protect public service journalism

Help VOSD raise $150K by December 31st!

Donate 2016

    MisleadingStatement: “City currently receives about $2.5 million in rent annually from the Chargers,” says a city document provided to Mayor Kevin Faulconer’s Chargers stadium task force.

    Determination: Misleading

    Analysis: In theory, the Chargers have to pay the city of San Diego rent each year to play at Qualcomm Stadium. In reality, it’s the city that pays the Chargers.

    Over the past seven years, the city has paid the Chargers a total of $3.3 million despite a lease agreement that requires the team to pay the city.


    It is more important than ever to stand up for good journalism. Donate to VOSD today.

     Learn more about member benefits

    There are two reasons for this. The Chargers annual payment due to the city gets eaten away by a series of rent credits, which drastically reduces the team’s bill. Then the city pays the team each year as part of a settlement to a 2006 American with Disabilities Act lawsuit at Qualcomm. The result is that the city has owed the team money – an average of about $500,000 a year — after every season since 2007.

    Let’s break down how this all works:

    The team’s lease calls for an annual rent payment of $3 million plus more for home playoff games. (It was $2.5 million up until last year, which explains the statement in the city document given to the stadium task force.)

    But that number drops quickly when you factor in other details. The Chargers get to count lots of things toward their rent. The team’s property taxes, some parking revenues and the city’s suite at Qualcomm all decrease the rent payment. Most significantly, the team gets to count a percentage of all the beer, popcorn and other concessions sold at games toward its rent.

    “They pretty much get all revenues during home games with small exceptions,” said Tracy McCraner, the city’s financial management director.

    All these rent credits cut what the team owes to the city from $3 million to typically under $1 million every season. When you throw in the ADA settlement, which has averaged about $1.3 million a year, the city comes out as the net loser.

    This shows the city’s losses each year since 2007. The city did turn a $20,000 profit in 2006, and the 2014 numbers aren’t available yet.

     

    The claim that the Chargers pay the city $2.5 million each year in rent is misleading. Yes, there’s a rent payment in the team’s lease with the city. But when you factor in the team’s rent credits and the ADA settlement, the city owes the team money every year.

    This situation highlights two significant issues that shouldn’t get lost in new stadium discussions. Beyond what the city pays the Chargers, San Diego taxpayers subsidize Qualcomm Stadium operations to the tune of $10 million-plus each year. So even without a new stadium, a lot of taxpayer money is already going toward football here.

    The city’s failure to collect rent from the Chargers also shows the importance of hammering out the details in any new stadium deal. Over the past two decades, the Chargers have repeatedly crushed the city in stadium negotiations – ticket guarantee anyone? If city leaders want the team to pay rent at any new stadium, they better figure out a way to ensure they actually get it.

    If you disagree with our determination or analysis, please express your thoughts in the comments section. Explain your reasoning.

      This article relates to: Fact Check, Must Reads

      Written by Liam Dillon

      Liam Dillon is senior reporter and assistant editor for Voice of San Diego. He leads VOSD’s investigations and writes about how regular people interact with local government. What should he write about next? Please contact him directly at liam.dillon@voiceofsandiego.org or 619.550.5663.

      13 comments
      Bill Bradshaw
      Bill Bradshaw subscribermember

      Do you suppose it's possible that, under a new agreement, the city doesn't end up continually getting screwed by the Chargers?  Is there anyone here who can negotiate a reasonable agreement for the city?  Jason Hughes maybe?  This city has so little real expertise in myriad areas it's really frightening:  leases on city property with hotels, settlement of lawsuits against the city, negotiations with our unions, pension issues,you name it.  This city is run by amateurs in most key positions.  

      North Park Rick
      North Park Rick subscriber

      GO CHARGERS GO!!!

      ...no, I mean it!  Go!  Goodbye!

      profundis
      profundis subscriber

      The scale is in thousands, not hundreds of thousands.

      Richard Tanner
      Richard Tanner subscriber

      This article reflects a bigger issue with the City of San Diego.  They let Politicians negotiate sports deals.  Just look at Petco, PGA, etc.  This should be done on business principals not what a Mayor or Council Person wants.  When you hear a politician say the event or deal creates economic growth, guard your pocket book.  Because an event or deal will increase the overall good of San Diego is not relevant.  Naming rights, development, percentages of revenue are core issues and our politicians do not have a clue.  They listen to non professional advisors who have political motives.  So day in a perfect world our San Diego Government is going to wake up and smell the roses instead of selling the taxpayers short. 

      Bit-watcher
      Bit-watcher subscriber

      @Richard Tanner Good points!  In some municipalities, service as a city or town council member is seen as a public service and duty, not a stepping-stone for political advancement.  Many times when I follow the council, drilling down through the blather in the discussion, it's not about what's right for the city, but how it makes them look on a public issue.  

      Kent Hill
      Kent Hill subscriber

      <<<
      I have to ask, IF building and financing a football stadium for the Chargers is so financially sound, why do the Chargers need My tax money, while the infrastructure in San Diego continues to erode?

      Why can the football stadium in Carson be privately-funded, but a football stadium in San Diego needs over 500 million dollars of public money?

      David Benz
      David Benz subscriber

      The city renegotiated the lease in 2004 to get rid of the ticket guarantee that would have expired in 2007, and they cut the rent through 2020.  What a bunch of idiots.  Faulconer needs to tell the Chargers to get lost or we will end his career if he tries anything stupid, well anything more stupid than his normal day to day idiocy.


      "The existing lease would require the team to pay more than $70 million above the city's rent proposal through 2020, with annual rent escalating from $7.2 million this year to $9.9 million in 2020."


      http://www.utsandiego.com/uniontrib/20040427/news_1n27chargers.html

      Michael Vengrow
      Michael Vengrow

      Beyond the misleading statement about the City receiving $2.5 million in annual rent from the Chargers, the whole idea of taxpayers being forced to fund a private place of business, i.e., a new stadium, is anathema to basic property rights. I work hard to make my money. If Spanos, the Chargers, their fans, and their political friends want to fund the Chargers and a new stadium, let them pay for it! Don’t force me to give you my money. It’s not yours. It’s mine. Got it?

      Bill Bradshaw
      Bill Bradshaw subscribermember

      The team gets to deduct it’s property taxes from it’s rent?  WHAT property taxes, for Spanos home? 

      Next time some Chargers’ fanatic (there’s got to be at least one left) claims the Chargers are a financial bonanza for the city, tell him to show you the data. 

      David Benz
      David Benz subscriber

      @Bill Bradshaw There's a CA tax law that property tax must be paid on publicly owned property if the primary tenant is a for profit private entity.  That's the gist at least but it's been years since I read the actual law.

      Judith Swink
      Judith Swink subscriber

      Mayor Faulconer - if you allow/enable the Chargers to manipulate the City of San Diego into building a new stadium, you'll end up in history books right next to Susan Golding! If the Chargers can afford to participate with the Raiders in building a new stadium in Anaheim without taxpayer funding (so they say, at least), they can afford to build their own stadium here and it should not be downtown!


      Personally, I would love to see the Chargers leave San Diego. They can fleece taxpayers somewhere else. The costs to us, the San Diego taxpayers, has already been massive - imagine what that taxpayer money could have been paying for without the Charger lease ripoff!

      David Crossley
      David Crossley subscriber

      It looks like this won't be an issue much longer.

      Mark Giffin
      Mark Giffin subscribermember

      Your being kind here Liam.

      Its a bald-faced lie and indicative of lack of credibility this city has when it comes to the taxpayers.