Farmers Insurance Reaches $700 Million Deal for Los Angeles Football Stadium
Major insurer Farmers Insurance and entertainment company AEG announced on Tuesday their $700 million deal that could result in a new Los Angeles football stadium being named after the company. The monumental deal will be the most valuable such agreement ever, but most important for Los Angeles residents and football fans, it will be a significant step toward bringing an NFL team to the city.
Unprecedented 30-Year Deal for Farmers Insurance Football Stadium
The naming-rights deal between the two major companies is said to be an unprecedented one that could bring a team back to the Los Angeles area. The large amount of money to be passed between the deal makers is not what’s dropping jaws, however. The shocker is that Farmers Insurance has paid for a 30-year agreement that will place its name on a stadium that has yet to be built.
But that’s not all that makes this agreement unusual and unheard of. The site where AEG would like to place the stadium has yet to be approved. Not to mention that the team that will play in the stadium has yet to be acquired.
Despite the unusual nature of the deal, some speculate that Farmers, the largest auto insurance company in California, agreed to pay because it was founded in Los Angeles, has been headquartered in the city for 83 years and has successfully sponsored other events like the PGA Tour’s Farmers Insurance Open at Torrey Pines and the Farmers Classic tennis tournament.
Steps Needed for a Los Angeles Football Team
Because the deal isn’t set in stone, Farmers is requiring that AEG take specific steps, including getting the stadium built, before receiving a dime. And even after steps are taken, the company will only receive $20 million for the first year with funds escalating incrementally every year after.
Also, the insurance company is requiring that it receives at least 50 events per year, along with an attendance of at least 40,000 per event.
Despite the fact that the approval process alone (without acquiring the team) could take over a year, the entertainment company is hopeful that the deal could ultimately work to bring a team to the city.
AEG’s owner, billionaire Philip Anschutz, is in the process of trying to persuade city and state officials to approve other crucial deal points, including a long-term lease agreement and the land of the stadium. He also is looking for an expedited review of the environmental impact of building it.
In total, the company will need over $1 billion to accomplish its goal. But if all goes well with the Farmers Insurance deal, Los Angeles could be well on its way to getting the team it’s been missing for over 15 years.