AEG in K.C. and Roger Federer

Reporters who cover Anschutz Entertainment Group know that the privately-held company is, well, private. The boss himself, Phil Anschutz, hasn't granted a one-on-one media interview since the Nixon administration and he declined to sit down with the L.A. Times' Glenn Bunting before the paper published a long feature about him in July.

Anschutz also didn't bother to speak with reporter Justin Kendall of The Pitch, Kansas City's alternative newsweekly, about AEG's deal to construct a $276 million sports arena in downtown K.C. Scheduled to open in 13 months, the arena is being built on spec: no NHL or NBA team has yet agreed to be a tenant, and Kendall notes that at least seven franchises (including the team formerly known as the Anaheim Mighty Ducks) sniffed at K.C. before ultimately passing.

In the article, entitled "We're Pucked," Kendall wrote:

The responsibility for finding a team belongs to AEG. The city struck a deal with AEG in July 2004 and hailed it as risk-free to taxpayers. AEG would cover construction cost overruns and operating costs. The city reportedly had an in with AEG; Herb Kohn, a senior partner at Bryan Cave, the law firm that helped the city secure its contract with AEG, is a friend of the Leiweke family.

[Break]

The man offering more promises than anyone else, however, has been AEG's [Tim] Leiweke. Leiweke is a familiar face on the Kansas City sports scene. In the '80s, he was general manager and later president of the Kansas City Comets, an indoor soccer franchise that began with promise and kept crowds flowing into Kemper Arena. Leiweke left the team in 1988 to work for the Minnesota Timberwolves NBA franchise; three years later, the Comets fizzled out.
Leiweke talked about a major tenant for the Sprint Center even before voters in August 2004 approved a hike in car-rental and hotel and motel fees to pay for the new arena.

Early on, Leiweke said the only question would be whether the Sprint Center's tenant would be a hockey team or a basketball team, according to the Star. He continued his optimism in July 2004. "If you build a world-class facility and create the economic streams for the franchise to thrive, you're going to get an NBA and an NHL team here," he told the Star.

More than a year after those initial comments, Leiweke said in September 2005 that either an NHL or an NBA team would be in the Sprint Center "when you open the doors," the Star reported. In November 2005, he played up the Penguins as a possible tenant. "The Pittsburgh Penguins can be the Kansas City Penguins," he told the Star, "no question about it."

[Break]

American City Business Journals, the parent company of the Kansas City Business Journal, analyzed 179 markets earlier this year to see if residents had enough income to support pro sports teams. The study found that Kansas Citians can't even support the teams already here [the NFL Chiefs and the MLB Royals]. To support a hockey or a basketball team, Kansas City would need another $100 billion in personal income. "There's a new arena going up in Kansas City, inspiring brave talk about pursuing a franchise in the NBA or NHL," according to the report. "But the hard truth is that the city has already lost teams in both of those leagues."

[Break]

AEG faces no consequences if it fails to bring a team to Kansas City. The arena management company won't default on its contract with the city as long as the city continues to believe that AEG is doing a good job looking.
AEG invested $50 million in the Sprint Center's construction and signed a 35-year management agreement to operate the arena. The contract calls for AEG to "use all reasonable efforts" to lure a team to Kansas City within three years "at no cost to the city."

In fact, if AEG does find a tenant, it may lose money. AEG gets all of the revenue from the Sprint Center's 72 luxury boxes and club seats at events such as circuses and college basketball tournaments. If it finds a tenant, AEG would likely have to give up some or all of that revenue.

Every luxury suite has already sold out, at an average price of $110,000. In a remarkable show of blind faith, corporations and wealthy Kansas Citians have opened their pocketbooks for the suites, even though they have no idea what events they'll be attending. AEG will collect more than $7.5 million a year.

The Pitch recently requested interviews with AEG representatives to detail what efforts they've made to bring a team to Kansas City. Michael Roth, AEG vice president of media relations, responded in a conference call with Sprint Center General Manager Brenda Tinnen. At times, they seemed optimistic that a team would come. Other times, they hinted that it wouldn't happen as promised by next fall.

AEG won't reveal which teams are in discussions with Kansas City. Roth said during the conference call that the secrecy is "out of respect for the cities where they already play and out of our agreement that we have with the leagues." But Roth assured the Pitch that "numerous discussions" have taken place between AEG and prospective NBA and NHL owners about relocating to Kansas City. "There has not been a single franchise that would ultimately be sold or moved that hasn't had discussions with representatives of Sprint Center," Roth said. "And furthermore, with the NBA and NHL clearly being aware of the Sprint Center, they are playing a role in properly positioning the building to teams that are realistically looking to move."

* * *

Roger Federer did more than win his third straight U.S. Open and 9th Grand Slam title this past weekend. He also snapped the cover jinx at Play magazine. The New York Times' sports quarterly has published three editions in its first year of existence, with cover photos of skier Bode Miller (before the 2006 Winter Olympics), Brazilian soccer star Ronaldinho (before the 2006 World Cup), and Federer (before the 2006 U.S. Open). Miller bombed in Torino, and Brazil didn't get past the quarters. But Federer defeated Andy Roddick in the finals of the Open, giving Play editors a breather before the next issue appears in Oct.

September 11, 2006 1:26 PM • Native Intelligence • Email the editor
 

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