Thomas Himes, Staff Writer
Created: 02/05/2011 07:10:46 AM PST

Anschutz Entertainment Group President and CEO Tim Leiweke confidently proclaims he is the man who can bring the National Football League back to Los Angeles by building a state-of-the-art, multi-use stadium downtown, near Staples Center.

But despite Leiweke’s bravado, building a 64,000- to 72,000-seat stadium won’t come cheap. Leiweke knows that. And that may explain why the stadium’s reported price has more than doubled since November.

The stadium’s price tag now stands at $1.35 billion, Leiweke said. That number is nearly double the $725 million it was widely reported that AEG said the stadium would cost when the company issued a request for proposals in November.

The $725 million figure strictly referred to “building” the stadium, Leiweke said. By his own estimate, it will cost “a billion and a half dollars” before a single game can be played when you add all cost involved in constructing the stadium at its proposed site – $1.35 billion – and another $150 million to buy into a team.

About two years before Leiweke unveiled his plan, Majestic Realty Co. CEO Ed Roski Jr. announced he planned to build a 75,000-seat stadium near the junction of the 57 and 60 freeways on the Industry and Diamond Bar line.

Roski said his stadium, which he dubbed the Los Angeles Stadium, would cost only $800 million, in large part because he could offset steel costs by building the stadium into the side of a hill.

The state-of-the-art facility, to be built on 600 acres of land owned by the city of Industry, would be the NFL’s first LEED-certified green stadium.

Roski doesn’t have to worry about other infrastructure costs, either. Industry’s residents already have passed a ballot measure that would permit the city to issue $500 million in bonds, about one-third of which would go to roadway improvements for the stadium.

For $725 million in “hard costs,” Leiweke said he can build an NFL stadium downtown with a retractable roof. That would allow the stadium to double as an events center, hosting NCAA Final Four games, World Cup soccer matches and mega conventions.

The additional $625 million includes the $350 million needed to rebuild the West Hall of the Convention Center, plus so-called “soft costs” – design fees, legal fees, furnishings, site clearing and building a replacement to the Los Angeles Convention Center’s West Hall, which sits where the stadium would be built, AEG representatives said.

Construction costs

Whether or not a stadium can be erected in downtown L.A. for $725 million remains to be seen. The stadium’s design has yet to be selected and a contractor has not agreed to build it on that budget.

AEG representatives cite the $810 million construction cost of the Cowboys’ new stadium in Texas as proof a similar venue could be built in L.A. for $725 million.

“If you look at the new Cowboys’ stadium, they built that for $810 million in hard costs. And we’re talking about spending $725 million in hard costs,” said ICON Venue Group President Timothy Romani, who Leiweke has picked to oversee construction of a downtown stadium.

According to Leiweke, his stadium will cost less than Cowboys Stadium because it will be substantially smaller.

“(Cowboys Stadium) is roughly twice the size of the 1.6 million-square-foot stadium we are looking to build,” Leiweke said.

It would cost more than $1 billion in construction expenses to build Cowboys Stadium in Los Angeles, experts say. That’s because costs are higher here.

The cost of construction in L.A., on average, is 30 percent more than Arlington, Texas, according to Bill Bury, who oversaw the construction and financing of Cowboys Stadium as the director of sports venues for Manhattan Construction.

“Of course, construction in Texas has been much less expensive than in California so one would need to adjust for the 90000 ZIP codes,” Bury said.

Construction workers in Los Angeles earn roughly double the wages and benefits that are paid to the same tradesmen in Texas, according to federal and state wage guidelines.

For instance, an ironworker working in Los Angeles earns $56.73 an hour in benefits and pay. Employing the same tradesman in the Dallas area costs $26 an hour, according to guidelines set by the U.S. Department of Labor.

“Texas is a right-to-work state where it’s basically a race to the bottom with wages,” said Robert Anthony, who is the assistant business manager for the Arlington, Texas-based Construction and General Laborers Local Union 154.

Building a stadium to meet earthquake safety codes contributes 10 percent of the 30 percent in added costs in Los Angeles, Bury said.

All expenses considered, Cowboys Stadium opened to the tune of $1.2 billion in 2009. That price tag included $390 million in “soft costs.”

According to Romani, AEG’s estimated “soft costs” of building a stadium in downtown L.A. will amount to about $275 million.

Deep pockets

Regardless of how much the stadium costs to build, Leiweke said AEG will foot the bill.

“We will put up 100 percent of the money for the football stadium no matter what it costs,” Leiweke said. “If it’s $2 billion, it doesn’t matter, we’re paying for it.”

But Leiweke’s most likely candidate for private funding, billionaire AEG Chairman Philip Anschutz, has not agreed to pay for a stadium or a team, even though Leiweke said Anschutz is excited about the prospect of bringing a team to L.A.

“We need to prove to him that this business deal works,” Leiweke said last month. “No one is going to commit to spend a billion and a half dollars until you make an agreement with a team.”

Leiweke took a step toward proving the business deal could work this week when he announced Farmers Insurance had agreed to pay for naming rights for his downtown stadium.

In exchange for the stadium being named Farmers Field, the insurance company would pay $20 million during the stadium’s first year of operation as part of a 30-year deal worth $700 million. If two NFL teams moved to downtown L.A., the deal’s total worth would increase to $900 million over 30 years.

“Farmers’ commitment and partnership also allows us to completely privatize the development of the stadium… ,” Leiweke said.

Of course, no money would exchange hands unless a team agrees to move to L.A. and the stadium is built.

Public financing

L.A. city officials have yet to approve the demolition of the Convention Center’s West Hall and two adjacent parking lots – or even the building of a stadium on publicly owned land.

Leiweke has asked the city to issue $350 million in bonds needed to build a replacement wing for the West Hall and replace parking lots.

City officials say they do not know how those bonds would be issued because they have yet to receive a formal proposal from AEG.

In its first official action, the L.A. City Council on Wednesday directed city staff to engage in discussions with AEG regarding the stadium, $350 million in bonds and replacement of the West Hall.

Council members also voted to recruit a financial analyst to examine the proposed benefits of the deal.

To repay the $350 million in bonds, Leiweke said the city would impose a seat tax on the stadium. AEG would cover the anticipated shortfall between the city’s bond payments and money collected by that tax, Leiweke said.

The stadium’s financing also would include making bond payments while the facility is under construction, Leiweke said.

“We guarantee the repayment of the debt service,” Leiweke said. “We believe, in Southern California, based on our economy, it is wrong to ask the taxpayer” for money.”

But before the West Hall can be torn down, the city has to figure out whether outstanding bonds on the building can be retired and rolled into new bonds, according to Jason Klee, an administrative analyst for the city.

Los Angeles owes more than $440 million in outstanding bonds on the Convention Center, city officials said. Los Angeles pays about $48 million annually on those bonds, according to city documents and officials. Leiweke said $50 million of the $350 million in bonds the city issues would go toward paying off the existing debt on the West Hall.

Mayor Antonio Villaraigosa did not return a half-dozen calls and a written request for comment for this story.

“It’s key that no public financing from the general fund is there,” Councilman Tom LaBonge said at the Jan. 19 committee meeting. “And also a full explanation, because people … don’t understand the reality of building these types of great venues that are important for our community.”

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