Reality Check: Chargers Stadium Events Don’t Cover Costs

Chargers Stadium

Reality Check: Stadium Events Don’t Cover Stadium Costs

Stadium boosters often claim a new Chargers stadium could bring in hundreds of events. But many of those events don’t make that much money and they’re not being counted on to finance a new stadium.

It’s an increasing refrain among stadium boosters nationwide: A football stadium doesn’t have to be just a football stadium. It can host many other events – and those concerts, expos and conventions can help pay the bills for a pricey new facility.

Adam Day, chair of the mayor’s stadium task force, has said that would be possible in San Diego, too.

Stadium Nuts and Bolts logo“If a new stadium is managed and operated in the right way, we should have hundreds of events every year rather than just 10 or 15 football games a year,” Day said at a March City Council committee hearing.

Sports economists and experts argue this isn’t the way to pay for a new stadium. There aren’t enough events – and the money they make is increasingly going to NFL teams instead of the cities.

“No one should promote or consider that these events are a make or break rationale for building a stadium. The purpose for building an NFL stadium is to house an NFL team,” said Rob Hunden, a Chicago-based consultant who’s weighed in on projects including the Colts’ Lucas Oil Stadium in Indianapolis.

It turns out the mayor’s stadium task force largely agrees with that assessment.

Task force member and former NFL executive Jim Steeg told me that events won’t produce enough reliable cash to help build a new stadium.

He said the task force isn’t including events revenue in its initial stadium financing plan because there’s not enough guaranteed money there.

“There’s no way you can bankroll [stadium construction debts],” Steeg said. “I can’t go out and bond against having five events that will generate $2 million a year.”

What events can help offset are annual operations and maintenance of a new stadium, Steeg said.

The numbers bear that out – sort of. Only mega-events, which are relatively rare, make a significant dent in a stadium budget and the specifics of each deal with the football team calling the facility home drive just how much those events matter to taxpayers helping pay for the new venue.

I analyzed event data from seven NFL stadiums, including San Diego’s Qualcomm. Of the four that shared financial data, just one government entity collected more than the $3.1 million in revenue San Diego’s crumbling stadium made on events last year.

That’s despite each of the four venues hosting dozens – though not hundreds, with the exception of Denver’s Sports Authority Field at Mile High – of events a year.

Most of these gatherings didn’t pack the stadiums. Think bar mitzvahs, corporate meetings, proms and birthday parties, plus a smattering of events with more than 20,000 attendees.

Those smaller events don’t bring in lots of cash.

Event data released by the public agency that operates the Tampa Bay Buccaneers’ stadium included receptions and birthday parties that generated less than $1,000 for both the team and the agency.

Even fireworks sales, corporate dinners and larger parties often ended with less than $5,000 in revenue.

Concerts and college football games – both of which draw lots of ticket sales – make a lot more. A One Direction concert brought in about $451,000 and the Outback Bowl about $380,000.

All told, the Tampa agency has reported roughly $2 million to $3 million in annual event revenue in the last three years with about 80 non-NFL events a year. And it’s held onto less than half that amount thanks to its deal with the Tampa Bay Buccaneers.

Indianapolis’ Lucas Oil Stadium hosts only about 30 more events per year, but makes about three times as much, according to records from the group managing the Indiana venue.

That’s because Lucas Oil Stadium hosts lots of big events. The stadium drew $9.9 million in revenue in 2013 thanks to NCAA basketball games, a monster truck event, a Catholic youth conference and other large events.

But the Marion County, Ind., agency operating the stadium, which was built with event planners in mind, handed $3.5 million of that revenue to the Colts in keeping with its arrangement with the NFL team.

Lucas Oil Stadium has a few advantages that San Diego’s stadium won’t. For example, it’s got a roof that allows it to host basketball games and is close to the city’s convention center.

San Diego does get one perk the stadium board in Indianapolis doesn’t. In San Diego, the city collects all cash associated with dozens of non-Chargers and Aztecs events held at Qualcomm each year. But the $3.1 million generated last year wasn’t even enough to cover stadium workers’ salaries and benefits.

Mayor Kevin Faulconer and members of the task force he assembled to come up with a stadium financing proposal want to bring more events to Qualcomm’s potential replacement. They’re convinced they’d attract more than in the existing stadium if the city wasn’t in charge of bookings.

Steeg said companies such as Anschutz Entertainment Group or SMG could more aggressively promote the new San Diego stadium and get more creative about potential events.

But he cautioned that big, lucrative events are only available in limited number, even if a professional events company takes over, as the task force is envisioning.

Steeg should know. He’s the former mastermind behind the week-long spectacle that is the Super Bowl and now serves as a consultant on large-scale events.

“If you do 30 or 35 events over 35,000 (at a stadium), that’s a lot of events,” he said, estimating that Qualcomm’s probably hosting more than 20 large gatherings a year when you include professional and college football games.

He thinks a new stadium and events arrangement could help San Diego bring in more of those large gatherings.

Yet there are no guarantees the money those events make will go to the city or the county. It could go to the team, instead.

“It’s just not a given. It’s a negotiable point,” said Rick Eckstein, a Villanova University professor who’s spent years studying public costs for stadiums.

He and a handful of other stadium deal experts say NFL owners are increasingly pushing to operate venues themselves, in part, so they can take in event revenue. The Chargers are almost certain to go after this revenue stream, too.

Regardless of the final deal, Steeg believes non-Chargers events large and small play an important psychological role in making a new stadium work in San Diego. They help San Diegans who aren’t Chargers fans see some value in a stadium that’s likely to cost more than $1 billion, he said. It ensures the expensive facility isn’t just used a handful of times a year.

These events might help pay some of the day-to-day bills. But if other stadiums nationwide offer any guide, it’s that a large number of events isn’t necessarily going to bring a large amount of cash. And even if they do, the Chargers may end up getting some of the money instead of the city’s budget.

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