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How to Keep the Chargers in San Diego

Yesterday evening, the Chargers announced their agreement with the Oakland Raiders to build and share a new stadium in Carson. But there's still a deal to be reached in San Diego before they move...

Alright, everyone. Yes, the Chargers and Raiders have agreed to build a stadium in Carson, just south of Los Angeles. Let's get our hissy fitting done and over with...



The Chargers have only done one thing with this move; they've told the City of San Diego (City), County of San Diego (County), and their residents that they cannot wait for a ballot measure in 2016. Stan Kroenke's Inglewood project has made that timeline impossible.

So, the question is: How do we strike a deal to keep the Chargers in San Diego in 2015?

First Things First

The San Diego Stadium Advisory Group cannot wait until Fall 2015 to finish the fact gathering, site selection, and proposal drafting process. So, here's how I would save them some time, and get a proposal drafted within the next 60 days.

Select the Qualcomm Site, for the following reasons.

  • The land is already available and zoned for a stadium.
  • The cost of building there might be cheaper than downtown, especially if you're not building a combination stadium-convention center.
  • You'll have support (or at least no opposition) from the hoteliers or other agencies (e.g. the Port Authority) because you're not on their turf.
  • Most importantly, you'll have a better chance of getting a waiver for the otherwise required Environmental Impact Report (EIR), as a stadium has already been there for 48 years and the environmental issues are already documented, such as the San Diego River Flood Plain and contamination from the Tank Farm. If you can't get a waiver, at least you'll have the EIR in April of 2016, as opposed to Fall 2016 and construction can start sooner.
  • Lastly, the remaining land next to a new stadium could be leased or sold for future development and additional revenue.

Preferred Financing Option (i.e. does not require a 2/3rds public vote).

Now that we've selected the Qualcomm Site, let's discuss how to pay for the new stadium. I'm going to use $1.2 Billion as the working number.

The Chargers, along with the City and County, agree on a Memorandum of Understanding (MOU). The MOU would work along these lines:

  • The Chargers will put in $200 million.
  • The NFL will put in $200 million via their G4 Stadium Loan Program.
  • The City and County will put $800 million initially.
  • To reduce the financial risk to the City and County, they will create a Joint Powers Authority (JPA). "The Stadium JPA" will be responsible for issuing bonds for stadium construction.
  • The JPA will issue Revenue Bonds. According to San Diego's Debt Policy, these bonds "are obligations payable from revenues generated by an enterprise."  Issuance of Revenue Bonds does not require a public vote.

Where do the revenues come from to pay off the bonds, you ask? The answer is from any revenues generated by the stadium (such as naming rights, corporate sponsorships, advertising, concessions, parking, etc.). The MOU would detail how much the Chargers will pay annually to cover the bond debt. *In other words, the bond debt becomes like a rent payment - over 40 years, it would work out to something like $21 million per year.

I know this seems really complicated, but it essentially means the Spanos family is being loaned $800 million from the City and County, to be paid off over 30-40 years.

Fallback Financing Option (i.e. requires a 2/3rds public vote)

If it turns out the preferred option doesn't work (for whatever reason), there is at least the slim chance a 2/3rds public vote could be passed. Here's how this option would work...

First of all, create a $1.8 billion package which combines a new stadium at Qualcomm and a contiguous expansion of the San Diego Convention Center. Here's where the money comes from.

  • The Chargers will put in $200 million.
  • The NFL will put in $200 million via their G4 Stadium Loan Program.
  • Raise the Transient Occupancy Tax (TOT) from 10.5% to 15%. *Based on the current distribution of revenue generated by TOT taxes, this would add up to $1.17 billion over 30 years.
  • Sell the naming rights to the San Diego Convention Center for $150 million.
  • Lease the remainder of the Qualcomm Site for at least $100 million over 30 years.

The reason I'm combining both the new stadium and expanded convention center in the same package is that it forces the Chargers, Hoteliers, and other agencies to work together for each other's benefit. Raising the TOT and only building a stadium will draw fierce opposition from the hoteliers and Port Authority, while raising the TOT and only expanding the convention center would draw fierce opposition from the Chargers.

Bottom Line

Whatever the option the Chargers and the Public agree on, they have to do it soon. The Chargers have made it abundantly clear they cannot wait until November 2016 for a public vote. The Mayor and his Stadium Group have to get a proposal together for a public vote in Fall 2015 if the Chargers have any chance of staying in San Diego.

San Diego has already wasted 20 years and north of $200 million dollars over those 20 years by stalling for time, elected officials using it for political posturing, and frankly, allowing many fans (myself included) to look the other way (and in some cases, take pot shots at an ownership group that we don't always get along with) when we could have been pushing to get something done.

San Diegans have a once in a lifetime opportunity to both ensure the future of the Chargers in San Diego, and as an added bonus, utterly screwing the Raiders in the process.

Author's Note - Asterisks (*) denote where this post was slightly updated for clarity on Sunday, February 22 at 10:15 PM.