There is sawdust on the floor, plastic on the chairs, fixtures to be installed and testing to be done mere days before the Nokia Theatre is to open.
But there’s little doubt that the $120 million theater that’s $10 million more than the projected cost will be ready for its close-up when the Eagles and Dixie Chicks play the first of six shows on Thursday.
The theater is the first piece of Anschutz Entertainment Group’s colossal $2.5 billion L.A. Live development, which is $250 million over budget.
“Clark Construction is working under a guaranteed maximum price, so there’s a big incentive for them to get it done right on time,” said AEG President and Chief Executive Tim Leiweke last week. Typically, guaranteed maximums penalize contractors for cost overruns or failure to complete the project on time.
The additional expenses are the result of rising construction costs and some expensive add-ons, including LED display boards inside and outside the theater, Leiweke said.
The 250,000-square-foot theater required more than 725,000 man-hours to complete. The 7,100-seat state-of-the-art venue features a $2 million lighting and rigging package and a $1.5 million JBL Vertec sound system.
AEG has never missed a target date on the 10 projects it has opened over the past eight years, and L.A. executives intend to keep that streak going.
“Anytime you open a venue with the schedule we have, you are working up until the last minute and the last day,” said AEG spokesman Michael Roth. “But I think that not a single person will walk in and look at anything as unfinished.”
Entertainment hub?
Plans for the four million-square-foot L.A. Live development call for 226 condominium units, an 878-room hotel operated by J.W. Marriott and a 123-room luxury hotel connected with Ritz-Carlton. A whopping $950 million is being spent on the hotel alone. Also in the works are the ESPN Zone, the Grammy Museum and production studios.
Leiweke is hoping that the theater in particular and the entire project will help turn the downtown area into a “content campus” for various entertainment industry entities.
“Most of the entertainment companies are located in places like Beverly Hills and Hollywood, and Disney isn’t even in the city of L.A.,” Leiweke said. “If you look at L.A. we don’t have a Times Square, and a lot of the entertainment shows emanate from there. We will now have something comparable in Los Angeles.”
The project, launched in 2005, has had its hiccups. Residential builder KB Home bailed out of the condo development in December amid a softening real estate market. AEG then went it alone until Macfarlane Partners LLC came in as a partner in April.
Overall, however, the project has sailed along, thanks in part to a City Council critics see as overly accommodating.
“That whole area is too heavily subsidized,” said author and urbanist Joel Kotkin. “I don’t think L.A. needs that whole area as a publicly subsidized good, because we don’t lack for things to do. I think downtown would evolve much better without it.”
The city will collect the transient occupancy tax for the hotel and repay it to AEG over a 20 to 25 year period, an agreement worth $246 million to $270 million. A Redevelopment Agency grant and permitting fee rebates are worth nearly an additional $10 million combined.
“Nobody on the City Council is even looking into these issues. You saw 14-0 votes, and somebody ought to be asking questions,” said Kotkin.
AEG, however, maintains that the value of the municipal subsidies and incentives, while on paper worth $300 million over the next two decades, are worth far less in present dollars. Ted Firke, AEG’s general counsel, said that, based on AEG’s current valuations, the deal is worth closer to $70 million in net present value.
One more ticket?
Critics have suggested that the Nokia Theater is superfluous, and that it will be competing for the same local audiences that are currently attending events at AEG’s Staples Center, the Shrine Auditorium, the Gibson Amphitheatre at Universal City Walk and the Forum in Inglewood. So far, it has 120 acts booked in 2008.
“If we are competing with the Gibson,” Leiweke said, “we did something wrong. The Nokia is three times the cost of that building and larger. Our competition is New York, the big premieres and the big awards shows.”
The theater will host the American Music Awards, Latin Grammys and ESPY Awards, as well as numerous other productions from VH1, MTV and BET. The adjacent Club Nokia, which will accommodate about 2,300 patrons, will feature music acts and other cultural shows. The 40,000 square-foot outdoor Nokia Plaza, is intended for use as a red carpet arrival site and a broadcast venue.
Some observers have voiced concerns about parking, too. Spots downtown are already sparse and expensive.
AEG directly controls only 4,000 of the 20,000 parking spaces in lots within 10-minute walking distance. Prices for the AEG-owned lots will be in the $20 to $25 range, though other lots including those near the Convention Center have been known to charge as much as $40.
But the question of whether downtown can compete with the region’s other entertainment and nightlife draws remains to be seen and some observers, like Kotkin, have their doubts.
“Downtown will never be the pinnacle of L.A. nightlife. Between West Hollywood and Hollywood and all that’s there, I can’t see that it could replace them,” he said.
