EVERYONE WINS, FOR A WHILE

The politics of the Staples Center are taking shape long before the Democratic National Convention arrives next August. There’s a pecking order among the three major teams, a ranking determined by prestige, marketability and cash.

Consider: In the 48 hours after the Lakers named the successful and popular Phil Jackson as new head coach, the arena sells a flurry of luxury suites and Premier seats. Across town, the lowly Clippers try to sell tickets for their games by hawking the new arena as a sublime setting to watch basketball. It’s the flip sides of a coin: the Lakers can help the Staples Center, the arena can help the Clippers. Just listen to arena president Tim Leiweke, “The Clippers have been given a gift. Our challenge back to them is to make something of it.”

Staples Center owners are aware of the value and characteristics of each team, and have structured their agreement with each accordingly. The Lakers are likely to make the most money, the Clippers the least. Somewhere in between are the Kings, whose owners built the Staples Center but whose disappointing performance in recent years has hurt them at the box office.

That said, all three franchises are poised to reap rewards that could keep them competitive in the fast-changing economics of pro sports. Around the country, as player salaries and other costs have risen, teams have become creative in seeking new revenue sources. The last decade has seen a stream of NHL and NBA teams move to new arenas--by the end of 1999, 28 new arenas will have opened in the ‘90s. The new palaces have larger seating capacity, luxury boxes, pricey restaurants and premium seating.

“The way everything is going now, the revenue streams from whatever suite or ancillary revenues you derive are vastly important to your survival in the NBA and NHL,” says Peter Wirtz, vice president for the Chicago Blackhawks, who share the United Center with the Bulls. “That’s particularly true in the NHL, because player salaries have skyrocketed. The league is paying over 70% of its revenues to players. Finding ways to survive is challenging.”

Against that backdrop, the windfall from a new arena can be huge: The Kings claim they lost about $20 million last season at the Great Western Forum but anticipate they will come close to breaking even in their first season in the Staples Center. “We’re not projecting playoffs and not projecting sellouts every night and we know we have work to do to win the market back,” says Leiweke, who is president of the Kings as well as the Staples Center.

The calculations are different for each franchise, none of which will discuss its finances in detail.

THE LAKERS

Almost a decade has passed since the heyday of Magic Johnson and “Showtime,” even longer since the Lakers’ last NBA title, but this isn’t a team looking for a major make-over. The purple-and-gold remain a marquee attraction, filling court-side seats with a who’s who of Hollywood and a roster of wannabes. “The team sells itself,” says Mark Scoggins, executive director of marketing and sales. “I’ve never had to sell the team.”

Nor do the Lakers need the Staples Center to attract free agents, not with Jackson coming aboard as coach and a starting lineup that includes Shaquille O’Neal and Kobe Bryant. But there’s no mistaking this: The new arena does give the team one thing it never had at the Great Western Forum--luxury suites--and that translates into cash.

Here’s how it works: The arena leases the 160 suites and gives the Lakers slightly more than 25%--a projected $9 million--of the revenue. The arena also leases its 2,500 year-round Premier seats and hands over a similar cut, another $8 million. So the Lakers pocket some $17 million before filling even one of the 15,000 or so remaining seats available for the team to sell to its games. It’s enough income to perhaps sign one more quality player, which could make the difference between losing in the first round of the playoffs or going on to a championship. “When you look at the NBA, we’re starting to spend enormous amounts of money on salaries,” says Jerry West, the team’s executive vice president for basketball operations. “Moving into this building will allow us to remain competitive in paying our players.”

The revenue was attractive enough to lure the team into a 25-year lease, even though the move has potential drawbacks. The Staples Center signed its own deal with Staples Inc. and 10 founding partners, including the Los Angeles Times, which means all other companies are restricted to smaller, temporary advertising inside the building. While that does limit the Lakers’ ability to attract new sponsors, a team executive says the move has created a buzz in the corporate sector and among its sponsors. “Our sponsor base, while they may not be able to enjoy the arena signage, they can host receptions in luxury suites and can bring clients,” says Keith Harris, the team’s director of broadcasting and promotions. “It’s the place to be seen. Nobody wants to be in the position of having to say, ‘Oh, I didn’t get a chance to go.’ With us, that’s the frosting on the cake . . . .”

None of which should suggest the move has been easy. Tim Harris, the Laker vice president of sales and marketing, spent much of the spring and summer reassuring anxious fans concerned over seat locations, ticket prices, the drive downtown and parking. Seat locations changed because the Staples Center and Forum are laid out differently. Ticket prices generally increased, with some fans accustomed to paying $55 a game seeing the price for similar seats rise to $90. As for getting there, “People who have been season ticket-holders for 30-odd years are nervous,” Harris says. “They know exactly what time to leave home to get to the Forum in time for warmups, they know who they sat next to, which concession stand to go to.” Harris told them to think of relocating as graduating from high school and moving to college, which can cause short-term anxiety but also promises countless great possibilities. “The classroom is going to be different, your locker is going to be different,” he says. “People say, ‘Now I know where to park, which door to enter, where my seat is.’ The number one concern is getting there in time to see the game.

“Certainly, from everything you read and everything the patrons hear, the game of Laker basketball is still going to be good. It’s still a good organization and we still have the commitment to improve and win a championship. Fans are nervous because there’s an unknown. They’re saying, ‘Will I enjoy it?’ ” The addition of Jackson as coach appeared to answer that question for some. In the two days after his signing, the arena saw a spike in demand, leasing four more luxury suites and 60 of the year-round Premier seats.

West can offer further encouragement. The former Laker guard experienced similar upheaval nearly 32 years ago, when the team left the Sports Arena--its home for seven seasons in Los Angeles--and moved to the Forum. Inglewood was considered out of the way at the time, a gamble for then-owner Jack Kent Cooke, but the Lakers and the “Fabulous Forum” became inextricably linked. “The Forum has wonderful memories, but we’re going some place that’s spectacular, and I think for the fans, it will create new interest,” West says. “The amenities are just spectacular. During the construction, I’ve gone down every few weeks and looked at it, and it’s going to be very fan-friendly.”

THE CLIPPERS

The losing seasons. The empty seats. The jokes by “Tonight Show” host Jay Leno. The Clippers see their move to the Staples Center as more than a change of address: It’s a chance to shed their image as owner Donald Sterling’s plaything, the lamentable losers who have played a lonely and out-of-tune second fiddle to the glamorous Lakers. “The Clippers have more of an upside than anybody else. The building gives people a reason to go to see them,” Leiweke says. “This is Donald Sterling’s last great shot at making the Clippers work here.”

Under the terms of their lease, the Clippers are definitely renting--not buying--that “home team” designation. A late addition to the arena lineup, they committed to only six years, with an option to pull out after three. They receive none of the millions in suite revenues that go to the Lakers and Kings. Also, instead of getting 25% of Premier seat revenue, like the other teams, they receive a smaller fee for each premium seat sold.

Sounds like business as usual for a team whose attendance declined to a league-worst 10,263 per game last season. Since moving to Los Angeles from San Diego for the 1984-85 season, the Clippers have made the playoffs only three times and have lost in the first round each time. They were bad enough to qualify for five of the last six draft lotteries, which gives the NBA’s worst teams a chance to improve their position. Even that didn’t help. And a new arena probably won’t change perceptions of the Clippers when it comes to wooing free agents or keeping players from leaving. No one is likely to sign with--or stay with--a bad team because it has a nice arena.

Yet the Clippers have at least something to offer the Staples Center. If they do pack up the moving van again, the arena and, by extension, the Lakers and Kings will feel the shift as arena officials scramble to find other events to fill the suddenly vacant 41 Clipper home dates. And there is hope the team will become a valuable tenant by transforming itself into an entertaining squad that plays in a trendy new arena and provides fans good value for their money. “Let’s start with the fact we’re going to have a change of environment,” executive vice president Andy Roeser says. “We now can offer our fans the best arena in the NBA. It’s important to offer fans a good experience, so they can come away and say, ‘Wow, that was great. When can we do this again?’

“The Staples Center provides us the right environment. The timing is perfect, and the best aspect is we’re moving in with an exciting young team.”

The lineup will be significantly different from last season. Gone are Lorenzen Wright and Lamond Murray. Newly arrived are Derek Anderson and Johnny Newman. The Clippers also recently signed first-round pick Lamar Odom who, arguably like them, has a checkered past but shows promise of better things to come.

At the very least, the Clippers provide an inexpensive way for fans to get inside the building. Though some ticket prices increased, seats in the highest rows start at $10. “If you work downtown and you’re a business person, you’re going to be able to go see the Clippers a lot cheaper than to go see the Lakers,” says Lee Zeidman, vice president of operations for the Staples Center. Says Roeser: “We’ve had some very loyal fans at the Sports Arena, but I don’t think they’ll understand what they’re missing until they walk into the Staples Center. I would expect us to shatter all our attendance records. . . . We would expect the impact will be substantial across the board: bigger attendance, a better environment, more exciting and more fun.”

Even though the Lakers and Kings were given some priority in the scheduling, Roeser says the Clippers were assured they would not be stuck with unfavorable dates or times. There are no Monday afternoons on the schedule, for example. Roeser also disputes the notion that the Lakers and Kings are the arena’s marquee tenants. “The prime tenant will be determined by who’s playing on any given night,” he says. “If it’s a Friday night and we’re playing, we’re the primary tenant. The Staples Center is our home, and we will be hosting fans in our home.”

THE KINGS

This team knows what’s at stake. After missing the playoffs in five of the last six seasons and watching attendance dip to an average of 12,485 per game at the Forum, the Kings need a transfusion. First comes the money. They signed basically the same 25-year deal, with suite and Premier seat revenues, as the Lakers did. There are additional, less-visible financial benefits. “Your investment in the team is instantly worth more,” says a sports consultant close to the arena deal. “It’s the potential for marketing. Say the Kings were worth ‘X’ at the Forum. Now they might be worth ‘X’ plus 25% to 35% more at Staples.” That means more revenue that, if wisely spent, could bring a few better players.

The team also stands to improve its attendance, if only because fans are curious to see the new arena. “Come hell or high water, people are going to come into this building,” Leiweke says. “If they do that, we’re going to win people over and people will fall in love with this team.”

Management took a big step toward making the Kings more lovable by acquiring high-scoring right winger Ziggy Palffy from the New York Islanders in June. The trade deviated from a build-through-the-draft strategy that started in 1996 when the team sent Wayne Gretzky to St. Louis and began to overhaul what had been a veteran, star-powered lineup by bringing in youngsters. While several of those players have developed in recent seasons, the Kings still are missing the playoffs. So the team sent some young players and a first-round draft pick to New York in exchange for Palffy. King general manager Dave Taylor had dual motivations: to improve the team’s offense, one of the NHL’s worst last season, and to give fans a reason to keep coming to the Staples Center after the novelty of the new arena fades.

The Kings also hired a new coach, former Canadian national team Coach Andy Murray. “I believe in the NHL,” Leiweke says. “It’s a great sport, and it’s played by a bunch of good kids who are committed and they’re a great bunch of role models. No question, this is going to be an opportunity to get people re-interested in the Kings.” The “people” Leiweke hopes to lure include business executives who can entertain clients and make deals in the comfort of a suite or private club, luxuries they couldn’t enjoy at the Forum. The Kings will be able to add drama to game night with special effects during pregame player introductions, and they can use the eight-sided video scoreboard to show highlight films and videos.

“Some people who are not die-hard, 100% hockey fans can come to the game with a friend or with a business partner and they won’t have to wait in line for bathrooms or concessions and they’re going to have an enjoyable experience,” says Kurt Schwartzkopf, the Kings’ director of marketing and promotions. “That’s really what we’re banking on, and it’s up to us to provide that atmosphere. Hopefully, we’re going to wow them.”

The Kings benefit from instant relationships with the 10 founding partners--including Sempra Energy, DirecTV and Bank of America--that have signed with the Staples Center. Some of those partners, such as McDonald’s, Toyota and Anheuser-Busch, had already been involved with the Kings, but increased their investments in the new arena, hoping to be associated with a trendy place and a successful team. “There is clearly a feeling that this building has given them new hope,” Leiweke says. “The building is great, but ultimately what you put in the building is more important. They want to see a different direction on the ice. And we’ve been very frank in telling them we want to see the same thing too.” Says Schwartzkopf: “These people have all gotten on board. They’re saying, ‘This is a vision we want to support.’ This is good for the city.”

The initial response from season ticket-holders was not as positive. Though ticket prices remained the same or in some cases dropped, fans worried about being assigned less-desirable seats at the Staples Center. The arena’s down-to-the-wire construction schedule intensified those fears because buyers couldn’t sit in their new seats to check out the sight lines. In addition, because the arena is larger and is not laid out the same as the Forum, many fans accustomed to sitting near the ice will be farther away--unless they pay higher prices.

Still, with 90% of last season’s 6,000 season ticket- holders renewing, Schwartzkopf is optimistic that attendance will rise. “I don’t think season seats will triple or quadruple. We will see a big increase, but where I think it will show up is in mini-plans,” a reference to plans that offer tickets to 10 or fewer games instead of the full, 41-game home schedule. As Leiweke sees it: “The Staples Center is going to give us a couple of years’ grace here.”

WHAT NEW ARENAS HAVE MEANT TO OTHER TEAMS

Hockey traditionalists mourned when the Montreal Canadiens abandoned the hallowed Forum and moved to the Molson Centre 3 1/2 years ago, but executives of the NHL’s most successful franchise recognized the financial realities that govern professional sports left them no choice. “Had we stayed in our old building, we would probably be bankrupt by now,” says Bernard Brisset, the Canadiens’ vice president of communications. “The Molson Centre is not the only solution to the economics of the game right now, but it was necessary for us.”

The privately financed Fleet Center in Boston, which cost $160 million and opened in 1995, has kept the Bruins one of the NHL’s few indisputably profitable teams. “It brought us an extra 3,000 seats, possible 3,700 if we fill everything,” says Bruin president Harry Sinden, whose team shares the arena with the Celtics. “It gave us more seats to fill, and the first year we filled them all. It dropped the second year, but our performance was lousy. . . . Our revenue and gross gates have increased because of the suites.”

The NHL’s Vancouver Canucks, who share GM Place with the NBA Grizzlies, lost $36 million Canadian (about $24 million U.S.) last season. The Grizzlies are privately owned and don’t release financial statements. However, Kevin Gass, vice president of communications for the Canucks’ parent company, Orca Bay Sports & Entertainment, says both teams gained in stature when they moved to the arena in 1995. He estimated 95% of the arena’s 88 suites are sold for hockey and 65% are sold for basketball. The arena hosts 160 to 170 events a year.

“We kept our old advertisers and other advertisers wanted to be associated with the new arena, with all the modern conveniences and amenities,” Gass said. “This [arena] is adjacent to the downtown core, unlike our old one. The move and location are hard to quantify, but I think the convenience factor has played particularly well for the Grizzlies.”

Many factors determine whether teams and arenas make money. The number of events booked into the arena is crucial, especially in cities that have only one major winter sports team. The Molson Centre, which doesn’t have an NBA tenant, has become a concert mecca and books 175 to 190 dates a year. The Canadiens and the arena are holdings of Molson Companies Ltd., which reported a loss of $2 million for the last fiscal year for the team, even though all 130 suites were sold out and the Canadiens led the NHL by drawing more than 20,000 fans a game.

“There’s some real economies of scale in having multiple teams. It adds revenue streams as far as what the signage is worth,” says Greg Jamison, president of the NHL’s San Jose Sharks, who also have no NBA co-tenant. “With the Staples Center having three teams, there’s a guaranteed 120 dates before you go anywhere with concerts or other shows, and that’s not counting exhibition and playoff games.”

The Sharks moved into the San Jose Arena in 1993, after playing two seasons at San Francisco’s Cow Palace. One of the NHL’s best-marketed teams, they still lost money last season, although Jamison declined to say how much. The Sharks are tenants in the city-owned arena and manage it for the city. They pay rent and all expenses of operating the building, including making capital improvements.

“Revenues have met projections, but sometimes what’s a little bit surprising is the cost of operating new buildings,” Jamison says. “They are a good revenue stream, which is why you see so many teams moving in that direction, and we believe it’s been a very good move for us. But it’s getting harder and harder to make money. The arena has been a good revenue stream, but because salaries and expenses are going up, it’s tough.”

Brisset believes the Kings’ move to the Staples Center will revive them financially and as a sports attraction. “A new building will be generating new interest and drawing new crowds,” he says. “It’s in a new district, and there will be interest in seeing the new district. It’s like a landmark in the city, and people look for reasons to go visit. I’m sure in L.A., people will go and get hooked on hockey.”