A New Old News Article about the San Diego Chargers Stadium Situation

Qualcomm Stadium - USA TODAY Sports

What does the funding for a new Chargers stadium in San Diego really look like? What are the team's other options?

John's right. I usually don't write any stadium stuff unless there's actual news (thus my otherwise unjustified absence this offseason), but I'll go ahead and take the bait. Besides, it's time to start getting ready for football season (just 2 1/2 weeks left to go!!!).

Let's briefly review why the Chargers' stadium situation hasn't really changed, going back to 2010. In the interests of brevity, we'll take these in reverse order of significance:

Ed Roski's dream of building a stadium in City of Industry.

He owns the land, and he got a Environmental Impact Report (EIR) exemption from state government in 2009. He also wants a minority share of the team, somewhere around 30%. The plans are in place, and some speculation is the cost would be lower because the design takes advantage of local terrain. Roski also apparently called Wayne Weaver with the intent of purchasing and moving the Jacksonville Jaguars, and was rebuffed.

So, what's the hangup?

No one wants to drive through 2 hours of Los Angeles traffic to the City of Industry to watch a football game.

Also, did anyone (or John) mention the location is in City of Industry?

AEG's aborted attempt to get Farmer's Field up and running.

Everyone (including me) spent a lot of time trying to figure out why Philip Anschutz was willing to spend over $2 billion dollars to build a new stadium without having a team in place (i.e. How he would make money without actually owning a team)? The answer was he wanted a significant interest in a team (like the Chargers), and didn't want to pay full price for the privilege. Also, former AEG executive Tim Leiweke was the point man in setting up the Farmer's Field deal, which (as it turns out) was predicated on selling AEG to someone who wasn't as smart a businessman as Anschutz.

In other words, when Anschutz refused to be a rube for the NFL, the deal fell apart. Furthermore, there have been recent rumors that the collapsed deal has allowed the NFL to quietly starting trying to get the location they've apparently long coveted - Chavez Ravine, adjacent to Dodger Stadium.

Other NFL Stadium Developments

Before we look at the Chargers situation, let's take a quick look at the last 2 stadium deals which were reached, those being the Minnesota Vikings, and the San Francisco 49ers.

Minnesota Vikings

The Vikings deal was reached in March 2012 with the combined efforts of the Minneapolis City Council and the Minnesota Legislature.

The deal is worth a total of $975 million, with the Vikings contributing $477 million, the state $384 million, and the city $150 million in hospitality taxes, plus another (projected) $188 million in operating costs during the life of the 30 year lease.

San Francisco 49ers

As John mentioned, the 49ers received $200 million from the NFL as a loan. This loan comes from the league's G-4 fund, which was replenished after the Collective Bargaining Agreement (CBA) was approved in 2011. This is a modified version of the G-3 program which was used by many teams and cities to help get stadiums built. The primary difference is the loan cap has been raised ($150 million under to G-3 system, $200 million under the G-4 system).

The 49ers deal in Santa Clara is worth a total of $1.2 billion. After the NFL loan, the remaining $800+ million comes from loans from Goldman Sachs, Bank of America, Merrill Lynch, and U.S. Bank. Also newsworthy is the selling of naming rights to Levi's, for $220 million over 20 years.

This brings us, finally, to:

The Chargers' stadium situation in San Diego

Ken Derrett, the team's Chief Marketing Officer, admitted in comments made in the UT San Diego, that there is a shortfall of funding for the project, as well as divulging the Spanos' intention to contribute $100 million to the total.

That leaves us with the following situation:

Projected $1 billion cost. Ideally, this would be a 64,000 seat stadium, with expandable seating to about 72,000, with the ability to host multiple events (e.g. Super Bowls, Final Fours, etc.). I'm going to go with the established downtown location, for lack of any better possibility at this time.

I'm disinclined to think San Diego could get a group of Wall Street firms to OK a loan package like what Santa Clara and the 49ers got because the Chargers don't have the name value of the 49ers, San Diego doesn't have Silicon Valley, and there's less overall people in the region to pull from.

Anyway, let's run through the numbers, for masochism's sake. All numbers are estimates:

  • $200 million from the NFL's G-4 loan program.
  • $100 million from the Chargers (apparently reduced from $200 million since last year). Now let's suppose the Chargers decide not to go cheap and put back $100 million, as was previously and publicly suggested. That would make it a $600 million dollar question, and not $700 million.
  • The easiest cash source would be the 166 acres where Qualcomm Stadium sits, plus the additional land where the Sports Arena is located. Previous articles in this series have pegged their combined value at approximately $250-300 million (due to the nearby oil farm toxic cleanup issues, otherwise, it might be closer to $500 million). Now we're talking about a $300-350 million question.
  • If we're using the naming rights deal that Levi's and the 49ers reached as a barometer, I'd suggest the city of San Diego could get anywhere from $170-200 million. Make that a $100-180 million question.
  • Now, unfortunately, we have a hidden cost: Relocating the bus yard, which will cost around $100-150 million.

Based on everything established thus far, I'd guess we're looking at about a $200-330 million dollar gap. Unfortunately, the tools you might have to fix the shortfall in other cities are likely not going to be available in San Diego.

  • You will not get any hospitality, car rental, or other tourism taxes raised (like in Minnesota or Arizona). The downtown hotel owners will not allow those taxes to be raised because they do not want to scare away convention business.
  • Any general tax increase is a non-starter, either at the municipal or state level.
  • Redevelopment money no longer exists.

I think the most realistic options are:

  • Tying up the retail / sales / property taxes raised from what goes onto the Qualcomm and Sports Arena sites into paying off stadium loans or bonds, but those taxes normally go into the General Fund and lots of people would be fighting for that money.
  • Personal Seat Licenses.

As for the Chargers, Mark Fabiani needs to speak to Mr. Derrett about what he says publicly. The organization is just starting to recover from the crashed 6th season of the A.J. and Norv Show, and building good publicity (along with a winning team) never hurts the quest to get a new stadium.

Thank goodness that the offseason is almost over!

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