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27Jan/1214

NFL IN LA: WILLIAM AND DAME BETS ON FARMERS FIELD WITH TWO MARRIOTT HOTELS

This rendering shows a hotel tower planned by Marriott International, Inc. The company plans to operate a new 377-room hotel tower adjacent to L.A. LIVE. The 22-story high-rise will house two Marriott International hotel brands: Courtyard by Marriott and Residence Inn by Marriott. It will be built at the Northwest corner of Olympic Boulevard and Francisco Street, on an entitled site that the developers have agreed to purchase from AEG. Credit: 901 West Olympic Boulevard Limited PartnershipBy Jaboner Jackson 8 a.m. |  As reported first by the The City Maven, two Marriott properties scheduled for groundbreaking across from LA Live and the JW Marriott-Ritz Carlton complex received unanimous approval Wednesday by the Los Angeles City Council for tax breaks.  The vote allowed hotel developer Williams and Dame to keep half of the hotel tax revenues for the two planned Marriott properties.  The development remains a bet by AEG and its strategic partners on the eventual expansion of the Los Angeles Convention Center and construction of Farmers Field. 

 

In September, footballphds.com discussed the Marriott project in depth, especially as it related to AB 900, a bill passed by the California legislature in conjunction with SB 292, to expedite Environmental Impact Reviews for LEED infill site projects with construction costs ("minimum investments") of greater than $100 million.  In the case of the Marriott project, a 22-story Marriott Courtyard and Residence Inn will be built on a current parking lot at an estimated cost of $118 million.  AEG sold the parcel of land to Williams and Dame in the spring of 2011 as part of its ongoing efforts to build five new hotels around the LA Live complex and for helping to finance cost overruns for the AEG-built JW Marriott-Ritz Carlton complex.  (Refresh your memory on SB 292, AB 900, and the Marriott projects here.)

 

The move by the City Council comes as no surprise to the Wonderful Readers of footballphds.com, who understood long ago the relationship between AEG and the City Council.  Long before other news outlets understood the momentum of the Farmers Field stadium project, we were calling it a done deal on the city level.  Furthermore, our readers remember the JW Marriott deal that AEG struck with the City of Los Angeles in which the City of Los Angeles allowed AEG to keep as much as $270 million in city taxes through 2035.

 

Nonetheless, the Marriott project remains a bet by AEG's strategic partners on the continued expansion of AEG’s LA Live complex, which currently contains Staples Center, Nokia Center, JW Marriott-Ritz Carlton, and dozens of restaurants and entertainment venues.  And no bet is without risk.  The current hotel structure in downtown Los Angeles is sufficient for current convention needs, particularly since Los Angeles ranks 15th in the nation for convention center business.  Accordingly, the Marriott groundbreakings presuppose increased convention center business, which AEG and the City of Los Angeles hope are tied to construction of Farmers Field and a new convention center wing, commonly referred to as Pico Hall. 

 

The risk concerns the flipside to the bet--namely the possibility that Farmers Field will not happen, a risk that increased when the NFL rebuffed AEG's financial and management model for Farmers Field this fall, an issue first reported on by Jason Cole of Yahoo! Sports.  And since construction of Pico Hall is tied to construction of Farmers Field, the NFL's hesitation over AEG's stadium plans brought with it doubt about expansion of the Los Angeles Convention Center.

 

The City of Los Angeles, which has been left at the altar several times already by the NFL, might be thinking that history is repeating itself.  Late last year, Mayor Antonio Villaraigosa met with AEG's owner, Philip Anschutz, to discuss the stalled progress on Farmers Field, particularly in light of a delayed Environmental Impact Report and the NFL's own concerns about the financial model and cost of the stadium.  And such hesitation has seemed to have trickled into yesterday's Marriott vote, in which Williams and Dame has been incentivized to continue with groundbreaking on an already entitled project.  The vote was odd to say the least.  The Marriott projects had already reached significant developmental milestones.  But there seems to a growing sense of unease by the City of Los Angeles.   By keeping half of the hotel taxes, the Marriott projects become more financially palatable if Farmers Field and Pico Hall do not come to fruition. 

 

Although Farmers Field has always been a done deal at the city level, it is the NFL that must finally make Farmers Field a reality. And the City of Los Angeles is realizing that once again the decision to return the NFL to Los Angeles is not theirs to make.  The City of Los Angeles is getting antsy again.

 

References:

AB 900, SB 292, and More Hotels Around LA Live (09/2011)

AEG’s Missteps With Farmers Field (12/2011)

Farmers Field and the City of LA (06/2011)

Remembering the LA Live Deal (06/2011)

The City Maven (01/2012)

 

jaboner@footballphds.com

Comments (14) Trackbacks (0)
  1. More hotels means more places for me to take Jose’s mom for the deed.

  2. The more development around the wasteland that is down town L.A. the better. Before AEG, there was NOTHING. Now you have commerce, development. People need to look at the big picture and remember how the area was a wasteland before AEG.

  3. With AEGs track record, it would be foolish to think they won’t get it done. These things take time to develop. The city wants Farmers. AEG wants Farmers. It seems like the fans want Farmers. The thing that I’m waiting to see is if the city will have to incentivize Farmers too. How will the public feel about this if push came to shove and by public subsidies we get a stadium and without we don’t?

    • the fans do not overcome economics.

      this land was owned by aeg since staples was built and I’m pretty sure the hotel plans were in the works well before the football stadium was even being considered at the cc.

      furthermore 10 home games a year does not justify a need for new hotel construction…this is clearly a response to convention demand.

  4. Let’s look at the facts. USC is going to renovate the Coliseum. USC will have 6 home games. It’s a total waste to not bring the NFL to the Coliseum. The problem the NFL used to have was it was janky. You know USC will get it done up good for the baller alums.

  5. bring the superbowl to la!

  6. Good piece, thanks for writing. This article shows the effect of AEG on that entire part of Downtown. The synergies between Staples and the Convention Center, Live, Nokia, Farmers, other hotels exist because AEG saw a vision and executed that vision. I’m not sure AEG or the Marriott need tax credits at this stage anymore though. It would be worth knowing why the city council allowed the tax credits. When you read the source article, it says that Rosendahl was vocal against the tax credits and then he ended up voting for them. What’s this reason? Has anyone interviewed the city council about Farmers Field recently? If not, this might be a good thing for you to do. I know I would be interested in reading it.

  7. I’m just waiting for the EIR to come out. I fully expect once Barack Obama (if re-elected) allows the Bush tax cuts to expire after the year, then we’ll see the Spanos Family sell that 35% share to AEG. Once that’s done then in 2013 the Chargers will play at the Coliseum for a couple seasons and once 2015 comes the Rams will leave St. Louis for Los Angeles too. Then you have two teams in LA from the AFC & NFC plus AEG will get a little over a billion dollars in naming rights with two NFL teams. I’m still convinced that the Raiders will end up being a tenant at Santa Clara Stadium. Oakland will eventually lose all 3 of its pro-sports teams and they should just demolish those two stadiums and redevelop that area for Oakland. But I promise that the Warriors will go to San Francisco to have an arena across from AT&T Park, the Athletics will move to San Jose and the Raiders will move to Santa Clara.

  8. Agree on Chargers/Rams to Farmers if it happens and Oakland losing all their teams but where did you hear about the Warriors to SF? It’s looking like Warriors to San Jose.

  9. Search on Google News about the Giants & Warriors talking about an arena across the China Basin on the parcel of land that the Giants own. The Warriors probably won’t get to San Francisco until the 2017-18 season. I highly doubt the Warriors move to San Jose, last year Larry Ellison offered to buy the New Orleans Hornets to relocate them to San Jose at the HP Pavilion. Sacramento Kings might relocate after this season as well to Anaheim at the Honda Center and change the name to Anaheim Royals.

    • It never made sense to have the Kings playing in Sacramento. But then again how much sense does it make to have 3 teams (Lakers, Clippers, Kings) in LA/OC? Even though it’s not a popular choice, some place like Fresno/Bakersfield would do better for an NBA team than OC. People forget that there is a central California too.

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