Politicians don’t often admit they have no idea what they’re doing. So it came as a surprise when San Diego Mayor Kevin Faulconer did just that earlier this month when announcing his partnership with county officials to negotiate with the Chargers.
“The city and county don’t have the in-house legal and financial expertise for a major stadium development deal and negotiation,” a Faulconer press release said.
Based on the city’s history of deals with the Chargers, Faulconer’s right.
Starting in earnest with the decision to renovate Qualcomm Stadium two decades ago and give the team a new lease, the city has fumbled the ball again and again, leading to millions of dollars in losses and debt, a decrepit stadium and the team threatening to walk away before the lease runs out.
There were many to choose from, but these are the top three follies from the city’s negotiating history with the Chargers.
The ‘Ticket Guarantee’
In the annals of infamous City Hall decisions, this is a contender for the worst. The ticket guarantee got its name because the deal with the Chargers worked like this: The city would guarantee that the Chargers would sell 60,000 tickets for each game. If not enough fans bought actual tickets, then the city would have to make up the shortfall, at taxpayers’ expense.
The ticket guarantee, which sprung out of lease negotiations in the mid-1990s, overlapped with a period of horrendous Chargers teams. Not a lot of fans paid their own way to games and the city bought the excess tickets and gave them away. The bill –and anger from taxpayers – quickly added up. When the Chargers decided to raise ticket prices in 2002, for instance, it meant the city owed the team more money when no one bought them.
After every game, the media would dutifully report the cash sent to the Chargers to subsidize an empty stadium. Sometimes the number would top $1 million per game. All told, before the ticket guarantee was ended as part of lease renegotiations in 2004, the city paid the Chargers $36 million.
The Americans With Disabilities Act Lawsuit
Part of the reason the city renovated Qualcomm stadium in 1997 was to add seats and luxury boxes to host a Super Bowl in 1998 and make the Chargers happy. When city leaders did that, they forgot about people in wheelchairs. Ex-Union Tribune columnist Gerry Braun put it this way in a column:
As it remodeled, the city was required to bring the stadium into compliance with the Americans With Disabilities Act. City leaders met this legal obligation in the same spirit they met their obligation to fund the city retirement system. I believe the term of art in public-administration circles is, “Let’s not and say we did.”
Soon a lawsuit was filed, and the city was required to rip out seats and install wheelchair ramps. The Chargers balked at the lost revenue from fewer seats in the stadium. So the city now has to pay the team each year to make up for it.
Over the last eight years, this payment totaled $10.5 million.
The Case of the Disappearing Rent
The 2004 lease renegotiations ended the ticket guarantee, but it also had loopholes for the Chargers to escape paying their full rent.
The team’s rent is supposed to be $3 million a year. But plenty of caveats knock that number down. Among the craziest: The city pays half the property taxes on the Chargers headquarters in Kearny Mesa.
On game days, practically all the money made in the stadium, like the sales of popcorn and beer, counts as part of the team’s rent, a city financial official told me.
Along with the ADA settlement, the rent credits are the biggest reason the city has ended up owing the Chargers money at the end of every season since 2007.