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10Apr/1228

NFL IN LA: USC’S MASTER LEASE FOR THE LOS ANGELES COLISEUM

Master Lease USC ColiseumBy Jaboner Jackson 9:30 a.m. | While local fan attention focuses on AEG's Environmental Impact Report for Farmers Field as the next step in the return of the NFL to Los Angeles, the University of Southern California (USC) and Los Angeles Memorial Coliseum Commission continue to work from behind closed doors to cede operational control of the Coliseum to USC.  Last August, footballphds.com was the first and only media outlet to report that USC would be gaining operational control of the Coliseum, and sure enough the process is quickly coming to fruition.  Today, we examine the terms of USC's Master Lease for the Coliseum and detail how USC will figure prominently into the return of the NFL to LA.

 

Allegations of Corruption, Financial Mismanagement, and Secrecy

 

The Coliseum and its associated bodies have become the poster child for public mismanagement and corruption.  As expertly reported by the Los Angeles Times and LA Weekly, six individuals were indicted last month on financial misconduct relating to embezzlement and bribery.  Included are ex-Coliseum manager Patrick Lynch, ex-events manager Todd DeStefano, Coliseum janitorial contractor Tony Estrada, former technology manager Leopold Caudillo, Jr., and two rave concert promoters, Pasquale Rotella and Reza Gerami.  Five of the six individual have been arraigned.  Estrada has fled the country to Brazil rather than face charges. 

 

LA Weekly, largely through the work of Dennis Romero, drew public attention to possible Coliseum misconduct almost two years ago after the death of a teenager of an ecstasy overdose at Electric Daisy Carnival.  The LA Times subsequently expanded on the investigative reporting of possible wrongdoings in Coliseum business transactions, thereby putting pressure on the District Attorney's office to investigate, which they have been doing now for the past eighteen months.  The allegations of corruption and financial mismanagement provided yet another backdrop by which USC has been able to negotiate terms of a Master Lease. 

 

Meanwhile, the main impetus for the Master Lease was related to the Coliseum's inability to fulfill contractual obligations of $60 million in stadium renovations.  Accordingly, per USC's lease terms for the Coliseum, USC had three options last fall in light of these failed contractual renovations:  1). Asking for and negotiating a Master Lease, 2). Breaking its lease and leaving the Coliseum without fault, or 3). Making its own renovations on the Coliseum in lieu of lease payments.  USC chose the first option last fall.  Thereafter, closed door negotiations between the Coliseum Commission and USC began. 

 

USC Master Lease Terms

 

Current terms of the Master Lease between the Coliseum and USC include the following (NFL related items are bolded):

 

1. USC will lease the Coliseum, Sports Arena, 110 freeway sign, parking lots, and associated properties currently owned by the Los Angeles Memorial Coliseum Commission.

 

2. USC will maintain an advisory board to guide the staging of events at the Coliseum and Sports Arena for the "public benefit."

 

3. The initial lease terms will be twenty (20) years.  USC will then have four (4) five-year renewal options and then one (1) two-year renewal option.  USC will retain a first refusal right for additional lease terms.

 

4. USC will pay base rent to the Coliseum Commission.  USC will also pay a percentage of a Calculated Amount each year of the profits to the Coliseum Commission, in sliding scale fashion. 

 

Table 1: Calculated Amounts Payable to Coliseum Commission Annually

Calculated Amount

Payable by USC to Coliseum Commission

$0 - $2.5 million

5%

$2.5+ million - $5 million

10%

$5+ million - $7.5 million

15%

$7.5+ million

20%

 

Footballphds.com

 

5. USC will perform and finance renovations, including structural upgrades, locker room upgrades, and stadium seating, which USC estimates will be almost $100 million.

 

6. USC will retain all monies related to the selling of naming rights for the stadium and its components and affiliates. 

 

7. USC will exclusively have the right to manage and schedule events for the Coliseum and Sports Arena.  The Coliseum Commission will retain the right to schedule eight (8) events annually at the Coliseum including an annual Fourth of July event.

 

8. USC will negotiate in good faith with the NFL for housing one (1) NFL team for up to four (4) years at the Coliseum at a lease rate deemed to be fair market value. 

 

9. USC will make the Coliseum available to any Olympic and International Special Olympic events. 

 

10. USC will make the Coliseum available for the Super Bowl. 

 

11. Coliseum Commission will receive ninety (90) complimentary tickets to USC games.  USC will negotiate complimentary tickets for the Coliseum Commission for NFL events. 

 

12. USC will provide the Coliseum Commission with office space.

 

13. USC will receive the transfer of the Coliseum Commission's liquor license.

 

14. USC will retain all advertising and signage rights, while maintaining a ban on certain product advertisements, such as tobacco products.

 

15. USC will have the right to raze the Sports Arena if USC wishes.  USC will also have the right to stop operating the Sports Arena.  In such a case, USC will have the right to transition events to USC's Galen Center.

 

16. USC will repair and maintain the Coliseum.

 

Next Step for Master Lease

 

The Coliseum Commission expects to release a modified Master Lease this week.  Tentatively, the Coliseum Commission is set to vote on the Master Lease on May 2.

 

Although the Rose Bowl has been alluded to as possible temporary home for a relocating NFL team while either Farmers Field or LA Stadium gets built, the Coliseum remains the clear frontrunner as the team's temporary home.  Current Rose Bowl renovations are being done for the benefit of UCLA football and the Rose Bowl's own events.  Pasadena residents in the Arroyo Seco rightly have been reluctant to expand Rose Bowl events due to traffic, pollution, and noise concerns.  Meanwhile, both AEG and Majestic Realty have solid working relationships with USC. Both AEG and Majestic will preferentially work with USC over the Rose Bowl as a temporary home for a relocated team.

 

***

 

This week, we continue to dive into AEG's EIR for Farmers Field.  Meanwhile, brush up on NFL in LA lingo here and take our NFL in Challenge here. 

 

 

Disclaimer: The FOOTBALLPHDS have ongoing relationships with the Marshall School of Business of USC and the Annenberg School of Communication of USC. 

jaboner@footballphds.com

 

Comments (28) Trackbacks (0)
  1. Its good to see the Coliseum is transferring to capable hands. the Coliseum commision has let one of the best college football venues in the nation get run down and outdated due to their mismanagement and greed. The first thing that needs to get done is to remove the sun deck and bring the seats from the turnstyle end of the stadium closer to the field. That will increase usable seating capacity. Next thing they need to fix are the bathrooms. It’s like walking into County Jail in there. Last thing they need to do is bring back the beer gardens. Screw the Pac-12′s ban on booze. I want my Miller from the keg during the routine halftime walkaround the stadium.

  2. It’ll take more than 100 million to make the Coliseum pretty.

    You what what would be great? If USC steals the NFL team away. Oh wait, USC is already a professional football school.

  3. all the pieces are falling into place RAIDER NATION TO COME BACK TO LA

  4. 1 thing the writer didn’t say is that the entire process could be illegal. these “closed door” sessions are against commission bylaws. it’s also not in the public interest to give up the coliseum to a private group when the coliseum is a public entity owned by the state, county, and city (ie people). the best solution is to get a real group of commissions and manager who won’t use the coliseum as their own bank account. it needs new appointment procedures. it doesn’t need to be given to usc.

    • the coliseum has run amok for at least 20 years and their failures have been well documented…the mismanagement by the commission clearly indicates that the rampant corruption outweighed any sort of management in the name of public good.

      clearly the public management via political appointment has been an abject failure…it’s time to try a new management model and usc has been the only entity that has kept this landmark from falling into disrepair.

      • I’m familiar with these negotiations. It’s not the corruption that triggered these talks. These talks were triggered by the current USC lease. The current lease has provisions in it that mandate renovations. The renovations were not done, the provision was triggered. The corruption is icing on the cake. It’s also a way for the public to accept the transition of a public entity to a private manager without backlash.

        • agree with you but these talks have been going on for well over a decade…the last lease negotiation was simply the 1st time these talks were ever documented.

          usc has been angling for 100% control the coliseum since the raiders left.

  5. Am I missing something? Why does the Coliseum commission need 50 free tickets? Isn’t that called bribery?

  6. Off topic but UCLA needs an on campus stadium to truly compete with USC (and now Oregon too).

  7. The most fascinating part is the stipulation about NFL teams and housing 1 team. What about 2 teams? The city probably has the inside track (but not as much as AEG of course) about what’s really happening with Farmers. So this could bode very well for the NFL here. Of course, this might just be attorneys and their so called “forward thinking” and it could all be nothing.

    • Scheduling conflicts and field maintenance has to be on USC’s mind if an NFL team plays there as well. As for a 2nd NFL team coming before Farmers Field or City of Industry Stadium get built, they could easily play at the Rose Bowl as their renovation will be finished in 2013.

  8. Haven’t seen anything in the Farmers Field EIR about the possibility of the Coliseum parking lots being used for Farmers Field games. Seems like a natural considering the 2 sites are only 2 miles apart and directly connected via the Metro Expo line.

  9. I don’t know what the seating capacity is but I do know the Coliseum was used in The Most Crucial Game episode of Columbo.

  10. Great article JJ. I hope all the pieces are coming together for a NFL team.. The funniness thing is people crying about a privately financed stadium and noise cars in the neighborhood when their is already staples. championship riots, a convention center. I people don’t like sports facilities next to their home why TF they move there. Other cities are complaining about tax money like Minnesota but I don’t hear crap about noize and transportation. Downtown Minneapolis is similar to LA that a football stadium will go smack down in the center with limited parking. Other cities would bend over just to have a NFL team. This time LA is doing it the best way we can without tax money so lets get it done. I am tired of all the cry babies.

    • make it happen tim bring the nfl home!

    • trancefreak I bet you’ll be happy if they can just bring EDC & MM back to DTLA! screw the nfl when you can party till the next afternoon.

      • +1Million bring back EDC to LA Coliseum. LV is crap for EDC especially at that race track. The track was banked and complete bullshit.

        • LMAO!!! I was at the very last EDC in Los Angeles. It was fun, it’s a shame that some kids are retarded and don’t know when to drink water or their friends that can’t take care of themselves, let alone their friends and other human beings.

          • HARD is now sooooo much better than EDC. I’m going to Coachella this weekend 2 even tho I promised myself last year I wud nevr go back. Hopefully AEG doesn’t muck this up! Last year was torture!

  11. I wish the City of Los Angeles would just sell the damn Coliseum to USC, it’s a hassle for our government to maintain and they certainly can use the cash-infusion plus USC could turn that entire site into something spectacular if they do (and they should) tear-down the LA Sports Arena.

    • Doesn’t the State own the Coliseum? I think Schwarzenegger wanted to put it up for sale a couple of years ago when he illegally tried to auction off the State’s real estate assets. I would also like to see USC take ownership of the stadium. It’s as good as on campus and the university if infinitely more capable of managing the facility. Not sure about security though, especially since those two exchange students got shot the other day.

      • the state, city, and county all own part of the coliseum not sure how the % is split out but talk about the 3 stooges of local government

  12. one more story on the total train wreck that was the coliseum commission

    http://blogs.laweekly.com/informer/2012/04/coliseum_audit_raves_cash_payments.php


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