Politics Smart Local News Funded by Smart Local People

Fact Check: Pro-Chargers Ballot Language Leaves Something Big Out

In their ballot statement in favor of Measure C, Chargers supporters imply that the debt and obligations at Qualcomm Stadium would be erased by the measure's approval.

MisleadingStatement: “Even more, the initiative would relieve existing obligations at Qualcomm Stadium that are currently paid out of the general fund totaling $15 million per year.” – From the ballot argument in favor of Measure C by Jerry Sanders, Carol Kim, Juan Vargas, Nicholas Segura and John Thomson.

Determination: Misleading

Analysis: Whatever you want to say about the Chargers initiative to build a new convadium in downtown San Diego, let this fact be perfectly clear: The city of San Diego loses a ton of money every year on Qualcomm Stadium in Mission Valley.

Basically there are three main causes of the hemorrhage. One, Qualcomm Stadium is costly to operate. Two, it is falling apart and needs major repairs and renovation. And three, we’re still paying off the bonds we issued in the ‘90s to refurbish the stadium.

In 2014, the city lost a whopping $12 million operating the stadium.

If Measure C passed, the Chargers could vacate Qualcomm Stadium. If that happened, and there was a place for San Diego State to play football games, the city could shutter the stadium. That would relieve the city of obligations to operate, maintain and rebuild the stadium. And that would be cheaper than having to do those things!

But Chargers supporters went too far in their official ballot statement in support of Measure C submitted to the San Diego city clerk.

In pointing out the positives of the measure, they wrote: “Even more, the initiative would relieve existing obligations at Qualcomm Stadium that are currently paid out of the general fund totaling $15 million a year.”

To get to $15 million, the authors are relying on the high end of a range of how much the city loses at Qualcomm Stadium every year.

But let’s accept that number as the true amount of what the city loses every year.

Even so, the statement is misleading.

First off, the measure may pass this year but the losses at Qualcomm Stadium will likely not be relieved until 2022, at the earliest. That’s the soonest possible opening for the downtown stadium. That’s six more years of losses at the stadium.

The Chargers’ own lease at Qualcomm expires in 2020. Likely there will have to be another lease negotiation just to get them a couple more years until their new home can open.

But bigger than that is the fact that the city still pays an average $4.9 million per year to pay back debt it took on in the 1990s to renovate Qualcomm Stadium.

These payments will go on through 2026 unless there is some kind of refinancing or early payoff.

There is nothing in Measure C that retires that debt. The Chargers don’t dispute this. Here’s Chargers special adviser Fred Maas talking about the losses and debt at Qualcomm at a briefing for reporters when the measure was published:

“Two things are happening at Mission Valley, right? One, they’re being saved of existing operating deficits of $10 to $15 million a year. And, if some of the discussion is in fact correct, we’re opening up a huge asset there for them. We’ve not included that in here because it was sort of a different thing we thought we’re relieving significant pressures on them,” he said.

The city itself has alerted voters how much of a drain the stadium is. As the mayor was preparing to make the case to rebuild the stadium at its current site with a major investment from the city’s general fund, his chief financial officer, Mary Lewis, estimated the stadium would cost the city $285 million over the next 20 years.

Better to spend that money on a new facility instead, the argument went.

Chargers special counsel Mark Fabiani also emphasized the relief the measure would provide the city if Qualcomm Stadium is allowed to mothball in the early 2020s.

But there would still be costs at Qualcomm, he acknowledged in an email.

“But the number will pale against what the city will be paying for operations and deferred maintenance of the stadium stays open and operating for San Diego State (which would be the almost inevitable result even if Chargers depart),” he wrote.

If the Chargers leave Qualcomm Stadium before the lease expires in 2020, the team must pay a termination fee to help the city with the bond repayment. But that fee goes down precipitously in coming years to, of course, zero in 2020. Here’s that schedule:

chargersterminationfee

Were the Chargers to leave in advance of the 2017 season, the team would have to pay more than $12 million. But it goes down about $3 million each year after that. It’s possible the Chargers will stay at least another year even if Chargers President Dean Spanos decides to move the team to Inglewood.

Thus, if Measure C does pass, the city could – and probably should – try to negotiate a contribution from the Chargers to help pay off Qualcomm Stadium’s debt in the lease extension the team will need until its new stadium opens.

If Measure C doesn’t pass, well, the stadium is set to be a drain on city finances for many, many years.

Unquestionably, though, if the city is allowed to mothball or demolish Qualcomm Stadium, it will save up to $10 million a year currently spent on the facility. There’s an element of truth in the statement that the measure would relieve the city of major costs.

That would be a relief, but the ballot statement implies that the debt and obligations at Qualcomm Stadium would be erased by the measure’s approval.

That’s misleading.

Show Comments
Loading

We’re striving for the best possible discussion and may delete comments using our editorial judgment. All comments containing links will be reviewed by VOSD staff before they are published.
Read our full comment policy.
For longer comments, consider submitting an op-ed to Voice of San Diego.
Read the guidelines here.

We have recently updated our commenting system. If you are unable to submit a comment, please clear the cache and cookies in your browser, or use a private browsing window. Click here for detailed instructions.