To understand all this drama over the past few weeks about the Chargers, the team’s quest for a stadium and the mayor’s mediocre response, it helps to imagine the worst-case scenario for the Chargers.

The absolute worst thing that could happen to the team and owner Dean Spanos is if the St. Louis Rams or the Oakland Raiders move to Los Angeles. Check that, the worst would be if both moved to L.A.

Scott Lewis on Politics Logo

This would have two major impacts on the Chargers.


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The first is a little hard to quantify. A few years ago, the Chargers hired AEG to help it market to L.A. and Orange County. This helped the team build a fanbase there. In fact, the Chargers’ special counsel Mark Fabiani claims 25 percent of the team’s season ticket base comes from the great megalopolis to our north.

We don’t have access to their numbers, so we have to just trust him.

He’s right, though, that this L.A. fanbase probably instantly dries up if either the Rams or Raiders or both move back to L.A.

The second major impact is more important: If other teams move to L.A., it will remove a major piece of leverage the Chargers have right now.

And that’s the nightmare for Spanos. If the team is stuck in San Diego, loses its market share in L.A. and Orange County and has no leverage against its current landlord as it wallows in Qualcomm Stadium, meekly arguing that it might, someday, have to move to San Antonio or St. Louis.

Of course, he’d still be the billionaire owner of an NFL football team in a beautiful city. Some people’s nightmares are worse than others’, I guess.

It’s a business nightmare. The Chargers are a tenant at Qualcomm Stadium. The city is the landlord. The Chargers can get out of their lease every year. They want a big tenant improvement if they are to consider a new, long-term lease.

I mean, they want an enormous tenant improvement. Their tenant improvement, in fact, would probably be the most expensive construction project the city has ever embarked on.

Some of us have more leverage in lease negotiations than others, I guess.

In that context, take a new look at what’s happening. The Chargers are saying to the mayor, in no uncertain terms, that he needs to persuade citizens to make about a $1 billion public investment in the team and the NFL or they will sign a lease somewhere else.

Now, this has been the status quo for quite some time. But the opportunities in L.A. were on the backburner. It suited the Chargers to wait and see if they ever came together.

Unfortunately, there’s a new catalyst disrupting things: a rich guy named Stan Kroenke.

Kroenke owns the St. Louis Rams. He recently announced that he’s going to build a stadium on his own land in Inglewood. He doesn’t need much public investment. He just got a measure qualified for the ballot.

Kroenke can move his own team there. Or he could invite the Chargers, or the Raiders or two of the three. Or, he’s rich enough to buy one of them.

This is both an exciting and frightening development for the Chargers. And it explains why everything is suddenly so tense between the Chargers and the mayor. It also explains why the team has suddenly become so candid about how hard it will be to get anything built in San Diego.

If you’re going to solve a problem, you have to be real about the problem.

Several years ago, if I had written this sentence: “It might be that – despite the great effort that has been expended – there is at least at this time no publicly acceptable solution to the stadium issue in San Diego” – it would have earned a rebuke from Fabiani.

Yet he actually wrote that sentence himself Monday. It was part of a series of points he made about how difficult the outlook is.

He told the mayor’s task force, for example, that it should not come up with a plan that can’t get the support of two-thirds of voters. And he’s admitted how difficult that is. Right now, public opinion is flipped: About two-thirds of San Diego residents oppose any public funding for a new stadium.

In 10 years, Fabiani has gone from claiming that public money was not needed to build a new stadium (just some land) to saying public money might be needed to insisting that it will be needed in giant bundles and it will require a tax increase.

It’s a rather stunning evolution.

And it’s quite a message to San Diego voters. The Rams owner plans to build his new stadium without this kind of public investment because of one major variable: preferred seat licenses, or PSLs. These are the rights fans buy just to be able to buy tickets to games.

Santa Clara and the San Francisco 49ers sold about 62,000 of them and raised $550 million.

“Our studies – and the real world experience of the Padres – demonstrate that we cannot sell PSLs in any significant numbers here in San Diego. A Task Force recommendation that ignores this reality will be worthless,” Fabiani wrote.

Are you seeing what they’re saying here? The market will not buy what they’re selling, so we have to raise taxes to make up the difference.

The Chargers want us to deal with these facts and overcome them.

Finally, when you realize how stressful this Kroenke move into L.A. is, it also helps you understand why Fabiani and the Chargers have blasted the mayor’s task force.

It is clear they have decided it is a farce. More importantly, the Chargers and Fabiani appear to have concluded that the task force might actually stand in the way of getting a project done.

They don’t have time for a farce.

At the forefront is the concern about the timeline I outlined here. Remember, the Chargers are panicking. If someone takes the L.A. market, there are serious consequences for them. A vote is probably happening on that stadium in June!

Yet the mayor is dancing an awkward dance. He’s trying to have it all ways. He’s clearly internalized the numbers about how bad the public sentiment is on investing tax dollars into the stadium. But he is also afraid of being the mayor who lost the team or of calling out the extortion he may feel the Chargers are exercising.

Faulconer wanted to show progress with the task force but he also did not want to risk taking a position on any of the many ideas for a stadium we’ve batted around for a decade. In particular, he still is not willing to say whether he supports the Chargers’ vision of a downtown stadium that connects to the Convention Center.

And yet, if they don’t start working on a plan soon, it’s hard to see how it will progress in time for the 2016 ballot, let alone before the Chargers feel like they have to make a decision.

They have more power than ever before but they can see it all evaporating unless they make a move as soon as possible. In that light, the team’s angst and attacks make a little more sense.

 

    This article relates to: Chargers Stadium, Government, Must Reads, Quest

    Written by Scott Lewis

    I'm Scott Lewis, the editor in chief of Voice of San Diego. Please contact me if you'd like at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it's a blast!): @vosdscott.

    32 comments
    Dean Plassaras
    Dean Plassaras

    Here is the Santa Clara deal which Fabiani claims will be used for Carson.

    Bottom line: the reason it doesn't work for the owner is that it commits everything under the sun (see page #6 on the link below) into servicing the construction loan and then the permanent loan which must replace it.

    The good news for SD though are that we could certainly use the same structure here or at least parts of the same structure by tapping the same revenue sources Fabiani has so freely committed towards a fake LA deal. I see no problem whatsoever for SD using luxury suite sales, stadium builders license sales, naming rights and other sponsorships and NFL financing above $150 Mil. minimum as mechanisms for new stadium construction.


    http://santaclaraca.gov/modules/ShowDocument.aspx?documentid=6560

    Kent Hill
    Kent Hill subscriber

    <<<
    If a for-profit business can NOT survive without public subsidies, then it should either be sold or it should declare bankruptcy and dissolve their assets and pay back the public monies that they owe.
    I have lived and worked in San Diego since 1986 and I am tired of politicians, so-called industry leaders and private businesses that think that taxpayers monies should be used by a minority of for-profit businesses, while the public infrastructure rots away and public services are under-funded. 
    I wonder how much it takes for public bureaucrats and elected officials to sell out the citizens of San Diego for a few golf trips or a few pieces of silver?
    There should be more important things to consider, rather than whether an extremely rich person's sports franchise stays or leaves or leaves San Diego!

    Jeff Toister
    Jeff Toister subscriber

    Scott - can you answer a few questions from some of the recent Chargers coverage?


    In 2010, VOSD estimated that the Chargers cost taxpayers $12.2 million per year. Is this figure still fairly accurate? How would that number change if the Chargers left? (http://voiceofsandiego.org/all-narratives/chargers-stadium/estimate-of-public-losses-on-qualcomm-stadium-less-than-reported/).


    Does the city have any contingency plans for the Qualcomm stadium site if the Chargers leave?


    The LA Times article that came out today mentioned getting the Carson stadium proposal on the ballot. What exactly would voters need to vote on?

    David Crossley
    David Crossley subscriber

    As of tonight, it would appear their level of panic has dropped considerably.

    msginsd
    msginsd subscriber

    @David Crossley It was a nice story by Lewis, but he apparently misread the situation.   This is really just Kabuki theater with Spanos playing against a very weak mayor and he knows it.  Faulconer is just another in a long line of wimpy mayors that started with that dolt Susan Golding..  Unless he stands up and says "I tried, see ya", he'll go down in history as the guy who put football before basic citizen services and failed at both.


    This is what happens when you put a weak PR executive in charge of a large city.  Inability to lead.  Just like this worthless pledge to "combat slumlords".  As others have pointed out, it's not about spending more money, it's about establishing policies and priorities and seeing that they're carried out.  You know, leading.  You cannot lead when you're being led around on a leash by organizations like the Lincoln Club, the Chamber of Commerce, or the San Diego County Hotel Motel Association.


    I'd hate to see the Chargers leave San Diego, but in all honesty they're better off in a market like LA and San Diego has much bigger problems than the loss of a NFL team.

    BRAD nelson
    BRAD nelson

    Where's the World Series Trophy we were promised with the new Padres stadium???  Feeling fleeced San Diego, let's double down on a Lombardi....only $1B of tax payer funding to go

    Don Wood
    Don Wood subscriber

    The  Chargers have carefully examined the polls and have decided that the only way they can convince SD voters to help fund a new stadium is to team

    up with the big hotel owners and JMI realty to present the voters with a combination new stadium and convention center expansion downtown. By themselves, neither the Chargers or the big hotel owners who want to expand the convention center have much of a chance of getting voters to agree to tax themselves or give away public real estate assets to fund an individual stadium or a "contiguous" convention center expansion on public tidelands. The difference is that the Chargers recognize reality, while the fat cat hotel owners like Doug Manchester want to keep plugging along on their original expansion plan, even after the courts found their proposed new taxes needed to fund one illegal. The mayor doesn't have the leadership qualities needed to convince the big hotel owners, who are among his biggest contributors to join the real world and appears willing to let the Chargers leave for LA rather than buck his big hotel and tourism industries buddies. Unless something changes, San Diego will become a former NFL city focused even more on ripping off tourists than it was before this debacle began.

    Rb-Socal
    Rb-Socal subscribermember

    Buh-bye. Bye now. C ya. We need roads, better schools, mass transit and a whole lot more. What we don't need is another stadium boondoggle. Next issue please. $5 million per year in empty seats was bad enough. Blackouts and $100 a seat costs to go to the games are bad enough. I don't need to tack Mr. Spanos' subsidy onto my property tax bill when I can't even get the city to pave the streets or fix the sidewalks in front of my house. Mass transit would take me 90+ minutes to get to work, and I live close to Old Town. And this guy wants us to bend over backwards to build him a new stadium after we just fixed up the old one. No thank you. 

    bgetzel
    bgetzel subscriber

    Let's talk about the root of the problem. Typically, a business has to control costs while it tries to boost revenues/sales. NFL owners, with the aid of foolish cities, have not had to control costs. Paying their players millions of dollars a year is common-place. And if an individual owner refuses to pay at that level to players, there are many teams that will do so, thereby leaving a team with an inferior product. Of course, if cities are willing to help those owners to build billion dollar stadiums, they will generate higher revenue by selling luxury boxes, selling more billboards, etc. This is not the way things supposed to work in a capitalist system. If businesses can't control costs -they fail. The system is stacked against the Chargers.  They will certainly be moving, if not to L.A., then to history.

    Bruce Bogers
    Bruce Bogers subscriber

    Isn't a "PSL" sort of like Wal-mart charging admission? I imagine I'll enjoy NFL football on TV next year just as much as last year. The only cost to me is to put up with commercials. The Spanos family isn't even from San Diego, so enjoy wherever you end up, I'll watch on TV.

    Bruce Bogers
    Bruce Bogers subscriber

    @Bill Bradshaw @Bruce Bogers  I don't see the NFL Network replacing all that cash the NFL receives from Fox, CBS, ABC, ESPN, and NBC. Maybe some day it will all be pay per view, but not in what's left of our lifetimes. I've come to realize over the years that some of the greediest people in America are NFL owners. Their TV contracts put them in the black before they sell the first ticket, Cities have taxpayers pay for their place of business, and they threaten to move (or do move) if they don't get their way. The NFL has received non-profit status and their leader pulls down 40+MILLION a year. Franchises are valued at upwards of a BILLION dollars yet they need us to not only foot the bill for stadiums, some even make you buy a license for the right to purchase tickets! All for a mediocre 8-8 team. Has Qualcomm even been paid off yet?  Will the taxpayers get naming rights to offset the cost? Will the taxpayers get a cut of parking and concessions? What exactly is in it for us besides a middle of the road team?

    Civic pride in a non-winning team?

    Bill Bradshaw
    Bill Bradshaw subscribermember

    @Bruce Bogers Don't count on watching free forever.  The NFL Network is just the start of the league's plan to milk every viewer to watch every game.

    Matty Azure
    Matty Azure subscriber

    Dear Spanos,

    "Two men will move you."

    Signed,

    Vox Populi

    Mike
    Mike subscriber

    Fabiani's letter on Monday admitted that the team is fairly certain San Diego will not be able to sell many PSLs to help build a stadium.  He also noted that the economics do not work out for private investors to partner w/ the team to build a stadium.  Both of these admissions should not be taken lightly.  Imagine if a local RadioShack owner came out and said we know much of the city won't buy our stuff and we know we can't turn a profit, so we would like the city to spend public dollars to build us a larger store.  Would we go for it?  Should any business ask for a hand out in this manner?  They admitted that they can't make any profit for private investors to partner with the team.  They admitted their "fanbase" won't buy PSLs.  What kind of business are they running here?

    If the current owners don't go bankrupt running this team, then we know they can afford this fun hobby of theirs and that's ok. We can still be fans regardless.  If the current owners do go bankrupt from all this "economic hardship" then it's probably a good thing the city didn't throw good money after bad and go down with this sinking ship.

    Tammy Tran
    Tammy Tran subscriber

    Would Mr. Dean Spanos be willing to sell the Chargers to Mr. Kroenke for $800M?  It's just my thought.

    David Benz
    David Benz subscriber

    Hey Scott, the 49ers raised $530 million from personal seat licenses (PSLs), but what's $20 million between friends.

    http://www.mercurynews.com/southbayfootball/ci_26064012/49ers-sell-out-levis-stadium-few-single-game

    oh and that's not including the over $400 million they pocketed from luxury suites which is not shared.


    Is it clear to you yet that the Chargers are going to shoot down or sabotage any attempt at getting a stadium in San Diego?  That's why they back the "Convadium", screamed about Cushman, and now make their ridiculous demands.  It's over, one more lame duck season and then they're gone.


    Kroenke's Inglewood stadium financing only "pencils out" with 2 teams sharing the stadium and splitting the financing.  The NFL has zero interest in bringing the Raiders fan violence back to LA because that wont attract corporate money.

    Bill Bradshaw
    Bill Bradshaw subscribermember

    Have the Chargers done anything to justify the demands they are making on the city?  A team, to be a credible force in a major city needs to do two things:  Put a consistently winning team on the field and develop a large, loyal fan base.

    In over 50 years here, this team has backed into one Super Bowl and gotten blown out in the first quarter.  They are a consistent “also ran”, sometimes winning their division but seldom advancing after that.  As for the fan base, they admit that 25% of their fans are from L.A., and Charger regulars complain that in some home games they can’t tell the home team.  Seattle or Green Bay this ain’t!  Must be the stadium, right?  No chance. 

    Is the reason for a poor fan base that this is a “small” market?  That’s what the team and local sportswriters try to sell.  Hold it!  This is a county of over 3 million and that doesn’t count about two more mil right across the border or the fairly significant number of fans in Imperial County.  Question: Has the team ever had a significant Latino player?  Not in my memory.  The Padres "get it", but not the Chargers.

    We have experienced multiple blackouts most years.  The management is so football inept they fired their coach after he went 14-2!  They had to hire a consultant to help them find a new general manager and head coach.  And they expect the taxpayers to finance a new stadium?

    The best possible outcome of the current “crisis” would be that the “Spanos Goofs”, as one L.A. sportswriter calls them, get tired of the flak and sell the team.  Not likely, but Spring Training starts tomorrow, so who cares?  

    -P
    -P subscriber

    The people in new Jersey are still paying for the old, TORN DOWN, Giants stadium. If the Chargers really want cash from the city, they need to be prepared to give us more than blacked out home games. Heck, the NFL is tax exempt. 

    Glenn Younger
    Glenn Younger subscribermember

    Even with big PSL money of $550 million, the odds of a billionaire spending the multi billions it will take to create a world class stadium, are slim.  Jerry Jones did not do it.   The state and local taxpayers in Texas put in more money than Jerry did to build AT&T stadium.  

    And the cost to build is just one element.  

    The upkeep on these stadiums is HUGE.  The yearly cost to maintain and pay property taxes on will make even a Stan Kroenke quiver.  

    The idea that any rich guy will build, own and maintain a stadium is a real reach and I believe that our Mayor and others at City Hall know that.  

    Mark and Dean are coming off as shrill, and that is about the only play they have left.  Should make for an interesting drama.  

    Jerry Ollinger
    Jerry Ollinger subscribermember

    I don't want a penny of taxpayer money spent towards a stadium for the Chargers. And I don't want them to get any tax incentive to stay, or for the city to issue any bonds to finance a stadium. I enjoy watching NFL football. If the Chargers leave San Diego, well that's the way it goes. I don't appreciate the Chargers trying to hold our mayor and other elected officials hostage in their effort to get us to build them a stadium at our expense. The NFL owners are some of the richest people in the world. NFL football is a very profitable business, and it should be treated as a business. It's not the San Diego Chargers; it's the Spanos Family Chargers. They have enough money, like a billion dollars, to build their own stadium without help from the taxpayers. Does the Spanos family believe in free market capitalism? I wonder. 

    just robb
    just robb

    "The Chargers are saying to the mayor, in no uncertain terms, that he needs to persuade citizens to make about a $1 billion public investment in the team and the NFL or they will sign a lease somewhere else."

    Wait, I haven't read that..ever.  When did this happen?

    I have seen the Chargers talk about spending $250M, the NFL coming in with $400-$500M, and the City of San Diego coming up with $250...but never, ever have I heard the Chargers "in no uncertain terms" demand 1 Billion of public investment.  

    This seems more of a emotional persuasion piece than an objective one. 

    The City has had 14 yrs to build a new stadium...and has lost the Superbowl, Clippers, X-Games and soon will lose Comic Con too.  It seems as though the old guard wants the City to have reminiscent of their past. (please correct me if i am wrong)

    just robb
    just robb

    Thank you Scott.  The simplistic breakdown of what was attempted in the past and didnt work was what I had lived through...and detailed nicely. 

    I have read elsewhere that the numbers spent by Spanos and the NFL were $600 to $750M, and not the $400M you shared above..with the total of the stadium being somewhere around $1.1B.

    Regardless, the Chargers look to be tired of the same old games, spinning the same old trick and requests them to be realistic. Their write up was pretty spot on too. It came across as a plea to please, stop with the games.

    If you dont take care of the relationship you have...can you really be surprised and upset when things break down? Personally, I know of many in San Diego County that are not football fans and are frustrated that a rich billionaire wants our tax dollars.  Both sides seem to have their shills though...but the Truth is out there if you can weed through the emotion.  Be well and thanks again.



    just robb
    just robb

    Thank you Patrick. The billion dollar stadiums referenced were both Domed stadiums (ATL and MINN) that required more work/materials etc. The team seems to be asking for a real proposal from the task force, and not something that is unrealistic. 

    I would rather have a realistic proposal handed in than one that misses out.  And yes, you are correct about the Clippers leaving San Diego as well. That professional sports team left the City of San Diego a long time ago now.

    Patrick Flynn
    Patrick Flynn subscriber

    @just robb I think the proposals have been in the neighborhood of the Chargers/NFL combined contribution at about $400 million, and cost estimates for a new stadium at about $1.5 billion, leaving a funding gap of $1.1 billion.  The Clippers left San Diego in 1984.

    Scott Lewis
    Scott Lewis moderator administratormember

    @just robb You should read this: http://www.chargers.com/news/2015/02/16/chargers-remarks-stadium-task-force-extended-version


    The Chargers are saying several things here:


    - A new stadium will cost as much as $1.6 billion or more. 


    - They're going to put in $200 million and another $200 million from the NFL. That leaves a delta of about a billion or much much more.


    - They make explicitly clear in that piece that they will not tolerate any effort to try to raise the difference without raising taxes. And they will consider it an offense if the proposal does not have a strong chance of convincing voters to approve of the tax increase with a two-thirds vote.

    David Benz
    David Benz subscriber

    @just robb The Jet's and Giants MetLife stadium cost $1.6 billion and is open air, as is the 49ers $1.3 billion Levi's stadium.

    David Benz
    David Benz subscriber

    @Scott Lewis @just robb Scott, you actually believed Fabiani when he told you the Chargers are still interested in staying in San Diego.  That was funny.


    The Chargers aren't panicking, they're telling San Diego to go get stuffed because they've already negotiated sharing the Inglewood stadium.  They're badmouthing and blaming everyone but themselves.  Don't know how you don't see what's going on.

    Robert Cohen
    Robert Cohen subscriber

    @Scott Lewis @just robb Since the Chargers have been penciing out the numbers for over 13 years, they have concluded that their only chance of getting the stadium financed is through the TOT.  The only way they can get TOT is by piggybacking on the expansion of the convention center.  I don't think this is an opening or even a final offer.  I think this is a final demand.  The task force will probably drop the Mission Valley site pretty quickly because they know its a non-starter with the Chargers.  Seems to me the job of the task force is to determine whether it is worthwhile both economically and politically to do the piggybacking.  If they conclude in the negative, it's game over and the Chargers are gone.

    Anthony Wagner
    Anthony Wagner subscribermember

    The only thing that could be more amazing about this cogent opinion would be if the UT hand the foresight to come up with it on their own 

    David Crossley
    David Crossley subscriber

    The Chargers will need to make a decision before November 2016, or whenever a ballot measure is presented in that year, as I would imagine 1 team (or possibly 2) will be playing in LA.  At that point, the Chargers may just end up moving to San Antonio if they are not the AFC team that moves to LA.

    David Benz
    David Benz subscriber

    @David Crossley Everything will be announced by next February if it hasn't been decided already.  I'd put money on this being the Chargers last season in San Diego, good riddance, sell all of the Q land to a developer at FMV.


    There wont be a vote, they're gone.