Legitimate Questions About the San Diego Chargers' Stadium Plan

The answer is yes.

But before we get there, I want to point out that this is one of the better items I've seen published in regards to the Chargers' stadium plan, and really the only attempt I've seen from a politician which asks serious questions about the project without resorting to populist blather about the proper uses for tax increases and projections regarding the General Fund which rely on an economic depression and/or the complete collapse of San Diego's tourism industry.

So, on that count, thanks to Councilman Sherman and his staff for supplying a "lucid, intelligent, well-thought-out objection" (in the words of Judge Chamberlain Haller).

Let's get into the meat of the study Sherman's office produced, which compares the Chargers' plan to Lucas Oil Stadium (home of the Indianapolis Colts) and the Indiana Convention Center in Indianapolis.

Sherman's Study

Before we begin... In fairness to the Chargers and proponents of their Initiative, the study isolates Lucas Oil Stadium and fails to consider other facilities in other cities. The report doesn't take into account San Diego's convention industry as compared to Indianapolis, aside from mentioning the booking rate for the San Diego Convention Center is approximately 12% - 22% better than that of Indianapolis overall. The report also doesn't account for the challenges of an annex-type facility in a city with a harsher winter climate, as compared to San Diego.

I felt like the points made in the report were worthy of conversation, despite these potential issues with the report itself.

Sherman's Study (hereafter referred to as Study) essentially looked at the actual attendance numbers generated by Lucas Oil Stadium (hereafter LOS), as an off-site expansion of the current Indiana Convention Center.

Crucially (as we'll see later on), LOS counts the playing surface as part of the 183,000 square feet of total exhibition space. The field itself accounts for at least 57,600 square feet (ft²); when you include bench areas, media needs, boundary space, the figure increases significantly. According to the study, the LOS playing surface accounts for approximately 90,000 ft² of the total 183,000 ft².

Therefore, any large convention event has to book the field at LOS in order to realize the actual benefit of large convention space. According to the Study, the actual occupancy rate of the field is 39.1%, of which almost the entire amount consists of sporting events (e.g. NFL games, NCAA games, etc.). By comparison, the two exhibit halls at LOS (each with a capacity of 20,000 ft²) are booked only 32% of the time, which includes NFL game days and other events where the stadium is in use.

The long and short of the Study concludes that LOS - when considered as an expansion of the existing Indiana Convention Center - does not generate enough convention-type use to be considered a true expansion (or annex) type facility. Rather, it's a stadium with underutilized extra meeting space.

This is the single most important point of contention regarding the entire proposal (and it's not an old one). Any possibility of the project being considered a worthwhile public investment hinges on the Convadium's potential as a legitimate convention facility. The Convention Center elements of the Convadium have to be able to stand alone and generate business outside of sporting events to even merit consideration for public financing.

Further, as mentioned in the report, there is a significant financial incentive for the Chargers in considering the field as part of the convention center space. According to Section 61.2812 (xi) of the Initiative (Page 104), it says this:

Figure 1 - Section 61.2812 (xi)

What this passage means (in my reading) is that any revenues generated within the stadium section of the Convadium, whether a football game or a convention, go towards the maintenance and capital improvements of the stadium. The Study characterizes this as a rent subsidy for the Chargers. In my reading, that's not completely accurate.

But it does benefit the Chargers directly, and here's how. Refer to Section 61.2812 (i) of the Initiative (Page 102):

Figure 2: Section 61.2812 (i)

Here's where this situation potentially becomes a problem:

• The Chargers are responsible for designing the facility.
• Assuming passage of the Initiative in November, the Chargers design the facility in a manner which counts the playing surface or other stadium elements as Convention Center space.
• At least some of the revenue generated from non-football events within the stadium area is used toward operations, capital improvements, and repairs of the stadium.
  

In other words, the Chargers appear to have a non-football revenue stream going towards operations, maintenance, and improvements of the stadium. Now, if events are held within the stadium areas outside of football, it is reasonable to expect some non-football revenue to offset the operations and maintenance of those events.

But this passage is concerning - precisely because of the Chargers' ability to make that outcome more likely through control of the design process - as depicted below.

http://www.chargers.com/new-stadium/design

Figure 3 - Boat Show on playing surface

As an aside - this is also where Sherman's qualified opposition stands in stark contrast to the type of political opposition we've seen thus far. He said in his op-ed in the Voice of San Diego that he won't support the Convadium, based on what he knows right now, but is open to reconsidering his stance if the Chargers can provide more information which demonstrates how the Convadium concept can be successful. Some proponents of the plan will argue Sherman is a pawn in the downtown establishment (and he may well be), but that doesn't mean the points he makes are invalid.

In Closing

Councilman Sherman's study makes two legitimate points about the concept of a downtown joint-use facility.

The first is that evidence from at least one other NFL facility designed in this manner is not truly effective as an expansion of the existing convention center space. Second, the wording in the Initiative provides a clear financial incentive for the Chargers to manipulate the design process.

However - and most importantly in my view - this kind of detailed, nuanced criticism is precisely the kind of conversation we should be having about the Chargers' downtown proposal, and these are precisely the type of questions we should be asking to make sure the Chargers' plan doesn't actively hurt the public.