Four Myths About a Chargers Stadium That Must Die

On Wednesday, San Diego Mayor Kevin Faulconer will give his first State of the City address, and you should expect some kind of dorky civic surprise.

I bet, for example, County Supervisor Ron Roberts will make a cameo, as he has in the past, to announce that he and Faulconer have finally come up with a way for the city and county to work together to build a new Chargers stadium.

Whatever it turns out to be, the mayor will undoubtedly articulate something more ambitious than the basic “we have to keep the Chargers — they’re a regional asset” affirmation that we’ve gotten in all of these yearly speeches going back a decade. He may go so far as to call for the redevelopment of the Sports Arena and Qualcomm Stadium sites to free up money for a glitzy new building downtown that could do what both of them do, but better.

Whatever you think about the issue, we need to put several myths to rest. Every time I talk about this story, whether on the radio, at a party or on Twitter, the same simple responses come up. Here’s why we need to retire the most common ones.

Why don’t they get a bunch of private investors to pay for a new stadium?

This comes up all the time. Check out this U-T Facebook comment swarm, for instance. Inevitably the discussion of a stadium includes public money. People instinctively wonder why investors or the team won’t just build a stadium themselves.

They would if it made money.

Unfortunately, a stadium is a loser as a standalone business. The Chargers would not want the stadium if we gave it to them nor would any other business. Sure, the team pays rent, as would the Aztecs. Concerts will come and go. Monster truck rallies, all paying rent, will show up. But over the long term, the stadium becomes a terrible burden.

The Chargers are offering to operate and pay for the expenses of a new stadium but they do not want to own it.

That doesn’t mean that private sources can’t help fund a lot of it. But here, they just aren’t willing to do much.

Right now, the Chargers are willing to put up about $200 million for a new stadium. The NFL is willing to loan the team another $200 million. If the stadium costs $1 billion, that leaves a delta of $600 million.

In the past, in other cities, this gulf is usually filled by simple tax increases. That’s what happened in Denver and Indianapolis. That’s what happened in Arlington, Texas. (You can call that giant AT&T Stadium “The house that Jerry built.” But it’s the house taxpayers built, too.)

What makes us different than those cities is that, to raise taxes, we have to have a vote and two-thirds of voters have to approve it. In Texas, only a majority of voters needed to approve those tax hikes.

Now, other cities have tried to limit the taxpayer investment. Most recently, we got to see how Santa Clara and the San Francisco 49ers did it. The city of Santa Clara, through redevelopment and other sources, committed to put in $114 million of taxpayer dollars.

But that’s now expanded. The cost of the stadium ballooned to $1.3 billion, as these things do. They increased the hotel tax and the new agency in charge of the stadium has taken on a huge responsibility (read: gamble) to pay back loans on it.

And even that limited public investment was only possible because of a giant investment from fans in the form of so-called personal seat licenses.

Niners fans have purchased about 61,000 licenses. These are just the rights to buy future tickets to football games and other events at Levi’s Stadium. That could bring in more than $500 million to help the stadium owner pay back these giant loans.

And that brings us to our next myth.

The fans who care about football can pay for it.

I agree! It should be possible for the people who care most about this team and business to invest their money in it staying here.

But there’s really only one way for them to do it. Sure, they can buy tickets. But to help build a stadium, they would only be allowed to purchase those personal seat licenses like in Santa Clara.

It’s not clear that many people would.

“We’re just not in a market that supports personal seat licenses,” said Mark Fabiani, the team’s special counsel.

If we see a new stadium push here, yes, the team or stadium authority will sell some personal seat licenses, but it won’t be a significant part of the final funding formula. San Francisco and Dallas made big money with those licenses. But Minnesota and Atlanta are only expected to bring in about $100 million. The Chargers would expect about that much or less.

Now, those of you who have followed me over the years know that I’m particularly passionate about the idea of fans being able to invest in the team in a different way.

When businesses want to raise capital for an expansion, they seek out investors and usually have to offer a share of their business in exchange. The idea, of course, is that this sacrifice is worth it. It’s worth it for the business owner to give up some of his or her ownership so that they can get money to make the whole business bigger and more profitable.

I believe that the NFL owners are sitting on a sleeping giant — a pile of potential capital they could use to help their business grow if they allowed fans and locals to invest in their team and get equity in exchange. In Europe, this is how private soccer clubs fund stadiums.

Alas, only the Green Bay Packers are allowed, by current NFL rules, to raise money this way. And they, not long ago, raised a lot of it.

I have not, apparently, generated enough of a nationwide movement to force a change of this rule.

The fact is that owners have become addicted, like old meth heads, to taxpayer subsidies. They can’t see any other way to raise money or understand why they would want to look. And taxpayers continue to support this dependency by investing billions into these private businesses without ever asking for equity in return.

Unfortunately, the sentiment that “the fans who care about football should pay for a new stadium” is basically a “don’t let the door hit you on the way out” statement to the Chargers.

They can combine it with a soccer stadium. (Or the Olympics!) Or the Convention Center.

First of all, we’re not going to get the Olympics. I’m not even going to go there and I’m someone who thinks it’s a cool idea. (I will say this: Boston is proposing that the Patriots’ Gillette Stadium host the soccer matches — and that’s it — in its 2024 Olympic bid. But it’s going with a new temporary stadium for the opening and closing ceremonies.)

So that brings us to soccer. And soccer is having a moment. Across the country, cities with professional soccer teams are building them their own venues. Salt Lake City’s Rice-Eccles Stadium, which hosts the University of Utah football team, was not good enough for Real Salt Lake, which got its own stadium south of the city. Las Vegas and other cities are competing for the next team, each proposing new venues.

They all want a StubHub Center. It’s the largest of the soccer stadiums and it only holds 27,000. A 20,000-seat stadium was just approved in D.C.

Major League Soccer likes those smaller, intimate stadiums.

“They’re in a position to demand what they want,” Fabiani told me. “They’re not interested in playing in someone else’s stadium.”

What’s more, they actually have a rule against it (all these rules!). Major League Soccer won’t let a new team play in a football stadium unless the owner of the football team also owns the soccer team and controls the stadium. They don’t want the hassle of being just another renter in a venue.

Those who desire Major League Soccer in San Diego have their eye on the old Balboa Stadium. But that’s another story.

Finally, there’s the Convention Center. KPBS caught my eye with a recent report that the Convention Center expansion might not be dead after all. Tarryn Mento reported that Councilman Todd Gloria was pushing for a public vote on raising the hotel tax for the new construction.

OK, well that, again, would need a two-thirds vote. It’s a high hurdle.

The Chargers want hotel owners and tourism leaders to link the Convention Center to a new stadium at property owned by the former owner of the Padres, John Moores. But they’re just not into it. The Chargers need an ally on this or it’s just dead.

A football stadium will likely need to stand on its own in front of voters or as some kind of package of improvements.

Now that would be something to behold: Faulconer announcing Wednesday that he will push a giant infrastructure bond and tax increase that includes money for neighborhood needs, a Convention Center expansion and a new stadium.

Ha! My ability to make myself laugh is my most prized talent.

We’ll get Super Bowls regularly if we build it.

You hear this one all the time too. San Diego’s the perfect place to host the Super Bowl. Any cost/benefit analysis of the new stadium should keep in mind the glory of hosting this annual party every few years.

Ain’t going to happen.

Even the Chargers are trying to lower those expectations. Fabiani said that argument made more sense a decade ago when this conversation began.

“That was before the league decided to start rewarding teams for building new stadiums,” he said. “Washington D.C. wants a Super Bowl, Chicago wants one. San Francisco is getting one. Atlanta will get one with its new stadium. Same for Minnesota.”

And his kicker:

“The idea of a rotation is a myth,” he said.

Sure, San Diego would get one eventually as it waits in line with the backlog. And perhaps, after 10 or 15 years when they’ve rewarded these cities who coughed up the dough, we’d get another one. Obviously Arizona and New Orleans have found themselves with the big party more often than others.

San Diego’s probably more likely to get a second one in a new stadium than, say, Chicago.

But now Los Angeles could be one of those cities as well (LA is also in sunny Southern California).

The mayor could make some news Wednesday in his big speech. But we’ve been talking about this stuff for 10 years and nobody has even once said anything interesting.

I don’t expect that to change.