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SBJ/September 5-11, 2011/In DepthPrint All
With labor peace freshly assured in the NFL for the next decade, could the league finally return to Los Angeles, bereft of a team since 1994?
Periodically rising to the front of the NFL’s to-do list, Los Angeles in recent years has resided on the league’s back burner, a distant concern to the labor talks. That’s left two potential stadium sites, each pushed by a billionaire, to duke it out over which would be the best home for a team in America’s second-largest market.
In the absence of firm league guidance, however, and perhaps because the NFL believes competition results in the best deal, the tone and politics in Los Angeles have turned downright nasty.
“These guys throw things on the wall and see if they stick,” said Tim Leiweke, president and CEO of AEG, which is proposing a stadium in downtown Los Angeles.
“These guys” is developer Majestic Realty, which since 2008 has proposed a venue in City of Industry, a corporate haven a couple of dozen miles from the city center. Referring to John Semcken, Majestic’s vice president, Leiweke said, “this man has essentially gone out there and spun the truth and been wrong every time, and he knows nothing about our stadium.
“I don’t believe a word he says,” Leiweke added.
AEG’s Tim Leiweke (top) has accused Majestic’s John Semcken (right) of lobbying state legislators against the Farmers Field project.
In an interview before Leiweke’s remarks, Semcken declined to comment on AEG’s competing project, although in the past he has criticized it publicly. And a Majestic spokesman, speaking for Semcken, said, “Majestic Realty is one of the most successful real estate firms in the country, and with John did all the negotiations with the city for Staples Center.”
Part of the acrimony stems from the Southern California rivalry between Majestic owner Ed Roski and AEG’s Phil Anschutz. The two developed Staples Center together before Roski declined to respond to capital calls and his share was diluted. And it also stems from, sources said, very different outlooks on the football question by the two men.
Majestic, said one source close to the situation, believes it has the solution to finally return football to Los Angeles, and the source said that had AEG not suddenly pitched its own plan last year, the NFL would have already chosen City of Industry. Meanwhile AEG believes, this source said, that City of Industry has had since 2008 to convince the NFL and lure a team, but has failed.
With few public funds available for new stadiums in California, the sites have bickered over which side would provide the biggest return, and which could truly get off the ground.
In the earlier interview, Semcken contended that because Roski controls the 600 acres in City of Industry outright, and as part of the stadium would be built against a hill, reducing steel costs, the project is more efficient. City of Industry’s billed price tag is $800 million, while Farmers Field, the AEG proposal, tops $1.3 billion, though it has a roof and a $700 million naming-rights agreement announced in February.
Leiweke points to the Farmers deal as evidence of his project’s viability and mocks Roski for not finding a title partner in City of Industry. Semcken’s spokesman responded that Majestic has not looked for naming rights, and believes it’s better to do so with a team in hand.
How much money a stadium can deliver is crucial. A team owner would likely need to pay a relocation fee to the league, and the developers could be constrained in what they offer a new team if stadium financing costs exceed projections. They are betting the lucrative Southern California market would solve this math.
“When no one in the market owns a team and there is clearly no substantial subsidy, you have an economic riddle which needs to be resolved before a team can come back to the market,” said Casey Wasserman, founder of Wasserman Media Group and a key Farmers Field supporter. “The riddle is twofold: How do you generate enough revenue to compel an NFL owner to relocate, while having enough economic activity left after a deal has been made with the team to finance a privately paid for stadium?”
For Wasserman the answer is simple: downtown Los Angeles and Anschutz’s enormous wealth. Leiweke brushed off suggestions that the Farmers Field project does not have as good a return by saying essentially it’s Anschutz’s money and so it doesn’t really matter.
However, that does leave a team banking on one man. And a football source said profit margins are not incidental.
“Yes, margin matters a lot,” this source said. “Generically, the margin available to the club/league is crucial. That is what pays the players.”
The Majestic spokesman, who asked that his name not be used, said, “In our building [the team’s take] will not be a fixed number, which makes it extremely attractive to potential owners. “It would place any team in the top five in the league [in revenue and profit], if not higher,” the spokesman predicted.
Whether that’s true is impossible to say, but what is true is that no NFL team seeking greener pastures has bitten on Roski’s long-standing offer: a minimum guarantee of revenue, control of the stadium operating company, but in return for a quarter of the team. Roski expects to make his money developing the land near the stadium, and from his stake in the club.
AEG is offering a more traditional model of a team as tenant guaranteed a certain amount of revenue, a model employed successfully at Staples Center.
The trend in the NFL, however, is for teams to control their own stadiums, so whether tenancy flies in the sport is unclear. Farmers Field would be housed next to a convention center and near L.A. Live and the Staples Center, forming another major part of the downtown entertainment district.
Meanwhile, emotions are raw over AEG’s recent state capital lobbying efforts seeking to win protection from environmental challenges to its project. In response, Semcken has personally met with legislators in Sacramento, the California capital.
“We won’t go forward if City of Industry is trying to stop us,” Leiweke said of the political equation. “They will do anything they can, including spinning the facts and making false statements.”
Roski in 2009 won from the state legislature such environmental cover for his project, and now AEG wishes for a similar arrangement. AEG officials believe Semcken is personally lobbying against them, and is upset he would do so when Majestic has the same deal.
The Majestic spokesman responded that politicians in Sacramento invited Semcken, and pointed out that when Roski won his victory in 2009, he had settled numerous environmental objections to his project. Farmers Field, by contrast, is not far enough along, the spokesman said, to even warrant objections.
Both sides are actively wooing teams that might want to relocate. With the regular season starting Thursday, however, there is little chance of movement on the issue because the NFL will not want word leaking that one of its teams is about to move.
“Nobody is going to make any commitment during the season,” Semcken said.
NFL Commissioner Roger Goodell told CBS Sports executives last month that the league would take its time carefully reviewing the two sites, said Sean McManus, CBS Sports chairman.
And that could mean unless the league is willing to put its weight behind one site soon, for some time, football in Los Angeles may remain out of bounds.
City of Industry
Where: 600-acre site 20 miles outside of Los Angeles
Size: 75,000-seat stadium
Cost: $800 million
Developer: Majestic Realty
Financing: Traditional capital structure similar to how Staples Center was financed (Majestic expects need for only $350 million of debt).
Public funding: City of Industry has agreed to use a ticket tax to pay for a new interchange.
Environmental report: Completed, and site has won immunity from further environmental challenges.
Team role: Majestic owner Ed Roski would buy between 20 and 30 percent of the club; the club would then own the stadium and be responsible for the debt. Majestic expects a $150 million grant from the NFL and about $300 million of club-seat fees to defray the cost, and cash from naming rights would cover a team's debt expense; team would then capture the remaining revenue.
Naming rights: None signed yet.
When can construction begin: Majestic says it is shovel ready, though AEG contends that Majestic has only schematics and not construction plans, which would take longer to complete.
Completion target: 2014
Pros: Stadium could be built by 2014; little risk of legal challenges impeding construction; more control of the stadium for the team.
Cons: City of Industry is considered in the middle of nowhere by Angelenos, although it's only 20 miles from downtown Los Angeles; Majestic seeks a 20 to 30 percent interest in the relocated team, which appears to be a major stumbling block.
Where: Downtown Los Angeles, next to convention center, L.A. Live and Staples Center
Size: 72,000-seat roofed stadium, expandable to 76,250 seats for special events such as the Super Bowl or NCAA Final Four.
Cost: $1.3 billion
Financing: Plan relies on AEG founder Phil Anschutz's wealth and big-ticket revenue streams, including a $700 million naming-rights deal.
Public funding: None for the stadium, but some public bonding for AEG work on the convention center
Environmental report: Scheduled to be finished by January
Team role: The team would be a tenant in the stadium with a guaranteed revenue stream, similar to how Staples Center is run. Anschutz would want a stake in the team, but the deal would not be contingent on that happening.
Naming rights: Farmers Insurance
When can construction begin: Non-binding Memorandum of Understanding completed with the city of Los Angeles underscores political support for the project, but numerous hurdles remain.
Completion target: 2015
Pros: Glamorous downtown Los Angeles location next to other major entertainment venues; roof would allow for many different events; AEG is a major developer of sports projects.
Cons: Some believe the cost will be far higher; the trend in the NFL is for teams to control their stadium, not be a tenant as envisioned by AEG; without legislative protection from environmental lawsuits, the project could be halted; potential traffic congestion downtown.
Editor's note: This story is revised from the print edition.
Now that the NFL has a fresh labor deal in hand, the league is focused on investing in and growing the game. For many, that means finally returning the league to Los Angeles, which has not had an NFL team since 1994, when the Rams and Raiders played their last games there and left the market.
But don’t count the league’s TV partners as anxiously pushing to be in the country’s second biggest market. TV networks aren’t fighting the NFL’s desire to put a team in Los Angeles, but they certainly aren’t clamoring for it, either. After two consecutive seasons of record high TV ratings, network executives say they are happy with their rights packages as they currently stand.
“Our package is fine the way it is right now,” said Sean McManus, chairman of CBS Sports. “We’re not lobbying to add another market. If it happens, we’re more than happy to take advantage of the opportunity if it’s an AFC team. If it doesn’t happen, we’ll adjust.”
Last year, CBS, ESPN, Fox, NBC and NFL Network set viewership records during the regular season.
So why is the NFL making such a big push for the Los Angeles market?
While owners talk about returning to such a major market, with a young generation of fans and serving as a gateway to the Pacific Rim, most media analysts believe the push for Los Angeles has as much to do with increasing media rights fees as anything else.
The NFL’s network TV deals expire after the 2013 season, and having a team in the country’s second biggest TV market could boost the fees the league is expecting, analysts say.
Currently, Fox pays $720 million a year, and CBS pays $620 million a year for their Sunday afternoon packages. Sources expect those fees to eclipse $1 billion a year in their next contract, which starts with the 2014 season and is expected to be negotiated at the end of this year.
IDA MAE ASTUTE / ESPN
Sources say ESPN is close to an extension for “Monday Night Football” worth $1.8 billion a year. The NFL is shopping a separate eight-game package that could be worth $700 million a year.
The question is how much higher would those rights fees go if a market the size of Los Angeles had a team.
“The concern networks have is that the NFL will use a move to Los Angeles as a way to leverage higher rights fees in the next negotiation,” said Neal Pilson, who ran CBS’s sports department in the 1990s.
But will a return to Los Angeles mean more eyeballs? Even the most optimistic predictions show little TV ratings growth for the league nationally. Pilson predicted that an NFL team in Los Angeles would have a minimal effect on the league’s national ratings, adding perhaps a “few tenths of a ratings point,” he said.
A competitive team in the market could lift national ratings marginally. But a subpar team could create problems — as a poor team that struggles to sell out games would see games blacked out in the market.
“The team has to be good so they get sellouts,” said Bill Wanger, executive vice president of programming and
During the Rams’ and Raiders’ last season in Los Angeles, in 1994, the teams had trouble selling out and blackouts were a problem.
“That’s the history of the L.A. market,” Pilson said.
Wanger said the lack of a team in the country’s second biggest market has allowed other NFL teams to make inroads there. In the years since Los Angeles lost the NFL, Wanger said national clubs like the Dallas Cowboys and Pittsburgh Steelers have become popular, since their games were often part of nationally broadcast games that were available in Los Angeles. That would change if a team returns to Los Angeles.
“What will happen is that you’ll get fewer games in the city, but you’ll get higher ratings,” Wanger said.
In 1994, the last season Los Angeles had an NFL team, the market ranked 17th in market ratings, with a 13.4 rating for its Fox games. Last year, Los Angeles ranked 50th, with an average rating of 8.6 for its Fox games. Last season, for example, the Cowboys game against Brett Favre and the Minnesota Vikings was the highest rated game in the market, with a 14.3 rating. Wanger would expect a local team to occasionally pull ratings in the 20s.
“For the league to prosper without a team in a market the size of Los Angeles is an indication of the strength of the NFL as a TV property,” said Ed Desser, president of Desser Sports Media. “I don’t see Los Angeles being transformed by the addition of an NFL team like a lot of other markets would.”
Last month, NFL Commissioner Roger Goodell addressed CBS’s NFL producers and talent, telling them that the league needs to make sure that any team is successful from a fan standpoint, competitive standpoint and commercial standpoint.
“We don’t have a vote. We don’t have a say,” McManus said. “We’ve expressed our interest that if there’s a team, we would like it to be an AFC team.”
“It would just be a positive story that you have a home team in that market,” Bogusz said. “It would be nice.”
For the many transplants in Los Angeles, the city is an NFL fan’s dream, with the maximum number of games broadcast into the market each season. Last season, Fox and CBS broadcast 52 games in Los Angeles.
Chicago, for example, which sold out every game last season, had 50 Sunday afternoon games. Tampa, which had all eight of its home games blacked out last season, had only 42.
“That difference in games is significant,” Wanger said. “You’ll get more games and more of those national appeal teams without a team. However, if you get a good team — and hopefully it’s an NFC team — the benefits are great. That’s the bottom line.”
Los Angeles isn’t the only issue left on the NFL’s plate with labor finally concluded. Below are quick looks at some of them:
■ In-game experience: The league continues to worry about fans choosing to stay home and watch games on elaborate in-home entertainment systems rather than go to a stadium. Blackouts ticked up last year, so whether that trend continues will bear watching.
■ HGH testing: The league and union have been at loggerheads over how to implement HGH testing as called for in the new CBA. It’s unclear whether a protocol will be in place in time for Thursday’s season-opening game.
■ Commissioner’s authority: Players continue to rankle under the personal conduct powers used by the commissioner. The recent five-game suspension of rookie Terrelle Pryor, which appears as if the league was punishing him for bad acts in college, was not well-received in locker rooms. Will the union start to appeal these moves?
■ NFL Network: While the network has made strides with distribution and is now in 58 million homes, breaking down the doors at Time Warner Cable and Cablevision are next on the to-do list to boost carriage.
■ International: Will the league continue to play regular-season games in London or move to a different market? And does Toronto, instead of seeking more than just one game from the Buffalo Bills, instead go after the entire team?
■ Debt: The league clamped down on team debt preparing for the lockout. With that in the rearview mirror, will restrictions be loosened?
The NFL Experience is coming to the league’s new offices in New York City.
No, visitors to the new Park Avenue address that opens this month won’t be able to toss footballs and run sprints. Unlike the traditional former digs a few blocks south, however, the new space has been designed to convey to visitors and employees alike passion for the sport.
RENDERINGS COURTESY OF JACK MORTON WORLDWIDE
Visitors will wait on a bench that sits on artificial turf, surrounded by player video footage, creating the sensation of being on an NFL field.
“They wanted it to be more of an experience,” said Jim Fenhagen, senior vice president of design at Jack Morton Worldwide, which handled a lot of the more experiential elements of the new offices. “We kept hearing from them that they wanted people to feel that they could only be at the NFL; they didn’t want a generic office.”
Visitors to the new 345 Park Ave. address (the expiring one is 280 Park) will
In this reception area, on the 8th floor, visitors will experience the feel of a coach’s box at a typical NFL stadium and will be able to demo the interactive technology that allows coaches and officials to review every play from every game.
On the innovation floor, Fenhagen said, the reception area will be replete with consoles featuring the newest technologies so that visitors can learn about them while they wait.
Another feature will be a hallway connecting different sides of one of the floors that will include a replica of an NFL Network studio and an homage to the league’s broadcasters.
The fan-themed floor will have a stadium grandstand reception area with stadium seating and signage. The visitor will be surrounded by photos of fans that seek to capture the emotions of an NFL game.
Jack Morton is doing similar work with TV retailer QVC to turn its call centers into a more glamorous environment that resembles the set of the network.
And in sports, Jack Morton also is working with New York Road Runners on moving some of its offices out of the club’s creaky Upper East Side location to a midtown space that will be clearly branded as the home of a running organization.
The league will meet with business partners in a typical sports bar environment where NFL-themed products will likely be displayed.
Also working on the NFL space is the architecture firm Ted MoudisAssociates. And FutureBrand, a unit of Interpublic Group, started some of the design work.
The league declined to discuss the office project, but reports have said the move will reduce its office space and lower its costs.
Technology continues to play a bigger role in how NFL venues improve the fan experience, whether it’s how they are able to order concessions, or the quality of the mobile service they receive. The following are some of the improvements fans will find this season at various stadiums.
COWBOYS STADIUM: Legends Hospitality Management, the Cowboys’ retail and food company, installed a new electronic queuing system to improve customer flow at the Cowboys Stadium Pro Shop.
A new system will help shoppers navigate checkout lines at the Cowboys Stadium Pro Shop.
In many cases, Legends officials saw shoppers give up and leave the store instead of trying to negotiate a line with no sense of order. The concessionaire did some research and found an automated solution. Every register now has a button for sales personnel to hit after a sale is completed. It activates a 42-inch LED screen in front of the line to guide the next customer in line to an open register.
For Cowboys Stadium’s two preseason games, Legends saw a 30 percent increase in speed of service for fans moving through the line. The investment was $15,000, Bekolay said.
EVERBANK FIELD: The Jacksonville Jaguars, in tandem with their concessionaires, Ovations Food Services and Levy Restaurants, are rolling out smartphone applications for ordering food and drink during NFL games. Both firms are using FanGo, one of a few mobile food ordering vendors in the market.
Ovations handles general concessions at EverBank Field and is deploying the system for pickup service, restricted to a stand in back of Section 118 in the north end zone of the lower bowl.
Fans who want to use the technology download the FanGo application and register with a valid credit card number. Tapping the application takes consumers through the proper sequence for ordering food and drink. When their order is ready, the consumers receive a text message with information on where to pick it up, said Tom Anastacia, Ovations’ area general manager.
FanGo will be ready for operation Sunday, the day of the Jaguars’ first regular-season game against Tennessee. If it proves to be successful, Ovations could add more mobile concessions locations in the upper deck, Anastacia said. Ovations’ deal with FanGo is a revenue-share model, he said.
Levy, the Jaguars’ premium food vendor, will use FanGo for in-seat service for club seats.
SUN LIFE STADIUM: The Miami Dolphins are giving fans buying tickets to Liv Sun Life club seats $25 gift cards to spend on food and drink.
Liv Sun Life, a swanky two-level space above the stadium’s west end zone, debuted last season as a hip hospitality
Dolphins fans in the Liv Sun Life Club will get $25 gift cards for food and drink.
Complaints about last year’s steep ticket prices prompted the Dolphins to cut Liv Sun Life’s ticket prices in half for the 2011 season to $150 to $275 per game. As a further incentive, the team threw in the complimentary gift cards after the club’s ticket holders felt they also got hit hard in the wallet to buy premium food and drink in the lounges, said Mark Tilson, the team’s senior vice president of sales and ticket operations.
Every ticket sold for the club has a gift card attached. For example, a fan holding four season tickets in Liv Sun Life receives four gift cards with a total of $100 in value per game. They have to “use it or lose it,” the card’s value cannot be carried over to the next home game, Tilson said.
RELIANT STADIUM: Aramark, the Houston Texans’ food provider, is printing QR codes on in-seat menus inserted in the cupholders for 8,400 club seats at Reliant Stadium. When scanned by a smartphone, those codes take the user to an Aramark-hosted website with a map of concession stands inside the Verizon Club. In addition, SMG, the operator of Reliant Stadium, put QR codes on the back of 23,000 parking passes. When scanned, those codes take drivers to a Google map for real-time traffic updates near the stadium.
METLIFE STADIUM: The joint venture operating the second-year home of the New York Jets and Giants is upgrading cellular and wireless technologies to accommodate increased demand throughout the 82,000-seat building.
Stadium officials have seen a huge increase in data sharing and texting since the stadium opened in April 2010, said Peter Brickman, the facility’s chief technology officer. Moving forward, stadium management is conducting a slow rollout of Wi-Fi service starting with the facility’s 212 suites. As officials gain more confidence in the system, it will be expanded to other parts of the facility.
CANDLESTICK PARK: The San Francisco 49ers are the first NFL team to use paperless tickets for their home games this season at Candlestick Park, according to team officials.
The club worked with Ticketmaster, its ticketing provider, to provide the new technology as one option for season-ticket holders and single-game purchasers to gain access to the stadium.
Those who choose the paperless option must provide a credit card to be swiped through a reader at the gate to confirm the ticket holder’s identity. In return, the fans receive a receipt printed with their seat number and section that serves as their ticket stub for the game.
One point of distinction for this new program: The 49ers allow fans with paperless tickets to resell tickets outside of systems operated by Ticketmaster’s primary site and Ticketmaster Exchange, the team’s official secondary ticketing platform. To date, event-goers who purchased paperless tickets through Ticketmaster could not transfer those tickets to other secondary sites to resell them.
ST. LOUIS RAMS: The Rams extended their sponsorship with Charter Communications to cover naming rights for a new tech-themed lounge on the 100 level. The new branded space is part of the Bud Light Party Zone spanning the north end zone inside the Edward Jones Dome.
The Charter Red Zone, with room for 300 people, will have 25 computer terminals for fans to check their fantasy stats, and Sony televisions to watch the NFL RedZone channel.
The lounge will eventually be open to all fans. As part of its soft launch early in the season, the Rams are restricting access to Charter subscribers, connected to a promotion for using the firm’s mobile applications to pay their bills, said Bob Reif, the Rams’ executive vice president of sales and marketing and chief marketing officer.
Separately, the dome’s new Ping HD digital menu boards are now fully operational after a slow rollout the past two seasons. Delaware North Sportservice, the Rams’ concessionaire, has the flexibility to reduce food prices late in the game to sell remaining items.
Here are some possibilities on who could be the tenant for an NFL stadium in Los Angeles:
■ San Diego Chargers
■ Minnesota Vikings
■ Buffalo Bills
■ Oakland Raiders
■ Jacksonville Jaguars
■ Expansion team
That’s another possibility, adding an expansion franchise, but the NFL has not indicated it is ready to expand.