By Kevin Glaudin
The Los Angeles Clippers have called the Staples Center home for 21 years. Beginning in 2021, construction of a new 18,000 seat arena in the Inglewood area will begin, which the team will call home in 2024. Following the Rams and the Chargers, the Clippers franchise is the newest California sports team to break ground on a new state-of-the-art facility for their team. The new space will see a wide array of other non-basketball tenants as well. For example, the Los Angeles Olympics committee is currently planning to use the space in 2028. The yet to be named Inglewood stadium will provide the Clippers as well as other possible tenants, with a new stream of income. While the new arena will provide great benefit to the Clippers by way of increased revenue and team value, the effect on the community and legal challenges arising from the purchase and construction in the surrounding area will be detrimental to current and future Inglewood residents. In an already expensive community, the newest attraction will drive up the cost of living in the area, devastating residents. Both developers, and government should look to provide reasonable financial and legislative assistance to those, especially renters, whose lives will be affected by new developments as a result of franchise relocations such as the Clippers’ move to Inglewood.
I. The Inglewood Stadium’s Effect on the Value of the Clippers
The Clippers are set to see great benefits from the construction of their arena both directly and indirectly. With home games, concerts, the Olympics and other sporting and entertainment events being planned, the Clippers and owner Steve Balmer will make a lot of money from this new stadium. The trend toward increased profitability established by other California teams that have invested in brand new arenas is a good sign for the Clippers organization. The Warriors, for example, saw a vast increase in revenue after moving to Chase Center in 2019. According to Chris Bengel of CBS Sports, “[s]tarting this inaugural Chase season, it’s estimated that the Warriors will take in about $700 million in annual revenue for the foreseeable future.”[1]
However, in light of the global COVID-19 pandemic and uncertainty surrounding when patrons will return to full capacity arenas to watch sporting events at full capacity, the question of whether construction of the Inglewood arena will hurt the Clippers is a significant one. Given that the pandemic has forced franchises to play in stadiums at a limited capacity or with no fans at all, no revenue is being generated by costly arenas such as the Rams’ SoFi stadium. The Rams are projected to lose approximately $121 million in revenue as a result of no fans being permitted to watch games the stadium. While the completion date for the Clippers’ Inglewood arena is still a few years away, the uncertainty of COVID-19 and continuous spikes across the country are sufficient to cause a sense of concern for the Clippers. It is a possibility that patrons will be unable to return to events held at the Clippers’ Inglewood arena upon completion.
II. The Surrounding Area Both During and After Construction
Even with this uncertainty surrounding COVID-19, in the short term, the construction of the stadium will provide an economic benefit to the area. The Inglewood project is estimated to generate about 10,000 construction jobs and 500 permanent jobs, with local hire components in place to fill 30 percent of available construction jobs with local labor and 35 percent of the available arena operation jobs will be filled by local residents.[2] When the project is completed, the Inglewood campus will generate an estimated $268 million in economic activity for the city annually, and more than $190 million in new tax revenue from 2020-2045.[3]
Although the new arena is set to bring in new streams of revenue both temporarily during its construction and permanently after it is built, the current and future Inglewood residents will be forced to bear the brunt of the costs of the new attractions in town. A concern of many residents is the question of displacement of current residents due to the incoming attractions to the area. Thirty-five percent of Inglewood residents are renters, and many worry they will not have a place in the “new Inglewood” that emerges once these major projects finish construction. With such a large-scale revitalization of the community set to take place, visitors and investors alike will be drawn to the area and, although that may seem like a positive to the outside observer, residents fear they won’t be able to afford their homes any longer.
Given the new stadiums and influx of visitors, property value in the area will increase. While this increase in property value may be great for residents that are homeowners, it is a detriment for the majority of Inglewood residents who are renters[4] as they are likely to see an increase in rent prices. Writing on a case study observing the correlation between sporting venues and property value, Alex Spatz explained, “The presence of a stadium has a positive impact on real estate and property values, with a positive correlation to proximity.”[5] George Carlino and Edward Coulson looked at the housing market in every American city that had an NFL franchise between 1993 and 1999.[6] Carlino & Coulson’s study concluded a hike in real estate value over the six-year time period. While housing prices often do increase over a fixed amount of time, as Spatz writes, property values indeed see beneficial results in direct correlation to proximity to stadiums.[7]
However, there may be other reasons for the increasing rent prices in areas that build sports arenas. For example, between January 2016 – when the NFL agreed to let the Rams and Chargers relocate to Los Angeles – and June of this year, the median price of homes in Inglewood jumped 37.3 percent to $542,100.[8] Although there was a rise in home value after the relocation was granted, there was one before, too. In the two years leading up to 2016, home prices in Inglewood saw an increase, but at a rate closer to that of the rest of the county: 17 percent, compared to a little under 15 percent countywide.[9] While the allure of both SoFi and the soon to be Inglewood arena may have a part to play in the increased Inglewood property values, they are not the only cause. Inglewood’s location has always made it a “hot market,” but the stadiums and future train “brought more visibility” to buyers who might once have focused their searches on more upscale Westside communities.[10]
Regardless of the cause in the rise in property values, the worries about a changing community expressed by Inglewood residents were at the core of a legal battle between the Clippers and Inglewood residents, who claimed that city violated the California Surplus Land Act by failing to give first priority to a possible affordable housing development.[11] In response, lawyers for the city and developers argued that the property did not qualify as surplus land and proclaimed that the land was unsuitable for housing since it sits under a flight path for nearby Los Angeles International Airport (LAX).
The plaintiffs, Uplift Inglewood, wanted the land to be used for affordable housing, parks, and schools to improve the area; nonetheless, the city of Inglewood and the Clippers prevailed. In the suit, Uplift Inglewood argued that Inglewood failed to prioritize the use of the land for affordable housing, parks, and schools, as required by California law, by entering into a 36-month “exclusive negotiating agreement” with Murphy’s Bowl, a company controlled by the Clippers.[12] In an area craving revitalization, community members were of the sentiment that increased affordable housing and landmarks were more important than a new sports stadium which would not bring about the same benefits to Inglewood residents as the housing and landmarks would. In his reasoning for siding with the Clippers and Inglewood, Judge Daniel S. Murphy said that the parcel of land, which is in an LAX flight path, does not qualify as surplus land because the city had acquired much of it as part of a Federal Aviation Administration-funded and Los Angeles World Airports-funded program intended to redevelop residential areas impacted by aircraft noise.[13] Judge Murphy wrote that, “a key goal of the city’s redevelopment efforts was the removal of incompatible residential uses and the conversion of these areas to noise-compatible commercial, industrial, or other revenue-generating uses.”[14]
At the center of the lawsuit filed by Uplift Inglewood was the concern of the proper use of land to construct the stadium. Specifically, whether a stadium or construction of buildings such as affordable housing should have been given priority to the land. D’Artagnan Scorza, spokesperson for Uplift Inglewood stated, “[i]n the midst of booming development – which has caused skyrocketing rents and the loss of affordable housing – it simply does not make any sense to prioritize an NBA arena over the needs of Inglewood residents without investing in the needs of residents.”[15] Loss of affordable housing and skyrocketing rent prices are some of the complaints that can be heard from members of the community and constructing a stadium, should not be given priority over building community necessities such as affordable housing to accommodate families at risk of being displaced.[16]
III. Remedies a. A Meaningful Investment
One of the main issues arising out of the construction of the Clippers’ new arena is the venue’s effect on the community, as well as how developers plan to properly invest on the community. The Sacramento Kings faced similar issues when constructing their new arena, Golden 1 Center. The Sacramento Coalition for Shared Prosperity, a community group filed a lawsuit against the City of Sacramento in hopes of achieving greater investment in the surrounding community. According to Ben van der Meer,
[a]larmed by the ownership of the neighboring Marshall Hotel — which is not owned by the Kings or part of the arena development — recently evicting low-income residents with plans to redevelop the site into a boutique hotel, the coalition called for $40 million for housing for low-income workers at the arena and nearby development as part of the agreement.”[17]
Although the Kings and Sacramento may have formed a “group” to ensure community benefits, actual disclosure and planning was said to be insufficient. Additionally, when the Brooklyn Nets moved to the Barclays Center, the project’s developer promised to erect “affordable” housing along with the project. Most of the first units to go up required applicants to bring in at least 130 percent of the area median income, or between $81,258 and $159,640 per year.[18]
While the Clippers and other sports franchises typically see great benefits from their newly built arenas, the same cannot always be said for surrounding residents, and these equities should be balanced. The group responsible for relocating the franchise to Inglewood should be cognizant of the detriment that the newest arena will have on the people already struggling to remain where they are. In order to truly achieve the benefit or both the franchise and the public, a meaningful investment into the community and opportunity for stable and growing employment are routes that should be taken, and Clippers’ management seems to acknowledge this concern. According to team management, the arena’s revenue will be used to provide support for vital city services such as schools, parks, libraries and police and fire stations. Additionally, as part of their “community benefit plan” the organization has pledged up to $75 million in low-interest loans for the acquisition, preservation, or development of affordable and mixed-income housing in Inglewood. Other proposals include more than $12 million for youth and education programs, up to $6 million toward improvements of Inglewood’s public library and financial assistance for renters and first-time homeowners in the city.[19]
b. Legislative Support
The government also has a role to play in these scenarios. Thankfully, due to recent legislation passed in Inglewood, there is indeed a cap to the amount rent may be raised in a given year. In June of 2019, the Inglewood City Council unanimously approved permanent rent control measures that will block property owners from increasing rent by more than 5 percent annually. Although certain exceptions apply, this shield of protection from an absurd one-time rise in rent by opportunistic property owners is a win for renters struggling to afford already high rental prices.
While measures such as these are a good start, especially in California, they are present on a city-by-city basis rather than statewide. State legislation should create uniform rent control measures in order to aid residents from being forced pay exorbitant rent prices based off of where they reside. While in certain instances there may not be recourse to prevent certain rent-increasing developments like SoFi and the Clippers’ new arena from being erected, there should be blanket legislation in order to prevent the presence of these developments from driving rental prices sky high.
IV. Conclusion
There is no question that the construction of the Clippers’ new Inglewood Stadium will provide the franchise and the city with millions, if not billions, of dollars in economic growth in the near future, once construction is complete. Although the new Inglewood arena is a shining light on continued projects in the city, an issue that is continuously ignored is the lasting effect on those renting in the area. Residents around the country tend to see their rent price rise in connection with development of stadiums. These equities should be balanced. While management may have an “initiative” set in order to help benefit the community, the developers’ investment must be one that is sufficient and sustained in order for community members to not fall victim financially to the arrival of their new neighbors in town. City specific rent control measures must be expanded statewide to protect certain residents from unjust rent hikes.
[1] https://nba.nbcsports.com/2019/10/26/report-in-new-chase-center-warriors-will-take-in-700-million-in-revenue-more-than-knicks-or-lakers/
[2] https://www.nba.com/article/2019/07/25/la-clippers-unveil-plans-inglewood-arena-official-release.
[3] Id.
[4] https://www.point2homes.com/US/Neighborhood/CA/Inglewood-Demographics.html
[5] https://www.multiplecities.org/home/2018/4/13/the-housing-impacts-of-sports-stadiums
[6] Id.
[7] Id.
[8] https://la.curbed.com/2018/9/19/17632488/inglewood-home-value-increase-nfl-stadium
[9] Id.
[10] Id.
[11] See Uplift Inglewood v. City of Inglewood et al 2019 Cal. Super. LEXIS 8449, *11 (2019).
[12] https://www.lamag.com/citythinkblog/clippers-arena-lawsuits/
[13] Id.
[14] Id.
[15] https://www.lamag.com/citythinkblog/clippers-arena-renderings/
[16] https://csulauniversitytimes.com/inglewood-oks-la-clippers-stadium/
[17] https://www.bizjournals.com/sacramento/news/2014/06/26/new-lawsuit-against-arena-asks-for-more-community.html
[18] https://patch.com/new-york/parkslope/affordable-apartments-near-barclays-center-require-81k-salary
[19] https://www.latimes.com/sports/clippers/story/2019-09-10/club-proposes-committing-about-100-million-in-benefits-to-inglewood-as-part-of-arena-deal
