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If the Chargers do end up leaving San Diego, the NFL might have to hold one last public hearing here. Here are the other steps and rules that the team would have to follow.
Also, the city of San Diego outlined some of its hopes for a resolution in its request for proposals from investment banks. No, Goldman Sachs was not invited to bid.
The NFL regulates how its teams are supposed to move from one city to another. With three teams vying and/or head-faking for Los Angeles, the league might speed up the process. Let’s look at how the league’s rules say a move is supposed to work.
First, the league indicated this week it may change the dates that teams are allowed to formally decide to move. Accelerating the relocation process from Jan. 1, 2016, to sometime this year would place even more pressure on St. Louis, Oakland and San Diego to get their stadium proposals together in a hurry. Commissioner Roger Goodell, as quoted by the U-T, said:
“We’ve had some discussion … about whether that’s the appropriate timeframe to do so,” Goodell said, referring to the Jan. 1 to Feb. 15 window in which teams can apply to move. “There’s a lot to do when you relocate your franchise.”
The NFL’s relocation policies describe a number of processes, both internal and involving the “incumbent community” from which the team seeks to move. Assuming the league doesn’t suspend or amend those rules as well, they include the following:
Procedures Relating to Notice and Evaluation of the Proposed Transfer
Before any club may transfer its franchise or playing site outside its current home territory, the club must submit a proposal for such transfer to the League on the following basis:
1. The club must give the Commissioner written notice of the proposed transfer, including the date on which the proposed relocation is to become effective, and publish the notice in newspapers of general circulation within the incumbent community. The notice must be filed no later than February 15 of the year in which the move is scheduled to occur. The League will provide copies of the notice to governmental and business representatives of both the incumbent community and the community to which the team proposes to move, as well as the stadium authority (if any) in the incumbent community (the “interested parties”).
This notice would presumably have to be filed by the end of whatever new relocation window the league may decide on.
2. The notice must be accompanied by a “statement of reasons” in support of the proposed transfer. The statement must address each of the factors outlined in Part C below, and may also identify and discuss any other relevant business factors that the club believes support its request to move.
Part C refers to “Factors That May Be Considered In Evaluating The Proposed Transfer,” such as level of fan support, adequacy of the current stadium, public financial support to the franchise and the team’s financial performance, whether the team has negotiated in good faith with its current city and other factors relating to the effect of the move on the league as a whole. The Chargers will likely be regarded as having satisfied these factors.
3. With the assistance of appropriate League committees, the Commissioner will evaluate the proposed transfer and report to the membership. The Commissioner may also convene a special committee to perform fact-finding or other functions with respect to any such proposed transfer.
The league formed a Committee on Los Angeles Opportunities last month after the announcement by St. Louis Rams owner Stan Kroenke of his intent to build a stadium in Inglewood. The committee consists of the owners of the Chiefs, Patriots, Giants, Texans, Panthers and Steelers.
4. Interested parties will have an opportunity to provide oral and/or written comments regarding the proposed transfer, including at a public hearing conducted by the League in the community from which the team seeks to relocate; written comments may be submitted within 15 days of the conclusion of such hearing.
Will the NFL follows through with this part of the process, if we reach that point? A public meeting held after the Chargers file for relocation would be a potentially ugly spectacle. Though after 54 years here, San Diego would certainly have earned at least that gesture.
5. Following the Commissioner’s report on the proposed transfer, the proposal will be presented to the membership for action in accordance with the Constitution and Bylaws, either at a Special Meeting of the League held for that purpose or at the Annual Meeting.
The annual meeting just happened, so if the relocation window is moved up, this would be the actual vote held at a special meeting of NFL owners. Twenty-four of the league’s 32 teams must vote to approve a relocation.
6. After any League vote on a proposed relocation, the League will:
i. publish, within 30 days of any relocation decision, a written statement of reasons in newspapers of general circulation within the incumbent community setting forth the basis of its decision in light of the League’s rules and procedures for evaluating franchise relocation; and
ii. deliver copies of its written statement of reasons to the local governments of the community from which the club seeks to relocate and any sports authority or similar entity with jurisdiction over the stadium or facility from which the club seeks to relocate.
This is the NFL equivalent of a Dear John letter after the owners vote to approve a move. The final nail in the coffin.
These regulations aren’t law and the league could decide to amend or alter its own rules. But until further notice, these are the guidelines relocating teams are expected to follow.
Also of significance was the news that San Diego has taken steps to hire an investment bank for the potential financing of a stadium. U-T San Diego’s Lori Weisberg reported that Mayor Kevin Faulconer solicited a firm “to review revenue sources for a stadium and float bonds if and when the time comes to build what could be a more than $1 billion project. … Such advisers would also assist Faulconer once negotiations with the Chargers commence.”
This is an important step. San Diego has previously retained the services of these kind of hired guns, like consultant Mitchell Ziets and the financial advisory firm Lazard, without getting much, if anything, done. But things appear more serious now. The city has a history of negotiating unfavorable deals with the Chargers and loses millions each year operating Qualcomm Stadium. Among its other responsibilities, the to-be-hired investment bank will be expected to help prevent that history from repeating.
Of course, the financial incumbent in this story is investment bank Goldman Sachs working with the Chargers, the St. Louis stadium authority and the governor of Missouri.
San Diego sent the Request for Proposal to firms on Feb. 26 and is currently evaluating five proposals. This is arguably one of the strongest indications to date that the mayor’s office is proactively engaged and not simply waiting for the stadium task force to complete their work.
The RFP sent to investment banks explains that San Diego solicited firms from the “City’s Investment Banking Services – Underwriter Pool, Senior Manager Classification.” Goldman Sachs is one of the firms in the city’s underwriter pool. The city knew Goldman would be a counter-party to any potential stadium negotiations, and the mayor’s office confirmed that Goldman was not solicited for a proposal.
A dry bureaucratic document, the RFP does contains relevant details for those closely following the stadium process. It identifies the city’s objectives in hiring an investment bank:
(1) assist the City in exploring various financing options unique to sports facilities; assess the revenue capacity of potential revenue streams of the stadium facility and related development; provide as needed expert consultation to the City such that the City is able to formulate a comprehensive financing proposal; and (2) serve as the underwriter for any financial instruments or bonds to be issued if a feasible project and financing plan is proposed and receives affirmative public support and other necessary approvals.
The firm San Diego hires will be paid to advise the city on a stadium financing plan, as well as earn fees and commissions as the underwriter of loans for the project if it becomes a reality.
Requirements listed in the RFP for a submitted proposal include:
6. Provide two client references for the firm where the firm was involved in offering expertise in the development and execution of financing plans for stadiums, sports facilities, or similar large scale for profit projects. Please ensure your client has agreed to provide a reference in advance.
7. Exceptions and capital conflicts: Confirm your firm’s ability to complete all services requested in this request. If there are exceptions to services that your firm cannot complete, please describe. List all conflicts of interest and potential conflicts of interest your firm may have in providing the services to the City.
Too bad Goldman Sachs works for the Chargers, since it is one of the most expert firms in stadium financing. It may be worth knowing if any conflicts were disclosed by the firms that submitted proposals.
The city anticipates selecting an investment bank in April. Time will tell if that firm actually gets to underwrite the financing for a stadium, or if instead, the ball of relocation rolls up the 5 to Carson.