L.A. Firm’s Investment in London Is Paying Off
An unlikely winner in Wednesday’s decision by the International Olympic Committee to award the 2012 Summer Games to London was Anschutz Entertainment Group, the Los Angeles company that owns Staples Center and the Los Angeles Kings of the National Hockey League.
Its planned $1-billion upgrade of London’s former Millennium Dome -- recently regarded as an embarrassing white elephant for the city and Prime Minister Tony Blair -- looks like a shrewd investment now that it will be a key venue for the Games as the arena for basketball and gymnastics.
“We took a huge risk and were roundly criticized in the real estate industry and in London,” President Tim Leiweke said, “and it will probably be the best project this company has ever done.”
The $1.2-billion dome, covering 1.2 million square feet in southeast London, was built by the government to usher in the new millennium in 2000.
Its exhibitions exploring the human condition at the turn of the century drew smaller-than-expected crowds, and taxpayers have shouldered more than $54 million in maintenance costs since.
Under an agreement with the government, AEG demolished the exhibitions and drew up plans for a sports and entertainment complex inside and around the dome.
The centerpiece is to be an indoor arena projected to seat up to 23,000 that can host athletic and music events.
After completion, scheduled for 2007, it will also include a music hall of fame, exhibition space, music club, 10-screen movie theater, ice rink, restaurants, bars and possibly a casino. AEG is naming the dome the O2 after the British mobile phone provider.
O2 has agreed to pay more than $11.3 million a year for the naming rights, for six years starting in 2007.
That agreement and the stadium deal are examples of opportunities in Europe for sports businesses such as AEG, which have seen prices to compete in U.S. sports hit the roof, said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon.
“European sports are still passion-driven rather than business-driven,” he said.
AEG’s support of the London bid included lobbying by Chief Operating Officer Scott Blackmun, who is a former chief executive of the U.S. Olympic Committee.
The company began work on the London site about five months early so Olympic officials could see progress during a February visit.
“It was excruciatingly difficult but we showed them we were for real,” Leiweke said.
AEG is building a music club in Times Square, indoor arenas in Berlin and Kansas City and a soccer stadium in Chicago. It expects to break ground on a $1-billion entertainment district and hotel next to Staples Center in September.
