The Morning Report
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To understand all this drama over the past few weeks about the Chargers, the team’s quest for a stadium and the mayor’s mediocre response, it helps to imagine the worst-case scenario for the Chargers.
The absolute worst thing that could happen to the team and owner Dean Spanos is if the St. Louis Rams or the Oakland Raiders move to Los Angeles. Check that, the worst would be if both moved to L.A.
This would have two major impacts on the Chargers.
The first is a little hard to quantify. A few years ago, the Chargers hired AEG to help it market to L.A. and Orange County. This helped the team build a fanbase there. In fact, the Chargers’ special counsel Mark Fabiani claims 25 percent of the team’s season ticket base comes from the great megalopolis to our north.
We don’t have access to their numbers, so we have to just trust him.
He’s right, though, that this L.A. fanbase probably instantly dries up if either the Rams or Raiders or both move back to L.A.
The second major impact is more important: If other teams move to L.A., it will remove a major piece of leverage the Chargers have right now.
And that’s the nightmare for Spanos. If the team is stuck in San Diego, loses its market share in L.A. and Orange County and has no leverage against its current landlord as it wallows in Qualcomm Stadium, meekly arguing that it might, someday, have to move to San Antonio or St. Louis.
Of course, he’d still be the billionaire owner of an NFL football team in a beautiful city. Some people’s nightmares are worse than others’, I guess.
It’s a business nightmare. The Chargers are a tenant at Qualcomm Stadium. The city is the landlord. The Chargers can get out of their lease every year. They want a big tenant improvement if they are to consider a new, long-term lease.
I mean, they want an enormous tenant improvement. Their tenant improvement, in fact, would probably be the most expensive construction project the city has ever embarked on.
Some of us have more leverage in lease negotiations than others, I guess.
In that context, take a new look at what’s happening. The Chargers are saying to the mayor, in no uncertain terms, that he needs to persuade citizens to make about a $1 billion public investment in the team and the NFL or they will sign a lease somewhere else.
Now, this has been the status quo for quite some time. But the opportunities in L.A. were on the backburner. It suited the Chargers to wait and see if they ever came together.
Unfortunately, there’s a new catalyst disrupting things: a rich guy named Stan Kroenke.
Kroenke owns the St. Louis Rams. He recently announced that he’s going to build a stadium on his own land in Inglewood. He doesn’t need much public investment. He just got a measure qualified for the ballot.
Kroenke can move his own team there. Or he could invite the Chargers, or the Raiders or two of the three. Or, he’s rich enough to buy one of them.
This is both an exciting and frightening development for the Chargers. And it explains why everything is suddenly so tense between the Chargers and the mayor. It also explains why the team has suddenly become so candid about how hard it will be to get anything built in San Diego.
If you’re going to solve a problem, you have to be real about the problem.
Several years ago, if I had written this sentence: “It might be that – despite the great effort that has been expended – there is at least at this time no publicly acceptable solution to the stadium issue in San Diego” – it would have earned a rebuke from Fabiani.
Yet he actually wrote that sentence himself Monday. It was part of a series of points he made about how difficult the outlook is.
He told the mayor’s task force, for example, that it should not come up with a plan that can’t get the support of two-thirds of voters. And he’s admitted how difficult that is. Right now, public opinion is flipped: About two-thirds of San Diego residents oppose any public funding for a new stadium.
In 10 years, Fabiani has gone from claiming that public money was not needed to build a new stadium (just some land) to saying public money might be needed to insisting that it will be needed in giant bundles and it will require a tax increase.
It’s a rather stunning evolution.
And it’s quite a message to San Diego voters. The Rams owner plans to build his new stadium without this kind of public investment because of one major variable: preferred seat licenses, or PSLs. These are the rights fans buy just to be able to buy tickets to games.
Santa Clara and the San Francisco 49ers sold about 62,000 of them and raised $550 million.
“Our studies – and the real world experience of the Padres – demonstrate that we cannot sell PSLs in any significant numbers here in San Diego. A Task Force recommendation that ignores this reality will be worthless,” Fabiani wrote.
Are you seeing what they’re saying here? The market will not buy what they’re selling, so we have to raise taxes to make up the difference.
The Chargers want us to deal with these facts and overcome them.
Finally, when you realize how stressful this Kroenke move into L.A. is, it also helps you understand why Fabiani and the Chargers have blasted the mayor’s task force.
It is clear they have decided it is a farce. More importantly, the Chargers and Fabiani appear to have concluded that the task force might actually stand in the way of getting a project done.
They don’t have time for a farce.
At the forefront is the concern about the timeline I outlined here. Remember, the Chargers are panicking. If someone takes the L.A. market, there are serious consequences for them. A vote is probably happening on that stadium in June!
Yet the mayor is dancing an awkward dance. He’s trying to have it all ways. He’s clearly internalized the numbers about how bad the public sentiment is on investing tax dollars into the stadium. But he is also afraid of being the mayor who lost the team or of calling out the extortion he may feel the Chargers are exercising.
Faulconer wanted to show progress with the task force but he also did not want to risk taking a position on any of the many ideas for a stadium we’ve batted around for a decade. In particular, he still is not willing to say whether he supports the Chargers’ vision of a downtown stadium that connects to the Convention Center.
And yet, if they don’t start working on a plan soon, it’s hard to see how it will progress in time for the 2016 ballot, let alone before the Chargers feel like they have to make a decision.
They have more power than ever before but they can see it all evaporating unless they make a move as soon as possible. In that light, the team’s angst and attacks make a little more sense.