Author's Note: this post is 100% WILD SPECULATION TIME!!! Take it for what's it worth.
The San Diego stadium situation is a tough nut to crack. There's a lot of factors to consider and several competing constituencies involved.
Building off stuff we know, let's try to come up with a plan which makes people reasonably happy, satisfies everyone's needs, and provides some options for the future.
So, follow me down the rabbit hole...
What are the conditions we're setting for ourselves?
Here's the list of things to consider in this plan:
- Dean Spanos said explicitly that he would prefer for the San Diego Chargers to be in downtown San Diego.
- The JMI Convadium plan appears to be the team's preferred option because it reduces the overall stadium and convention center costs by about $400 million over any other option.
- San Diego Mayor Kevin Faulconer wants to pursue a contiguous Convention Center expansion.
- San Diego needs additional events to be held at the facility to maximize the revenue generated.
- The Public cost should be minimized wherever possible. And no, I'm not going with the "no public money" fantasy that everyone wants. If it were possible (and it might have been had the Chargers used it as their Plan B in Houston), it's what I'd present.
- San Diego State University needs land for a campus expansion.
- Any plan needs to be flexible enough to accommodate the outcome of the Briggs Initiative, pass or fail.
So, with all of these ideas in mind, what can be accomplished?
The JMI Convadium concept is the least expensive stadium construction plan on the table. This is because the stadium and convention center facilities share infrastructure, and the stadium footprint is smaller.
But we know that the Convention Center element of the plan isn't wanted ... at least not at this time.
It might be an option if the Briggs Initiative passes and there's no other option for additional convention center space, or if the contiguous expansion isn't possible for assorted reasons (e.g. can't pay for it, can't win court challenges, don't own the land necessary, etc.). So, we'll say for now we're not building that part of it, but leave it possible if necessary.
So, is there a way we can separate out the stadium element from the convention center element and get a rough idea of the cost? Luckily for us, there is. Let's reference the JMI cost analysis from the CSAG Final Report, as well as JMI Facility Study (warning, this document is ginormous).
|Plan E (Joint Use Facility)||$1,420,330,815|
|Plan C SDCC Expansion||$370,588,169|
|Stadium minus CC +||$1,049,742,646|
Now, let's not forget the land purchase and relocation of the MTS Bus Yard. From the CSAG Report, it was estimated that land would cost $100M, and relocation of the bus yard would cost about $150M.
Add these items up and we get a total of $1.3 billion.
Before proceeding further, and based on the information at hand, I cannot identify a way for the Chargers and JMI to do this 100% privately. If the goal is to keep NFL football in San Diego, and eliminate taxpayer involvement, your best hope is letting the Chargers go to Los Angeles, bringing in the Raiders, and hoping they'll put $600M into a Qualcomm Stadium renovation, as well as taking on all cost overruns, annual maintenance, and capital improvements.
So, How Do We Pay For It?
We know their absolute minimum is $500M. $200M from the team, which in turn gets them the full $200M from the NFL's G4 Loan Program, and then the extra $100M from the NFL to sweeten the pot in San Diego.
I think their contribution needs to be at least $700M. This adds $100M of their own money, in exchange for getting their preferred location, as well as $100M in Personal Seat Licenses (PSLs).
In their original MV financing plan, the City and County offered $350M in public money. $200M from the City in Lease-Revenue Bonds, $150M in cash from the County. Here's where I save some money. My plan calls for $210M total, split $110M/$100M.
San Diego State University / Mission Valley
Since we're building a stadium downtown, Mission Valley is now available. Remembering that half of the 166 acres are owned by the City, the other half by the San Diego Water Company (SDWC), here's my plan for Mission Valley.
- Reserve 50 acres of SDWC land along the San Diego River for conversion into parkland. Don't use more than 4 acres of City land for the park space.
- Sell the remaining 116 acres of the Qualcomm site to SDSU for $200M.
- The 37 remaining acres of SDWC land is purchased at $2M / acre for $74M total (fair market value).
- The 79 City acres are sold at reduced cost to SDSU for about $1.6M/acre, for a total of $126M.
The $126M from the City land in Mission Valley is then put into the new stadium as an additional contribution. Further, a tenant agreement is created where SDSU plays downtown for nominal rent (like $1 per season) and keeps its ticket and advertising revenues, while the Chargers and JMI split the remaining revenues 70/30.
SDSU football can play downtown as long as they want, while getting the campus addition it desperately needs, and maybe eventually building their own stadium in Mission Valley if they so choose.
Contribute $21M, as suggested in the CSAG Report.
Contributes $250M as a second tenant, with the idea that the facility will serve as the home for an MLS expansion team owned by John Moores.
Grand Total: $1,307B. We get there with $7M to spare. Here it is in table form:
|$$$ (millions)||% of Grand Total|
|SDSU / City Land MV||$126||9.6%|
Annual Maintenance, Capital Improvements, and Cost Overruns
Here's where I'm going to make an unpopular suggestion. I would suggest the City and County take on the responsibility for Cost Overruns, to a point. My suggestion is that the Public's initial contribution of $336M (includes the Qualcomm site revenue of $126M from SDSU) be expanded up to a $500M cap to cover cost overruns.
Cost overruns beyond that point would be covered by the Chargers and JMI 50/50.
Now, if I'm the Public, I'd rather bear any additional costs up front and with a cap, because I want no part of annual maintenance and capital improvements.
According to this article in the Voice of San Diego, annual maintenance at Qualcomm currently runs $12M per year. When you factor in the expiration of the stadium expansion bonds in 10 years, that works out to $303M over 30 years.
Capital improvements tend to be extremely expensive items, such as new scoreboards, upgraded club seats and luxury boxes, potential seating expansions, and so on. Better to allow the Chargers & JMI to bear those costs over time, since they will be realizing most of the revenue from the stadium.
Here's the updated Grand Total, allowing for an example of $250M in Cost Overruns. You'll see that the Public has reached its cap, and the Chargers add in $40M / JMI adds in $40M to cover the rest.
|$$$ (millions)||% of Grand Total|
|City Land MV||$126||8.1%|
As I suggested earlier, the Convention Center element of the Convadium could be built there if the Briggs initiative passes, paid for by the TOT rebate element. Or, it could be built there if the City is prevented from undertaking any contiguous Convention Center expansion.
Pursuing the Convadium plan becomes more palatable for the Mayor if it's not his first choice, but rather an option he can exercise if necessary.
However, what if the contiguous expansion gets built?
You now have Tailgate park, next to a stadium, with critical infrastructure already in place, in a prime downtown location between Petco Park and the new stadium.
Maybe an alternate use for the site could involve building a new arena in place of a Convention Center annex, if the NBA and/or NHL could be lured to San Diego. Such an option could be attractive to an owner, who would face reduced arena construction costs. The Chargers and JMI could also contribute as minority partners and generate additional revenue.
Or, possibly, a mixed use commercial and residential property, similar to the small entertainment district idea used in Glendale across from University of Phoenix Stadium, or the Packers' Titletown District, or Ballpark Village in St. Louis.
With this plan we've managed to do the following:
- Get the Chargers downtown, which they've said they prefer.
- Given the Mayor the Convadium as a contingency plan, not a take-it-or-leave-it option.
- Provided plenty of space for SDSU to grow.
- Come up with a plan with initial public costs totaling about one-quarter of the total, and capped at no more than one-third of the total if cost overruns occur.
While I'm sure this isn't the final deal to be adopted, I think it illustrates one of many possible deals which can be made which protects taxpayers (as much as realistically possible), as well as solve the problems of almost every involved constituency. It also illustrates the degree of flexibility which will be needed to make a final deal.