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Making Peace With the Inevitable

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Dean Spanos may soon be forced to make billions of dollars in Los Angeles. And that’s Ok with me.

Headed North on Interstate 5
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I’ve said it many times over the last couple of years.

I want the Chargers to stay in San Diego,

Even following 2015, I was willing to show good faith. As proof, I bought season tickets (with a friend) for 2016.

I’m willing to have public money spent towards that goal. As proof, I voted Yes on Measure C, despite my misgivings about the plan.

But the fact remains that I am neither an owner of the San Diego Chargers nor am I any other person who has the power or influence to affect their ability to relocate.

This is Dean Spanos’ team. He may do with it as he pleases.

The False Dilemma - San Diego Against Itself

San Diegans have been presented with a classic false dilemma - that dilemma being: give Spanos a deal entirely on his terms or watching the Chargers move to Los Angeles.

It’s a false dilemma precisely because no deal he’s offered in San Diego can make him as wealthy as he would be in moving to Los Angeles. Period.

Spanos knows this. San Diego knows this. Los Angeles knows this. The NFL knows this.

Everyone knows this.

Regardless of how poor the team performs on the field in Los Angeles, the value of the franchise will go overnight from $2 billion to close to $4 billion simply by moving. By the time Spanos would be able to sell without incurring a penalty from the NFL (15 years) the value is likely to be over $5 billion. Throw in luxury boxes, advertising revenues, concessions, higher ticket prices at Stan Kroenke’s yet-to-be built (or named) Inglewood Stadium... and from a business perspective, it’s quite simply a no brainer.

In exchange, he has to pay nominal rent each year to be a tenant in Inglewood, plus over $600 million of relocation fees (adding interest), and probably close to another $100 million in physical relocation costs (e.g. team headquarters, practice and training facilities, rent or fees to USC for use of the Coliseum, rebranding, etc.).

This was the deal he made back in January 2016 and decided to not immediately take. This is the same deal which was ratified at the NFL owners meetings last week.

Dean Spanos should take the Los Angeles option right now if maximizing his father’s investment in the NFL is the number one priority. Take it and never look back.

No deal San Diego makes or offers can match that deal. Any attempt by San Diego results in San Diego simply bidding against itself.

San Diego Cannot Give Dean Spanos a Deal on His Terms

This isn’t about leverage or negotiation. Last January, it was reported that the Chargers would be seeking a public subsidy of at least $500 million to stay in San Diego. When Mayor Kevin Faulconer and County Supervisor Ron Roberts met with the team in February, they refused to come off their offer of $350 million for the Mission valley stadium proposal from 2015.

As a result, we all got Measure C, a plan which required a 2/3rds Yes vote to pass and alienated a significant number of the allies it needed to have a chance to pass. As we know, it ended up with 43% of the vote.

All of this helps to underline a point which has been (compared to other states and municipalities) made very clear. One professional franchise in California has received almost 50% public financing since 1998, and that’s the Sacramento Kings with their new arena in downtown Sacramento.

Here’s a list of franchises in California which have received new or modified stadiums since 1995, the total cost of the project, and the percentage of public money involved.

  • San Diego Chargers: Qualcomm Stadium 1995, $78 million. 100% public.
  • Anaheim Ducks: Honda Center 1995, $128 million, 100% public.
  • Oakland Raiders: O.Co Coliseum 1996, $200 million, 100% public.
  • Los Angeles Angels of Anaheim: Angel Stadium 1997, $117 million, 25% public
  • Golden State Warriors: Oracle Arena 1997, $121 million, 100% public.
  • San Francisco Giants: AT&T Ballpark 1997, $357 million, 22% public.
  • San Diego Padres: Petco Park 1998, $456 million, 66% public.
  • Los Angeles Lakers/Kings/Clippers: Staples Center 1999, $400 million, 17% public.
  • San Francisco 49ers: Levi’s Stadium: $1.2 billion, 9% public.
  • Sacramento Kings: Golden One Center 2016, $534 million, 47% public.
  • Los Angeles Dodgers: None.
  • Los Angeles Rams: None.
  • The new arena proposed by the Warriors in San Francisco is also expected to be privately financed.

Petco Park remains the largest public subsidy any professional sports team has ever received in California (adjusted for inflation or otherwise). Furthermore, given the 22 year gap between the Raiders and Rams departure from Los Angeles and the Rams return, and the steep decline of public financing for sports teams in California since the late 1990’s, it seems clear the days of public entities paying enormous sums of money for sports teams has mostly passed in the Golden State.

Between Spanos’ rejection of the Mayor’s plan from 2015 and the voters‘ rejection of Measure C, what’s evident is the deal Spanos wants from San Diego is one that existed 20 years ago, and one which virtually no single municipality in the United States can afford at this point. Oakland is in a similar position at it relates to the Raiders.

Before you say “look at Minneapolis or Las Vegas” those deals offered either a combination of a) local and state revenues as in the Minnesota Vikings stadium deal or b) exclusively state funds as in the proposed Las Vegas stadium deal.

The primary reason the Chargers don’t have a stadium in San Diego is that in 1995, when the team had the political capital and public support to get a new stadium, Alex Spanos settled instead on an expansion and minor renovation of then Jack Murphy Stadium, a new team headquarters, and a generous lease agreement which was 100% publicly financed.

If it was a deal too good to pass up, it was also a stunning lack of foresight on Alex Spanos’ part. It’s the foundational mistake upon which all other mistakes (and they are legion) were made in the pursuit of a new stadium in San Diego.

What Might Work in San Diego?

If Dean Spanos were truly serious about staying in San Diego, his Citizen’s Initiative from last year would’ve had significant buy-in from multiple people/interests in San Diego who stood to benefit. I speculated on some ideas in more detail in a previous post, but here’s a summary of those alternatives:

  • Partner with San Diego’s Tourism Industry to raise the Transient Occupancy Tax (TOT) which covered stadium financing at any site while still allowing for a contiguous Convention Center expansion.
  • Partner with Anschutz Entertainment Group (AEG) on a downtown stadium joined up with an arena, thereby replacing both the aging Qualcomm Stadium and Valley View Casino Center in one fell swoop, and positioning San Diego for future NBA or NHL relocation/expansion.
  • Partner with San Diego State University (SDSU) and Major League Soccer (MLS) on a smaller stadium in Mission Valley, which creatively preserves the intimate setting SDSU and MLS desires, while allowing for temporary expansion for NFL games and Bowl Games.

To aid in rehabbing a devastated public image, Spanos could also have done the following as part of any stadium campaign (as I wrote earlier this year), putting aside that actually winning games cures a lot of ills:

  • Revert to the AFL uniforms, and make the Air Coryell royal blues the official alternate.
  • Engaged the public by owning the damage 2015 caused to the fanbase.
  • Signed Joey Bosa in time for training camp.
  • Firing Mike McCoy following the 2015 regular season and hiring a new head coach.
  • Getting current and past players involved in the stadium campaign.
  • Lowering ticket prices.
  • Abandoning Mark Fabiani’s leak-heavy media based campaign strategy.
  • Make it clear PRIOR to the vote that 50% on Measure C was a required benchmark to ensure Spanos would continue working in San Diego if Measure C didn’t otherwise pass.

What Actually Happened

As I said above, this is Dean Spanos’ team. He may do with it as he pleases. But aside from some reasonably low season-ticket prices, none of the things suggested above actually happened.

Measure C alienated a core economic constituency in San Diego, and the higher profile support it did receive (SD Chamber of Commerce, Mayor Faulconer) was conditional at best. In other words, there was very little buy-in from community leaders.

Further, we’ve had consistent (see La Canfora, Jason as a recent best example) vaguely sourced stories for months indicating that once Measure C failed, the team would be forced to relocate to Los Angeles. Speaking for myself, these stories stopped working as leverage (ham-handed or otherwise) in early-to-mid 2015. Rather, I’m so tired of the stomach kick which accompanies them, as well as the dread expectation of seeing them that I simply want them to stop, even if it means the team leaving San Diego as a result.

All of this is combined with one of the most viscerally awful on-field seasons I can remember as a fan, with the injuries to star players combined with freakish stomach-churning 4th quarter mistakes/collapses accounting for 8 of their (current 9) losses.

And somehow Measure C STILL got 43%!

With All This In Mind

I’m under no illusions a “miracle” will happen between now and January 15th.

What Dean Spanos and the NFL would regard as a miracle would probably cost San Diego at least half a billion dollars.

What San Diego would regard as a miracle would be an owner who strikes a deal along the lines of what Stan Kroenke is planning to do in Inglewood.

There are hundreds of millions of dollars between those miracles and no readily apparent way (or willingness) to bridge them.

So, I expect Dean Spanos to prove to everyone that he’s capable and willing to move the Chargers from their home of 55 seasons to Los Angeles in 2017.

I’m not sure I want to be wrong about this. I don’t want or need another 2 years of vaguely-sourced media leaks threatening a relocation to Los Angeles if the (insert stadium plan here) doesn’t pass (insert required vote threshold here).

I simply want a good deal where an NFL franchise can make money and use at least some of that money to improve the product on the field. I also want a deal which isn’t crippling for the municipality in which I reside and which provides essential services to my neighbors, my family, and I.

I’d be thrilled if that team was the Chargers.

But the Chargers are Dean Spanos’ team...