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Experts Say LA Is Making The Right Call When It Won't Pay For New Stadiums

While many cities across the country bend over backward to attract or keep sports teams by helping the owners build modern stadiums, often offering public funding and tax breaks, Los Angeles is a different world. 

If owners want to play ball in the city of Angels, they should prepare to bring their checkbooks. The owners of the new Los Angeles Football Club privately financed the $300M-plus Banc of California Stadium, the latest stadium to open in the city.

“The stadium is a nice amenity but there’s too many things to do here,” University of Southern California Lusk Center for Real Estate Director Richard Green said. “LA doesn’t need it, so it’s not going to pony up any money for it.”

The Los Angeles Football Club held a ribbon cutting for its new Banc of California Stadium in Exposition Park in Los Angeles
Banc of California Stadium in Exposition Park Los Angeles

Privately financing stadiums has become the norm in Los Angeles, and experts say it is a model that should be followed by other sports team owners and cities across the nation.

“I applaud LAFC doing what every sports team should do,” Field of Schemes editor Neil deMause said. Field of Schemes is a website that tracks city spending on professional sports stadiums. “It is not unheard of, what they are doing. It’s just more common in Los Angeles and California.”

Green said when pro teams enter the Los Angeles market, the value of the franchise immediately goes up. 

“LA is a world-class city. It has an enormous television market,” he said, adding that Los Angeles and Orange counties have 13 million residents. “It’s very valuable for a team to be here. [LA officials] don’t need to beg. In some smaller cities, this is their way to gain an identity.” 

On Wednesday, the 31 owners, among them Nomar and Mia Hamm Garciaparra, Magic Johnson and several commercial real estate executives, held a ribbon-cutting ceremony for the grand opening of the new Banc of California Stadium.

Designed by Gensler and built by PCL Construction, the $350M, 22,000-seat soccer stadium is the most expensive Major League Soccer stadium in the nation.

Magic Johnson, co-owner of LAFC, speaks on the mic during a ribbon cutting ceremony April 18, 2018 at the new Banc of California stadium  in the Exposition Park neighborhood of Los Angeles.
LAFC co-owner Magic Johnson, co-owner Peter Guber, Los Angeles Mayor Eric Garcetti and LAFC head coach Bob Bradley

The owners spared no expense on a stadium that will have to compete with venues such as the Staples Center, Dodger Stadium, StubHub Center and the under-construction Los Angeles Stadium at Hollywood Park in Inglewood

Los Angeles is one of the outliers in the nation when it comes to having owners privately fund professional stadiums. 

The home of the Los Angeles Lakers, Clippers and Kings, the $375M Staples Center, which opened in 1999 in downtown, was privately financed. AEG spent $150M to build out the MLS Los Angeles Galaxy’s StubHub Center in Carson.

Rams owner Stan Kroenke is spending around $5B to fund the 298-acre Los Angeles Stadium and Entertainment District in Inglewood.

Those privately funded efforts stand in stark contrast to the efforts of other cities to bring in sports teams.

The Cincinnati City Council recently approved nearly $35M in public financing to build a $200M stadium for FC Cincinnati, in hopes of becoming an official MLS team. MLS officials are convening this week to decide on the league’s expansion plans.

A few years ago, Washington, D.C., leaders approved funding of about half of the construction costs for a new $300M stadium for its team, D.C. United. That stadium is slated to open in June.

Studies show at least 13 MLS stadiums have received some sort of public taxpayer money from their respective cities.

Proponents of publicly funded stadiums say the public funds are offset by the amount stadiums generate in economic growth for the surrounding areas. Stadiums provide jobs and business and attract tourists. 

In Cincinnati, it was an opportunity to spur redevelopment in a neglected part of town.

"This is a once-in-a-lifetime opportunity — $250-plus million invested in a community that has historically lacked investment," Cincinnati City Council Member Jeff Pastor said, WLWT5 reported.

A photo of the Los Angeles Football Club's Banc of California Stadium field in Los Angeles
Banc of California Stadium field

Both Field of Schemes' deMause and USC's Green cited studies that show professional sports teams and stadiums are not the economic engine touted by supporters and team officials.

Several studies in recent years have shown there is little economic benefit when it comes to having a stadium.  

"I would actually say it is one of the worst things you can do as a business owner — to set up next to a stadium,” deMause said. “The stadium is only open half the time. There’s little foot traffic."

Green said LA does not allow itself to get extorted to build a stadium.

“It reflects cities that have self-confidence,” Green said. “They know the city is more important than the team.”

Banc of California Stadium will feature an intimate seating section where fans can feel they are part of the action. For well-heeled guests, there is a VIP club with indoor and outdoor suites with a pool deck. 

Visitors could grab drinks at a Heineken bar with a view of the action, and there are seats where fans could put their feet on the playing surface.

“It’s like going to a basketball game, where your feet touches the hardwood,” LACF President and co-owner Tom Penn said before the ribbon-cutting ceremony.

“This is a one-of-a-kind venue in the planet,” Penn said. “This is a distinctly Los Angeles venue.”

Los Angeles Football Club President Tom Penn greets the crowd during a ribbon cutting ceremony April 18 at the Los Angeles Football Club stadium in Los Angeles.
LAFC President Tom Penn

Penn said his ownership group is bullish on the stadium and the Exposition Park area is seeing a renaissance of commercial development.

He said when the MLS franchise was awarded in 2014 there was little to no discussion with his group of owners about having part or all of the project financed by local or state taxpayers.

“No, it’s very difficult. We never sought that kind of public funding,” Penn said. “It was never part of the plan. I don’t think there has been a publicly funded team in the city in decades. It doesn’t happen."

Los Angeles City Council President Herb Wesson, who has been either a state or local politician for 20 years, said he cannot remember when a sports team owner approached the council to publicly fund a stadium.

“What we try to do is work with the owners and developers and hasten their ability to build the stadium,” Wesson said.

It took less than 20 months for the Banc of California Stadium to be built. 

“We like to form a public and private partnership and in this case we are happy with what we have done,” Wesson said.

The exterior of Banc of California Stadium the new home of the Los Angeles Football Club
Banc of California Stadium in South Los Angeles

Penn called the Banc of California Stadium a civic asset. Forty percent of the stadium’s employees are local residents. More than 3,000 jobs were created and many women- and minority-owned businesses were hired for the building of the stadium, he said.

With the Exposition Park area seeing several destination-type developments around USC and the under-construction Lucas Museum of Narrative Art, Banc of California Stadium will be a hub for Angelenos to gather to be entertained with sports, concerts or music festivals, he said.

“There is a complete renaissance in Exposition Park,” Penn said. “It’s just really incredible to be in that location and to be part of this revitalization.”

“Our mission is to unite the world city through the world’s game and we feel like this stadium is the perfect place to do that,” he said.

CORRECTION, APRIL 20, 10:05 A.M. PT: A previous version of this story had the name of the Lucas Museum of Narrative Art wrong. The story has been updated.