The Chargers' Rent
We explain what the team pays the city and vice versa.
Last week, I wrote that the Chargers essentially get free rent from the city of San Diego.
But if you look at the team’s lease, the Chargers are obligated to pay the city $2.5 million a year plus more money if there’s playoff games.
The team does indeed pay the city rent. But it doesn’t end up being $2.5 million and, when you factor in the money a 2006 legal settlement, the city often ends up paying Chargers more money a year than they receive from the team. That’s why I said they “essentially get free rent.”
Here’s how it breaks down.
The team receives a number of rent credits that eat away at that base $2.5 million rent. The credits include a property tax break for luxury boxes and a 2000 settlement over the Americans with Disabilities Act. Also, the stadium’s concessionaire pays part of what the team owes every year.
From 2005 to 2007, the Chargers directly owed the city $3.5 million through its rental agreement, an average of $1.2 million a year including playoffs. Perhaps that’s not too much money, but it’s not “essentially free,” either. Earlier this year, Mayor Jerry Sanders’ office and the Office of the Independent Budget Analyst pegged the team’s average rent at $700,000 a season, not counting playoffs.
But my “rent” calculation factored in something else.
There’s a second ADA settlement from 2006 that forces the city to compensate the Chargers because of lost seats the city removed from the stadium to comply with the law. It’s not a rent credit, though. It’s a separate payment, more than $1 million from 2005 to 2007, that’s made exclusive of the rent.
Factor that in and the city actually sent more money to the Chargers in those years than they received from the team. The city paid the Chargers nearly $500,000 from 2005 to 2007. That’s an average $164,000 loss each year.
(Numbers from 2005 to 2007 were the most recent fully available statistics that I could find. Qualcomm Stadium and city real estate officials did not respond this week to my request for more recent data.)
My discussion of the team’s rent situation was part of much larger point about the importance of the city having good negotiators with the team, especially now that three of Sanders’ point people on the Chargers are leaving.
The city’s financial bind with the Chargers contributes to $12 million in annual losses from its operation of Qualcomm.