L.A. SINGING THE BLUES ABOUT '98 GRAMMYS.

Byline: Fred Shuster Daily News Staff Writer

On the eve of tonight's Grammy Awards ceremony at New York City's Madison Square Garden, local officials said they do not expect the show to return to Los Angeles for the all-star 40th anniversary music extravaganza next year.

At the conclusion of last year's Grammys at Los Angeles' Shrine Auditorium, National Academy of Recording Artists head Michael Greene said that the show had outgrown the 6,300-seat venue and was heading to New York. He also said the Grammys would alternate between cities after that, a plan that local officials now say is in doubt.

``It's unlikely the academy will come back to L.A. next year. Of course, we're sad about them going to New York,'' said Cody Cluff, president of the Entertainment Industry Development Corp., a joint city-county group which acts as a liaison for various entertainment events. ``The Grammys went to New York because of the larger venue.''

National Academy of Recording Arts & Sciences officials say a final decision won't be made until after tonight's 39th annual show, the academy's first at Madison Square Garden.

Los Angeles has hosted the Grammys at the Shrine for seven of the past 11 years and expected that the awards show would return next year.

Since 1978, the music awards show has taken place at either the 6,000-seat Radio City Music Hall in Manhattan or the Shrine, which hosted the Grammys in 1995 and 1996.

``The future hinges on how well the show works out at Madison Square Garden,'' Cluff said. ``If it's a disaster, who knows what will happen.''

New York City officials lured the show to the Big Apple this year by mounting an ambitious campaign. New York Mayor Rudolph Giuliani chairs a Grammy host committee which kicked the National Basketball Association's Knicks out of the 12,000-seat Garden to make room for the show, which will be televised tonight on CBS.

Giuliani proclaimed February Grammy Month in the Big Apple. Special events included a free outdoor concert with Grammy winners Michael Bolton and Art Garfunkel. Giuliani also arranged for the creation of a $100,000 grant program to promote music education in New York public schools.

Madison Square Garden, for its part, is reportedly keeping open a string of 1998 dates in case the show stays a second year.

Giuliani said it was only fitting that the Grammys come to New York.

``It's appropriate that the world's premier city is hosting the highlight event of the music industry,'' Giuliani said Tuesday through a spokeswoman.

``The Grammy Awards bolster and complement New York City's energy, spirit and vitality. New York's cultural and creative diversity make it the ideal city, not just for Grammy night, but for a monthlong series of music events including putting the spotlight on music education for our city's children.''

A spokesman for Richard Riordan said the Los Angeles mayor could not find time on his schedule to comment on the Grammy situation.

According to the academy, at least 3,000 members of the music industry were shut out of the Grammys at the Shrine last year because of a space crunch. The Great Western Forum has been ruled out because the Inglewood venue is located beneath a Los Angeles International Airport air corridor, which makes the necessary outdoor events and press facilities impossible, Cluff said.

One Los Angeles effort that could turn the tide is the proposed sports-entertainment complex planned for downtown. Developers of the complex revealed plans last week for a $240 million, 20,000-seat arena on 11 acres where the North Hall of the Convention Center is located. The City Council endorsed the project on a 13-2 vote.

Cluff said he understood that the downtown arena, if all goes well, could be open in time to host the 41st annual Grammy Awards in 1999. But other officials said the proposed arena might not be ready to open until September 1999.

There are 52 annual entertainment industry ceremonies, from the Academy Awards to Nickelodeon's children's TV honors, with the majority taking place in Los Angeles, said Diane McGraw, president of the Los Angeles Sports and Entertainment Commission, an organization designed to represent the city in bidding for sports and entertainment events like the Grammys.

McGraw said it was inevitable that the Grammys would return to New York for its anniversary next year. She said the show could return to Los Angeles in 1999 if an appropriate venue is located.

``All indications are the Grammys will come back in 1999,'' McGraw said Monday. ``After this year's show, NARAS will determine what works best for them.''

She said that NARAS might consider returning to the Shrine a last time in 1999 if the new arena is not ready.

In order to bolster the awards show's traditionally lackluster ratings, the academy and CBS reportedly spent $2 million on promoting the New York event, which is being sponsored by Coca-Cola Co. to the tune of $10 million in advertising.

Performers on the show include Babyface with Eric Clapton, Bruce Springsteen, Natalie Cole, Celine Dion, Smashing Pumpkins, Beck, Vince Gill with Patty Lovelace and Alison Krauss, No Doubt and the Fugees. The event will be hosted by comedian-actress Ellen DeGeneres.

New York City and Los Angeles officials have skirmished for several years over the privilege of hosting the music industry's biggest awards show, which has a worldwide television audience of more than 1 billion.

Los Angeles is home to the Grammys' governing organization, NARAS, and to an estimated 70 percent of its members. The show has pumped an estimated $35 million into New York's economy in the past, but brings less to Los Angeles because fewer Grammy members need hotel accommodations here.