SBJ/January 9-15, 2012/Facilities

Leiweke sees another busy year for AEG

Selling Farmers Field naming rights was AEG’s top headline for 2011 but by no means the company’s only story to tell. President and CEO Tim Leiweke says several new projects mean the pace won’t be slowing down in 2012.

It has been nearly a year since the announcement of AEG Global Partnerships’ 30-year naming-rights deal for Farmers Field, an agreement valued at about $700 million. Environmental reviews continue this year at the downtown Los Angeles site of the proposed stadium, a $1 billion development and the largest project in AEG’s 13-year history. It is also the company’s most daunting endeavor, considering AEG must find an NFL team to relocate to Los Angeles before officials can break ground.

“Axs is the retail brand for our ticketing, our digital platform and distribution. … Don’t be shocked if all three platforms are up and running [this] year.”
— Tim Leiweke
Photo by: GETTY IMAGES
AEG Facilities in 2011 also took on a role to develop and finance a new NBA arena in Sacramento and welcomed a new equity partner in food service giant Compass Group North America, which will provide more story lines for 2012.

This year AEG is also focusing on getting its new ticketing system up and running in arenas, and there’s a new network in the works that will include sports programming.

Leiweke recently discussed Farmers Field and AEG’s many other moves during the past 12 months, and looked ahead to 2012, in an interview with SportsBusiness Journal staff writer Don Muret.

Let’s talk about Farmers Field and the NFL reviving its stadium loan program. Good news or bad news for AEG? What does it mean for this project?

LEIWEKE:
I have not had a specific conversation with Commissioner [Roger] Goodell in a while, but my interpretation just reading what came out of the league meetings was, one, they clearly understand and are beginning to structure a way to help the teams in California find a way to get stadiums built in a state where you’re not going to get a lot of public and taxpayer support. I see it as good news, their timing is in line with our timing. Our [environmental impact review] will be completed probably by June and we are not under pressure, feeling like we have to get a team deal done at the same time. We would much rather stay focused on what is the largest EIR in the history of downtown Los Angeles.

Does it hinder AEG’s attempt to get an NFL team now that these loans will be made available to clubs like the Chargers and the Vikings?

LEIWEKE: No. The reality is, in a perfect world, you’re still talking about a 20 percent type of piece within the overall financing of the stadium. I don’t think [Goodell’s] announcement was, “We’re going to pay for the stadiums.” I think his announcement was, “We’re going to help,” but clearly the far majority of any financing package for any stadium for the NFL is still going to heavily rely on personal equity, personal guarantees and assistance in some cases from communities. But not in our case. I don’t think there was anything he said that is a magic bullet that suddenly gets stadiums built in St. Louis, Buffalo, San Diego, San Francisco, Oakland or Minnesota. The far majority of the economics and the financing of those stadiums are still going to fall on either the community or the owner.

Shifting to Sacramento, give us an update on what role AEG corporate and AEG Facilities will play in the development of the Kings’ arena. Is there an investment by AEG to help fund this project?

LEIWEKE: It is AEG Facilities, and we continue to spend a lot of time with Mayor [Kevin] Johnson and his team in Sacramento. We have not made a commitment nor will we until this all plays out. Whatever we finally agree to with Sacramento or with the NBA is subject to taking this back to the partners at AEG Facilities and getting [its board] to sign off on it, and they haven’t done this yet. To date, there have been discussions about what role we would play, including would we make an equity investment, but we have not made a commitment to do that.

Could it be similar to what AEG did in Kansas City [investing $50 million to help pay for Sprint Center construction in return for the arena management deal]?

LEIWEKE: It would be a little different simply because there is an anchor tenant there [the Kings] that’s going to take out a large portion of the revenue streams directly related to basketball. So that means if AEG Facilities makes a decision to make an equity investment — and that’s if — it’s not going to be the nature of Sprint Center, because we own 100 percent of the revenue streams at Sprint Center.

With the Compass deal, you’ve got a food company as part of the whole operation now. Give us your vision for how that partnership will grow AEG.

LEIWEKE: We’ve always had a good relationship with [Compass-owned] Levy [Restaurants], and they serve quite a few of our venues around the world. This partnership by no means locks us into Compass or Levy exclusively. We still have an obligation when we go out on a public process and bid the food and beverage services of arenas and stadiums. If it’s AEG owned and operated, where we don’t have an obligation or commitment to go out and bid it, then obviously chances are more likely than not we’ll work with Compass and Levy. … We have had great success with them on investments like Sprint Center in Kansas City and the O2 in London. They like the growth of our company and they clearly see us as an opportunity to at least get a foot in the door and bid on the third-party accounts.

Leiweke says Farmers Field is AEG’s No. 1 priority, but other initiatives qualify as No. 1-A.
Photo by: NEWSCOM
Give us more details on AEG’s ticketing operation and how it’s going to work on the arena side. Will Staples Center be the first one to go live?


LEIWEKE: No, Sprint Center will be the first one and Home Depot Center will be right behind it, and then Staples Center will be next with the Nokia Theatre and then the O2 in London. Our goal by the end of calendar year 2012 is to have the majority of our facilities in North America and Europe on Axs. That’s roughly 10 million tickets. … We’re expecting [Sprint Center to convert] by the end of first quarter 2012. They have been very busy in Kansas City, and we expect to hit that timeline.

Explain how the branding works with Axs. Is that the name of the ticketing system?

Leiweke: For any AEG facility, the brand will be Axs. By the way, our network that we have been talking about will be called Axs if and when we pull the trigger on that.

The television network?

LEIWEKE: “Distribution network” is what I like to call it now as the world changes. Axs is the retail brand for our ticketing, our digital platform and distribution. What I will tell you is, don’t be shocked if all three platforms are up and running [this] year. For AEG, the No. 1 priority is Farmers Field and the EIR, and the No. 1-A priority is Axs for ticketing, digital and distribution.

What is the network all about?

LEIWEKE: Lifestyle and music. More awards shows take place at L.A. Live than any other campus or building in the world [and] more live music takes place at L.A. Live than any campus in the world. We are in the festival business with events like Coachella, New Orleans Jazz Fest and Stagecoach. Our entertainment division produces literally thousands of concerts each and every year. So the network is connected to our ability to create a platform for music and for artists, tied into ticketing and lifestyle and awards shows. Regal Entertainment [owned by Phil Anschutz, AEG’s chairman] is still the largest [film] exhibition company in the world. So movies, red carpets, premieres, behind the scenes, are going to be a high priority for us.

Will you be able to watch this channel on television?

LEIWEKE: Yes.

Have you signed any deals toward that end?

LEIWEKE: No, this is a work in progress. At some point in 2012, my guess is we will make an announcement on that platform. We’ve been working on it for three years, we continue to work on it, but I do sense it is coming to a head here.

Would there be sports content on that channel?

LEIWEKE: Yes.

AEG’s teams, or how would that work?

LEIWEKE: No, our teams are committed to regional deals and we’ve already committed the Galaxy to the Time Warner platform. My guess is the [Los Angeles] Kings will finish a deal here one way or another in the first quarter of 2012. [For cycling], we were just with NBC and we’re going to focus on a new relationship with them for the Amgen Tour California. We have great relationships with ESPN and NBC and Fox and now Time Warner, and our goal is not to compete with them, because we have thousands of hours of sports content on a regional or national basis on other channels. Whether it be our partnership with Oscar [De La Hoya] on Golden Boy Promotions or what we do with the our marathon business, our desire is not to make Axs an all-sports network. It will be more focused on music, but it doesn’t mean there won’t be sports content.

What’s new on international growth in facilities?

LEIWEKE: Brazil and South America — you’re going to hear a lot of activity coming out of AEG in that part of the world this year. That might be our largest growth area, but I also sense we’re going to see some growth in Europe and even in North America. I know we have some good stories coming in China, we have a couple of deals that are going to get done there.

Can you touch a little bit more on the business side of Staples Center?

LEIWEKE: I’m really proud of what Andy Roeser and Donald Sterling have done with the Clippers. I know a lot of people like to beat Donald up, but I’m a fan and I’ll give him a lot of credit. He stepped up here, not just short term, but long term. To look at Blake Griffin, Chris Paul and Chauncey Billups, Caron Butler too, and add them to the mix of what they already had. That team is going to be an anchor for our building for a very long time and that’s fantastic.
The Lakers, people could doubt them and question them, but I learned a long time ago, never bet against Dr. [Jerry] Buss. … The key now is to get the Kings back to where they should be. Unfortunately, a .500 record is cause for concern and our general manager made a decision to change coaches. But I’m convinced the Kings will be there at the end of the year. Staples Center has never had three teams in the playoffs at the same time and that’s a goal for all three teams this year.
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