually a daily basis

Although Roski and his associates are pushing the commission to approve the memo at its next meeting, March 3, at least two members of the negotiating committee--Yaroslavsky and Specht--have expressed reservations about some of the proposal’s provisions.

“The Coliseum is a public asset and the public should be a full partner in any deal,” Yaroslavsky said. “The public has interests just as the developers do, and those interests--some of which are financial--must be protected.”

Specht said the memorandum obtained by The Times represents the proposal by Roski and his group, not the agreement that she expects ultimately to be adopted. “We’re starting over,” she said. “This [memo] went way further than we expected.”

Specht added that members of the commission’s negotiating group have scheduled meetings with representatives of the state so that the public agencies can discuss their positions.

“Everything is open,” she said. “Everything is on the table.”

Roski and his partners, however, have grown increasingly insistent that they need to wrap up this phase of the negotiation to increase their credibility before the mid-March meeting of the NFL owners.

“The NFL will make a decision in March on which city will obtain a new franchise,” said George Mihlsten, a prominent lawyer and lobbyist who represents New Coliseum Venture. “They will take a little longer to decide what follows from that decision.

“We need a lease in place with the Coliseum,” Mihlsten said. “We are negotiating in good faith with the memo as the framework for our discussions. We expect to conclude these negotiations soon. We would like to see the essential business terms worked out by the commission’s March meeting.”

Patrick Lynch, general manager of the Coliseum, described the negotiations as “very much a work in progress,” but added that “we are working as fast as we can because we agree with Ed Roski that this has to proceed as rapidly as possible. We want to show the NFL that we can get the job done.”

City Councilman Mark Ridley-Thomas, the most vocal champion of returning football to the Los Angeles Memorial Coliseum, said he had not seen the memorandum of understanding, but he said its key elements were consistent with what has long been discussed as part of such a deal.

“That’s not something new,” he said.

Roski, who also insisted that the agreement is still subject to negotiation, seemed to indicate some flexibility on specifics, such as what would occur if the franchise moved. “The agreement would be that we would have control as long as the team is there,” he said in an interview Monday.

Although the developer acknowledged that the proposed rent of just $1.5 million a year is relatively little for such a huge public facility, he argued that there are hidden benefits in the deal.

For one thing, he said, once the property passes under private control, Roski and his partners would be liable for real estate taxes, which he estimated at about $4 million a year.

In addition, he said, a new football team could generate $200 million in various sales and other revenues, all of which are subject to state and local taxes. And the team would carry a payroll of about $100 million, which also would be taxable.

Although they have not made an issue of it publicly, another factor recently has emerged to create both new potential and new pressure on Roski. Last month, billionaire Eli Broad announced that he has joined Roski in the football campaign.

With Broad’s billions behind the effort, Roski and his partners now stand a much better chance of winning the NFL’s 32nd team. But what complicates matters for Roski is that Broad’s fortune also reduces the developer’s relative importance, since the Coliseum Commission controls the stadium site and Broad brings the money to the deal, leaving Roski with less of an obvious contribution to make to the overall success of the deal.

As a result, some observers believe Roski is trying to seal a deal now in part to solidify his place in the partnership with Broad.

But some observers are asking why the commission should strike an agreement without knowing anything about what Roski and his partners may pay for a football franchise or what sort of immediate windfall they may reap from the sale of naming, signing and other rights.

The less visible Staples Center was named for $100 million over a 20-year period.

Similarly, nothing in the memorandum of understanding addresses the issue of whether the public might share in some way in any appreciation of the new football franchise’s value, which--if recent history is a reliable guide--could be substantial. For example, the Philadelphia Eagles were sold for $175 million in 1994, then the Washington Redskins recently went for about half a billion dollars.

For his part, Roski dismissed any suggestion that he or his group was trying to hurry negotiations to strengthen his hand in his partnership with Broad. “We’re straight-up partners,” he said. “He puts in a dollar, I put in a dollar.”

He did emphasize, however, that speed was of the essence. The NFL owners meet in March, and Roski predicted that if this deal falls through, football will not come to Los Angeles.

“This has to be in hand,” he said. “If it’s not in hand, it’s not going to fly. . . . The owners will do the easy thing and make a decision to go to Houston.”