Inglewood city officials are launching an audit of their financial relationship with SoFi Stadium and claiming the stadium could owe years of ticket taxes, one month after a judge voided the 2015 contract that brought the stadium to Inglewood.
The Inglewood City Council voted unanimously Tuesday to commission the audit. Mayor James Butts said the move is a necessary next step after the court ruling, which threw the terms of the financial relationship between the city and Hollywood Park stadium development into question.
Millions of dollars are at stake for both the city and the stadium businesses. City officials say that the ruling means a cap that limited the amount of admissions tax that Inglewood could collect no longer applies. They also plan to investigate the authenticity of $376 million worth of infrastructure bills Hollywood Park claims the city owes. The findings of the audit could also factor into discussions of how the city will address its current $30.8 million deficit.
The City Council motion — put forward by Butts and co-sponsored by Councilmember Dionne Faulk — requires the city attorney to retain an accounting firm to conduct the audit and report back to the public on its findings within 30 days. It set aside $325,000 from the city’s General Fund to pay for the audit. You can read the city’s full explanation of the audit here.
Butts, who was at the city’s helm a decade ago when developer Stan Kroenke brought his Hollywood Park pitch to Inglewood, said city officials built what they thought was a partnership with their stadium counterparts.
But that partnership has crumbled. Since last summer, the city and stadiums have been slugging it out in a complex series of court cases over the stadium’s contract and Inglewood’s network of video billboards. The conflict has spilled over into the Nov. 3 election via ballot measures that would change the city’s commercial advertising and ticket tax rules.
The audit approved by the City Council on Tuesday will dig into the entire financial relationship between the stadium and city since 2015, unpacking what is owed and what was received from taxes on everything from tickets to parking. City officials plan to continue auditing the taxes on a quarterly basis into the future.
Still, it’s not guaranteed the city would be able to force the stadium development to pay any debt the audit does claim. Hollywood Park could still appeal the court ruling that voided its contract with Inglewood, while Butts said the city wants to negotiate a new contract to replace it.
A Hollywood Park spokesperson said the stadium development has lived up to its financial obligations, including paying all of its taxes.
“This is yet another thinly veiled attempt to distract from scrutiny surrounding the City’s own fiscal mismanagement and the questionable actions of its Mayor,” the spokesperson wrote in a statement.
Some locals at Tuesday’s meeting said during public comments they were baffled why the city hadn’t set up an audit process earlier.
“We have needed an audit from day one. We can’t sit here and claim we didn’t know or have an inkling what we were doing with Hollywood Park,” Diane Sambrano said.
Speaking during the meeting, Butts said the audit was triggered because of the void left by the development agreement and because major events including the 2027 Super Bowl and 2028 Olympics are about to hit Inglewood.
The mayor first claimed the development agreement was illegal in a letter written directly to Stan Kroenke last year, saying the city’s lawyers made the determination while researching billboard litigation.
Millions in tax revenue at stake
After the judge ruled in agreement with the city, Butts told The LA Local that city officials were still researching the specific implications of the court’s ruling. In Tuesday’s council motion, city staff highlighted what they say is one major change they’ve discovered: There’s no longer a limit on how much admissions tax the city can collect.
Inglewood collects a 10% tax on tickets sold at SoFi Stadium, but the 2015 initiative that brought the stadium to the city put a cap on that revenue, starting at $15 million a year and increasing annually with inflation.
The admissions tax cap also happens to be the subject of the current ballot Measure AT. WOW Media, the billboard operator allied with the city in its dispute with the stadium, is funding a campaign in favor of the initiative.
Admissions tax has been a sizable revenue stream for the city — bringing in an average $20 million a year since SoFi Stadium opened — but city officials have said it could be significantly bigger. A city analysis of Measure AT estimated that getting rid of the cap could bring in as much as an extra $50 million in future years. The city did not estimate how much admissions tax revenue it has missed out on while the development agreement was in effect.
The Inglewood audit seeks to clarify basic questions about how taxes are assessed on ticket sales and whether those taxes are actually forwarded to the city. Officials say it will provide transparency about ticket sales, pricing and fees, which have been heavily scrutinized in recent years across the state.
Gray gets support on proposal for future billboard revenue audit
Councilmember Gloria Gray attempted to amend the audit motion Tuesday, asking the city manager to also audit the revenue the city gets from billboard fees.
“I believe the same standard of financial transparency should apply to every city agreement,” Gray said.
Though her motion didn’t receive a second, Councilmember Eloy Morales said he’d support putting a billboard revenue audit on the council’s agenda in the future.
“I think we all support all those audits,” Morales said.
Gray’s move was a rarity for a council that seldom debates motions during public meetings and almost always votes unanimously. The councilmember is currently running for mayor against Butts.
Inglewood pulls in as much as $8 million a year from billboards, according to budget records. Much of that comes from a series of deals the city cut with WOW Media allowing the billboard company to construct and operate the billboards on public medians and sidewalks. In return, WOW gives the city a cut of ad revenue along with other concessions.
