In the quest for a new stadium, the public needs to meet the team at least part of the way.
By Andy Cohen
Last week, the venerable Chargers blog “Bolts from the Blue” ran a piece pondering the question of who will be primarily at fault if the team ends up leaving San Diego, its home since 1961, for the greener pastures of a new stadium in a new locale. It’s an interesting question with few concrete answers, but with plenty of blame to go around if the team does relocate.
Let’s be clear about something: The Chargers cannot continue to play in Qualcomm Stadium indefinitely. Contrary to popular belief driven primarily by civic pride, Qualcomm Stadium is the second worst stadium in the entire NFL, surpassed only by Oakland’s O.co Coliseum, which is truly a pit unmatched. Not even Candlestick Park, which is scheduled to be replaced as of the beginning of the 2014 season with the new Levi’s Stadium in Santa Clara, comes anywhere close to being as awful as Qualcomm. Candlestick at least has some charm to it. It has some character; an intimate, festive atmosphere for fans. The ‘Q’? Not so much.
The ‘Q’ is wholly owned by the City of San Diego, and by the city’s own admission, it is in an embarrassingly dilapidated state with a backlog of maintenance needs approaching $100 million ($80 million as of 2011). It is also a massive drain on the city’s coffers to the tune of $11.8 million per year. That’s $11.8 million that could be spent on other pressing civic needs.
A 2010 San Diego County Grand Jury report also compared the leases of the Chargers and the Tampa Bay Buccaneers, who, like the Chargers, play in a publicly owned facility. The Grand Jury found that the Buccaneers pay significantly more in rent to the Tampa Sports Authority. However, that comparison is hardly apples to apples, since Tampa’s Raymond James Stadium saw its first regular season NFL game in 1998, compared to the then named San Diego Stadium, which first opened its gates to the public in 1967.
The difference is in the revenue generating capacity of the newer stadiums compared to the older buildings such as Qualcomm. The newer stadiums are in and of themselves revenue generators for the teams that occupy them: Electronic sign and ribbon boards allow for greater in-stadium advertising flexibility and broader advertiser appeal; more efficient and strategically placed concessions offer greater convenience and better service, encouraging more sales and increasing revenue; better premium seating options that are more valued to the fans who opt to purchase them; the list goes on and on.
The Buccaneers are able to generate more revenue from their stadium, and thus have the ability to pay more in rent….not to mention the fact that they are paying for a new, modern facility with more bells and whistles which presumably has its maintenance needs up-to-date.
The Chargers have been seeking a new stadium for the team to call home for over a decade. They’ve explored numerous sites, including the current Qualcomm property, parcels in Oceanside and Chula Vista and Kearney Mesa, as well as two recent proposals downtown. To date there has been precious little progress to point to, and yet Spanos and his Chargers soldier on in a quest to continue to call San Diego their home.
The BFTB crew lays a large portion of the blame for the “mishandled” stadium issue on the Chargers’ ownership, Dean Spanos in particular. They accuse the Chargers’ brass of being shortsighted, saying that “they should have worked with the city for a new stadium in 1995-1996, when the cost was much lower.” They then compare the costs of the seven newer stadiums that opened throughout the NFL between 1995 and 1999, lamenting that they “settled” on a $78 million expansion that was completed in 1997. The problem is that the expansion idea was the city’s to begin with; a new stadium had to that point never been part of the discussion, and at the time was not deemed necessary by the team.
Then-Mayor Susan Golding (a Republican) was intrigued at the prospect of getting San Diego into the permanent Super Bowl rotation. Convinced that an expanded Jack Murphy Stadium would play host to The League’s premier event on multiple occasions (it was, twice, in 1998 and 2002, but was notoriously precluded from future Super Bowls by then Commissioner Paul Tagliabue due to its dilapidated status). It was Golding that spearheaded the effort to expand the stadium to permanently meet the NFL’s minimum seating capacity of 70,000 seats for hosting Super Bowls, and it was Golding and her administration that introduced the infamous ticket guarantee that became the object of massive public derision.
Cost projections when the team first began its new stadium quest in 2002, by the way, came in at $400 million.
About that ticket guarantee (actually a rent credit, as the BFTB crew accurately notes): Once again, it was the city—under massive pressure from the public—that approached the team about renegotiating the Qualcomm lease and doing away with the controversial ticket policy whereby the city was required to “purchase” enough general admission tickets to prevent local blackouts. In hindsight, from a financial standpoint the guarantee would have turned out to be a winner for the city. But at the time no one could have forecasted the years of sellouts that followed the team’s ascendancy to elite status that began in 2004. Attendance ebbs and flows with the success or failure of the team, and up until the renegotiated deal was finalized for the 2004 season, attendance had been less than stellar for a team that went 1-15 in 2000, and whose best season since a 1995 playoff appearance was Marty Schottenheimer’s first as head coach in 2002 at 8-8.
Politically, and from a PR standpoint, the ticket guarantee was an unmitigated disaster, leading to scores of bad press for both the team and the city. The actual structure of the deal was never completely understood by the public, and it reached a point where the city could no longer abide by the existing contract. From their point of view, they had no choice but to rid themselves of the stink of the ticket guarantee just to create a sense of public goodwill.
BFTB also claims that despite the numerous proposals put forth by the team, Spanos has never declared just exactly what the team’s contribution to a new facility would be. In truth, the team’s proposals have always included at least $100 million contribution to the cause by the team and its owners, and perhaps more, in addition to an assumed $150-$200 million in so called G4 loans from the NFL. The question has always been a matter of where the balance would come from, and what the public contribution would be, if any. From day one the team has offered to pony up a significant chunk of the cost out of their own pockets (so-to-speak….the money would not necessarily be in the form of direct cash infusions from their own bank accounts, but more likely loans, funds from naming rights, etc. or some combination thereof).
Spanos and the Chargers have been incredibly patient, spending tens of millions on multiple proposals and outreach efforts in order to garner support and momentum for getting a new facility done. And if the team hasn’t given more specific numbers as to what their actual contribution amount will be, it’s because no one has actually sat down with them and discussed the situation in depth. No one has taken their concerns seriously, no one has taken their proposals seriously and earnestly begin to discuss a solution to the city’s current stadium problem—and it is a problem. And that’s the city’s fault, too, since it hasn’t been for lack of effort on the part of the team. After all, they can’t negotiate with themselves….or they could, but they wouldn’t likely get very far. The $100 million is likely merely an opening figure, one that represents eight percent of the family’s entire net worth. And admonitions of the family’s unwillingness to “cede majority control to another person or group” is ludicrous on its face.
Rather, it has been a lack of political will on the part of the city of San Diego to seriously address the issue, and an unwillingness by the public to support any sort of public contribution toward a new stadium. The public understandably views these public-private stadium partnerships with a great deal of skepticism, but an unwillingness to even consider a public financing component is what will eventually drive the team from San Diego. “Good faith deal making” requires a willingness on the part of both parties to consider a deal. For a variety of reasons, an entirely privately financed facility in San Diego is not at all realistic, and if there is no public financing component, there won’t be a new stadium. Period.
The City of San Diego and its residents have to make a choice: Is keeping the Chargers in town important or not? To this point we have heard nothing but platitudes from city officials about how they would like to keep the Chargers here where they belong, but nothing more than platitudes. There has been no commitment from anyone to sit down and hammer out a mutually beneficial bargain, whatever form it may take and if it’s at all possible to begin with, on the part of our civic leaders. The city certainly has other dire issues to deal with, and if a new stadium is just not in the realm of possibilities, then we need to simply say so.
Choosing to leave the team to their own devices and to deal with the issue on their own is a legitimate course of action. Reasonable people can make a reasonable case that having an NFL football team for the city to call its own is not and should not be a priority. And if that’s what the majority in this city believes, then we should stop stringing the team along so that they can explore their next opportunity and not waste any more time or resources fighting a futile battle in San Diego.
But know this: If the Chargers do eventually leave, it will be our fault, not theirs.
Anna Daniels says
“The question has always been a matter of where the balance would come from, and what the public contribution would be, if any.” You cannot seriously be suggesting that there is no public contribution required in Spanos’ stadium scheme.
We’ve been there, done that and we’re still paying debt service on stadii past.
I agree–let’s stop stringing the team along– and bid them farewell.
Jim Hopkins says
You speak as though it would be a bad thing if the Chargers left town. A new stadium means a giant sucking sound from my wallet. A stadium would have been built a long time ago if the Chargers didn’t need a huge subsidy from the taxpayers. The Padres are taking about $25 million a year from the city’s budget. Isn’t that enough? Study after study has proven that sports stadiums are bad investments for the taxpayers. I for one would rather have clean and well paved streets rather than paying to see adult men actively trying to hurt one another week after week.
If them leaving is meant to be then it’s meant to be, but it’s still disappointing if that’s what it has to come down do. I also would rather have clean and paved streets but has someone who (from a fair weather standpoint) DOES get some enjoyment of seeing adult men “trying to hurt each other week after week” it would be nice of we could have both. But if it has to be one other the other I’ll go with better infrastructure.
I live in the “city” and would have to contribute my taxes for the new stadium. My friend lives in La Mesa; regularly goes to the games but does not have to pay any share of the stadium because she doesn’t live in “the city.”
Fair? I think not.
Andy Cohen says
1) Your tax contribution, assuming there is one (there are ways to structure the financing so that it doesn’t come directly from tax dollars, although the feasibility of most of those ideas is likely questionable at best) would amount to a small fraction of a penny on the dollar. Statistically insignificant on the micro level.
2) The argument that the burden of resources should not fall on the city and those who live within the city limits alone is entirely reasonable, and in my opinion, is absolutely correct. And there have been discussions about making it a countywide effort. The argument goes that the team is a “regional asset,” and not exclusively a city one. In fact, I believe that the team published an examination of its season ticket base a few years ago and found that the majority of the team’s season ticket holders reside outside of the city limits, but still within San Diego County (heavy concentration in North County).
Blanca Pez says
” Statistically insignificant on the micro level.”
And at the macro level, a whole lot of money we could use for things more important than football.
The City has many properties where nothing is done to upgrade and maintain. Then, as if by magic, they HAVE TO be replaced. They are just too derelict to be used any more. This is always a surprise. How much do we still owe on the old stadium?
Anna Daniels says
In 2010,the public was on the hook for $76.6M. The Chargers would have to pay a fee to leave, but the amount goes down each year. Even with a fee pay down in 2010, the public would still have a $50M liability. http://tinyurl.com/lcoqsnu
Andy Cohen says
FYI: If the team does leave before the expiration of the current lease agreement in 2020, according to the contract the team is obligated to pay the entire outstanding balance of the financing for the 1996-97 expansion. Each year that balance declines, hitting zero in 2020 (I believe).
John Lawrence says
Professional football would be a money losing proposition if it were not for public money kicked in to build stadiums. It doesn’t matter where they try to go. The deal is the same: no public money, no stadium. I’m sure the Chargers would have been long gone if they would have been able to find a better deal elsewhere. Their problem is that taxpayers are wising up and choosing to spend their tax money in other ways than on building new football stadiums.
John Lawrence says
If demand is there for the product, then let the private owner pay the cost of producing the product which includes the cost of stadiums. The City should stay out of it and let the free market determine the success or failure of the venture. Public money should be used for public ventures and private money for private ventures.
Brian Brady says
There is a fundamental problem in the NFL model, though; television revenue sharing. 2/3 of that money goes to players salaries, bonuses, and the NFL Players Association. The other 1/3 is split 32 ways to the owners.
If the NFL wanted to go back to the pre-Rozelle, free market days, they’d have to renegotiate the labor contract. For all the talk of taxpayer subsidies going to the Spanos family, know that a huge chunk of that money goes to the Rivers family as well.
Taxpayers subsidize not only luxury box seats for the wealthy but huge signing bonuses for players. Like it or not, taxpayer-funded stadia are yet another example of what happens when Big Labor, Big Business, and Big Government get together. Sports welfare is also anti-competition because it creates an artificially high barrier to entry to compete against the NFL.
Being very catty, Brian, if the Rivers family can afford 7 children maybe they don’t need my money anyway.
And…if my money is allowing them to have 7 children, I would prefer that that money go somewhere else.
Brian Brady says
I don’t disagree, Judi. I love that Philip Rivers has 7 children but I don’t want to fund it. I certainly don’t want to hire people, hold a gun to your head, so you fund it, just because I love it.
I think there is no doubt that I agree with most Freeps that corporate welfare is simply CRAZY but I want to point out that the NFL most certainly CAN make a profit without public subsidies.
Y’all hear me defend capitalism here a lot but, to be clear– This. Is. Not. Capitalism.
Agent of Chaos says
If the Spani want to open their checkbook and pay for it themselves to maximize their profitability potential (no, seriously)… No one will stand in their way.
What? They want the city to pay for 80%?
Eva Posner says
What if the NFL/Chargers hiked ticket prices and Chargers memorabilia prices by a dollar or two for a season or two…or five, and set that money aside for the stadium? Then the people who are actually going to the games and taking stock in te team can pay for their upgrade and the rest of the residents are off the hook?
Great idea – but I can’t afford the cheapest tickets now. Hike the prices – no one buys a ticket, and all the games are dark in San Diego. Afraid it won’t fly, Eva.
Blanca Pez says
“What if the NFL/Chargers hiked ticket prices and Chargers memorabilia prices by a dollar or two for a season or two…or five”
And how long would it take to get the money to pay for the stadium? I don’t care what they charge as long as not a dime of taxpayer money is used.
Anna Daniels says
It is obvious that the love of football cuts across partisan politics– check out the SDFP twitter feed on the weekends to see the interest of our own editors and readers. We have an opportunity to say that we love football, don’t want the Chargers to leave San Diego, but won’t sign on to the public investment that is demanded to keep them here. Maybe we can own the franchise like the Greenbay Packers, the only non-profit community owned major league member.
The Spanos family’s net worth was $1.1 billion in 2011. That same year the Chargers were the 2nd biggest political contributors in the NFL and their contributions went to Republicans. The family’s most recent beneficiary was Rick Perry, during his disastrous presidential run.
We cannot blame citizens for not wanting to participate in the transfer of public wealth upward to already insanely wealthy private interests who could afford to buy their own stadium, cash on the spot. We cannot blame citizens for questioning the public benefit of dealing with the Spanos family, when their particular political leanings happily put the squeeze on the very things the public holds dear after pillaging the public pocketbook for their own benefit. The Spanos family can keep the Chargers in San Diego.
I come from Steelers country. I’ll toss the the Chargers one of Myron Cope’s Terrible Towels to help them out.
John Lawrence says
Private profit at public expense is the name of the game in pro football. And us lemmings go along because we really want bread and circuses just like the ancient Romans. Only difference is the Romans didn’t have to pay through the nose for their circuses!
Andy, you are coming at this issue from the viewpoint of a sports person. I have the opposite position: as a non-sports person, Chargers — and every other sports team — CAN continue to “play” in whatever place they now have. Unless the owners build a new one. Simple. Just like any other actual business that doesn’t receive public subsidies. You, and everyone else on this forum, know that those terrible money numbers are direct result of the disasterous contracts the city has allowed with Chargers — AND Padres! — for their “playgrounds”. How much is the debt service on PETCO Park?
Many other much more valuable businesses have departed out fair city. You think we are gonna shell out any more to keep this bunch of thugs (owners AND players) around? I certainly hope not.
Blanca Pez says
What private sector company demands that the taxpayer finance their plant and equipment and give them nothing in return – other than pro sports? There is negative economic benefit in publicly financed stadiums.
Brent Beltran says
No more corporate welfare. New stadiums are a drain on public resources and they only benefit a few while it is a detriment to the rest. If sports team owners want new digs they should pay for it themselves. Not suck up taxpayer money.
Exactly. And furthermore, any and all non-monetary incentives that sports teams get that businesses and companies in other industries do NOT get, should be eliminated. These, too, are drains on the general public. It’s even less fair to me than it is to Judi; shee wants to go to the games if she could afford it. I could care less about any of the sports. But, as a city dweller, worker and home owner, I hafta pay for them. NO public subsidy for Chargers!
Whew. I got carried away there :-)
Dave Rice says
Having seen almost a dozen of them, San Diego’s stadium is pretty bad. Terrible, even. I don’t know if it’s worse than Candlestick, but those two are pretty much tied for the worst dumps I’ve ever been in (no way I’m going to Oakland, I’ve worked in that town and it was scary enough).
The team can’t continue to occupy its current facility – it’s just not economically feasible in a league where every other team is able to generate revenue for new (read: luxury) facilities. And yes, those other teams do it by bilking the taxpayers, so if the Chargers can’t get the same deal and have to play fair (pay their own way), they’re essentially still on the losing end of the stick as compared to the rest of the league.
Everyone that tells the Spanos family to pay for a stadium themselves is missing the point – that’s probably not feasible. Technically, if the family were to divest themselves of every asset they owned and sunk 90-100% of their net worth into one construction project, they could get it done (most likely). But on its face that’s a stupid idea from a business standpoint.
All said, I’ve been a Chargers fan for almost 20 years, and I’ll be sad to see the team go. But when it comes down to neighborhood investments or welfare for the wealthy, there’s really no thought to be given to that no-brainer. I’ll still root for them wherever they end up, and at least they’ll be on TV more often. Unless they move to LA, because I hate everything associated with that shit pit.
bob dorn says
$1.1 Billion. That’s the total worth of the Spanos family, according to the last Fortune Magazine 100 richest ranking I saw. Maybe they need our loan?
Mr. Rice, you exactly exemplify another negative point of “sports fans” when you say you’ll still be a fan — unless they move to LA “because I hate everything associated with that shit pit.” Why would that matter in any rational choice? Oh well.
And, for business owners to invest half their worth into an expansion is not too much. Real business-people do it all the time with something they believe in.
Andy Cohen says
It would amount to far more than half of their net worth, which is $1.2 billion, $946 million of which is accounted for by the Chargers alone, making them the 25th (out of 32) most valuable in the NFL. No business would ever invest that large a share of their net worth in a single project.
Andy, In the body of this article, you wrote: “The $100 million is likely merely an opening figure, one that represents eight percent of the family’s entire net worth.” That would make the Spaonis worth more like 12 Billion. But, even if they are worth “only” a bit over one billion, they oughta be able to lure other investors — PRIVATE investors! — to make up the (exorbitant) cost.
Andy Cohen says
100,000,000/1,200,000,000 = .08 = 8%
Even simpler: .1/1.2 = .08 = 8%
Blanca Pez says
Then maybe they can’t afford to own the Chargers. If they can’t pay their own way, get out of that business.
Dave Rice says
While I admit that my rather crass comment is a pretty broad generalization, it’s not entirely (or even mostly) backed by my sporting allegiances. I do think Dodger fans can be a bit mouthy and harbor bad attitudes toward other fans, yes, but there are really more fans of most teams like that out there than not (exceptions that come to mind include Packers fans that are actually from Green Bay, St. Louis Cardinals, fans, perhaps a few others).
More my point is that I’ve never had a particularly good experience traveling to Los Angeles, I detest traveling through Los Angeles on my way to more northerly destinations, I don’t care for the atmosphere there, I find a significant number of Angelenos have a more aggressive, callous attitude, and I’ve never had an edible taco shop meal within 30 miles of the place, though I’ve tried dozens of times.
I’m sure there are people who love LA (millions and millions of them, even). I’m just not one of them and I wouldn’t consider traveling there to support a team that formerly represented my hometown.
Besides taking the one line that’s not in context with the rest of my post to call me out, anything else to discuss? Andy pretty much makes the point that investing the Spanos family’s entire worth in a stadium isn’t feasible, especially since they’d have to sell the franchise to free up the cash to construct the building. Not much point in that…
Being a NON-sports fan, I cannot comment on any other part of your post. My reply stands. Don’t take it personally though; the attitude is endemic for sports-folk.
Don Wood says
Before the California Coastal Commission voted on the convention center expansion proposal, the Chargers made it perfectly clear that this city could either expand the convention center or keep the Chargers in town. That is because the Chargers new stadium proposal required some of the TOT surcharge currently earmarked for the convention center expansion in order to pencil out. City politicians like Todd Gloria and Kevin Falcouner, knowing this, stood up at the coastal commission meeting and urged a vote for the convention center expansion. When the commission voted to approve that project, they signed an exit pass for the Chargers, who will eventually leave town, since the city made it clear that it values a bigger convention center over keeping an NFL football team here. Remember that when Falcouner and Gloria run for office.
Blanca Pez says
“Remember that when Falcouner and Gloria run for office”
Yes, I will, and I’ll vote for them and their choice.