Stay up to Date
Our weekly insiders' guide to political and policy news (Saturdays)
An NFL VP reiterates that a complex real estate deal to fund a new Chargers stadium probably won't work. Combined with other challenges, this deal is dead.
Not long ago, the mayor’s stadium task force began arguing the Chargers were torpedoing everything it was doing. The team was doing this, they said, because its owner didn’t want anything to come together and wanted to move the franchise to Los Angeles.
He said the goal was to win over the NFL — not the Chargers. Surely the other owners would force the Chargers to stay if we put together a reasonable plan.
This is why it was amusing to see the NFL come to town and tell the task force that, to win over the NFL, the group needed to win over the Chargers.
The messenger was the league’s lead executive on business ventures, VP Eric Grubman. He told the task force that if the Chargers don’t support what the mayor comes up with, this was an exercise in futility.
He also laid down two major conditions as part of a grand ultimatum. Perhaps the Chargers were shooting torpedoes before. But these — these new ones from Grubman — have sunk the ship.
First, he said the NFL and Chargers were no longer able to wait until November 2016 for a public vote on a new stadium.
If you want a stadium built, you have to take this news as devastating. He’s not even willing to say even that a June 2016 ballot would suffice. They want it now.
I’ve tried to make sense of timeline issues before, but this is simply unworkable. We have to have a vote, too many politicians have committed to it. It’s the right thing to do. And getting something together for a vote will take at least a year.
Then Grubman said something else that caught my eye and probably should have been the lead of the stories that had it. The U-T’s Nick Canepa described it like this:
“Grubman told them that, if stadium financing depends on development around the facility (which is what the committee is counting on), it won’t work, because it will take far too long to get it done, and bringing in a developer would just mean another mouth to feed,” he wrote.
The LA Daily News also wrote a similar take. If that’s true, Canepa’s right: It was a major setback.
But Manolatos told me Grubman did not say that. He said that the task force simply had to “eliminate the risk” of generating money for the stadium from construction around it.
“We already had plans to eliminate the risk,” Manolatos said.
Manolatos apparently got the U-T to change its editorial on the subject as well. The paper retracted its claim that Grubman had told the task force that “financing the stadium with the help of a Qualcomm site development partner” was unacceptable. That’s no longer in the piece (the paper did not make note of the change to its text).
Why is this such a big deal? Unlike other parts of the country that build stadiums, we can’t raise taxes to do it without a two-thirds vote. So to make up a big part of the difference between what the NFL is willing to pay for a stadium, and what it costs, the idea has been to squeeze value out of the land that surrounds Qualcomm Stadium and apply that to the stadium.
If Grubman said that’s not going to work, then the clock has run out on this game. The Chargers are moving.
But maybe he did not say that, as Manolatos is apparently saying.
I contacted Grubman. He refused to discuss in detail what he said to the task force, but he did say this.
“I believe I am on record, and in multiple places, that real estate development is unlikely to yield funding for a stadium, and thus it is not a track that offers a high probability of success,” he said.
Notably, Grubman did not try to correct either Canepa’s take or the one in the LA Daily News.
But let’s assume, for now, that Manolatos is right and the task force and mayor merely have to eliminate the risk of development to make the Chargers and the NFL happy. In other words, they need to prove that the NFL doesn’t have to worry about land-use lawsuits or recessions or pollution or anything that could possibly disrupt the money for this stadium.
Real estate development, though, is all about risk. Only two routes could possibly eliminate the risk: One is the city simply sells the land around Qualcomm Stadium and puts the money from the sale into an escrow account marked “For the NFL.”
By law, selling more than 80 acres of land requires a specific vote of the people — it might have to be separate from a required vote by the county. Two votes? Those are not insignificant hurdles.
Or maybe they sell 79 acres and avoid a specific vote. At $2.5 million an acre, that’s almost $200 million. Cobbled together with other potential revenue streams, it might be enough for a $1 billion stadium.
But it’s hard to picture a developer who’s going to give the city $2.5 million per acre right now for land that’s zoned for … a stadium. They want to build condos. Perhaps they’d pay that much for land that was zoned to build offices, condos and a hotel.
Changing the zoning requires either a long environmental review or legislation at the state level — or a vote. These are not insurmountable problems. But they involve risk and time.
The Chargers are now saying they can’t tolerate any more of either.
Perhaps a developer would put up the money despite the risk.
That might win the Chargers over. But they’re not being helpful. The Chargers’ Mark Fabiani told me he was pessimistic about the idea. They tried for years to find their own investor — remember, the Chargers could not find a partner in 2005 to develop the area around Qualcomm Stadium.
“We were advised throughout by the best experts money could buy. And so, unfortunately for us, we are all too well-acquainted with the myriad reasons why a development-based solution is likely doomed to fail,” Fabiani said in an email.
That’s the development problem.
The vote problem is much worse. Grubman told the city that it should try to pull something off this year. The NFL’s commissioner just announced he might move the deadline and window for applying to move to Los Angeles up. Once one team does, chances are others will. Grubman warned the task force that waiting until after January for a public vote was risky.
Even Manolatos admitted that was news to the task force and they don’t know how to deal with it.
“That’s a political problem that will be up to the mayor and City Council to solve,” Manolatos said.
Got your checklist? The Chargers will move to LA unless we give the team a plan to subsidize the stadium with at least $500 million in public money without the risk involved in waiting for a real estate development to come together and it has to be fully approved much sooner than ever imagined. A vote will have to be called and approved before teams start officially vying for Los Angeles.
Or the mayor has to change course and renege on his pledge to let the people vote on a plan. Maybe send a letter to the NFL apologizing for taking so long with its billion dollars.
That’s just to make the Chargers happy.
Laugh out loud.
Maybe the mayor could not satisfy the team at all and this was all a folly — an elegant trap he’s stumbled into. Or maybe the Chargers really would have gone along with a downtown plan. Though if time and risk are intolerable for Mission Valley, it’s hard to see how they would have been better downtown.
Regardless, it’s done. Unless plans in LA fall apart, the Chargers are breaking up with the city. The mayor just might have to decide if he wants to dump them first.