We’re still several months from the NFL and its constituent owners making any decisions on team relocations, yet the league and Roger Goodell are getting exactly what they want. San Diego and St. Louis are bending over backwards to make please the kings, Carson and Inglewood are having their own battle over the presumptive single Los Angeles stadium slot, and Oakland is, well, treading water I guess.
San Diego’s CSAG (Citizen’s Stadium Advisory Group) released its plan in time for the owners meetings in San Francisco. As expected, it focused on building at the current Qualcomm/Mission Valley site instead of the downtown site the Chargers preferred in prior years. The cost is expected to be $1.4 billion, broken down into various revenue sources:
The plan proudly proclaims no new taxes, which is technically true, but it neglects to mention that it’s carrying over an ongoing operating subsidy, split equally by the City and County, that was negotiated to keep the Chargers at Qualcomm. So right off the bat that’s $242 million in present value subsidy, plus the sale of 75 acres at the stadium for $225 million. Field of Schemes has the total subsidy at $647 million, I’ll call it $467 million as I won’t count the various rents as subsidies (you might) or . $500 million would come from the Chargers (60%) and the NFL’s G-4 fund (40%) in the plan, though the Chargers’ recent disinterest in the deal may indicate a dissatisfaction in their $300 million piece. Since PSL revenue ($150 million) would be limited and is already accounted for, the Chargers would have to come up with $200-210 million on their own from non-PSL sources like tickets, concessions, and some luxury seating proceeds. That translates into a $12 million/year of revenue required of the Chargers along with $10 million/year for rent, assuming that San Diego hits its fundraising targets for PSLs. For reference, the 49ers pay roughly $24 million/year in rent at Levi’s Stadium. To help offset that cost to the team, the Chargers would have control of naming rights. A $12 million/year naming rights deal for 30 years (both optimistic projections) would effectively cancel out the $300 million team contribution.
A special infrastructure financing district would be created to allow for future ancillary development to take place. That would be worth $116 million, though that money wouldn’t go towards construction of the stadium. Another $40 million come from future hotel taxes to fund a hotel next to the stadium. To many stadium advocates, hotel and car rental taxes are not considered a true subsidies since they aren’t levied on locals. They’re still taxes.
Two parts of the plan struck me immediately. $225 million from the land sale may well be appropriate for the area, which has a trolley station that could anchor some transit-oriented development. The more important takeaway is that $225 million now sets a bar for Coliseum City, in that San Diego is now offering up land for free to fund the stadium’s construction, so Oakland and Alameda County will be expected to do something similar. This is despite the fact that the NFL has recently frowned upon real estate development acting as a funding source in favor of less speculative revenue streams – as if PSL sales aren’t speculative.
The other question mark is operating costs. CSAG claims that based on examples like AT&T Stadium in Dallas, revenue from a year-round event schedule would make the stadium self-sustaining. I find this assertion highly optimistic at best. The fact is that a stadium will cost $7-10 million per year to operate just for the NFL games. If that isn’t accounted for, why should anyone believe that revenue from other much smaller events will make up for that operating cost, not to mention the cost associated with running those smaller events?
The total cost of the project is $1.4 billion with a $1.1 billion construction cost, so perhaps that “buffer” will take care of the subsidy. If it doesn’t, chances are taxpayers will foot the bill, adding another $121+ million to the public side of the ledger.
I’ll do a proper comparison of San Diego vs. St. Louis and the two LA plans plus Oakland when those come out. For now I encourage you to assess San Diego’s plan on its own merits. CSAG’s plan appears meant to be in line with the stadium financing structures for Minneapolis and Santa Clara, at least in terms of public share. If that’s the case, the NFL should be able to pivot and align with the plan they way the same are posturing to do with St. Louis. Is it a good deal? Not really, but this is the NFL we’re talking about. As usual, they hold the cards.