Conventions, Football Don’t Mix

An unsolicited stadium proposal by de bartolo + rimanic design studio inspired by the Chargers’ logo. Note the lightning bolt shadows.
  • An unsolicited stadium proposal by de bartolo + rimanic design studio inspired by the Chargers’ logo. Note the lightning bolt shadows.

Southern California has balmy weather and, seemingly, balmy leadership. For one thing, both Los Angeles and San Diego want to expand convention centers in the teeth of a grossly overbuilt market and slumping convention attendance. Both are considering use of a football stadium as convention space, when evidence shows that has limited appeal to convention planners and attendees.

Los Angeles is close to approving the construction of a $1.2 billion retractable-roof stadium that will be used as a convention site in conjunction with the existing center. The San Diego Chargers want a fat subsidy to build a similar stadium that would serve as a convention site. The stadium would be several blocks away from the existing convention center; repeatedly, studies have shown that attendees don’t want to shuffle or even shuttle between distant sites. San Diego downtown leadership prefers to expand the current center — but wants a stadium to be built as well.

Both Los Angeles and San Diego are in desperate financial shape. Promoters claim that the L.A. stadium and center will be paid for with private funds. That remains to be seen. There are no such promises in San Diego. A retractable-roof stadium would require a public subsidy of $700 million to $800 million or more. The convention center expansion will cost $500 million or more.

In Los Angeles, the company financing the project, Anschutz Entertainment Group, is using dubious assumptions. The state Legislative Analyst’s Office notes that the company assumes the stadium would regularly host National Football League playoff games, the Pro Bowl, Super Bowl, Pac-12 championship, National Collegiate Athletic Association basketball tournaments, and the like. The City of Los Angeles and the Legislative Analyst’s Office say such expectations are far too optimistic. Also, Anschutz is assuming that a reconfigured convention center will be extremely successful in attracting new events. But the City doubts that will happen because of intense competition.

Would an expanded convention center pay off for either Los Angeles or San Diego? Charles Chieppo, Harvard researcher writing for Governing.com, a publication for leaders of state and local government, cites figures from the publication Tradeshow Week. In the past 20 years, the national supply of convention exhibit space zoomed by more than 70 percent. But from 2000 to 2010, attendance at conventions and trade and consumer shows decreased from 126 million to 86 million. Ergo: huge supply, dwindling demand. In 2010, Tradeshow Week went out of business. ’Nuf said.

As a result of the overbuilding and attendance decline, “People are offering incentives right and left, as is San Diego,” says Heywood Sanders, professor at the University of Texas at San Antonio and the national authority on convention centers. “It’s really tough with the overbuilding plus the recession and companies cutting back on travel.” Convention centers have no option except to slash prices.

Las Vegas is generally considered the first or second most successful convention destination. “There are lots of new casinos, a regularly expanding center, and — ahem — other visitor amenities,” says Sanders. In 2007, the center had 1.55 million attendees. By last year, that had dropped 25 percent.

Visitors to the convention center in Washington, D.C., accounted for 376,000 room nights in 2008 — the deepest part of the Great Recession. By last year, when the economy was growing, albeit slowly, convention-related room nights were down by more than 100,000.

What about Los Angeles? Its convention center “has been losing business — indeed, hemorrhaging,” says Sanders. In 1998, total room nights resulting from attendance at the convention center were 353,325. By 2002, the number was down to 205,824, and by last year, all the way down to 137,187. These are data compiled by LA Inc., a nonprofit whose mission is to promote Los Angeles tourism, and PKF Consulting, a firm that works for the hospitality industry.

“We are at a competitive disadvantage,” the president of LA Inc. recently told the Los Angeles Times. “We drastically need more hotel rooms downtown.” He said that Anaheim, San Diego, and San Francisco have three to six times as many hotel rooms immediately around their convention centers.

Last year, a two-hotel hybrid was completed in the L.A. convention district. It has 879 JW Marriott and 123 Ritz-Carlton rooms, plus condos. But that’s still not enough. “The argument for years was that ‘we need a hotel.’ It would be the magic missing ingredient that would propel convention business in Los Angeles,” says Sanders. “It’s not at all clear that it has. There is some suspicion that [Anschutz Entertainment Group’s] whole effort to get the stadium built and the convention center expanded is to pump business into that hotel and entertainment complex [L.A. Live, partly financed by Anschutz].”

Sanders notes that centers in Las Vegas, Orlando, Atlanta, and Chicago experienced business declines after completing expansions.

The San Diego Convention Center claims that its activities accounted for 709,298 hotel room nights and $1.27 billion in economic impact last year, but Sanders has always cocked an eyebrow at San Diego’s numbers, believing the center overstates out-of-town visitors by including too many locals from such events as Comic-Con.

With the industry overbuilt and business declining, does San Diego need an expanded convention center? “An expansion is justified locally by the argument that it will inevitably bring more events and more attendees, but it is a gamble — a bet on what will happen in a very indefinite future,” says Sanders. “Other cities are building [convention centers] and expanding. Is San Diego going to be the place that will succeed? That is an open question. The consultants who say it will have told other cities they will succeed, and repeatedly they have not.”

The San Diego power structure, including Mayor Jerry Sanders, does not want the proposed Chargers stadium to serve as a convention center expansion. The consulting firm pushing for expansion of the current center says that a noncontiguous building, unless it is directly across the street, results in two completely different venues. No major corporations or trade and consumer shows would book both venues at the same time. Even San Francisco’s Moscone Center and Moscone West, which are right across the street from each other, confuse some attendees.

And certainly a football field does not make a good convention center addition, says Heywood Sanders. Indianapolis, Atlanta, and St. Louis are the cities trying to use football fields as convention center space, and none has worked well. “The flat floor space is about 150,000 to 180,000 square feet. That’s not very much space,” he says. A company displaying tractors or construction equipment, for example, does not want to be surrounded by a bunch of empty seats.

The stadium touted by the Chargers would be several blocks away from the convention center; thus, it would have two strikes against it immediately.

A football stadium will work for some conventions: “Social, religious, and fraternal groups like to have an open arena for large assemblies — say, 10,000 or 15,000 Baptists. But they do not necessarily constitute the most desirable convention business,” says Sanders. That is to say, they may not utilize the “ahem” amenities.

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The cost you mention [$700 million] is a little off. Its more like $ 800 million with a cost overrun [something that always happens in San Diego] of $ 80 -$ 120 million [plus the environmental impact review of $ 60-$ 100 million and the remediation of the sight at about 5 $ 50-80 million which puts this project well over $ 1,000,000,000,000.00. If you "STEAL" $ 450 million from CCDC there is still a shortfall of $ 650-750 million. One thing you can count on is that neither the Spanos' or the NFL is going to pony up the shortage. Which leaves the city to shop out for another billion in bonds to pay for the stadium. With the city's past problems in the bond market it will be difficult if not impossible for the city to borrow a couple of bucks let alone a billion. The extra $ come in interest which the city would have to pay a premium for if there are any bond companies dumb enough to loan San Diego anything. Just on the finance portion of a new stadium it is dead on arrival. What is interesting is the powers that be {Sanders/UT/Builders & Developers] know this and are willing to risk a total collapse of the city for a pipe dream. If the project ever gets started you can count on a big giant hole with re-bar sticking up all over overgrown with leaves and rust. If you think the city is in a big FINANCIAL HOLE now add this $ billion dollar to the equation watch the whole city burn to the ground.

I don't argue with your figures. I am being conservative stating that taxpayers will pick up the tab for $700 million to $800 million. The cost of moving the bus depot must be added in. There will certainly be cost overruns. Pro sports owners ALWAYS grossly understate the cost projection. You are correct in questioning whether the City could ever sell bonds to pick even part of the tab. Best, Don Bauder

The heart of the boosters' argument, that expansion will inevitably bring more business, relies on projections that make zero sense.

More people will attend ever bigger conventions in the future?

Says who?

On the contrary, most projections are for less corporate travel, more video conferencing. That video over IP infrastructure is being built right now by private companies, and it works better and better every day. In the future, the trend will most likely be toward fewer and smaller conventions.

It's the same with the popularity of football. Today it dominates American professional sports, but there's little reason to think that it will expand itself much more, or find additional revenues. As with all forms of mass entertainment, it loses its luster over time with new and more exciting spectacles coming onto the scene.

One of today's fastest growing and maybe most profitable sport is mixed martial arts. So if San Diego's "leaders" want to actually get some kind of economic benefit from blood sports, we ought to build a cage match arena.

Or, if we really are talking about economic benefit to the city, why should we subsidize only venues featuring young athletic men using their bodies to entertain men drinking beer.

Women deserve equal promotion. So venues where young athletic women use their bodies to entertain men drinking beer are every bit as deserving of subsidies, and FAR more likely to actually turn a profit and result in extra hotel room (ahem) related tax revenues.

It's ridiculous. How about the city getting out of the entertainment business altogether?


Fred Williams

If the City stated that the TOTAL cost of the convention center expansion would come from the transient occupancy tax, with a heavier assessment on hotels near the facility, the whole idea would be dropped in a hurry. You are absolutely right: convention space has grown exponentially around the country and the world while convention attendance has plunged. Centers are slashing prices because of the overbuilding. But the promoters will want to go ahead with the expansion as long as other taxpayers pick up the tab. Best, Don Bauder

Why would anyone want to go to LA for a convention, or Anaheim, for that matter, is beyond me. I attended the music industry's NAMM show in Anaheim and was struck by what a hideous concrete wasteland they have around the Anaheim convention center. There's Disneyland nearby, but that doesn't make up for complete lack of ambiance outside its gates.

I did a non-ticketed visit to Comic Con this year to try to get a feel for what that was all about and I have to say even though I have spent a fair amount of time in downtown SD, it was impressive to do a walk around of the convention center, from bayside to Gaslamp. From the waterfront and weather to the wealth of eateries and the vintage character of the Gaslamp, it is one of heck of a great place when you need a respite from the convention halls (I actually never made into the Comic Con halls, but there is so much going on outside that you can have a great experience without a ticket).

If we have to make a choice, let's take the conventions and give LA the Chargers. For better or worse San Diego has become the Miami Beach of the West Coast and we might as well make it easy for everyone living east of Yuma to come spend money here at least once every year or two.

From what I picked up during my Comic Con walkabout, the inside of the convention center was bursting at the scenes. Perhaps there is a need for some more elbow room there or perhaps the Comic Con folks need to plan more wisely. They've talked about moving to Anaheim, but I think they underestimate how big a role San Diego plays in the overall Comic Con experience. The LA movie and TV production people who now flock to Comic Con have to be motivated in part by the fact they get to expense a stay in San Diego - doubt they'll get that worked up over a drive to Anaheim. I met a lot of Arizonans who make this event their annual vacation: a great event in a great location. If you're a Zonie, you don't want to spend your summer vacation walking around streets of Anaheim (average July high of 84 versus 76 for downtown SD).

This city does have an allure that is just not there for so many of the other convention cities listed in the article, and I think we might be able to justify some type of gamble on more convention space, but it's proven that city wagers on the Chargers don't pay off.

Your message is a thoughtful one, Bob, but I question that there is a need for a convention center expansion now. Slapping down $500 million just to keep Comic-Con is ridiculous. The San Diego public is not aware of the figures, quoted in this article, on the massive overbuilding of convention centers in the U.S. combined with collapsing convention attendance. That's because other local media don't look sufficiently into these numbers. So I think the answer is that there should be no stadium and no convention center expansion until the downtown power brokers make an intelligent case for either or both. And that won't happen. Best, Don Bauder

Building a stadium downtown will not make more convention space if we tear down our present Stadium, which could do all the proposed events. The current Stadium hosts many events in it's parking lot that couldn't be held downtown.

I would guess that a conventioneer would prefer a fifteen minute bus ride to scenic Mission Valley, to a ten block walk through the homeless displaced by downtown development, unless the super hero costume has gone to their head.

Forget the idea of putting up a retractable-roof stadium to be used as convention center space. It's ridiculous. Best, Don Bauder

Just look at what happened with Petco Park. Hundreds of millions of dollars were completely wasted through years of legal struggle. Just for a stadium that you can't park at. I would rather go to an event at Qualcomm.

Don't forget--it's all about money extraction. If you keep your eye on that ball, the economics analysis is simply irrelevant; it's just a matter of how much smoke you blow and how you adjust the mirrors.

Of course it's about money extraction -- from the taxpayers. The economic analysis is irrelevant if those who stand to make the money don't have to put a significant amount in the pot. Best, Don Bauder

Today's (Sunday, September 18) Light News features a story about a mayoral debate held under the auspices of Voice of San Diego. The headline in the rag states "Pensions, Stadium Top 1st Mayoral Debate." If this world were a rational place, there would be no mention of a stadium in such a forum. (Note that DeMaio and Bahnee D were not there; each had an excuse for declining to attend. That kept the likely two biggest vote-getters away.) A stadium is out of the question. The real issues should be those associated with the unsustainable path of the city. It has a huge pension deficit, yet continues to promise new hires the same ultra-sweet deal that got them in this fix. The infrastructure is crumbling, or non-existent. Two sewage pumping plants have no backup power generation source, hence when there is a massive power blackout, both dump raw sewage into the waterways and then the ocean. Streets continue to crumble, the parks are often little better than recreational slums, and there's no prospect in the foreseeable future getting them brought back to an acceptable level. So, why talk of a stadium? Well, one reason it to divert attention from the impotence of the pols to really fix the things that are wrong. The more time spent arguing about the pros-cons of a new sports venue and such things as having a retractable roof or not, the less attention is paid to the real and intractable needs of the city.

I agree with Don about the declining interest in attending conventions, and I doubt that it is a short-term economic trend. Society in general is just not likely to ever redevelop that much desire to travel long distances by air to spend too much money in a host city that picks its pocket.

Financially, both a new stadium and convention center expansion would be off the table in a rational world. But you have to understand that the downtown power brokers don't give a damn about the rotting infrastructure, the decaying neighborhoods, the unlivable living conditions in some neighborhoods, the crumbling streets and roads, the non-functioning sewer and water systems, the closing of libraries. They only care about legacy projects that will line their own and their clients' pockets. Best, Don Bauder

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