The Morning Report
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Wednesday, Jan. 23, 2008 | Chargers special counsel Mark Fabiani went to Chula Vista’s City Council meeting Tuesday looking to gauge what he’d called the policymakers’ body language.
By the time the meeting ended, the council had given Fabiani and the Chargers three hearty rounds of applause — an unusual gesture from a public body, and exactly two more than they gave a heart-disease-awareness speaker who’d preceded Fabiani.
After the meeting, Fabiani said he’d seen “very good body language.” But he left with little more than the clapping and a nonbinding resolution the City Council unanimously adopted saying they’d like to see the football team stay in San Diego County. Council members waxed nostalgic about the blue-and-gold. Steve Castaneda recalled growing up next to a former coach. John McCann remembered the Chargers’ 1994 playoff run and how “it gave us something to dream about.”
But as the Chargers continue focusing on the prospects of crafting a stadium deal in Chula Vista, that nonbinding resolution is about as much certainty as the team has there.
The team is eyeing bay-front land in the city. To help finance a water-front stadium, they’d look to develop land in eastern Chula Vista located next to a four-year university campus.
The team’s ideas for that stadium and development are uncertain, though, and are conditioned on numerous things occurring, many over which the team has no control.
That bay-front land has a power plant sitting on it. No one knows when it will be torn down, because state electricity grid managers require its power to maintain the region’s energy reliability.
And the university campus doesn’t exist. Nor does the city yet own all of the land that would be needed to site a university. It doesn’t have any agreements with any colleges to build a school once it does. City officials are negotiating with two private landowners to acquire about 270 acres in eastern Chula Vista.
Speaking to council members, Fabiani outlined two tracks the team will follow as it refines those ideas during the next six months. First, the team is paying for a study that will examine how to pay for a stadium. The Chargers estimate the cost (including supporting infrastructure like roads) at $1 billion to $1.3 billion — far more than the team’s owners are willing to pay and far more than the stadium’s revenues would cover.
The Chargers’ owner, Alex Spanos, is willing to pay “several hundred million,” Fabiani said, and the team expects a loan from the NFL for about $100 million. Add the NFL loan to the list of uncertainties. The funding in the stadium subsidy program dried up after being given to stadium projects underway in New York and Kansas City.
Even with the loan, those two sources fall short of $1 billion. The team’s financing study will look for ways to fill it, Fabiani said, potentially by building such things as a research park, university housing, restaurants and movie theaters to compliment the university campus. The study, expected to be finished within four to six months, will consider how profitable different development densities would be. Similar studies have been conducted during the Chargers’ evaluation of stadium options in Oceanside and San Diego.
The team does not expect the associated development in Chula Vista to generate enough money to fill the gap, though. Fabiani said he expected it to cover about 75 percent of the needed revenue; the team is eyeing the city and county of San Diego as possible sources of the other 25 percent.
The Chargers’ second track revolves around the team’s desire to learn more about the timeline for the demolition of the South Bay Power Plant. A year ago, the city and port agreed the plant should be torn down and replaced off the bay front. Since then, no specific replacement plans have been announced and no demolition timeline has been set. The future of San Diego Gas & Electric’s proposed transmission line, the 150-mile-long Sunrise Powerlink, could factor in, Fabiani said. If approved, the power line would deliver enough energy to the region to make the South Bay plant not vital to regional electricity needs.
The team doesn’t have a deadline for when it would need the South Bay Power Plant to be torn down, Fabiani said. But the Chargers want to know whether there is a specific demolition date the team can plan around.
“What we’re looking for more than anything is certainty,” Fabiani said. “If you knew for sure the power plant was coming down in 2012 — that that was a certain date — that might be something you could live with. Really, you’re looking for certainty. That may not be achievable here.”
While the Chargers appear to be publicly jugging several uncertainties, some sports business analysts say that is a natural byproduct of a stadium search being run in tandem with local governments.
“What you see when you involve local and regional government, everybody wants to have some say in it,” said David Carter, executive director of the USC Sports Business Institute. “So you tend to see the number of contingencies grow over time. You don’t see these deals become less complicated. They become more complicated with more horse-trading.”
The risk, Carter said, is that deals take so long that the politicians championing them are termed out of office or not reelected.