The Morning Report
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I spent much of the last two weeks talking with sports economists, consultants, professors and investment bankers related to the Chargers stadium search, particularly about what a proposal to build a stadium in Los Angeles could mean for the team.
The result was my story yesterday that shows some of the same financial problems the Chargers face in finding a stadium in San Diego also exist in Los Angeles.
(There was also the story about a new stadium proposal involving the Wonder Bread building in downtown San Diego. We’re dubbing that effort “Wonderbread Stadium.”)
My conversations with the sports economic experts focused on the deal that Los Angeles developer Ed Roski is proposing: Give me 40 percent of your team to move into my stadium. I wanted to know how that deal might pencil out for the Chargers. Among others, I spoke with Jim Kahler, executive director of Ohio University’s Center for Sports Administration and a former senior vice president with the NBA’s Cleveland Cavaliers.
- Kahler said I should focus on how much the Chargers revenues would increase by moving from San Diego, the 28th-largest television market, to Los Angeles, the second-largest market.
NFL teams share the league’s television revenues so there’s no more money to be made in television rights. But a larger television market means a larger audience and more money the team can charge for its stadium naming rights, signage within the stadium, local sponsorship revenues, etc.
Kahler thinks the Chargers could earn an additional $15 million a year in local sponsorship revenue, $10 million more a year with new luxury boxes and $12 million more a year from higher ticket prices. Kahler rounded down his estimate and said the Chargers could make $40 million more a year by moving to Los Angeles.
If Roski were willing to reduce the stake he wants in the team to 30 percent, Kahler called the decision a “no brainer.”
- One factor I only touched on in yesterday’s story could make the financing question moot. The NFL’s owners collectively will decide if a team returns to Los Angeles — not any individual owner and certainly not a billionaire Los Angeles developer.
The league’s bylaws say that a super-majority of the NFL’s owners must approve a move if it’s not considered in another owner’s territory, explained Rodney Fort, a University of Michigan sports management professor. If it is considered in a team’s territory, the vote must be unanimous.
“It is the league, not any individual owner, that decides where its teams are located,” Fort said.
- Last, I wanted to link to a story by our media partners at NBC, who followed up on our downtown stadium coverage. Let me point out the impressiveness of the red fedora worn by Bob Sinclair, owner of the Wonder Bread building.