Industry Noize: AEG Quietly Rebounds

But AEG is a global concern, and while U.S.-based observers were watching the spectacle of events that might have shaken many others, the company quietly continued to focus on its worldwide business – and that business is apparently booming.

“We’re coming off our most successful year in 2013,” AEG President/CEO Dan Beckerman told the Los Angeles Times, citing worldwide operations including The O2 arena in London and Mercedes-Benz Arena in China.

AEG now has 27,000 employees in 17 countries and counting, according to the paper, including arenas in England, Germany, France, Sweden, Turkey, Australia and Brazil.

The “overwhelming majority” of the privately held company’s profits are earned from the arenas AEG owns.

“We’re really focusing on countries and cities where we have strong existing bases,” Beckerman said. Much of the focus for the company has been on real estate development and multimillion-dollar sponsorships of its arenas, events and sports teams, the paper reports.

For instance, British mobile phone provider O2 pays AEG $11.3 million a year for naming rights to the former Millennium Dome in London, which AEG spent a reported $1 billion to renovate. The revamped O2 made its debut in 2007, and was subsequently named Pollstar’s Best New Major Concert Venue and Best International Arena – winning the latter award every year since.

AEG also has lucrative naming-rights deals with many other major companies, such as Staples office supplies and Mercedes-Benz. Pharmaceutical giant Amgen is a name sponsor for the AEG-owned Tour of California cycling race, and Herbalife pays an undisclosed sum to have its names on the jerseys of the L.A. Galaxy soccer team and rents offices for its world headquarters at AEG-owned L.A. Live.

Beckerman told the Times the company has sold naming-rights deals “on every continent.”

Next up in the real estate department, AEG breaks ground with MGM Resorts International on a Las Vegas project May 1 that includes a 20,000-seat arena. L.A. Live could be the model for future entertainment district development, and continues to draw investment into a revitalized downtown L.A. to the tune of billions of dollars’ worth of hotels, office and retail space from other developers.

AEG is also a financial partner in a planned Renaissance Hotel adjacent to L.A. Live and is considering developing a garage space it owns nearby – which leads back to the question of Farmers Field. The proposed NFL stadium would be constructed on land now occupied by a portion of the L.A. Convention Center, which AEG operates for the City of Los Angeles.

The company retains City Hall approvals to develop the stadium until October. No team has emerged as a possible tenant, although St. Louis Rams owner – and Philip Anschutz confidante – Stan Kroenke of Denver raised eyebrows with the purchase of 60 acres of land near The Forum in nearby Inglewood.

While the acreage seems insufficient to house a pro football stadium, that didn’t stop tongues from wagging that Kroenke might be considering moving the Rams back to L.A. While giving away no details, AEG Vice Chairman Ted Fikre told the Times that building Farmers Field and bringing the NFL back to Los Angeles “remains one of our highest priorities, and we are continuing to work on moving it forward.”

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