Promises, promises - AEG is never short of them

Several weeks ago Tim Leiweke & Co., citing a study that AEG itself had commissioned (but never released), said that a downtown stadium and updated convention center would generate $42 million in annual tax revenue for the city - an impressive-sounding number that happens to bear little resemblance with reality. Once you break down the specifics, as AP writer Jacob Adelman did, the revenue number is based on some pretty tall assumptions - that AEG will draw an annual Pac-12 championship, major boxing championships, and of course, Super Bowl after Super Bowl. Some of this might happen, but certainly not all of it. From AP:

The projected 38 events outnumber tallies for comparable venues such as Atlanta's Georgia Dome, which hosts about 33 events each year. Arlington, Texas' Cowboy's Stadium, Glendale, Ariz.'s University of Phoenix Stadium and Indianapolis' Lucas Oil stadium each draw 25 events per year, according to a Metropolitan Research and Economics tally of events at comparable NFL venues released separately by AEG. "Thirty-eight does seem high to me," said Daniel Rascher, president of San Francisco Bay Area-based consultancy SportsEconomics. "It just seems it would be pretty amazing to have that many events in basically a football stadium."


AEG also expects to host a boxing match each year with 50,000 people in attendance, adding $380,625 to government coffers. Fight promoter Roy Englebrecht, who helped form Golden Boy Promotions with boxing champ Oscar De La Hoya, said AEG is unlikely to stage a match with such a crowd even once, let alone every year, unless it virtually gives tickets away. "If you look back in the history of professional boxing in the United States, you could probably put on one hand the number of championship fights that drew 50,000," he said.

Also highly suspect are the number of additional conventions that would come to L.A. with an updated facility. The AEG-paid research says 14; the city's own consulting firm says five. Big difference. Frankly, even five may be pushing it. From LAT columnist Mike Hiltzik:

L.A.'s chief regional competitors (Anaheim, San Diego and San Francisco) are upgrading their own convention centers, so they're likely to maintain their competitive lead over L.A. Also, downtown Los Angeles offers only 1,685 hotel rooms within half a mile of the convention center. In Anaheim and San Diego, the figure is closer to 8,000. In San Francisco, it's 19,000. The marketing challenge for even a spiffy new L.A. convention center "should not be underestimated," the consultants wrote, understatedly.

Folks, this is only the beginning of what is likely to be the incredible shrinking stadium deal.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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