The Morning Report
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San Diego’s New York-based football stadium consultant, Mitchell Ziets, presented an overview of NFL stadium financing primarily over the last eight years at a morning meeting of the Centre City Development Corp. Wednesday. Ziets and CCDC head Fred Maas also spent time with a gaggle of reporters, including myself, afterward. Ziets expects to have an economic feasibility report for San Diego within three months.
My seven key takeaways or interesting tidbits from the presentation:
- Ziets’ data showed the public has paid an average of 54 percent of the 11 NFL stadiums built or renovated since 2002. As the U-T notes, that would mean a hypothetical $400 million subsidy for the Chargers proposal, though Ziets pointed out that he would not simply recommend San Diego pay the average. For its money, the public typically has received an iron-clad lease with a team through the length of the bond payment, ownership of the stadium and no responsibility for cost overruns or operations maintenance costs. Rent is a pittance. Only five teams pay more than $1 million a year to their cities.
- Expect to see Ziets a lot more. CCDC Chairman Fred Maas justified the $160,000 spent to hire the consultant in part to get him on the city’s negotiating team if and when the time comes to figure out a concrete proposal for the Chargers. Ziets has advised on more than 75 sports facilities and franchise acquisitions.
- The argument that is emerging for a new stadium is looking like it will rely heavily on promoting economic development in the East Village area. That’s the way the Petco Park baseball stadium was sold to voters, too. The problem is some of the logic doesn’t work as well as before. The Chargers stadium is planned over a maximum 15-acre site, leaving little to no room for related development. Petco only is a few blocks away, meaning there’s already a stadium there that’s spurred redevelopment. And football with its 10 guaranteed home games a year draws fewer people to the area than baseball with its 81 home games a year.
- “What we’re really talking about here is a larger area,” Maas said. “It may not necessarily inure to the benefit of the team or to a public-private venture, but will inure to the benefit of downtown. I’m one who believes — irrespective of the stadium — something has to happen in that location in East Village.”
- Ballot propositions for new stadiums — something likely to happen in San Diego — work out surprisingly in favor of their construction, Ziets said. Of 38 recent referenda Ziets analyzed, 71 percent passed. Of the 11 referenda that failed, 10 stadiums still got built. One major caveat to this data. Only one referendum involved a football team in California, and that proposed stadium for the San Francisco 49ers was never built.
- Ziets bucked some of the received wisdom on how the NFL’s salary cap influences teams’ desires to have a more lucrative new stadium. A salary cap — a financial ceiling above which no team can spend — also works as a salary floor, Ziets said. Teams that don’t make as much money off their stadiums have to pay more of their money to players leaving less of it for their owners. That’s not like baseball, for example, where small-market teams can spend fractions of the large-market teams on player salaries. In short, the salary cap equals increased need for stadium revenues.
- The Chargers have contended the opposite: Playing without a salary cap — as the NFL may do next year — means the team would not be able to compete with larger market teams for players. In short, no salary cap = increased need for revenues from a stadium.
- Only in the case of a new Dallas Cowboys stadium has a city gone it alone in the public portion of a stadium’s financing. In every other case, a state or county has also been involved. For the Chargers, there’s been no talk of direct support by the county, though the county would need to a support a change in state law that would increase the money CCDC is allowed to spend before building a stadium.
- Ziets ended his presentation with an assertion that diminished the importance of comparative study. Each city, Ziets said, finds a way to pay for a stadium based on the financing mechanisms that are available to it uniquely. In short, what other cities have done doesn’t necessarily matter for San Diego. He called the theory “looking under rocks.”
- “There’s generally something that’s germane to a specific city that makes it work,” Ziets said.
— LIAM DILLON