San Diego Caves To Chargers, Agrees To Finance New Stadium

San Diego ChargersSan Diego, in a desperate bid to keep the Chargers from relocating to Los Angeles, has offered to provide public funding for a new stadium, but even that may not be enough.

The Citizens Stadium Advisory Group in San Diego unveiled a proposal this week involving at least $600 million in public financing for a new, $1.1 billion-dollar stadium, The San Diego Union-Tribune reports. Yet, even though it is the most generous offer currently on the table, the team has so far demurred, saying it needs time to evaluate the offer against possible alternatives.

According to Market Watch, the Chargers have been under pressure from the NFL for years to update Qualcomm Stadium, which was built nearly 40 years ago. But until now, the team’s requests for taxpayer assistance have always been summarily rejected by city officials. (RELATED: Super Bowl Shines Spotlight on Stadium Subsidies)

The difference in this instance is the very real threat that the Chargers will follow through on plans to build a $1.7 billion stadium in Los Angeles, which would be shared with the rival Oakland Raiders. That proposal received preliminary approval in April, inducing San Diego Mayor Ken Faulconer to break with tradition and offer the team an incentive to stay put.

Faulconer’s plan, which he insists “won’t raise taxes,” calls for $173 million in bonds, $121 million from the city of San Diego, $121 million from San Diego County, and $225 million from the sale of the current Qualcomm site. In addition, the mayor’s committee estimates that another $100 million could be realized from ticket surcharges and the sale of personal seat licenses.

The Chargers, meanwhile, are asked to contribute $300 million towards the cost, with the NFL kicking in another $200 million.

At the conclusion of the league’s annual owners meetings Wednesday, Chargers chairman Dean Spanos told the Union-Tribune that he was aware of the proposal, but that he was not yet familiar with the details and would be reviewing it this week.

“I’ve always said, and I maintain the fact we want to stay in San Diego,” Spanos said, adding. “We’re committed to keep trying to see if there is a viable solution.” (RELATED: Obama Asks Congress to End Stadium Subsidies)

However, despite acknowledging that San Diego is “a great market,” Spanos also indicated that taxpayer subsidies would have to be substantial in order to keep the team from leaving, saying, “This is all going to come down to: Can we find a viable solution from a financing perspective?”

Significantly, San Diego is not in competition with other cities looking to lure the Chargers with their own incentive packages, as is frequently the case. Instead, Spanos seems to be referring to the enormous revenue potential of the Los Angeles market.

In fact, the proposed Los Angeles stadium would be financed entirely with private money, and would likely cost the Chargers about twice as much as they would have to pay under the San Diego plan. (RELATED: Obama’s Plan for Ending Stadium Subsidies Misses the Point)

Nonetheless, sports economist John Vrooman of Vanderbilt University told the Union-Tribune that the Chargers might actually come out ahead by rejecting the subsidies. Over 30 years, Vrooman projects that the team’s value would increase from $1 billion today to about $2.3 billion if they move to Los Angeles, compared to just $1.4 billion if they remain in San Diego.

Follow Peter Fricke on Twitter

Originally published by the Daily Caller News Foundation

Stadium plan for Chargers, Raiders near Los Angeles advances

As reported by the Associated Press and featured in the Sacramento Bee:

A proposed stadium near Los Angeles that could become home for the NFL’s San Diego Chargers and Oakland Raiders hit an early milestone Wednesday.

Organizers said sufficient petition signatures have been verified by election officials to qualify the proposal for the ballot in Carson, where the project would be built on a former landfill.

The Raiders and Chargers are planning a shared stadium in the city on the edge of Los Angeles if both teams fail to get new stadiums in their current hometowns.

Inglewood Approves NFL Stadium Plan, Increases Lead in Race to Bring a Team to L.A.

As reported by the Orange County Register:

INGLEWOOD – The Inglewood City Council on Tuesday night unanimously approved Rams owner Stan Kroenke’s plans to build the world’s most expensive stadium at Hollywood Park.

The council’s approval of the Hollywood Park Land Company’s plans to build a $1.86 billion, 80,000-seat, closed-roof stadium as part of a larger 298-acre redevelopment is the closest the NFL has been to returning to Los Angeles since the Rams and Raiders left Southern California more than 20 years ago.

“It’s the one, best chance for the NFL to come back here,” Inglewood Mayor James T. Butts said after the four-hour council meeting that included the 5-0 vote. …

Click here to read the full article

Have We Seen an End to Publicly Funded Stadiums?

The San Diego Chargers’ and Oakland Raiders’ announcement that they had taken steps toward jointly building a privately financed $1.7 billion stadium in Carson may have been done at least partly with the intent of persuading their home cities to push for taxpayer subsidies to allow each team to remain in place with their own new stadiums.

levis.stadiumBut the fact that the teams see no trouble in coming up with $850 million apiece seems likely to make San Diego and Oakland voters more opposed to subsidizing billionaire team owners than ever. So does the fact that Walton family member Stan Kroenke, who owns the eager-to-move St. Louis Rams, is preparing to build a $1 billion-plus stadium of his own in Inglewood without public dollars — and with the blessing of city officials who are putting the project on a fast track, bypassing environmental laws.

The deal accepted by Santa Clara County voters in 2010 limiting the subsidies for the 49ers’ new $1.2 billion Levi’s Stadium seemed a good deal at the time; the highest estimate of direct subsidies for the project CalWatchdog.com could find is $156 million. After what’s happened in recent years, that deal doesn’t look so good anymore.

Live sports are gold for TV networks

That’s because the economics of sports have changed since the 49ers’ deal was negotiated. Whether they move or not, the Chargers and Raiders have much less to back up their argument that they would face a “competitive disadvantage” by going without the subsidies that pro teams have traditionally demanded for new stadiums and arenas. They understand that franchise ownership is more beneficial than ever in an era in which live sports are the most consistent way to build a big real-time audience on TV and online.

For the 2014 season, TV networks paid more than $5.5 billion to the NFL. After some league and player pension expenses are paid, the rest of the TV money and other revenue is divvied up among the 32 teams. The $188 million each team got in 2014 was up at least 20 percent from 2013.  Teams are likely to get even more money in coming years. In October, when DirecTV renewed its contract with the NFL, it increased its annual payment from $1 billion to $1.5 billion.

The National Basketball Association and Major League Baseball are enjoying similar huge gains in TV rights payments. Teams in those sports benefit both from national TV fees and local deals with cable companies.

Cable TV bills swell due to sports fees

This double revenue stream explains why the Dodgers sold for a record $2.15 billion in 2012 and the Clippers sold for a record $2 billion in 2014.

Only franchises in the New York City metropolitan area are likely to do better than the 20-year, $3 billion deal the Lakers struck with Time Warner Cable in 2011 to build two regional cable TV networks around the team; and the 25-year, $8.5 billion deal the Dodgers signed with Time Warner in 2013 to set up a dedicated cable channel built on the team’s preseason and regular-season games.

These TV costs, of course, are passed along to consumers via sky-high cable TV bills — something Californians already complain about. When residents put two and two together and realize that pro sports are already hitting their pocketbooks in their cable bills, they may be even less enthusiastic about conveying money to billionaire team owners to help build stadiums.

For these reasons and more, Levi’s Stadium could be the last publicly subsidized pro sports facility in California.

Originally published on CalWatchdog.com

Ups and Downs of Proposed Inglewood NFL Stadium

PERSPECTIVE-I was glad to hear Inglewood is in line for a new NFL stadium. The location sure beats the congested downtown site our City Council and mayor were trying to push.

Any major project – whether a stadium, commercial or residential – carries with it promises of new revenue and economic growth.

The promoters of the Inglewood stadium are assuming that the tax revenue generated would be more than sufficient for the city to reimburse the investors for costs of the required infrastructure improvements to the surrounding area.

Aside from whether it is fair to provide any form of assistance to the investors, can we really bank on estimated economic improvements to the metro area as a whole? Developers and politicians will be slinging some pretty big numbers to the public before the stadium hits the ballot in the form of a measure.

It depends in part on whether you believe commercial projects are similar to a zero-sum game concept – an improvement in one area produces an offsetting effect in another.

The answer has much to do with what I call discretionary substitution…..and few segments of the economy are as discretionary as entertainment. And the NFL, as any major sport, is pure entertainment.

For a broad range of residents, available dollars for entertainment are limited. Whether a family goes to Disneyland or a professional football game is a mutually exclusive decision for all but those with deep pockets.

Another factor is availability of free time. Many wealthy people do not necessarily have an abundance of it. They are rich in part because they devote significant time to their business affairs. The average family, on the other hand, is consumed with staying above water; their time is devoted to not only their regular jobs, but raising children.

As a result, there are trade-offs when it comes to what events or activities we choose to entertain us. To some extent, the discretionary spending deck gets reshuffled with each new product entering the market. There are still the same numbers of suits, and the card values remain the same. The odds of winning at solitaire are unchanged. You substitute a Disneyland ace for one from the NFL.

Price points for major sports admissions are skewed heavily towards high-rollers. Corporations and other large organizations purchase blocks of tickets and use them to entice clients and as perks for key employees. But there are budgetary limits. Most companies want assurances of value in return as they would for any other form of marketing or compensation. It is very reasonable to assume that a company may replace ticket purchases for, say, Kings games for the NFL.

Where does that leave the Kings or other teams?

They will market the available seats to other buyers in the chain, who will make their own substitutions, and so down the line it goes.

What about the client or employee who receives a ticket gratis from a company?

Almost always, the recipients are on their own for concessions – a pretty expensive bite at any venue. That may translate to fewer nights out at a restaurant or movie.

For a new stadium’s positive economic impact to pan out, you need an abundance of deep pockets, something LA has. Certainly, major corporations comprise an important part of that segment. You can’t rely on the average fan for ticket purchases. There are enough wealthy individuals and firms who will spend more than they otherwise would if the NFL comes to town, so I expect there would be an uptick in the region’s net revenue and economic activity if a team is secured.

Adjacent neighborhoods may realize an improvement in quality of life, as would certainly be the case in Inglewood, although there would be hidden costs as well.

But how much will the net benefit be to the local communities and the greater metropolitan area?

It will be important to discount projections for the ripple effect of discretionary substitution, as complex an analysis as one can attempt.

Inglewood will probably come out a clear winner because the ripple effect will mainly hit beyond its borders. Los Angeles – both the city and county – could realize a modest benefit (less costs of managing additional traffic and safety), especially if many fans visit from out-of-town and fill hotels, but little benefit should be assumed to the extent attendance and participation is drawn from the general population.

Property tax revenue would experience a big bump, and state income tax on the players’ earnings would not be chump change. But how much of that will filter down from Sacramento to local governments?

Residents and stakeholders need to challenge gung-ho assumptions. It is also important that voters in communities adjacent to Inglewood scrutinize the deal, too. After all, we share the same freeways, airport, and hotels. Emergency services overlap, too. Residential and commercial streets flow into each other – traffic is a shared liability.

I welcome the return of the NFL to our important sports market, but we better understand the deal to be sure it is as positive an addition to our greater economy as pitched by its supporters.

This article was originally published on CityWatchLA.com

(Paul Hatfield is a CPA and former NC Valley Village board member and treasurer.  He blogs at Village to Village and contributes to CityWatch. He can be reached at: [email protected])