Madison Square Garden — which owns the Forum in Inglewood, California, with Azoff MSG Entertainment Chairman Irving Azoff — has filed suit against the city of Inglewood and Mayor James Butts over an allegedly secret land deal with the Clippers to build a new arena 1.5 miles south of the Forum. MSG’s lawyers claim Butts tricked MSG into giving up the arena’s lease of the city-owned land and then tried to cover his tracks by negotiating with a personal email address and private cell phone.
In June, the Clippers held a surprise press conference at their El Segundo, California, practice facility, where the team announced a new plan to enter into a three-year exclusive negotiating period with Inglewood officials for the rights to build an arena on a 15-20 acre parcel of land along Century Boulevard and Prairie Avenue. As part of the agreement, Clippers owner Steve Balmer paid the city a nonrefundable deposit of $1.5 million to cover permitting costs and a future environmental review of the project.
MSG officials argue they had a 15-year lease and option to buy on the same city land, which the Forum was using for overflow parking. Forum lawyers allege Butts tricked Forum officials into terminating the parking lease, allegedly saying Inglewood needed the space to develop a “technology park.”
“Mayor Butts repeatedly requested that MSG Forum give up the property so that he could implement a ‘Silicon Beach’ in Inglewood,” lawyer Marvin Putnam of Latham & Watkins LLP wrote in a 46-page complaint filed Monday (March 5) in Los Angeles County court. Forum officials resisted the swap, but relented after Butts insisted “the development opportunity” was “critical to the future of the City” and promised to find a “suitable alternative” to replace the overflow lot.
The suit alleges Butts, Inglewood’s Parking Authority and its Successor Agency were secretly negotiating with Clippers while the lease termination process unfolded. When the lease ended in April 2017, the city and team allegeldy began drafting terms for an exclusive negotiation period to begin Clippers arena talks. Two months later, Mayor Butts rang up MSG’s New York headquarters and finally disclosed his dealings with the Clippers, hours before a planned press conference.
The suit says Butts tried to avoid creating a paper trail with MSG Forum by using personal email accounts and text messages from his cell phone to coax company officials to end the parking lot lease agreement. Development of the Clippers arena was also slowed after the California state legislature didn’t approve an exemption to the Environmental Quality Act for the project, which would have expedited the review process.
Since the Clippers were bought by Balmer in 2014, the team has wanted to move out of the Staples Center in Los Angeles, which it shares with the LA Lakers and LA Kings. Last year, Balmer announced plans to leave the team’s longtime home when the its lease expires at the end of the 2023-2024 season.
The Clippers would have been the third major project slated for development near the old Hollywood Park Racetrack, which closed and was demolished in 2015 to make way for a new $2.7 billion stadium for the Los Angeles Rams of the National Football League. Butts had also helped negotiate the purchase of the Forum by MSG from church group FEI in 2011 and negotiated an $18-million city loan to the rehabilitation project. As part of the agreement, MSG would spend at least $50 million renovating the Forum and later agreed to pay the city $2.24 for every ticket sold, guaranteeing about $600,000 annually for 30 years. Ultimately, MSG spent $100 million renovating the building and today it is one the top grossing arenas in the world, ranked No. 6 on the Billboard’s 2017 Year-End Boxscore edging out competitor AEG’s Staples Center in downtown Los Angeles by nearly $4 million.
Since opening the Forum reponed in 2014, it has been in intense competition with the Staples Center and the two are currently locked in a bitter venue war over complaints of block booking between the Forum and Madison Square Garden in New York, and Staples Center and O2 Arena in London. Knowing the market was competitive, Forum officials required an agreement with Inglewood that city officials would “not engage in ‘any action or proceeding,’ without MSG Forum’s consent,” that would cause “a material adverse impact on the use, operation, functionality, accessibility, or economic competitiveness of the Forum,” the suit reads.
In total, the suit alleges nine civil charges including breach of contract, fraud and contractual interference. It comes after the Forum filed claims against Inglewood and Mayor Butts in September and October. Lawyers for MSG want a judge to issue an injunction stopping negotiations with the Clippers and issue a finding that Inglewood is in breach of contract for the leased parking lot. They are seeking punitive damages “to punish the defendants and make an example” of them “to the community.”
We reached out to Butts’ office for comment but did not receive a response at time of publishing.
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