For more than two months, the San Diego Chargers have not lost a football game.
The team is on a winning streak off the field, too. In late October, team President Dean Spanos and Mayor Jerry Sanders met to talk about a new stadium downtown. The team has hired an architect to produce drawings and the city’s downtown redevelopment agency, Centre City Development Corp., has hired a consultant to determine how to pay for a stadium.
Given the burst of activity, I thought I should answer some frequently asked questions on the team’s now 7-year-old stadium search.
Why are the Chargers trying to ditch their existing stadium?
The Chargers argue that Qualcomm Stadium, the league’s third-oldest facility, does not allow them to be competitive in the NFL. Newer stadiums allow teams to make money off new amenities, such as luxury boxes. Forbes magazine ranks the team 24th out of 32 NFL teams in value, $733 million behind the league’s top team, the Dallas Cowboys. (It’s not as if the Chargers are hurting, however. Forbes values the team at $917 million with $224 million in revenue from the 2008 season.)
On the field, it might be tough to argue that four straight playoff appearances is not being competitive. The Chargers say a lack of funds will affect their ability to hire coaches and pay their players bonuses. But the new stadium wouldn’t be bad for the owner’s wallets, either.
Doesn’t the NFL’s structure even the playing field for small- and large-market teams?
The league has a hard financial ceiling, called a “salary cap” and teams aren’t allowed to spend more than a certain amount on players each year. The league also gives shares of revenue from its gargantuan television contract and other sources of income to all 32 teams. Differences between small- and large-market teams’ payrolls are the least of any of the country’s major sports.
But next year it is likely that the league will play without a salary cap and end a small portion of its revenue sharing agreements.
A year without a salary cap bolsters the Chargers argument that the team cannot compete with the Dallases of the world, as this story shows.
How long have the Chargers been looking for a new stadium in San Diego County and why did other efforts fail?
The Chargers began their search for a new stadium in 2002, just five years after the city renovated Qualcomm Stadium in 1997 for $78 million.
The team and the city’s initial efforts focused on the redevelopment of the Qualcomm site in Mission Valley. The team first wanted to tear down Qualcomm and build a new stadium. Then the Chargers wanted to build a stadium and 6,000 condominiums at Qualcomm, but that plan fell apart in 2006 after the team couldn’t find a development partner.
After that, the Chargers have negotiated with National City, Oceanside, Chula Vista and Escondido. All the sites have fallen apart for various reasons, but the primary problem has been an inability to find a financial model amid a real estate crash and local municipal budget problems. The team put Escondido on the back burner after negotiations began downtown.
Why do the Chargers need public money?
Because everyone else in the NFL gets it. And if San Diego doesn’t give it, it’s possible some other city will.
New stadium projects in Denver, Indianapolis, Phoenix and New York all received taxpayer subsidies. NFL cities, such as Cleveland, Houston and Baltimore, lost teams because they wouldn’t pay for new stadiums. They got teams back only after they did. In short, only 32 cities have NFL teams but more than 32 cities — including now NFL-less Los Angeles — want one.
Essentially, San Diegans have two choices. Call the Chargers’ bluff and see if they move somewhere else. Or shell out the money to keep them.
How much public money are we talking?
We don’t know at this point, but it’s likely to be a lot. CCDC hired a stadium consultant in November to determine various financial plans and the consultant met with Sanders earlier this month. The Chargers have pegged the team and the NFL’s contribution at $250-300 million. That would leave an estimated $500 million needed before the team could build.
Wow, $500 million is a lot of money. That’s all going to be taxpayer dollars?
Depends on how you define taxpayer money. Raising taxes to pay for a stadium is nearly impossible, given that California requires a two-thirds majority for tax increases.
Instead, the most direct source of public funds would be from the city of San Diego in the form of downtown redevelopment dollars. That process is essential, but will be complicated.
There are other ways to get funding, though the most obvious involve a public contribution of some sort. San Diego State University also plays football games at Qualcomm and the school has been in discussions with Sanders about expanding its campus to the Qualcomm site. It’s reasonable to expect the university to kick in money for the downtown site through a lease at the new stadium and/or purchasing some or all of Qualcomm.
The Chargers continue to make the point that a football stadium is not the best use of Qualcomm’s 166 acres. Opening up the site to development could create revenue that would go toward the project.
Is Qualcomm a bad deal for the city?
The city loses money each year to operate and maintain Qualcomm. A stinging report from the city auditor in May showed that stadium operations are not self-sustaining and are unlikely to be in the future. If the team leaves before its lease runs out in 2020, the city could be on the hook for $21.4 million in bond payments without a team playing at the stadium.
A Chargers official estimates the city will lose $300 million over the life of the team’s lease if there are no changes to the deal.
Former City Council President Scott Peters argued in an op-ed this weekend that the city could put $225 million toward a new stadium without spending any more than it would otherwise to maintain Qualcomm.
Why can’t the city and the team just build a new stadium at the Qualcomm site?
Two reasons: money and the environment. Unlike downtown, Qualcomm is not in a redevelopment area, meaning that source of funding is impossible. Also, there’s a giant plume of fuel beneath Qualcomm Stadium that needs to be cleaned up — at great expense — before anything can be built there.
When can the Chargers leave and how much does it cost them to do it?
The Chargers can leave at any time. The team’s lease with the city runs through 2020, but the Chargers have an annual window between February and May where they can buy out of the lease. In 2010, the buyout is $54.7 million. But in 2011, it decreases to $25.8 million and goes down each year thereafter.
Will the Chargers move to Los Angeles?
Los Angeles always has been the leverage the team has used to broker a deal in San Diego. This fall, a new site outside Los Angeles has progressed further than any previous proposal, though it’s far from certain that a stadium will happen.
The Spanos family, which owns the Chargers, is friendly with Ed Roski, the billionaire who’s building the Los Angeles stadium. The Los Angeles Times recently handicapped the Chargers as the team most likely to move there. Six other teams are targets for Roski, and the Jacksonville Jaguars and Minnesota Vikings have gained currency of late. Also, there have been rumblings that two teams could move to Los Angeles.
Complicating the Roski deal is that he wants an ownership share of the team that moves there.
CCDC’s consultant expects to have his study completed sometime in the next couple months. That’s the same time that Los Angeles’ developer expects to approach teams around the league with a financing plan to move there.
Have more questions?