The Morning Report
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San Diego’s stadium saga has inspired lots of new questions about sports economics and the current status of Qualcomm Stadium – on top of many of the same ones we’ve been hearing for years.
I decided to make life easy for you and quickly answer some of the most common questions about the Chargers and their years-long push for a new stadium in one post.
Suggest any questions you think we left out in the comment section.
The Money Questions
Why don’t the Chargers get a bunch of private investors to pay for a new stadium?
Stadiums aren’t cash cows. They cost more to build and maintain than they bring in.
Stanford University economist Roger Noll put it this way in 2004 in comments to Minnesota Public Radio:
“Most likely, as one gets out past 10 years, the interest costs will in fact exceed the revenue enhancement. … The reason teams have in fact asked for public subsidies is that these stadiums aren’t worth it. They actually cost more than the incremental revenues they generate over their lifetimes. And that’s why they go for public subsidies. It’s not really a good business investment over the long run.”
The Chargers say they can stomach a privately financed deal in Carson, in part because they can sell more personal seat licenses near L.A. (See the next question for more details on how those work.)
Can’t Chargers fans pay for a stadium?
Fans do have one option: they’re called personal seat licenses, which guarantee fans season tickets for seats they’ve picked.
But Chargers stadium point man Mark Fabiani has been adamant those licenses can’t be a significant part of the San Diego stadium funding plan.
“We’re just not in a market that supports personal seat licenses,” Fabiani said.
What’s up with Goldman Sachs’ willingness to finance a Chargers move to L.A.?
The Chargers and Fabiani go way back with Goldman Sachs.
But reports that Goldman would eat the operating losses the Chargers might take in the first few years after a move to Carson, plus renovation costs for a temporary stadium, surprised some folks.
But remember that Goldman’s also advising Missouri Gov. Jay Nixon’s stadium task force and that a regional St. Louis agency hired the firm try to explore ways to keep the Rams in St. Louis two years ago.
Goldman Sachs would probably benefit if the Chargers move to Carson and the Rams stay in St. Louis.
What’s San Diego making (or losing) on Qualcomm Stadium?
San Diego lost $12 million on Qualcomm Stadium last year.
The team pays rent, but it’s allowed to use things like parking revenues and a portion of concessions as credits toward the bill. Plus, the city pays a sum to the team every year as part of a legal settlement.
SDSU isn’t paying rent at all. Instead, the city collects $1 per ticket at Aztecs games.
The city does make some money off non-football events, but last year it spent more on salaries and benefits for the folks working at the stadium. And then there are public safety and repair costs.
All told, the city spent $10.2 million subsidizing the stadium balance sheet and another $1.8 million on repairs and public safety services at Chargers games last year.
Why don’t the Chargers share a stadium with a soccer team?
Here comes another rule.
Major League Soccer isn’t cool with having a new team play in a football stadium unless the teams share an owner, and have control of the stadium too.
And the two leagues tend to want different specs out of their stadiums. For example, soccer teams prefer smaller stadiums with wider fields.
Will San Diego get regular Super Bowls if it builds a new stadium?
Nope. The NFL’s been rewarding cities that build new stadiums with Super Bowls rather than have the big game at the same cities over and over again.
Here’s what Fabiani told VOSD earlier this year:
“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.
This means a new stadium would probably get San Diego at least one Super Bowl but additional ones aren’t guaranteed.
The stadium task force wants a new stadium to go in Mission Valley. What about that plume underneath the Qualcomm site?
More than two decades ago, gas from the Mission Valley tank farm – the region’s petroleum hub – leaked and spread 25 feet underground, underneath the Chargers stadium, its parking lots and almost to Interstate 805.
There’s since been a massive cleanup effort and the San Diego Regional Water Quality Control Board has mostly signed off on it.
State regulators, environmental and development consultants plus an attorney advising the city on cleanup efforts told VOSD the past pollution shouldn’t trip up Mission Valley stadium plans.
Will Chargers fans still be able to tailgate outside a new stadium?
Financing a Mission Valley stadium will likely require thousands of new homes and commercial developments. Tailgating requires open concrete space – and that doesn’t generate cash.
What’s wrong with Qualcomm Stadium anyway?
The Chargers’ 48-year-old stadium is considered one of the NFL’s shoddiest.
Four years ago, a consultant concluded it needed $79.8 million in repairs.
None of the issues critically endanger stadium operations but they ain’t pretty either. Pieces of the concrete stadium are falling off and metal is rusting. It’s in need of a pricey new systems for plumbing and heating and air conditioning, among other needs.
Why do the Chargers hate the stadium so much?
Bottom line: Qualcomm Stadium doesn’t have the digs that’d help the team make more money.
That includes a lack of premium seating and fan hangout areas that would allow businesses to sink more cash into naming rights, signage and more. Plus, the stadium doesn’t have ideal vantage points, so the team has to charge less for tickets in some areas.
Wouldn’t all the events a new stadium could host help cover the cost to build it?
Former NFL executive Jim Steeg, who’s serving on the mayor’s stadium task force, said events aren’t part of the group’s current financing proposal. There just isn’t enough guaranteed money there.
While stadiums host hundreds of events, not all of those events make lots of money and NFL teams are increasingly getting a cut of the cash they do make – meaning less goes to the cities that host the stadiums.
Those events could, however, help the city or the Chargers cover venue operation and maintenance costs.
The Carson/NFL Chess Game
Why are the Chargers just now threatening to move north when the St. Louis Rams are seriously looking at a Los Angeles move?
Chargers owner Dean Spanos and his family have long been watching other team owners flirt with moves to Los Angeles. Meanwhile, they’ve also worked to build more of a fan base in L.A.
St. Louis Rams owner Stan Kroenke’s plans for a stadium in Inglewood could siphon away potential Chargers fans in Los Angeles and Orange counties.
Worse, if the Rams or the Oakland Raiders – who are looking at a Carson stadium with the Chargers – actually move to L.A., the Chargers will lose major leverage in their negotiations with San Diego.
And the Spanoses need taxpayers’ help to make a deal work here.
How does the NFL regulate team moves?
A team needs the approval of at least 24 of 32 NFL owners to get the go-ahead for a move.
And there are rules on the books that encourage teams to stick in their home cities.
Here’s one relevant excerpt from the league’s relocation policy:
Because League policy favors stable team community relations, clubs are obligated to work diligently and in good faith to obtain and to maintain suitable stadium facilities in their home territories, and to operate in a manner that maximizes fan support in their current home.
Those rules are unlikely to hamper the Chargers, though, because they’ve spent more than a decade making stadium proposals.
How would a Chargers move work?
It’s quite a process.
How this timeline will actually play out in reality isn’t clear. The Chargers can buy out of their lease with the city sometime between February and May. But the NFL will have the final say on when a move happens – and where the team plays in the meantime.
Goodell also said last month the league may be interested in moving up the moving notice date to fall 2015.
What does the city get if the Chargers bail?
The Chargers have to buy out their Qualcomm Stadium lease if they decide to head north. If they do that early next year, they’ll be on the hook for about $15.2 million – unless they can prove the stadium is dangerous or uninhabitable. (Both are unlikely.)
That won’t cover the city’s building debt for Qualcomm Stadium, which the city will be continuing to pay off until 2026.
San Diego (Sports) History
If it’s so hard to get a stadium here, how did the Padres pull off Petco Park?
Many cities nationwide have paid for new stadiums with tax increases. California requires a two-thirds vote for tax hikes, making it much harder to raise hundreds of millions of public dollars for a new venue.
The San Diego Padres got a new ballpark anyway by working with local officials to craft a measure that didn’t require a two-thirds vote and promising a revitalized East Village – which made the proposal more enticing than just a ballpark.
Why did the Chargers 2005 stadium proposal fall through?
A decade ago, the Chargers wanted to build a new stadium on the Qualcomm site. The plan was to finance the new venue with 6,000 condos, a hotel and other amenities.
But the Chargers needed a developer and someone with money to do that. They never found a development partner and then the housing bubble burst.
Why not just renovate Qualcomm Stadium?
The folks leading the conversation about a new Chargers stadium – and the guy currently managing it – are convinced that’d be a bad idea.
They all cite a few key reasons: Qualcomm wasn’t designed with only football in mind so fixes would cost more, the stadium needs about $80 million in repairs and a big $78 million renovation in 1997 didn’t work.
What will the county’s role be in financing a new Chargers stadium?
A handful of ideas are being floated. For example, there’s been some talk that the county would give the city what’s called a bridge loan, where they float cash until revenue from the new stadium starts coming in.
But it’s mostly hot air. Even the county supervisor who initially threw out the idea of that loan isn’t advocating for it.
Is having a football team here an economic benefit to the city?
Economists disagree on many things but stadiums as investments is not one of them. They largely agree: Stadiums aren’t good bets.
Cities just aren’t making big bucks on stadiums. And in many cases, they’re not even breaking even.
Sports economist Andrew Zimbalist, who’s extensively studied the public cost of sports, summed up the situation this way:
“Cities spend millions of dollars to support a variety of cultural activities that are not expected to have positive economic effects, such as subsidizing a local symphony or maintaining a public park. Sports teams can have a powerful cultural or social impact on a community. If that effect is valued by the local residents, then they may well decide that some public dollars are appropriate. However, if the public or its political representatives are trying to make the case that a team or a facility by itself will be an important development tool, then the electorate should think twice before opening its collective wallet.”
So, basically, go ahead and subsidize an NFL stadium if the Chargers give you the warm fuzzies but don’t expect to make lots of money or see lots of permanent new jobs.