Although Los Angeles Kings chairman and chief executive Bruce McNall was close to a deal to sell a portion of the hockey team to Sony Pictures Entertainment last week, he has instead formed a partnership with IDB Communications.
At a Great Western Forum press conference Wednesday, McNall confirmed a partnership with IDB chairman and chief executive Jeffrey P. Sudikoff and director Joseph M. Cohen to build a $ 125 million-$ 150 million sports arena in the L.A. area.
But Sony may not be entirely out of the sports arena picture if interactive theater facilities are part of the project, as envisionedby McNall and Cohen.
McNall will swap an undisclosed equity stake in the Kings for an undisclosed stake in the new project, which is contemplated as a 20,000-seat arena skedded for the Kings’ first home game in fall 1995 or 1996. IDB is a diversified communications company primarily involved in long-distance telephone services.
The agreement comes on the heels of reports that Sony Pictures Entertainment was attempting to complete a reported $ 415 million deal for stakes in the Kings and Lakers — the latter team owned by Jerry Buss — as well as participation in the construction of a new arena; that project was to be built on vacant real estate at Hollywood Park, the Forum’s Inglewood neighbor.
Sources said SPE chairman Peter Guber and president and chief operating officer Alan Levine were actively pursuing the deal as late as last week.
“I think they dragged their feet and the deal went away,” said one source familiar with negotiations among SPE, McNall, the Lakers and Hollywood Park. An SPE spokesman declined comment.
The McNall/IDB pact reportedly came together quickly once the SPE negotiations stalled. It ends a two-year search by McNall to find a partner in the Kings.
An open door
Meanwhile, a source familiar with Wednesday’s deal said “the door is wide open” for SPE to become involved in interactive theater, retail and studio facilities as plans for the new sports arena project are finalized.
McNall and Cohen said interactive facilities will be part of the sports arena project, while it is well known in real estate circles that SPE has been searching West Los Angeles locations for a showcase state-of-the-art high-tech theater venue. In Manhattan, at 67th Street Theatre near Lincoln Center, the SPE exhibition company Loews Theatres is constructing a 10-screen showcase theater that includes a high-tech Imax screen.
Because Sudikoff and Cohen are investing personal funds in the sports arena project, the McNall agreement will not directly impact on IDB.
However, Cohen acknowledged that the partnership with McNall could lead to a future pay-per-view television agreement between IDB and the Kings. He said ownership of the Kings and control of the sports arena could be used as a platform for IDB’s entry into the interactive distribution arena. “It’s a brave new world, and you have to have a platform to enter the game,” Cohen said.
In 1986, the Kings entered into a 20-year basic cable deal with Prime Ticket Network that annually covers 68-72 preseason, regular season and postseason games. However, McNall expressed confidence that new television revenue streams could be implemented quickly if interactive distribution becomes viable over the next few years.
“It is a fast-changing technology, and Prime Ticket has shown great willingness to be flexible in the (Kings) arrangement,” McNall said. In addition to the Prime Ticket pact, the Kings also have an eight-game broadcast contract with KTLA, but that contract expires at the conclusion of this season.
McNall said the Sudikoff and Cohen investment underscores the increased interest in sports franchises by entertainment concerns.
“You’re seeing the merger of sports and entertainment getting closer and closer,” McNall said.