The LA Times is reporting that AEG, the backers of an NFL stadium in downtown Los Angeles, are close to completing a primary naming-rights deal with Farmers Insurance.
The sources, who requested anonymity because they are not authorized to speak on behalf of the project, said AEG was originally hoping for a 30-year deal starting at $20 million a year, with annual increases as part of the agreement. The current terms are not known, however.
The proposed stadium, which would have a retractable roof and would host NFL games, conventions and other events, would be located next to Staples Center where the Los Angeles Convention Center's West Hall now stands.
The news of a pending agreement between AEG and Farmers Insurance was first reported Saturday on Twitter by Sports Illustrated's Peter King.
A naming-rights deal would be a significant step toward making the proposed stadium/events center a reality, paving the way for the NFL to return to the nation's second-largest market. It would provide guaranteed income, an important part of any stadium-financing plan.
Stadium expert Marc Ganis called the development "significant" but added that it "doesn't mean a team is on its way" to Los Angeles.
"It adds some meat to the bones, but it does not solve any of the three threshold issues: securing the team, the environmental and land-use issues, and the full financing of the stadium — though it helps for that," said Ganis, president of Sportscorp Ltd.
Naming-rights deals are difficult to come by in this economy, and neither the Dallas Cowboys nor the New York Giants and Jets, who share a stadium, have secured such deals for their new venues. Ganis said, however, that those teams are looking for more lucrative agreements than the one AEG is thought to be seeking.
Los Angeles would seek multiple "founding partners" to sponsor elements of the stadium, as is the case with other NFL venues. For instance, AEG has 10 such sponsors for Staples Center.
Farmers Insurance would be known as the "naming-rights partner" for the NFL stadium.
"I would suggest that this is a smart deal by Farmers," Ganis said. "Because if the stadium doesn't happen, they can get a lot of free publicity without putting up any money. If the stadium does happen, they got it at a discount."