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Could the Padres keep the Chargers from getting a new stadium?

San Diego fans and voters have adopted a “Fool me once, shame on you. Fool me twice, shame on me” attitude towards the Chargers’ efforts to get a new stadium, quite likely because they once invested in the Padres, and feel they’ve been ripped off.

Petco Park 5/31/13.
Petco Park 5/31/13.

In all of the previous discussions about stadium issues for the Chargers, we’ve taken a look at all the principal players involved in the stalemate: politicians, special elections, the Chargers own mistakes, the condition of Qualcomm Stadium, the presence of Los Angeles, and even what a new stadium might look like. However, I think there’s one other major player which factors into this problem: the San Diego Padres.

Author’s Note: In all honestly, I’m probably looking for a passive aggressive way to lash out at the Padres before I all but ignore them for the next 2 months, and this post gives me an excuse to do it.

Let’s start by taking a trip back in time…

Late summer and early fall 1998

The San Diego Padres were running away with the NL West title on their way to a franchise record of 98 victories, wins over the Houston Astros in the NLDS, and over the Braves in the NLCS. They were swept by the Yankees (the best single-season baseball team I’ve ever seen) in the World Series. Most importantly, the future of the Padres hinged on Proposition C; a vote whether the Padres and the City of San Diego would join forces to redevelop downtown’s blighted East Village, with a new baseball stadium as the centerpiece.

Meanwhile during that same 3 ½ months, the San Diego Chargers were at beginning of the Ryan Leaf era, basking in the glow of finding a great young QB after 2 victories. After the Week 3 implosion at Kansas City and the subsequent idiocy directed at (then) U-T writer Jay Posner, the Ryan Leaf era initiated its sharp decline into poor performance on the field, boorish performance off the field, and turning the franchise into the butt of all NFL jokes until 2004.

Boy, have things changed in the last fifteen years...

Was Petco Park a good use of taxpayer money? The Padres first expressed interest in a new stadium in 1995, following the agreement between the Chargers and the City of San Diego (hereafter called City) to expand Qualcomm Stadium at a cost of $78 million dollars. Part of that agreement included the Chargers receiving the majority of advertising, concession, and parking revenue generated at Qualcomm Stadium, including that which was generated at Padres games.

According to the Memorandum of Understanding (MOU) drafted by the Padres and the City in spring of 2008, the original cost of the project was $411 million dollars. The Padres were to pay $115 million, while the City (including the now-defunct redevelopment agency, and the Port of San Diego) contributed $296 million. Additionally, the Padres, under the JMI (John Moores Inc.) Realty banner, would be responsible for spurring private investments in the land around the stadium, of at least $300 million dollars.

Most interestingly, because the project was loosely defined as redevelopment, and not specifically a stadium, it only required a simple majority of votes to pass, and not a two-thirds supermajority. On November 3, 1998, Proposition C passed with an approximate split of 60% in favor to 40% opposed.

Due to cost overruns, lawsuits, and allegations of bribery, the project ended up costing $456.8 million dollars, with the Padres finally paying $153 million, and the City covering $303.8 million. The stadium, named Petco Park, was completed two years behind schedule, opening for baseball in Spring 2004.

The benefits to the taxpayer are pretty hard to nail down. The project appears to have created about 7,000 permanent jobs, most of which are part-time, and only some 4,100 of those carry health insurance. In one study, the debt obligation for the City appears to be about $17 million annually, after tax revenue generated. Other studies have stated the city will make money over the long term, with $355 million in tax revenue generated by 2030. It's also worth noting the money spent on the project could have been better deployed to help San Diego sort out its pension crisis - a crisis which was on the radar of the City Council at the time the MOU was being drafted.

One element cannot be disputed, and that is the stunning success of private investment surrounding Petco Park. JMI Realty estimates $3 billion in private funds has been invested. Some estimate that John Moores, Padres owner from 1994-2012, may personally have made $700 million alone from his investments through JMI Realty.

Since the only clear winner thus far is Padres ownership, let's see if Petco actually was good for the team.

Did Petco Park make the Padres a better team?

Initially, yes. The payroll increased by over $10 million from 2003 to 2004, and the team went from bad (1999 – 2003, 71.8 wins per season) to competitive (2004 – 2007, 86.5 wins per season). The Padres did manage to win the NL West in 2005 and 2006 – although it was a terrible division. However, the problems which were at the root of the Padres’ struggles since the late 1980’s continued unabated. These problems were related to minor league scouting and player development, but were covered up by then GM Kevin Towers because he excelled at two things: finding bargain priced pitching, then selling high on that pitching in trades for quality players.

However, during the 2004-2007 run of (qualified) on-field success, the Padres were not once involved in bringing a marquee free agent to San Diego, when it might have made a real difference. As mentioned above, 2004-2007 was a period when (then owner) Moores was receiving tremendous wealth.

Then we get Moores’ divorce in February of 2008, leading to Jeff Moorad’s attempted-layaway almost-purchase, and then the new ownership group of Ron Fowler, Peter Seidler, and the O’Malleys. All that ownership drama, starts, restarts, payroll slashing and General Manager changes (from Kevin Towers, to Jed Hoyer, to Josh Byrnes, to who the hell knows) have translated into one competitive (and heartbreaking) season in 2010, and a lot of bad baseball otherwise from 2008-2014, and the exodus of any players remotely of value or popularity.

From the perspective of San Diego sports fans, a public investment of $303.8 million in Petco Park has yielded two division titles from 2004-2013, a 1-6 playoff record, with an average payroll of slightly over $57 million per year, and a winning percentage of .491 (average season record of about 80-82).

Since Petco Park opened in 2004, the Chargers have produced five division titles, one wild card appearance, a 4-6 playoff record, and a winning percentage of .625 (average record of 10-6). They were willing to give big-money extensions to players like LaDainian Tomlinson, Philip Rivers, Antonio Gates, and Eric Weddle. They've spent money in free agency, even after poor experiences with Jared Gaither and Robert Meachem.

Lastly, the economics of MLB tend to reward big-money, big-market teams, while the NFL economic model is designed to promote across-the-board parity, and thus reward teams for better decision-making in regards to drafting and free agency. Because of the NFL’s economic model, the truth is the Chargers don’t really need a new stadium to remain competitive.

In Closing

Petco Park might not have been an outright boondoggle, as the project clearly spurred tremendous growth in a previously blighted part of downtown San Diego. However, all that development has not generated the tax revenue which was initially projected, and the city’s bond payments were certainly a part of the city’s fiscal problems. Most importantly, John Moores received the lion’s share of the wealth generated from the project, and put very little of that wealth into the team he owned.

Very simply, the construction of Petco Park and the redevelopment of East Village benefited John Moores far more than it benefited San Diego’s taxpayers and sports fans. It laid out in stark terms that when a new stadium is built, the owner of the team benefits far more than anyone else does. That "owners" like Moores, Jeff Moorad, and Ron Fowler got wealthy while lying to the public and hosing the fans makes it even worse.

This is no small problem for the Spanos family to overcome. Based on how things have gone, I’d argue they may not be able to overcome it.