The Morning Report
San Diego news and info
you need to take on the day.
On Voice of San Diego’s podcast featuring Chargers special counsel Mark Fabiani, Scott Lewis briefly mentioned an alternative option for financing a new stadium – giving San Diegans a stake in the team in return for our public tax dollars. Who could argue with that?
Well, the NFL, for one. The league no longer permits the public an interest in a team unless it’s the Green Bay Packers.
Mayor Kevin Faulconer has put together the Citizens Stadium Advisory Group, commonly known as the stadium task force, to come up with a proposed location and financing plan by this fall.
Presumably, the mayor will take these recommendations under advisement, formulate his own plan and put it on the 2016 ballot for a vote. That’d be reasonable enough. The general consensus is that the measure will ask the public to donate the Sports Arena and Qualcomm Stadium properties, and approve a tax increase to boot.
And what would we get for our largesse? Thus far, we’ve only heard nebulous claims of economic benefit and local pride. Nothing concrete. That’s a tough sell considering the ballot is also expected to include a tax increase for the megabond.
But what if the Chargers fans who were willing to increase their taxes (along with every else’s taxes) for a new stadium were given the opportunity to own something concrete? That is, the stadium and the land beneath it.
Rather than a ballot measure to give away public assets and funds, San Diego can pioneer a course that is financially sound for its citizenry, generates funding for stadium construction and largely removes government involvement from the equation. The proposal is a bit involved, so stay with me here:
Upon determining a preferred site, the city proposes its sale to a holding company. This sale would be contingent upon the holding company generating sufficient funds to purchase the land, at fair market value, and the money necessary to construct the stadium. Assuming approximately $400 million comes from an NFL loan program and the Chargers combined, the $1 billion stadium would require a $600 million injection from the holding company for the development alone.
Additional dollars would be needed to cover property management, insurance, a contingency reserve and payment to the city for the land. The city auditor would determine this figure, but for now let’s use $100 million as a placeholder.
The holding company would then be given a period of time, say six months, to crowdfund the $700 million by sale of its shares to the public. The minimum share price could be set at an attainable level, say $1, to allow everyone an opportunity to be an owner. The shares could be sold in classes – maybe Class A shares would cost $1, Class B shares $10,000 and Class C shares $100,000.
These various share classes would come with their own benefits at different values, much like the model Green Bay Packer fans have with their team. Maybe Class B shares come with the right to purchase premium seat tickets, and Class C shares grant access to luxury boxes.
The uniting factor for all fans would be their individual stakes in the company owning the dirt, and eventually the stadium. The shares would afford their owners certain rights in the holding company, such as profits and annual votes on the board members running it, much as any corporate entity.
For legitimacy, the Chargers could prime the pump by placing their funds into the holding company, along with the NFL’s loan commitment. The Chargers would likely be the largest shareholder, but that’s fitting, as they will put in the most dollars.
Assuming just 10 percent of the countywide population (aka hardcore fans) were eager to buy an interest in the stadium, the average fan’s purchase would come in under $2,200. This appears to be a figure within reach for the region. And expanding the crowdfunding media campaign to all of Southern California may reduce the figure further.
If the result is a stadium in San Diego, financed without reaching into the general public’s wallet, who could argue with the outcome? And failure to get past the $700 million goal line need not be a tragedy. The holding company could be arranged to terminate the transaction, so that the city keeps its land, and shareholders are returned their investments.
Perhaps, best of all, the Chargers and the public could put this matter to rest.
Felix Tinkov is a development, land use and municipal law attorney, a partner in Lounsbery Ferguson Altona & Peak, and is Voice of San Diego’s Public Records Act counsel. Tinkov’s commentary has been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here.