Wolff is currently working on a large hotel project in downtown L.A. near Staples Center and the L.A. Convention Center, where the City is pouring tons of money into redevelopment. Wolff's hotel deal is one to watch, because at $350 million its price tag runs close to the what a new ballpark would cost. The project is also being funded in part by a large tax subsidy, which could cover over half the cost. Wolff and partner Richard Ackerman are concerned that the tax revenue, which would be generated by an incremental raise in hotel occupancy tax, may not fully cover its share:
I'm not sure how commonplace corporate sponsorships of things as trivial as meeting rooms or sheets are, but such arrangements are very much at home in the world of sports venue construction. The best example of successful corporate sponsorships in America is SBC Park, though every new stadium and arena shows evidence of this type of activity. If you are one of those "purists" who disliked SBC Park for its commercialization, you're not going to like the new A's ballpark, especially if it ends up being largely funded by private sources. Don't be surprised if the place ends up being the illegitimate child of Times Square and Kauffman Stadium. Someone has to pay the bills.
But hotelier Lew Wolff and financial partner Richard Ackerman, a principal at Apollo Real Estate Advisors, said last week that more revenue must be generated in order to cover its future loan payments on the $350 million project.
“We are scraping every possible revenue source so that if something goes wrong in the next couple of years we’ll be able to ride out any storm,” Ackerman said. “We’re trying to hedge our risk on an immense project by being very cautious.”
To that end, the developers have retained Anschutz Entertainment Group, majority owners of the Staples Center, to help fill the 55-story hotel with lucrative corporate sponsorships.