AEG Scores at Brazil's World Cup

CEO Dan Beckerman ('96) holds the keys to some of the world's best-known venues, including several 2014 FIFA World Cup stadiums

written by David Davis

 

Talk about a juggling act. “I went to classes during the day in Westwood and usually ended up at night at my office in the Sports Arena downtown,” Beckerman said. “That was a traumatic year. It was very busy.” His ability to concentrate on far-flung projects, along with his lifelong love of sports, have proved crucial during Beckerman’s career. Shortly after graduating from UCLA Anderson, Beckerman left the Clippers to become vice president and CFO of the Los Angeles Kings. Soon after, he added the Los Angeles Galaxy soccer team to his purview, becoming CFO of the newly formed Anschutz Entertainment Group.

Today, as CEO and president of AEG, Beckerman stands astride a sports-entertainment colossus that includes Los Angeles’ professional teams (Kings, Galaxy, 30 percent ownership share of the Lakers), venue ownership and/or management of arenas around the world (Staples Center, Barclays Center in Brooklyn, The O2 Arena in London, Mercedes-Benz Arena in Shanghai) and a live-concert-promotion division. And, with construction of the L.A. LIVE complex across the street from Staples Center, AEG has helped transform downtown Los Angeles from a once rundown neighborhood into a vibrant entertainment hub.

This summer, AEG expanded its global footprint into South America, with partnerships to manage four of the 12 venues used for the World Cup soccer tourney in Brazil. One of the four arenas, the iconic Estádio Maracanã in Rio de Janeiro, hosted the World Cup finals, as well as the opening and closing ceremonies for the 2016 Summer Olympics.

According to Beckerman, AEG established its presence in Brazil by following the same blueprint it used successfully in other foreign markets: open a home office and hire employees, develop relationships and invest in the community, then forge alliances with local partners and the government. AEG’s international strategy is “not simply to export the American way of venue construction and management, operations and the fan experience,” he said. “We try and adapt to the local customs and cultures as it relates to how they entertain, what type of food offerings they have and the type of service they supply. It’s very different in Brazil than it is in China than it is in London.”

All Eyes on Brazil

The 2014 World Cup took place in 12 cities across Brazil. The last time soccer-mad Brazil hosted the tourney was 1950, when all 13 teams faced off in six cities. The years-long effort to stage the World Cup is a massive commitment — of money, planning, and national pride — and Brazilian leaders expected that the exposure generated by the event would spotlight the country as an emerging global player. “There has been some improvement with infrastructure, such as public transportation and airports,” said UCLA Anderson Professor Leonardo Bursztyn, a Brazilian native. “Potentially, this could facilitate and increase tourism, which in turn could generate long-term growth.” Still, the risks of undertaking such an ambitious venture are numerous, including safety concerns over terrorism and the exorbitant expense of stadium construction. Prior to the opening match in June, some Brazilians took to the streets to protest government spending on the World Cup, arguing that “maybe some of the money would better be spent on education and health,” according to Bursztyn. Another concern was the delay in stadium construction: Only a few months before the start of the World Cup, four of the venues had still not been completed, including Arena da Baixada. “A lot of times on these projects, it’s a mad dash to the finish – and, frankly, every stadium development deal we’ve been involved in has always been a mad dash that lasts 100 meters,” said Dan Beckerman, CEO of AEG. “You want to make sure that all the infrastructure is in place. Look what happened [at Russia’s 2014 Winter Olympics] in Sochi: The media exposed that some of the accommodations weren’t ready.”

AEG’s expansion into South America appears to be well-timed. “Investing in Brazil used to involve greater risk,” UCLA Anderson Professor Leonardo Bursztyn said. “For instance, Brazil used to have hyperinflation. It was not the best environment for foreign investors.”

That changed in the mid-1990s as Brazil and fellow BRIC nations began flexing their emerging economic muscle. (The BRIC countries are Brazil, Russia, India and China.) “Brazil experienced, in the last 10 years, impressive economic growth,” Bursztyn said. “The economy has been growing at a fast rate, with the expansion of the middle class and social programs that are lifting people out of poverty. Brazil is becoming a player, not only in Latin America, but in the world. The hosting of the World Cup and the Olympics are the crowning of this stage.”

Leaders on Leadership

In Brazil, which is known as the país do futebol — “the country of soccer” — for its unparalleled success on the pitch, AEG’s ownership of the L.A. Galaxy (as well as a soccer team in Stockholm) eased the transition into that market. That synergistic relationship, UCLA Anderson Professor Sanjay Sood pointed out, can only help AEG. “From a brand perspective, if you can tap into the passion that Brazilians have for soccer, that would be an excellent way to gain awareness for your company,” Sood said. “AEG is in a very nice position to benefit from the World Cup by showcasing not necessarily the AEG brand, but all the partners and talent and venues that they work with.”

Beckerman notes that the World Cup is only one facet of AEG’s interest in the region. “We think that there’s a lot of opportunity throughout South America, and we have an appetite to continue to grow there,” he said.

Now 44, Beckerman is married with two daughters. He was raised in Southern California, earned his undergraduate degree in economics at UCLA and then worked at Arthur Anderson for two years. He returned to Westwood to earn his MBA at UCLA Anderson. “It was a fantastic experience,” he said. “I really enjoyed the finance program a lot. I try to get back there occasionally to speak with students.”

2014 FIFA World Cup Brazil

After completing his first year at UCLA Anderson, Beckerman decided that he wanted to work in sports. He mailed hundreds of letters to professional franchises across the country, only to be rejected by every one except for the Los Angeles Clippers. He still keeps those rejection letters inside a red binder in his office. The job with the Clippers gave him hands-on responsibility across a broad range of disciplines, including sales and marketing, negotiating player contracts, lease agreements, and TV and sponsorship deals. “It was a blessing to get a job with an organization that was as small as that, because I was able to learn so much more than getting a position with a large organization where you’re a piece of a big puzzle,” he said.

Beckerman believed he might stay with the Clippers for life, until Los Angeles Kings owner Philip Anschutz hired him as CFO in 1997. That proved to be the turning point in Beckerman’s career as Anschutz and his partners went on to build Staples Center in downtown L.A., invest heavily in major league soccer (at one point, AEG owned more than half of the league’s franchises) and expand into concert promotion and venue management.

Last year, Beckerman was named CEO, replacing Tim Leiweke. It was “an adjustment to having that role and having the new title,” Beckerman admitted, “but I had already assumed many of the day-to-day responsibilities for operating the businesses while Tim was growing the company and helping to create the vision.”

Beckerman’s low-key style matches that of his company. Indeed, AEG’s strategy of shining the spotlight onto their teams and venues has served the organization well. “Being a private company with an entrepreneurial chairman like Mr. Anschutz enables us to be nimble,” he said. “We don’t have the pressure of quarterly earnings or the pressure of a three-year investment horizon that some equity funds have. We have access to very patient capital and someone who’s willing to take the right risks.” Beckerman pointed to two recent deals in which AEG’s patience was rewarded: the luxury hotel-condo project in downtown L.A. that launched during the challenging economic times of 2008-09 and its investment in land development near Berlin’s O2 World arena.

Estadio Maracaña

That tireless persistence also defines AEG’s current effort to secure perhaps the most elusive prize in all of the city’s sports business: the return of an NFL team to Los Angeles, complete with a state-of-the-art stadium. AEG’s own proposal, Farmers Field, includes a revamping of one part of the Los Angeles Convention Center. “It’s still a high priority for us,” Beckerman said. “We’ve been working on it for a while.”

As the NFL-in-L.A. conundrum works itself out, Beckerman remains proud of AEG’s substantial growth. “I still think of our company as a small company even though I know it’s not,” he said. “When I first came here 17 years ago, it was a very small organization with maybe 30 people. We now have 28,000 people. But, I still approach my job the same way: It’s a very hands-on role and I’m involved in every aspect of the business, from our venues to our sports teams to our development projects to our music division.” X