Southern California’s Most Influential Executives in Sports.
Playing to Win
Tim Leiweke didn’t let conventional wisdom stop him from building Staples Center; now he’s on the team trying to bring the NFL back to L.A.
By David Davis
Last summer, as Anschutz Entertainment Group planned its inaugural Fourth of July fireworks show at the Home Depot Center in Carson, AEG President Tim Leiweke got word that the Rose Bowl’s $100,000 fireworks celebration in Pasadena was billed as the largest in Los Angeles County.
So, just days before the event, Leiweke called the pyrotechnics company and upped his order of Roman candles and custom-made aerial shells to a whopping $125,000.
“The Rose Bowl was making a claim that it had the largest fireworks show in Southern California,” Leiweke said. “I wanted to clarify in the minds of the consumer that that wasn’t the case, and I think we did that.”
The one-upmanship was both a good-natured jab at a rival venue and a not-so-subtle reminder that the ultra-competitive Leiweke and, by extension, privately-held AEG plays to win.
Since arriving in Los Angeles in 1996 and overseeing construction of Staples Center, Leiweke has compiled a track record that, while not unblemished, is difficult to top. As head of the sprawling sports and entertainment holdings of billionaire Philip Anschutz,
he oversees 50 companies with 3,000 employees and gross revenues exceeding $1 billion.
In the Business Journal’s ranking of Southern California’s 25 most influential executives in sports, the 46-year-old Leiweke got the nod over longtime local fixtures like Los Angeles Lakers majority owner Jerry Buss and real estate mogul Edward Roski Jr.
“With Staples and the Home Depot Center, he’s accomplished more than nearly anybody has in the previous 50 years,” says L.A. Avengers owner Casey Wasserman. “It’s pretty staggering in a community that doesn’t always treat outsiders well.”
AEG’s holdings include the Los Angeles Kings, the L.A. Galaxy and four other Major League Soccer teams, 30 percent of the Lakers (with Roski), Staples Center, Home Depot Center, Hollywood’s Kodak Theatre and live-music promotion.
And that’s just its domestic holdings.
“Anyone who doubts or fails to acknowledge Leiweke’s omnipotence, does so at great risk,” says David Carter, principal in the Sports Business Group, a consulting firm that conducted the study for the Business Journal.
‘Cocoon of arrogance’
From his base in a third-floor office above the Palm Restaurant in downtown L.A., Leiweke lives the life of a senior sports executive: that is, extended hours, meetings and frequent travel. He consults regularly with Anschutz, and when he’s in town, Leiweke can often be found at Staples Center a block away.
His prickly demeanor sometimes offends politicians, the media or community leaders; AEG’s swagger and stealth has been described as a “cocoon of arrogance.”
Nevertheless, he knows when not to play hardball. He says he “gave away” Staples Center, rent-free, for ESPN’s X Games last year and will do so again this August to publicize the venue and build the brand. The strategy also gave suite-holders an extra event, generated goodwill with an important media partner and opened up Staples to the younger, extreme-sports set.
Leiweke’s also willing to invest in money-losing events such as boxing. Last year’s Lennox Lewis-Vitali Klitschko heavyweight championship fight was the type of event that, in Leiweke’s view, will help Staples reach its goal of being the premier entertainment venue in the world.
And he’s forged pragmatic alliances, sacrificing his own plan to bring an NFL team to downtown in favor of a unified effort at the Coliseum.
“I think AEG is doing exceedingly well with respect to labor-management issues and community benefit issues,” says state Assemblyman Mark Ridley-Thomas, D-Los Angeles, a Coliseum backer. “They’re having a huge impact on the landscape that is downtown Los Angeles.”
Leiweke says he won’t rest on past achievements.
He sets goals even if he knows they’re out of reach. He guaranteed that the Kings would make the playoffs this year, despite the team being decimated by injuries. (As of March 25, the Kings were three points behind in the race for the final playoff spot.)
Similarly, he predicts that AEG will break ground on a $1 billion downtown entertainment district, dubbed LA Live, by Nov. 1, though delays over an anchor hotel are still an obstacle.
It’s not necessarily that he thinks that the target date will be met. But as he says, you have to come out and set a goal in order to drive people toward it. “If you don’t, you’re never going to get anything done,” he says.
Midwest experience
Born and raised in St. Louis, Leiweke grew up a die-hard sports fan. He never went to college, instead entering the business at age 21 as the assistant general manager of the St. Louis Steamers of the Major Indoor Soccer League. In 1981, he joined with two of his brothers to run the league’s Kansas City Comets. (Younger brother Tod is now chief executive of the NFL’s Seattle Seahawks.)
In that baseball- and football-rich region, they succeeded in making indoor soccer a major draw by out-hustling the competition. With two-for-one ticket promotions and laser shows, the Comets even outdrew the NBA’s Kansas City Kings, forcing the team to leave town for Sacramento in 1985.
By the end of the decade, Leiweke was vice president of the NBA’s Minnesota Timberwolves and helped the expansion team set attendance records. To pump up revenue, he took advantage of every possible gimmick, including naming rights (setting a benchmark of $2 million per year for the Target Center), luxury suites, and corporate partnerships. “Tim was the first to recognize that buildings are the engines for economic development,” says former assistant Shawn Hunter, now chief marketing officer for Anschutz Entertainment Group.
Leiweke then moved to Colorado to run the NBA’s Denver Nuggets for Ascent Entertainment Group, a provider of in-room entertainment services now owned by Liberty Media Corp. He also helped Ascent acquire the NHL’s Quebec Nordiques and move them to Denver. But as Leiweke tried to build a new facility, which was to be constructed on land owned by Denver-based Anschutz, the deal fizzled and Leiweke ultimately resigned.
Shortly after becoming president of U.S. Skiing, Leiweke was approached by Anschutz, who had bought the L.A. Kings with Roski shortly after owner Bruce McNall’s financial collapse.
Anschutz, who does not speak to the press, made his fortune, estimated by Forbes at $5 billion, by defying conventional wisdom first in oil speculation, then in railroads and telecommunications. He is the largest shareholder of Qwest Communications International Inc. and also controls Regal Entertainment Group, which operates around 20 percent of the nation’s movie screens.
Uphill project
Both Roski and Anschutz saw the potential of parlaying their purchase of the Kings into a new venue, but as the point person for the Staples Center project, Leiweke faced an uphill battle. The L.A. area hadn’t seen a sports facility built since 1967, when Jack Kent Cooke erected Inglewood’s “Fabulous Forum” for the Lakers and the Kings. The city of L.A.’s labyrinthine approval process was thought to be impossible to navigate; then-City Councilman Joel Wachs wrapped his mayoral candidacy around opposition to proposed public subsidies.
Finally, downtown L.A. was considered a hell hole.
“Having been born and raised in Los Angeles, I appreciated that dream of bringing something big to downtown,” says Lakers executive vice president Jeanie Buss, and daughter of the team’s president, Jerry Buss. “But I also had lived here long enough to know how difficult it was. Tim saw what a state-of-the-art arena could bring to downtown and never lost sight of the goal, even though there were many people trying to stop the process.”
The public-private partnership included deals with News Corp.’s Rupert Murdoch, who bought 40 percent of the arena for a reported $122 million, and Jerry Buss, who sold a minority interest in the team to Anschutz and Roski. Ten corporate partners chipped in an additional $25 million, while office-supply company Staples Inc. ponied up $116 million over 20 years for the naming rights. L.A.’s Community Redevelopment Agency eventually added $12 million.
By the time the $375 million arena opened in 1999 it was already in the black. Today, Staples is one of the busiest venues in the world, with 250 annual events. Besides housing five pro sports teams (the Clippers play there, as do the Arena Football League’s Avengers and the WNBA’s Sparks), Staples has hosted the 2000 Democratic Party Convention, the Grammy Awards, the 2004 NBA All-Star Game and the 2002 NHL All-Star Game.
Leiweke notes that Staples’ success jump-started AEG’s explosive growth. “Southern California has been a great starting-pad for us and a great place for us to do business,” he says. “We were fortunate to land in the right place at the right time.”
Only the NHL’s current malaise dims his outlook. The league faces several obstacles: over-expansion has diluted the on-ice product, while its television deal adds little to teams’ bottom line. (Leiweke says that the Kings lose “about $10 million” per year.) With the collective bargaining agreement due to expire this September, a labor impasse looms.
Leiweke, considered a leading voice in NHL ownership circles, has long complained that the league’s economic structure is untenable. He has gone so far as to release the team’s audited financial records. “We’re not planning on [a lockout], but we’re prepared for it, if that’s what happens,” he says. “We’ll do what [NHL commissioner] Gary [Bettman] believes is in the best interest in the game.”
Building a sport
In keeping with Anschutz’s contrarian investment tendencies, AEG has made a huge bet on soccer, the most popular sport in the world but one that has been slow to catch on in the U.S.
AEG’s strategy with Major League Soccer is to control the sport from top to bottom. The league owns all 10 teams as a single entity. This streamlines expenses and increases control over player salaries. AEG operates five of the teams and, along with Columbus Crew owner Lamar Hunt, it also owns the league’s broadcast rights, as well as the domestic television rights for the quadrennial men’s and women’s World Cup tourneys.
“The structure of MLS is unusual it’s not the traditional NFL and Major League Baseball model,” Hunt says. “The investment that AEG has made is phenomenal. Their willingness to see the future is what’s driving the sport in this country.”
Leiweke estimates that AEG has “thrown approximately $300 million” at soccer and remains optimistic about the sport. He points out that, for the first time in its eight-year history, the Galaxy ended in the black (albeit modestly). “We have a business plan that, over the next five years, we’ll make that money back,” he says. “We’ve gone from ‘How do we fix soccer?’ to trying to keep up with potential and maximize the opportunity.”
Leiweke’s biggest gamble was to green-light construction of the $150 million Home Depot Center, only the second soccer-specific stadium to be built in the United States. “I remember hearing about that and thinking, they are smoking something funny if they think they can build a soccer-only stadium and make it financially viable,” says Kathy Schloessman, president of the L.A. Sports and Entertainment Commission.
Despite vocal community opposition, Leiweke teamed with local politicians to gain approval. He and his assistants attended hundreds of community meetings over a series of months to drum up support and answer questions.
Built on 125 acres on the campus of Cal State Dominguez Hills, the complex was privately financed, in part by the 10-year, $70-million naming-rights deal Leiweke struck with Home Depot. The 27,000-seat stadium opened in 2003, with 42 luxury suites, as well as an 8,000-seat tennis stadium and adjacent tennis courts. The Galaxy, which had played in the Rose Bowl, is the primary tenant.
Besides soccer, Leiweke has scheduled concerts, track and field events, rugby, and beach volleyball events at the complex, while a velodrome will debut this summer. Already, he says, Home Depot Center has turned a profit. “It got us a pretty decent rate of return,” he says. “As we lock in financing, we’ll make enough revenue above and beyond the debt service to begin to put some money into it and grow it.”
Dealing with criticism
Leiweke, who lives in Brentwood with his wife Bernadette and Stanford University-bound daughter, Francesca, hasn’t escaped criticism. Acerbic Los Angeles Times sports columnist T.J. Simers has complained about Leiweke’s “brat-to-bully routine,” as well as the expensive prices AEG charges for concessions and parking at Staples and Home Depot. Simers also charged Leiweke with not always talking straight, dubbing him “LIE-weke.”
In addition, AEG’s alliance with former Carson mayor Daryl Sweeney ended in embarrassment. AEG had supported Sweeney with campaign contributions during the approval process to build Home Depot Center. In 2003, Sweeney pleaded guilty to federal bribery charges unrelated to the Home Depot project.
Further, forays into second-tier professional sports have not always been successful. Staples has twice hosted the season-ending tourney on the women’s tennis tour; both events took place primarily in front of empty seats. AEG’s occasional boxing promotions have lost money.
Leiweke acknowledges that the criticism stings, but says he has learned to develop a thick skin. “With the media, you gotta remember they wrap dead fish in it the next day,” he says. “They write what they write because that’s their gig, but it doesn’t mean that that’s your tombstone. T.J.’s a professional. I admire him as a writer. But I don’t like it when my daughter reads that her dad’s a liar.”
His biggest disappointment, he says, is that the Kings have yet to win the Stanley Cup. “It would make hockey an important sport here and the Kings a favored nation within that world.”
Several projects await, including construction of soccer-specific stadiums in New Jersey and Illinois, and arenas in Berlin and London. Development in Southern California remains a major priority, too. The long-promised LA Live district next to Staples is envisioned as a 4 million-square-foot project featuring a hotel, retail stores and a 7,000-seat theater.
Finally, he wants to help bring an NFL team to L.A. An earlier effort to build a downtown stadium spearheaded by Wasserman, Roski and AEG floundered largely due to a lack of support at City Hall. Now, Leiweke says, local sports, entertainment, business and political leaders must unite behind one site the Coliseum because of the financial payoff of hosting multiple Super Bowls.
“If the private sector is going to be required to invest $400 million to $500 million to build a facility, then it is imperative for the NFL to take that investment and put it in a place where the economic impact will be best felt for the entire marketplace,” he says. “I do not believe that that is an empty piece of dirt in Carson nor do I believe it’s a stand-alone stadium in a residential community in Pasadena. We believe that the place it ought to be is the Coliseum.”
With so much on his plate, Leiweke may need help. He jokes that he’s waiting for daughter Francesca, who plays volleyball but is more interested in the business side of things, to join the AEG organization. Meanwhile, he’ll carry the ball.
“My brother compares me to a guy who runs into the wall, falls down, wipes the blood off his head, and then runs into it again,” Leiweke says. “In football, we haven’t been bruised enough. So we’ll keep charging into that wall and we’ll help bring a team here.”
No. 1
Timothy J. Leiweke
President
Anschutz Entertainment Group
Born: St. Louis, 1957
Education: High school
Most Admired Person: Cable television pioneer Bill Daniels
Career Turning Point: Still waiting for it
Business Philosophy: Run head-first into walls; if you fall down, wipe the blood off and “run into it again”
Goals: Win NHL Stanley Cup with Kings, build $1 billion entertainment district next to Staples Center
Personal: Lives in Brentwood with wife Bernadette and daughter Francesca
Favorite Quote: “Some people see things as they are and say, ‘Why?’ Others dream of things that can be and say, ‘Why not?'”
David Davis is an L.A.-based freelance writer who writes about sports for Los Angeles Magazine and the Los Angeles Times Sunday Magazine.
