FanPost

Value of Chargers Move to LA

Had occasion to post this in a thread and figured it could be a fanpost that might generate some interesting discussion, even if only to draw out a bunch of Spanos bashing.

The clear implication of the Spanos decision to move the Chargers to LA is that the Spanos family thought doing so under the terms they agreed to would increase the value of the franchise more than any alternative path. That is simply not true.

There are easy ways to show this.

1. In September 2016, the Chargers' last season in San Diego, Forbes assessed that the Chargers franchise was worth $2.08B, which was #21 among NFL franchises. In September 2020, Forbes assessed that the Chargers franchise was worth $2.6B, which was... #21 among NFL franchises. So relative standing is unchanged.

2. The average value of NFL franchises in that 2016 assessment was $2.34B. The average value of NFL franchises in that 2020 assessment was $3.05B. That is an average increase of 30.1%. The Chargers franchise increase was 25%. So the Chargers value grew at a below average rate.

3. The Raiders are the other team that moved at the same time as the Chargers, and they were similar to the Chargers in terms of being constrained financially relative to most other NFL franchises. In September 2016, the Raiders franchise value was assessed at $2.1B, ranking #20, one spot ahead of the Chargers. As of September 2020, Forbes assessed the Raiders franchise value at $3.1B, ranking #12 among all NFL franchises. Clearly, there was at least one better alternative available; the Raiders took it.

I would argue that there was also another better alternative. Had the Chargers been willing to spend the $650M they took on for their relocation fee on a San Diego area stadium, plus the $300M the NFL would have provided, and been more flexible about the stadium location (e.g., Mission Valley), they likely would have been able to get the city/county/state to chip in the rest.

Then they would have held majority ownership in a brand new, state of the art stadium which would have elevated their franchise value at least as much as it has grown since 2016. Spanos only offered to put up $350M toward a San Diego stadium, but took on twice as much as that for the relocation fee and the move, neither of which provides the franchise with any equity. It is easy to look at the Forbes list and associate positive value with stadium equity, and the Chargers have none, and they never will as long as they are Kroenke's tenant.

Doesn't seem like a smart business decision in retrospect, especially considering they gave up their San Diego fan base and haven't seemingly been able to build one in LA, which also has some effect on the long term bottom line.

I get that very few people posting on this site are likely to speak favorably about the move, but even an objective assessment shows that they bungled this decision pretty severely.

There have been rumors that the Chargers might be interested in moving to London. I suspect that would be a similarly disastrous move, but it might actually be more valuable than this move to LA. But the NFL would have to amend the terms of their LA relocation... no way the Spanos family can afford to pay the $650M for LA and also pay more to move elsewhere.

The only possible saving grace is that surely the NFL must realize that the Chargers as second fiddle in LA does not maximize the value of the franchise, and maximizing the value of every franchise is the way to maximize the value of the league as a whole. So maybe they will eventually steer the Chargers elsewhere, whether London or another location. Even if so, it implies that the Chargers will have effectively wasted all of the years in the interim.

All that said, I have no sympathy. I wish the NFL could take the franchise away and sell it to someone else.

Thoughts?

This FanPost was written by a member of the Bolts From The Blue community and does not necessarily reflect the views of the Bolts From The Blue editors or SB Nation.