Is New Chargers Stadium Worth The Investment?
Monday, May 24, 2010
What's the latest news on the Chargers search for a new stadium? Last week, the team unveiled a rendering of what a new downtown stadium might look like, but many questions about the project still remain unanswered. Reporter Liam Dillon, with voiceofsandiego.org, gives us an update.
MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. After looking at the new artist's rendering of a proposed Chargers stadium in downtown San Diego, most would admit, it's pretty darn good-looking. But, the machinations involved in getting that stadium built, at least partly with public monies, is not quite as good-looking to some people. For instance, the San Diego County Grand Jury just released a report critical of the current agreement between the City and the Chargers about operating expenses at Qualcomm. It seems San Diego loses millions each year. So the question remains, is a new Chargers stadium a good investment for San Diego? First, joining us for an update on the stadium, a couple of questions, Mark Fabiani is joining us, special counsel to the president of the San Diego Chargers. And, Mark, good morning.
MARK FABIANI (Special Counsel to the Chargers President): Good morning. Thanks for having me.
CAVANAUGH: I’d first like to invite our listeners to join the conversation. Do you think a new stadium is a good idea for San Diego? And that is specifically a new Chargers stadium. By the way, you can see the artist’s rendering of the new Chargers stadium on our website, KPBS.org/thesedays. If you’d like to join the conversation, our number is 1-888-895-5727. Mark, you presented this artist’s rendering that we’re talking about, you presented it to the press last week. You took some questions. What were some of the issues you discussed during that meeting?
FABIANI: Well, we also had a town hall meeting where people from the community came in and asked us questions, and the biggest one is the one you led off with, does this investment make sense for the public? And the answer is found in that grand jury report, which you also referred to at the outset. The public, whether you care about football or not, you need to understand, you have a very bad deal right now at the Qualcomm site for two reasons. One, it costs, according to the grand jury, $17 million a year to operate and maintain that stadium. The City loses that amount of money every year. And, second, the City owns that 166 acres of land which could be put to better uses. It could be developed. It could be a park created along the riverfront. So there are all sorts of things that could be done that would be better for that piece of land. Now, of course, to do that, you’ve got to find another location for the stadium or you’ve got to accept the fact that you’re not going to have any pro football or college football in town. So those are really the choices: find another location for the stadium, continue to lose all sorts of money on that site off into the future as far as the eye can see, or not have any football in town.
CAVANAUGH: Mark, what are the latest estimates for the cost of building a new stadium at the old Wonder Bread building site in downtown San Diego?
FABIANI: Well, if there’s good news in any of this for us, is that the costs have gone down in recent years because of the construction situation around the country. There was a boom, as you know, in the middle part of the last decade, and with the economic decline, there is less demand and, therefore, the costs are less expensive so the stadium itself might be around $700 to $800 million as opposed to a billion dollars. In addition, there are tremendous cost savings to building downtown because all the infrastructure is there on a Sunday afternoon. You’re not building any freeway on and off ramps, you’re not building any trolley extensions, no big parking garages. So for that reason, the site downtown, believe it or not, is the least expensive site we’ve looked at over the last 8 years simply because the infrastructure’s already there.
CAVANAUGH: And, Mark, I know we have to let you go but can you tell us before you leave what are some of the key issues that need to be resolved in the next few months as far as you’re concerned before the project can move forward.
FABIANI: Well, there’s really one key issue and it’s not just regarding the Chargers but the Chargers are a part of it, and that is for anything big to happen downtown that involves the taxpayers making an investment, the redevelopment agency, the CCDC, is going to have to raise its spending cap. I don’t want to get too technical here but it’s enough to know, I think, that the spending cap that the CCDC now has will be reached in a couple of years, which will mean the CCDC can’t spend any more revenue downtown. And if that happens, the Chargers stadium is never going to happen downtown and other big projects are never going to happen downtown. So that’s why I say, the Chargers are just one part of this issue. The cap raising debate is a huge debate involving homelessness, involving job training, affordable housing, and all sorts of other issues. But the Chargers stadium is part of that and unless the cap is increased—and there’ll be a vote on June 22nd in the city council to fund a study to see whether the cap should be increased—unless that happens, the downtown site really is not going to work for either the Chargers or the City. So that’s really the next big step here, is that June 22nd vote in the city council on the cap raising study.
CAVANAUGH: Mark, thank you for joining us. I really appreciate it.
FABIANI: It’s my pleasure. Take care.
CAVANAUGH: Mark Fabiano – Fabiani, that is, is special counsel to the president of the San Diego Chargers. Joining me now is Liam Dillon. He’s staff writer with voiceofsandiego.org. He’s been following the stadium story. Liam, good morning. Thanks for coming in.
LIAM DILLON (Staff Writer, voiceofsandiego.org): Good morning. Thanks for having me.
CAVANAUGH: Okay, let’s start talking about that big issue that Mark just talked about and that is raising the cap on the Centre City Development Corporation, the amount of money, the amount of tax money that they can spend on developing certain things downtown. If they raise the cap, would that automatically go to a new downtown Chargers stadium?
DILLON: No, but without the raising of the cap there would be no downtown Chargers stadium. And so it’s kind – it’s part of a larger whole. The downtown redevelopment agency says that it only has about $386 million left to spend and expects to hit that limit, I believe, around 2024. And so without an increase to the amount of money that it can collect, projects, as Mark said, projects like the Chargers stadium or other big things that would be built downtown won’t – that won’t be able to happen.
CAVANAUGH: Now the report that came out from the grand jury last week Mark just said was another reason why we should build a downtown stadium, but actually what the grand jury report actually said was they called Qualcomm Stadium a losing proposition for the City. What more can you tell us about that report?
DILLON: Well, they’re absolutely correct. And, in fact, every single report that’s looked at Qualcomm operations over the last couple of years has come to the exact same conclusion, which is simply that taxpayers are losing millions of dollars every year just by subsidizing the stadium. The Chargers pay very little in rent due to the agreements that they have with the City, and there aren’t enough events there to make up for that fact. And so, you know, we put the estimate at $12.2 million is the amount the City loses every year. The grand jury report actually had a couple numbers. Mark uses the $17 million number. I spoke with them and I prefer an $11-point million dollar number they have in there. But the fact of the matter is, no matter whatever number you use, it’s a heck of a lot of money that taxpayers are simply using just to keep Qualcomm operational.
CAVANAUGH: Does this make a case that, indeed, there should be another stadium built downtown? Or what else needs to change so that the City doesn’t keep losing money on operating a Chargers stadium?
DILLON: Well, it’s funny because, you know, the argument for a new stadium is simply coming down to the fact that taxpayers have such a lousy deal with the Chargers that they basically need to make a new deal with the Chargers. And the question that results from that is, well, if, you know, in the past with—and I’m sure a lot of listeners remember the ticket guarantee, which was a huge issue that was resolved a few years ago—but if the City keeps making bad deals with the Chargers, who’s to say that this time the City is going to make a good deal with the Chargers? However, the fact does remain that the City does have a bad deal right now.
CAVANAUGH: Now when we talked with Mark Fabiani, he gave a cost estimate of between $700 and $800 million for the downtown stadium project. How – First of all, do you agree with that cost estimate? And how does that – how do those costs break down between the team, the NFL, and the City?
DILLON: The $800 million is what’s been given as the cost estimate for the facility. However, there are other associated costs that are definitely going to happen. For example, part of the site that’s being considered is a bus terminal, and that bus terminal has to be relocated. Who knows exactly how much that’s going to cost but it will be significant. There are environmental problems at the site. Now, granted, that – if anything were to happen at that bus terminal site, a stadium or not, those costs would occur anyway. But the fact of the matter is, if you’re going to build a stadium, that, you know, that is part of that cost. Also, there are further discussions about potentially putting a domed roof over the stadium. What that would do would basically allow, as the Chargers put it, the Sports Arena site to be closed down in addition to the Qualcomm site, freeing up the Sports Arena land for perhaps new development. But in order to do that, there would be a $75 million cost tacked onto the stadium to put that roof on there.
CAVANAUGH: And, again, how much is the team going to pick up, the NFL, and the City?
DILLON: The way that it’s being described now is the Chargers say that they’ll put in $200 million, the NFL, which is a bit of a question mark because the NFL no longer has an active loan program for new stadiums, but the Chargers are counting on a revival of that program, the NFL would contribute $100 million and that leaves the balance, at this point, to be picked up by taxpayers, that’s about $500 million.
CAVANAUGH: We’re talking about a potential new downtown Chargers stadium. A new artist’s rendering was released last week and you can check it out on our website, KPBS.org/thesedays. And we have been asking for your calls. A lot of people got – want to get involved. 1-888-895-5727, or if you’d like to post your comment online, it’s KPBS.org/thesedays. Let’s hear from Tom in La Jolla. Good morning, Tom, and welcome to These Days.
TOM (Caller, La Jolla): Hi.
TOM: I just would like to comment that Chargers stadium or any stadium is a losing concept. There are many, many studies throughout the United States where the cities have built stadia (sic) for professional teams and for billionaires, and they’ve been losers all the way along. And I think San Diego’s lost enough money. Its infrastructure has totally collapsed. Taxpayers are being faced with rising utility rates and so forth and we don’t need anymore – We’ve got to save our city, which is in – near bankruptcy…
TOM: …because of the pension process…
TOM: …and so forth.
CAVANAUGH: I got your point. Thank you, Tom. Thanks very much for calling. Let’s go to Bodie calling from San Diego. Good morning, Bodie. Welcome to These Days.
BODIE (Caller, San Diego): I’d like to talk to you and the gentleman from the voiceofsandiego…
BODIE: Liam, thank you.
BODIE: Why don’t corporations step up and why have Americans been sucked into this supporting other people’s businesses?
CAVANAUGH: Okay, it’s a good question. Thank you, Bodie.
DILLON: Well, you know, it’s interesting, that, you know, the argument is pivoting from – on financial terms, pivoting from the fact that the City would see any real benefit from having – from building a stadium to basically the opportunity cost, which is you’re already losing money, taxpayers. This is the way the argument’s going, is you’re already losing money. You know, here’s a way, perhaps, where you stop losing money, and that’s essentially what the financial argument at this point is coming down to. And you have to sort of evaluate that on its own terms. So the point is, basically you’re already subsidizing billionaires, here’s a way where you might be able to stop.
CAVANAUGH: And there’s another argument that has to do with what you mentioned before in that retractable roof idea, the idea of putting a roof on the – a new Chargers stadium would potentially be a revenue enhancement for the City?
DILLON: Well, what that would do would allow, essentially, the freeing up of the Sports Arena site in addition to the Qualcomm site. And the way that the argument is going is that you’d be able to sell the Sports Arena site and develop that. Now again, you know, it’s important to kind of keep in context here, a tremendous amount of work has to be done particularly in this real estate market for those types of financial projections to be realized. And so, you know, you know right now that you are losing tens of millions of dollars every year operating the Qualcomm site; it’s a little bit further removed to say you’re going to make x-amount of dollars from selling it or from developing it, both that and the Sports Arena site, because that involves so many more variables.
CAVANAUGH: Let’s take another phone call. Alan’s calling from North Park. Good morning, Alan, and welcome to These Days.
ALAN (Caller, North Park): Good morning, Maureen. There’s an excellent book. It’s titled “Field of Schemes,” and it was actually written by a couple of really avid baseball fans that wanted to save their old, old stadium that they so much enjoyed going to even as kids. And what they discovered though is that the private owners of most of the sports teams in this country, whether it’s baseball or football or basketball, have figured out a scheme whereby they can rip off the public of public taxpayer money to build their private stadiums instead of spending their own money. And most of these owners are very wealthy people anyway. But they figured out this scheme, and I highly recommend the book, titled “Field of Schemes”…
CAVANAUGH: “Field of Schemes.”
ALAN: …available in our public library.
CAVANAUGH: Okay, well, thank you very much for that suggestion. I’m wondering, is the Chargers building this new stadium, what is the link between the new stadium and the Chargers staying in San Diego?
DILLON: Well, the Chargers have maintained they’ve been looking at trying to build a stadium here for 8 years. You know, there’s always a spectre of Los Angeles which now has two stadium proposals, one by a gentleman by the name of Ed Roski in the City of Industry, who is – has received an environmental waiver from the State of California to potentially build a football stadium there. There’s also a new proposal from the AEG Corporation, which a corporation that runs L.A. Live, where the Staples Center, the basketball arena is downtown Los Angeles, and they’re talking about putting a facility – a new stadium in the L.A. Live complex and so, you know, it’s always held out there and as Los Angeles being a possible destination for the Chargers or any other NFL teams that are looking for a new stadium. As far as the progress of that, it’s – that’s – nothing there is really going to happen until after the NFL solves its labor issues. There’s a potential for a lockout in 2011 and until those issues, and until the owners and players are sure of what’s coming next, there won’t be any movement on that front.
CAVANAUGH: Now we heard about how the city council is going through the process of seeing whether or not the cap on the CCDC funds should be raised and so forth, all of this a preliminary to perhaps going forward with the plan for a downtown stadium. How does the county government fit into this conversation?
DILLON: That’s a great question. The County’s probably going to be one of the most important actors here. Basically the way the downtown redevelopment funds would work, if the cap – the City simply did nothing, let the cap expire, is the County would receive a windfall in tax dollars once that cap ends. And so if there is a renegotiation for an increased cap, there has to be negotiations with the County to see how much money they are going to be getting and whether they’re going to see the same amount of money or more than they would otherwise, and that’s certainly questionable. And that’s where – kind of where push comes to shove here, whether the City and the city council and the mayor’s office are going to be able to convince the County that they’re going to get a better deal.
CAVANAUGH: And, indeed, if the County says no then they’re the ones who are potentially responsible for the Chargers leaving town.
DILLON: I’m sure lots of people politically will make that argument.
CAVANAUGH: Okay. Let’s take another call. Richard is calling us from Rancho San Diego. Good morning, Richard. Welcome to These Days.
RICHARD (Caller, Rancho San Diego): Good morning. Thanks for taking my call. My comment is, the City doesn’t have to do any deal with the Chargers. The Chargers are a private enterprise, they’re a moneymaking enterprise. If they want to build a stadium, let them. If they want the public to contribute money, then give us shares in the corporation. If they don’t want to do that and they want to move, Godspeed.
CAVANAUGH: Thank you for your call. Let’s take another call on the heels of that, Gary calling from East Village. Good morning, Gary, and welcome to These Days.
GARY (Caller, East Village): Thanks. Hey, great topic today. But I wonder if you guys have discussed the financial impact of a Super Bowl if it comes to San Diego. Of course, if we don’t have a new stadium, the NFL will not award San Diego a Super Bowl. If we do, we’ll probably get a Super Bowl every five years, and that’s a big financial kicker.
CAVANAUGH: Thank you for that. Do we know about the financial impact of the Super Bowl? Has that ever been sort of proven one way or the other, Liam?
DILLON: Well, there are a number of economic studies that sort of speak to that and they’re not necessarily uniform in the impact that Super Bowl has. You know, it’s tough to come to these numbers in a real accurate way but there is some indication that having Super Bowls coming to San Diego, which, you know, would not be guaranteed but would be likely if there’re a new stadium here, would provide some level of economic impact.
CAVANAUGH: So we’re in a situation now where in order to even move forward with this, the cap on the Centre City Development Corporation funding has to be raised, and we have a potential $500 million contribution towards the building of a new stadium downtown. What kind of hurdles stand in the way to getting to the point where an actual decision could be made on maybe whether or not this should even be built?
DILLON: Well, as Mark Fabiani mentioned earlier in the program, June 22nd is sort of the first date here. That’s when the city council will – is scheduled to decide on funding, spending $500,000 to fund a study that was expected to take about 12 to 18 months that would look at what the process of raising the cap would be and presumably that would include continued negotiations with the County and all of those things to kind of get to a certain level of a decision point where the numbers we’re getting and the estimates that we’re getting are a little bit more fixed. So, you know, there’s also a real big decision point out there and that’s one that the mayor and the Chargers have mentioned as November, 2012. That’s when any stadium proposal would be put on the ballot and that – then that does leave enough time for – if the city council were to act next month to have some idea of what the cap increase would look like.
CAVANAUGH: Do we have an idea on the breakdown on the city council about the arguments for and against, who is basically for this project at least being attempted at this point by raising that cap, and who isn’t too crazy about it?
DILLON: Well, it’s very interesting. Most of the council members I’ve spoken with are really, you know, in a wait and see mode as far as the stadium proposal goes. As far as the cap goes, I mean, there was a hearing on the study earlier this month and it was postponed basically because city council members were concerned about the fact that if you do increase the cap that means, likely, that more money is going to flow into downtown San Diego as opposed to other neighborhoods in San Diego and you have city council members from other districts that don’t represent downtown saying, wait a second, you know, I don’t have any lib – enough libraries in my district, I don’t have enough parks in my district, you do this, you increase the cap, there’s a chance that I’m not going to see any returns from that and my money’s going to go downtown. And so that’s a real concern.
CAVANAUGH: Because the $500 million, if indeed it’s spent on a new stadium, doesn’t go to building new parks and new libraries in other areas of the city and the county.
DILLON: Well, yes, correct. I mean, what it does or what raising the cap would do would allow more tax money to flow into downtown. And the proponents of this say, well, what that means if you have more money flowing into downtown, that creates increased property values that will eventually benefit the entire city and eventually benefit this whole city’s day-to-day operating budget, the one that funds these parks and these libraries. But, you know, that’s an open question. The City does know if the cap expires the amount of money it’s going to get, and so you’re really throwing a huge level of uncertainty into the program if the cap is increased but, you know, that uncertainty is needed if you want to do big projects like building a football stadium.
CAVANAUGH: And let me bring you back to the grand jury report that was released last week. Is there – Since no stadium is going to be – no new stadium is going to be around for quite a few years, if ever, is there any chance that the city could renegotiate this agreement that they have with the Chargers that is turning out to be such a losing proposition for the City?
DILLON: That’s highly unlikely. You know, the Chargers, in addition to the fact that they pay little to no rent every year net to the City, they also have a out-clause where every year at – paying a certain out-fee at I believe next year it’s somewhere around $27 million, they can break the lease that they have with the City which currently runs through 2020 without any threat of a lawsuit and that – And certain NFL thinkers around the league believe that the Chargers have the easiest out-clause of any team in the NFL where they can just simply pick up and move once they pay that $20 million-plus fee.
CAVANAUGH: Interesting. So the next date we have to look forward, June 22nd?
DILLON: That’s correct.
CAVANAUGH: Okay. Thank you so much for talking with us today, Liam. I appreciate it.
DILLON: Thanks for having me. Anytime.
CAVANAUGH: My guest has been, I’m sorry, Liam Dillon, staff writer with voiceofsandiego.org. He’s been following the stadium story and you can see a whole array of his articles at voiceofsandiego.org. We will continue to talk about the new Chargers stadium plus get an update on the Padres with sports talk show host Lee ‘Hacksaw’ Hamilton. That’s as These Days continues right here on KPBS.