Every day, AEG President and Chief Executive Tim Leiweke looks out the window of his office near the Staples Center and sees workmen and huge cranes bringing L.A. Live, the massive $2.5 billion sports, entertainment and residential complex, closer to completion,

The project which is running over its construction budget is expected to be the crown jewel of AEG's sprawling sports center and is seen as a key component in the revitalization of downtown.

For AEG, it's a clear sign that the heart and soul of Chairman Philip Anschutz's growing sports and entertainment empire is in Los Angeles. Already the second-largest U.S. sports and live entertainment company, AEG is making a major push to expand its live theater, music and awards show staging presence in conjunction with L.A. Live's arrival.

"This is clearly our operations hub, and it grows even more important as we get closer to the opening of L.A. Live," said Leiweke, who is the right-hand man of the reclusive Colorado billionaire and serves as the public face of AEG. He's been here since 1996, when he arrived to oversee construction of the Staples Center.

Today, Leiweke oversees more than 50 AEG subsidiaries, including two newly formed divisions AEG Facilities and AEG Entertainment with more than 4,000 employees and revenues in excess of $1 billion. Among the holdings that AEG has acquired in the past decade are pro hockey's L.A. Kings, pro soccer's L.A. Galaxy and a minority stake in the NBA's Lakers. AEG also owns two independent film studios, Walden Media and Bristol Bay Productions. AEG's Galaxy made worldwide headlines recently with its $250 million acquisition of soccer star David Beckham.

All of this growth in the sports and entertainment arm of AEG is coming as Anschutz is stepping back from Qwest Communications International, the Denver-based telecom company he founded. Anschutz resigned as a Qwest director last year, and said in a statement that he planned to focus on his other holdings that include, in addition to the sports and entertainment holdings, oil companies, railroads, newspapers and a theater chain.

In the fall, Anschutz sliced his direct holdings in the company to about 66.4 million shares, after selling and donating nearly 80 million shares. He also sold shares in June, July and October of last year. Most recently, on the day after the Beckham deal was announced, Anschutz announced that he was selling 43 million Qwest shares for $297 million.

Leiweke denied that there was a relationship between the expansion of AEG's sports and entertainment holdings and Anschutz's Qwest sell off.

"AEG happens to have a phenomenal chairman, but there's nothing he has to do in his other worlds to provide capital necessary to finance our growth; nothing we are doing requires him to liquidate any assets," Leiweke said. Nevertheless, sports and entertainment properties now represent a major portion of Anschutz's fortune, estimated by Forbes magazine to be $7.8 billion.

While much of AEG's focus is here, the firm has significant holdings outside of Los Angeles, including a New Jersey soccer stadium and arenas in Missouri, Berlin and London. Anschutz' Regal Entertainment Group, based in Tennessee, is the largest motion picture exhibitor in the world, operating nearly 20 percent of all indoor screens in the U.S. (and will include the multiplex being built for L.A. Live).

Ballpark figures
AEG's L.A. Live plans call for the 4 million-square-foot development to include 226 condominium units, an 878-room hotel operated by JW Marriott and a 123-room luxury hotel connected with Ritz-Carlton.

The project appears to be sailing along now, having conquered some hurdles along the way.

Faced with a softening real estate market, residential builder KB Home pulled out of the condo development in December, becoming the second major firm to withdraw from the project. KB came aboard last year, after original partner Lew Wolff withdrew. Despite speculation that AEG was looking for another partner, Leiweke said AEG will go it alone now.

In 2005, the city cut a deal to avoid a potentially project-stalling lawsuit over tax waivers. That allowed the nearby Westin Bonaventure Hotel, which would presumably compete with the L.A. Live hotel, to convert 400 of its existing rooms into condos.

Leiweke wouldn't say by how much construction costs at L.A. Live were exceeding the original $750 million-plus estimate, some of which is to be offset by public financing in the form of a loan, tax incentives and fee waivers worth $300 million. But it was enough to provoke him into using a sports clich & #233;.

"You're never in the ballpark when it comes to construction budgets," he said.

Battle of the bands
The primary obstacle to AEG Live's domination of the concert and theater realm is Beverly Hills-based Live Nation Inc., which owns 170 venues and produces more than 33,000 events a year. Like AEG, the company is making moves: Last year, Live Nation acquired the famed House of Blues chain and also produced all or part of nine of the top ten grossing concert tours in the country; AEG had the remaining one (Bon Jovi).

The former Clear Channel subsidiary spun off into a separate public company in 2005 also booked a number of events at both Staples Center and the Forum (for which AEG is the booking agent), including concerts by Shakira, Mariah Carey and U2 as well as Cirque Du Soleil's Delirium show.

"Live Nation is still significantly larger than AEG Live, and they made a very wise decision in acquiring the House of Blues," said analyst David Joyce of Miller Tabak & Co. "At the core, live entertainment boils down to artist relationships, and Live Nation has made a lot of headway in the last year by teaming up with people who have strong established relationships with huge acts like the Rolling Stones."

Leiweke conceded that Live Nation dominates that market, but stressed that amassing top-tier venues in select markets, rather than a large quantity scattered across the nation, is the company's goal.

"They are the big beasts in the amphitheater business, so we stay out of their way," Leiweke said. "We are an arena-theater-club business."

The companies' strategies also differ while Live Nation snapped up most of its considerable assets through acquisition, AEG Live has chosen to build its base from the ground up, incorporating technology to allow high definition broadcast and Internet content feeds from various arenas. The goal is to make AEG a content-and-distribution player in short order, according to Leiweke, and create its own network.

"An acquisition strategy makes it easier for Live Nation to get into the market quicker, but the advantage of building is it can tailor to your needs, even on the level of infrastructure," said David Kestenbaum, an analyst who covers Live Nation for Morgan Joseph.

Kudos clout
AEG may have an easier time dominating the awards realm.

Last year, AEG acquired Champions on Ice, Bounce Event Marketing and Ken Ehrlich Productions, and brought the kudos impresario himself into the company.

Ehrlich is the man behind the Grammys, the Emmys, the Blockbuster Awards, the Alma Awards, the Latin Grammys and the MTV Movie Awards.

Combined with L.A. Live's construction, the acquisition should make AEG a formidable player in the awards arena. The only major awards show locked into a long-term venue contract is the Academy Awards ceremony at the Kodak Theater, so there is potential to host everything from the Emmys to ESPN's ESPYs. The Nokia Theater already has 150 events booked for its first year, Leiweke said.

AEG has forged other significant entertainment partnerships as well. SBE Entertainment nightlife kingpin Sam Nazarian's company is going to install a club as an anchor tenant at the development. Nazarian is known for his ability to create exclusive hot spots, a touch that Leiweke said along with the 226 ultra-luxury condos atop the Ritz-Carlton hotel would make L.A. Live a draw for the high-end set.

"We (at AEG) don't go out to nightclubs," said Leiweke smiling, "but for those that do, Sammy is the best in the business."

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