By now you’ve heard about the Chargers’ stunning partnership with their arch-rival Oakland Raiders to build a $1.7 billion (!) stadium in Carson, south of Los Angeles.
There have been a lot of stadium agreements and plans in L.A. over the last 20 years. None has been realized. It’s different this time, we’re told, even though the Chargers have played footsie with Carson before.
It’s worth reviewing, then, how the NFL regulates the relocation of its franchises.
The NFL’s Constitution and Bylaws, in Article IV, Section 3, states:
No member club shall have the right to transfer its franchise or playing site to a different city, either within or outside its home territory, without prior approval by the affirmative vote of three-fourths of the existing member clubs of the League.
Teams can next apply for relocation between Jan. 1 and Feb. 15, 2016. With 75 percent of the league’s 32 teams needed for approval, it would take nine “no” votes to deny a move.
No team has switched cites since 1997, when the Houston Oilers moved to Tennessee and later became the Titans. That move came on the heels of the Cleveland Browns’ “transfer” to Baltimore in 1996, and after the Rams and Raiders left Los Angeles (Anaheim in the Rams’ case) in 1995.
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Indeed, League traditions disfavor relocations if a club has been well-supported and financially successful and is expected to remain so.
What does well-supported and financially successful mean with the NFL so secretive about it's finances? http://bloom.bg/1MDbUrR
Here's how you could raise a smooth billion from private sources: Sell a
40% interest of the Qualcomm site via 200,000 shares at $5,000 per share.
Boom. Done. Chargers and NFL kick in for the rest and there you have it.
Get a new 30 or 40 year ground lease with the Chargers at much better
terms than our current situation and build a new stadium at the Mission
Valley site.(Or 100k shares @ $10k, Or 400k shares @ $2.5k. You get the idea.)
Quick, call the mayor and see if there’s still room on the task force for another genius! This is brilliant.
I just have one question: Who is going to buy those 200,000 shares of “the Qualcomm site”, whatever that encompasses?
@Phillip Franklin I'm not sure if you didn't read what I wrote or if you didn't understand it. I'll assume it's the former. You missed this part: "Get a new 30 or 40 year ground lease with the Chargers at much better terms than our current situation" Let me know if it was the latter and I can try to help you with that as well.
@Bill Bradshaw The Qualcomm site I'm referring to is the land the city owns where Qualcomm stadium is located. Naturally I'd think that a good amount of Chargers fans would buy in and other investors too.
@David Crossley If that is the case, then so be it. I'm sure any possible solution has some degree of required process.
@Joshua Brant Yes that's the plan ... just put it on Kickstarter and my guess the $billion is as good as in the bank. Well it might take until the middle of March, but wow you just solved the problem. I almost know 200,000 people on my Facebook page alone who each have an extra $5000 in loose change in their couch cushions who would jump at that opportunity. I think the the mayor and his boys meet at happy hour over at Dobson's every day trying to solve this problem. You need to get over there and tell them about this. Boom problem solved!
That's the spirit Phillip Franklin. "It is as though they despise us because they are not us." When you live in a world where a person can raise $55,000 through Kickstarter for a single serving of potato salad, I don't think my idea is that absurd. $350 per square foot for prime real estate would garner interest from more than just Charger fans. Instead of repeating the same ideas over and over I'm trying to throw something out that's not been mentioned, and it's private money. Not only are things like a $55k potato salad being funded, but take a look at other things that are happening these days, like this: http://www.wsj.com/articles/single-building-ipo-is-in-works-1416350504
@Joshua Brant Joshua I understand what you are trying to propose. And in a world of full disclosure and honest and fair business practices it would make sense to propose a private financing proposal whereby individual investors could purchase a a slice or share of an investment opportunity. Obviously there is money to be made in the entertainment business of professional sports. The NFL makes tens of billions of dollars annually. However they have chosen not to share their profits with those who do not own one of their 32 franchises. In fact other than the special deal of the Green Bay Packers all NFL franchises can not be what the SEC would call publicly traded holdings. They expect the cities and public to build and maintain their facilities at the public tax payers expense. And this has been the case almost exclusively. For example AEG was offering the Chargers a deal for share of the equity in the team for a new stadium in LA. The Spanos family flatly refused that deal. It would make no sense for anyone to invest in any thing that has absolutely no equity sharing or any potential return on investment. The Chargers pay a negative net rent to the City of San Diego meaning that the city actually pays them to play here. Why would an investor put up a billion dollars for the opportunity of pay some one to play football in their facility for which they invest and maintain? It would be like me asking you to buy me a house in some nice place like Rancho Santa Fe or on the beach in Del Mar and pay me to live there for 20 years. You see it would be an insane business deal. But in essence that is exactly what the Chargers expect because that is what they think they deserve. How can you logically come up with a plan that accepts this as its base logic.
Keep in mind by response on the Kickstarter stuff was intended to be a joke, because most of a thing like Kickstarter isa joke. Just because people foolishly give away their money doesn't make it legit or acceptable. Look how many millions of people are known to be swindled each and everyday over the Internet and still people are giving that Nigerian prince money each and every day. The people who defraud people using such schemes as the Nigerian prince have the same philosophy about raising money as the NFL team owners who prey upon the public to finance their stadiums in return for less than nothing. They simply do because they know most people are suckers and are easily taken. Basically it works.
@Phillip Franklin I don't have the energy to get wordy, but let me summarize with this:
You could turn out to be right that the City is unable to make a deal that is not heavily in favor of the Chargers.
You could turn out to be right about the Chargers being unwilling to make any deal that is not overwhelmingly in favor of the Chargers.
BUT, if you start out with the assumption that those two factors are set in stone, then you will be unable to come up with a realistic potential plan to get a new stadium.
@Joshua Brant @Phillip Franklin Joshua what you don't understand is that basically the Chargers don't want to pay for the upkeep and maintenance of a new stadium just like they don't want to pay for the upkeep and maintenance of Qualcomm. All they want is some deal that will allow them to sell PSL's and luxury boxes and other income opportunities while paying as little as possible in return ( which to them means nothing). They want the city to assume all of the liability. Their contribution is money from the naming rights, income from concessionaire contracts, and other third party cash. Spanos does not want to put in any real hard up front cash. The so called loan from the NFL is nothing more than an advance on their share of the TV profits coming from the NFL. By putting in nothing you have nothing to lose. That would allow them to take off and go to another city in the future. Any lease deal that they would sign would be contingent on their whims. Only a a complete fool would invest their money in such a scheme. You seem to think the Nigerian prince is for real. No matter how you structure the deal with the Nigerian prince you are going to be taken.
The 75 miles criteria only makes sense as an "as the crow flies" distance, which would seem to put Carson very close to being within 75 miles from the "exterior corporate limits" of the city of San Diego.
@wadams92101 I agree on the "as the crow flies" measurement (we edited out a brief mention of this here). Using the online tool linked below, the as-the-crow-flies distance appears to be about 85 miles. I used Escondido as a proxy for the northern boundary of the San Diego city limits.
As you say, it's very close. The bottom line is likely less about the exact distance and criteria for lending from the NFL's stadium fund than what the league and its individual owners decide. They can loan money to the Carson project if they choose to, whether it matches their guidelines to the latter or not.
There's a couple errors in this report and some things you should know.
San Diego does NOT still owe $57 million on the 1997 stadium renovations. We owed $54,670,000 back in 2010 when we refinanced the debt. We could pay off the remaining debt in about 3 years using the Chargers lease buyout plus the TOT money we spend every year on stadium operations.
The $250-$500 million relocation fee is complete nonsense created by a bunch of sportswriters who don't understand simple financial concepts, especially the difference between relocation fees and expansion fees. As you said the last relocation fee was $28 million while just a few years later the Texans franchise paid a $700 expansion fee. The NFL and the Chargers both stated that relocation fees for Los Angeles have never been discussed.
Neil from Field of schemes is more interested in promoting his agenda than being factually correct, he will site the most suspect sources if it fits his agenda. It's sad that he makes a mockery of a very serious subject, I debunk his nonsense on a regular basis..
@David Benz What ever is owed by the city on the Q renovation will not be covered by the Chargers lease buy out, which means the tax payers will have to pay it..
Your figure of $700 for an expansion fee for the Texans must be type-o. $700 million? $70 million?
I have no idea who Neil From Field of Schemes is or what his agenda is can you enlighten me?
@David Benz The city owes $57 million in both principle AND interest on 1997 stadium renovation per the city's CFO: http://www.sandiego.gov/real-estate-assets/pdf/stadium/cityexpensesanddeferredmaintenance.pdf. The annual payment is $4.8m through 2026.
@Liam Dillon Thanks for the clarification, I knew that number was too high to be the outstanding principal.
Here's the schedule of transfers from the TOT fund to the stadium. The lease buyout and 4 years of TOT funds would pay off the principal and interest left on the 1997 stadium debt.
It's time to run the Chargers out of town and sell that property at FMV to developers.
If Carson isn't "home territory", then when Charger games are blacked out, why are they blacked out in Carson? According to the NFL, Carson is currently part of the Chargers TV market (albeit, a secondary market, as decreed by the NFL).