By EDVARD PETTERSSON
The Lakers and Kings are almost gone from the Great Western Forum, and Hollywood Park has been sold. But things are hardly dire for the city of Inglewood.
CarMax Auto Superstores Inc. has acquired two new-car franchises that it plans to relocate to an auto mall it will build near the San Diego (405) Freeway in Inglewood.
"We fully expect that CarMax will bring in $2 million and up in sales taxes once they are fully operational," said Mayor Roosevelt Dorn. "That will easily compensate for the $1 million a year the city netted from having the Lakers and the Kings here."
In addition to the two dealerships acquired this month, CarMax plans to open three more new-car franchises at the 16-acre site at La Cienega Boulevard and Olive Street, said Dorn. A used-car dealership also is planned.
Once completed, the property's assessed value could reach $20 million, giving Inglewood a significant boost in property tax increment funds, said Dan Akins, a redevelopment analyst with the city.
With the purchase of Prince Chrysler Jeep Eagle Co. and LAX Dodge Inc. this month, Richmond, Va.-based CarMax is making its first inroads in the L.A. market.
Val Brown, a CarMax spokeswoman, would not detail plans for the 16-acre site. But he acknowledged that the company is talking with other manufacturers about bringing in additional franchises.
"The two car franchises that we acquired this month were unique opportunities," said Brown. "We acquired them in preparation for the opening of the auto mall (in Inglewood) in about two years' time."
Buying dealerships so far in advance of building the auto mall might have been prompted by concerns that the dealerships would only be available for a limited time, according to Tom Thomson, an analyst with Wheat First Union.
"In an ideal world, they might have waited longer," said Thomson. "But they probably felt they had to act now in order to secure a foothold in the Los Angeles market. It's a fairly safe strategy for them because they will not have much trouble selling the new-car franchises should they want to."
Brown said the plan to build an auto mall in Inglewood does not conflict from Carmax's strategy to enter the market in a big way next year by opening about 10 used-car superstores.
"We wanted to make sure that when we enter the market, we would have enough critical mass to make an impact," said Brown. "We found that in large metropolitan markets, the distances consumers will travel are much smaller than in other markets, because of traffic and a dense infrastructure."
Brown said that CarMax, a subsidiary of Circuit City Stores Inc., will open a combination of so-called hub and satellite stores next year in Carson, Ontario, Van Nuys, Duarte and other locations.
The strategy of offering better service and a wider selection of used cars has worked well in smaller markets, and not so well in larger metropolitan areas, where a greater number of competitors offer an array of incentives.
"They were lulled into complacency by their success in places such as Richmond, but when they tried the same strategy in Dallas, they got their head handed back to them," said Thomson. "That's why they have been rethinking their approach and want to create a big splash when they enter the Los Angeles market."
In addition to the arrival of CarMax, Inglewood will soon welcome Churchill Downs Inc., which agreed to buy Hollywood Park Race Track earlier this month for $140 million in cash and $25 million in additional costs.
Dorn said Churchill Downs plans to refurbish the racetrack and is likely to further develop the 237-acre site. Representatives of Churchill Downs declined to comment on any future plans for the track while the deal is still pending. The sale is expected to close during the third quarter of the year.
Hollywood Park Inc., which sold the track to Churchill Downs, still owns 141 acres of land at the site. Chairman R.D. Hubbard said there are no definite plans for the site but the company is still looking at opportunities to either sell or develop the land.
Meanwhile, Jeanie Buss, president of the Great Western Forum, said she hopes to stage between 100 and 125 events at the Forum next year, including minor league hockey, rock concerts and indoor rodeos.
For reprint and licensing requests for this article, CLICK HERE.