Chargers release so-called financing plan

"This amounts to zero benefit to the people of San Diego."

Our most precious resource?
  • Our most precious resource?

The Chargers said they would release financial plans today (March 30) for their proposed downtown "convadium" — a combined football stadium and convention center. But the team's statement is a joke. So many details are missing, and so many assumptions are absurd, that there is no way to judge what the convadium will cost. So why bother with financing plans?

The Chargers seem to be counting on sales of personal seat licenses, even though they have denied their applicability in San Diego for at least five years. Luxury skyboxes, also unworkable to any significant degree, are still in the picture.

The team doesn't know whether the stadium will be on top of the convention center or next to it. The former would be very expensive, the Chargers allow, but there are no specifics.

Critical transportation questions are not addressed, despite widespread concern over traffic jams and parking. The team won't say how much time and money it will take to move the downtown bus terminal.

The money would come from boosting the hotel tax to 16.5 percent — one of the highest in the nation. How much will the higher tax reduce convention-center usage? Are the current recipients of the hotel tax, such as arts and culture groups, protected?

The convadium would be owned and operated by the city, but the Chargers will get credit for naming rights, which could easily exceed $175 million. This is preposterous, although, sadly, conventional in billionaire stadium scams these days.

Bruce Henderson

Bruce Henderson

"To what extent have the Chargers identified any benefits to the people of San Diego?" says former San Diego councilmember Bruce Henderson, a transactional lawyer. "It doesn't say the Chargers will sign a lease; there is not a commitment by the Chargers to do anything, even build the stadium. This has zero substance. This amounts to zero benefit to the people of San Diego and considerable potential benefit to the Chargers."

Henderson wonders how the Chargers, who are effectively paying no rent at Qualcomm now, can finance $15 milion a year in rent at a new stadium.

Ray Ellis

Ray Ellis

Other naysayers to the plan include city-council candidate Ray Ellis, who said in a statement, “We must put the priorities of our 1.4 million residents ahead of the interests of billionaires seeking taxpayer subsidies.”

April Boling

April Boling

San Diego County Taxpayers Association boardmember April Boling also issued a statement that reads in part, “The Chargers plan would raise taxes for a billionaire NFL owner to pay for a football stadium that would generate tens of millions dollars more a year in profits for the owner, yet the owner has little to no skin in the game.”

The Chargers intend to give more details tomorrow (March 31) in a legal notice in the Union-Tribune.

(updated 3/30, 10:20 a.m.)

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A recent advocacy piece by Kevin Acee (UT) is a good example of the tricks used to attempt to mislead voters about the true costs to citizens and true benefits to the Chargers.

http://www.sandiegouniontribune.com/news/2016/mar/29/chargers-stadium-plan-acee/

These tricks have been mentioned before in many excellent columns by Don, and by many posts. But I'll repeat I see 2 major tricks which use horrendously flawed and misleading logic.

  1. TOT taxes are just money from tourists. They don't affect San Diegans in any way.

  2. Most of the $1.15B in tax revenue is being spent on a convention center expansion. Only $350M will be spent on the Chargers' stadium.

  3. The Chargers are offering a good deal because most NFL stadiums get more taxpayer revenue than the Chargers stadium (assuming you don't count any of the land acquisition or convention center costs).

Of course, in reality both these arguments are deeply flawed.

  1. Higher TOT taxes will mean less revenue for hotels - either they lower rates and/or have lower occupancy (results: possible bankruptcies, layoffs, lower salaries). Also, there are other things that increased TOT revenue could be used for which would be far more appropriate uses of tax money.

  2. It's clearly not worth $800M for a non-contiguous convention center expansion. In 2013 a $520M contiguous expansion was proposed. It's debatable whether the $520M for a contiguous expansion would be a good deal for the city but it's certainly a heck of a lot better deal than $800M for a non-contiguous expansion. So more money is allocated for a less valuable convention center expansion. This would be like going to a car dealer and telling them you will pay 50K for a BMW 530 then having the dealer offer you a Toyota Camry for 80K. (Not to bash Toyota - I'm quite happy with my Camry).

  3. A "good deal" is only in perspective to the really, really bad deals other cities have received. This would be like a mob boss telling store owners that paying him 1% revenue as "protection money" is a good deal because other mob bosses charge 2%.

ImJustABill: This will not be a convention center expansion. It would be five or six blocks from the existing convention center. It would be a completely new convention center. One event could not be going on simultaneously in both centers.

Those who want to expand the current center say this would be a way to keep Comic-Con. But Comic-Con has come out with a statement saying it wants a contiguous expansion. So San Diego would be kissing Comic-Con goodbye. Smart?

Downtown boosters will no doubt come out and say Comic-Con has changed its mind and now wants to operate in two centers. Don't believe a word of it. Best, Don Bauder

The Chargers will release as few details as possible--but the details I am sure can be found. Deep in the text of the initiative. Just as the Chargers desire. Screw Spanos.

aardvark: Yes, telling details will be buried in turgid prose. Best, Don Bauder

do they plan to delay a public vote on this until the voters lose interest or get totally confused with all the plan ( proposals ) changes ?

Murphyjunk: Good question. John Moores is supposed to be planning a soccer stadium in Mission Valley. No doubt taxpayers will pick up most of the tab. If Qualcomm is torn down, what will be the Chargers' Plan B if San Diegans won't vote for the billionaire stadium subsidy? Best, Don Bauder

No wonder San Diego earned the moniker, Enron by the Sea.

Let's see we owe millions on the bonds for the 1997 Q's expansion orchestrated by Mayor Golding and Alex Spanos. Now the Spanos family wants San Diegans to be on the hook for hundreds of millions more. If we vote for this new boondoggle we deserve the pott-hole filled streets, the aging water systems, the sewer spills in our neighborhoods and ever reducing city services.

We already know non contiguous convention space doesn't work. Heck, the city already owns two convention centers which are losing money each year and have huge backlogs of deferred maintenance. But it's government why not own three, all losing money, all competing against each other.

JustWondering: Yes, non-contiguous convention centers don't work. There is plenty of evidence of this. Will San Diego decision makers read Heywood Sanders's book, "Convention Center Follies"? I doubt it. Best, Don Bauder

David Elgier - still trying to find bio of your previous works. Q - You know what it means when there's a sock on the doorknob? A - Somebody's getting F'd!

shirleyberan: And there is a sock on this doorknob. Best, Don Bauder

Hosting big sports events is a big boon to the economy. Look at how great Brazil's economy is doing after hosting a World Cup and going into the 2016 Olympics!!!

Or maybe not so great..

ImJustABill: You can find similar examples of cities that hosted Olympics and lost their collective shirts. Best, Don Bauder

Keep an eye on the Mission Valley land, the value there is comparable to the Con-Stadium price. If they can play it like they're selling to SDSU, people might approve the sale. A downtown stadium will end tailgating, and the Con-Stadium might well be inferior to our present Stadium in many ways.

Psycholizard: Of course the convadium will be inferior to Qualcomm. Convenience is only one of the ways. Qualcomm might need a bit of a facelift, but that is much less expensive than a new stadium on top of (maybe) or next to (probably) a second convention center. Best, Don Bauder

Good point Psycholizard. The new homes being built in Mission Valley have no parking or private yards. The land scheming never ends. They will chage our landscape and alter our lifestyle. No tailgate party? That's just unAmerican. We'll have to eat at an expensive downtown restaurant and uber there and back. Oh hell no. Hopefully will need 2/3 vote and turnabout this twisted plot.

shirleyberan: Yes, development has run amok in San Diego, and Mission Valley is one of the worst examples. Best, Don Bauder

One thing I heard today (AM 1360) is that the annual maintenence (15M) will come from TOT taxes not the Chargers.

So if that's true then the Chargers' out of pocket contribution to this stadium will be

650M - 100M (NFL grant) - 200M (NFL loan) - PSL revenue - naming revenue

which totals to the Chargers paying pretty close to ZERO.

ImJustABill: If personal seat licenses and luxury suites were workable, the Spanos family would be paying very little, as long as they get credit for the naming rights and ad rights money. (Giving the team credit for naming and ad rights when the City owns the stadium is outrageous.) Best, Don Bauder

Heather Paetow

The pros and cons are pretty simple.

The pro of the initiative is if it passes the Chargers stay in San Diego. In theory for 30 years at least (but there are likely loopholes which could allow them to leave earlier). There may be some small economic benefits to others outside of the Charger organization but these benefits are insignificant (see papers by Roger Noll or other articles on fieldofschemes.com). The only significant benefit to passing the initiative is that the Chargers stay in San Diego.

The con is that it costs San Diego taxpayers $1.15B. And it would perpetuate the notion that subsidizing wealthy business owners at the expense of the general public is acceptable public policy. Who knows where that precedent will eventually lead to?

So basically if you think keeping the Chargers is so important that it's worth $1.15B of public money then you should vote yes on the intiative.

The pros and cons are pretty simple. Is keeping the Chargers worth $1.15B of public money?

ImJustABill: Unfortunately, the precedent of subsidizing billionaires' sports palaces has already been established -- in San Diego and elsewhere. Best, Don Bauder

The Chargers have a history of finding reasons to tear up leases, they have never stayed to the end of the lease. We could have StadiumCon, a wart in Mission Valley, and no Chargers.

Psycholizard: "StadiumCon" would be a great name for a subsidized stadium. Best, Don Bauder

Thank-You Joseph Monroe, Explains A Lot.

shirleyberan: Joseph is a savvy observer. Best, Don Bauder

David Elgier,

I think you should put the following verbatim into the traffic / parking impact analysis in the EIR for the stadium.

" I encourage you to whip out your smart phone and download an application called Uber. That should end any concerns you have about parking."

I'm sure that would go over well with the EIR review committee.

ImJustABill: Neither self-driving cars or Uber will likely solve the parking problem. One factor will help: almost all the games are on Sundays. Best, Don Bauder

So many holes in this proposal and so little time! First, In Good Faith, you can start by writing it in plain English in 10-15 pages maximum. Most professional proposals for big ticket financing can be succinctly summed up fast and to the point. If they cannot do that, then those proposals usually hit the trash compactor fast in the private sector. I don't care if you are talking to GS, or anyone else. Imagine if you presented this pile of cow dung to any major private sector financier and wanted them to fork over 1.1B for this deal?! Just what do you think they would do with it?! Don't insult my intelligence with 100 pages chocked full of BS legalese. I didn't just fall off the the turnip truck!!! You are throwing up major red flags when you do that. You are definitely hiding a lot of things if that is the garbage you are sending to my office, putting on my desk or clogging my fax or email.

And, just to show me that you are serious about this deal and not just "blowing smoke you know where"
Where is your "Skin in the Game"?! Don't insult my intelligence by saying you will use "Naming Rights" (and other outside money from future revenue streams that do not exist now and are speculative at best like Advertising, Corporate Boxes, PSL's). If the City is expected to own your proposed facility, then the "Naming Rights" should be owned by, controlled by and credited as the City's contribution to your football stadium plan.

I could go on, but you get the idea. Rework this proposal so that it is palatable, readable, workable in a business sense, or don't clutter my desk, office, inbox with this garbage.... Any Decision maker worth his or her salt would have you escorted to the Curb by building security.

Signed,

Experienced And Knowledgeable DealMaker Bouncing Back this Weak Proposal For Much Needed Revision, Review and Reworking..

SportsFan0000: But they don't want the voters to understand the proposal, because taxpayers are getting such a screwing and the Spanos family is getting so much and putting in so little. Remember the adage: "Contrived complexity is the essence of white collar crime." Best, Don Bauder

David Elgier: What is so progressive about a subsidized stadium for a billionaire? Best, Don Bauder

Robert Reeser: Let him relieve himself wherever he likes. Best, Don Bauder

Doug Olive: How about Ubers in driveless cars? Best, Don Bauder

David Elgier: Financial plans should take parking into account, obviously. The whole project falls apart without adequate parking. Best, Don Bauder

Stephen Merrill: The Chargers were eyeing L.A. in the late 1990s when they were promising to stay in San Diego until 2020. Best, Don Bauder

David Elgier: Read what Alex Spanos said in the late 1990s, and Fabiani said when he was hired in 2002. Best, Don Bauder

Stephen Merrill: Alex Spanos demanded a new stadium when the paint was still wet at the rehabbed Qualcomm. Best, Don Bauder

David Elgier: If the Chargers are on the hook for $350 million, that sum should be tripled or quadrupled. If they want to build a stadium, let them do so with their own money. Best, Don Bauder

Joseph Monroe: Yes, we need more information on Elgier. Best, Don Bauder

David Elgier: Save you, no. Arrest you, maybe. Best, Don Bauder

Joseph Monroe: It seems to me he should register, but maybe he has a reason for not doing so. Best, Don Buder

Heather Paetrow: Somebody who loves or hates football is not likely to be objective. I enjoy watching football on TV but dislike corporate welfare. Best, Don Bauder

Joseph Monroe: In most cases, corporate welfare is a scam. But to the extent that legitimate functions of government -- infrastructure, police, fire protection, libraries, etc. -- benefit business, that could be corporate welfare that is necessary. Best, Don Bauder

David Elgier: Next time you talk with Goldman Sachs, ask why they had to be bailed out by the government in the Great Recession. Best, Don Bauder

Heather Paetow: Diatribes can be informative, as long as you understand where the writer is coming from. Best, Don Bauder

Rich Gibson: Yes, San Diego needs fundamental fixes -- particularly in infrastructure. Best, Don Bauder

Jim White: Providing water is a fundamental obligation of government. Subsidizing billionaire sports team owners is not. Best, Don Bauder

Chuck Waterman: Back in the mid-1990s, Bruce Henderson read the city's contract with the Chargers and said it was an avenue out of town. He went on to predict what would happen -- the Chargers, thanks to the sloppily-written contract (by the city) would go on to attempt to get out of town. He was exactly right. Do you know anybody else who was? (Maybe me, but only because as a columnist for the U-T I was consulting Henderson on the matter.) Best, Don Bauder

Being completely right about everything he said is no excuse for saying bad things about the Chargers. Bruce Henderson is still the devil. That's the way stadium subsidy advocates will see it anyway.

ImJustABill: That's the way it goes for a prophet. Bruce predicted what would happen and he was hated. When he turned out to be exactly right he was hated even more. Best, Don Bauder

Don, Then blame should be placed at the feet of the City's inept Contracts office, not at the Spanoses.

CW2016: Bruce won't disagree with such a statement. He notes that the government negotiators are inept and the teams hire the best law firms. In the ballpark scam, the city did hire some outside experts. Moores and Lucchino then rushed in and said they couldn't work with them. The experts were fired and the Padres took the city's pants down. Best, Don Bauder

Joseph Monroe: More than "reaching." It is "fantasizing" or just plan "b.s.ing." Best, Don Bauder

Chuck Waterman: Until the last couple of years, when San Diegans would not buy Chargers tickets, very few outtatown fans came to watch their teams play in San Diego. In the last couple of seasons, a lot of fans came from New England and Pittsburgh -- again, because San Diegans did not want to go. I can't blame them. Oakland Raider fans do come to San Diego, and fill up the jails for a day or two. Best, Don Bauder

ImJustABill: It can be found several places. It will generate some belly laughs, because all can see that it's give and take: the city gives and the Chargers take. Best, Don Bauder

One item that never comes up on building sports palaces for the rich is that because the property is still owned by the city there is no property tax on the facility. A $1 Billion stadium if owned privately would generate about $10 million in taxes steadily increasing each year.

Dennis: Good point. Economists have taken note of that. Estimates of what a subsidized billionaire's stadium will cost are always far short because they don't take account of lost tax revenue. Best, Don Bauder

But Don, We're going to have super bowls every 5 years and they each bring in 500M economic impact!

(well, maybe more realistic numbers are 50M-100M net economic impact for a super bowl every 10-15 years. But who cares about realism - realism is for NAYSAYERS!)

ImJustABill: A Super Bowl every 20 years if San Diego is lucky. Remember, most teams have built new stadiums or rebuilt older ones. The economic impact of a Super Bowl is anywhere from a loss to again of $30 million. The NFL's strategy of dangling future Super Bowls in front of cities considering a new stadium is, plain and simple, a scam. Best, Don Bauder

Read that with all the money spent on Services for a Super Bowl: marketing, promotions. police, fire, infrastructure services etc..that the city is lucky if it makes any cash on the Super Bowl...Hoteliers make some cash...City and County not so much...

Joseph Monroe: Excellent points. Anything taking that many pages is following a maxim that I use often: "The essence of white collar crime is contrived complexity." Both this convadium farce and the Briggs initiative are long and recondite for one reason alone: a huge pile is a good place to hide a rip-off. Best, Don Bauder

Exactly. The simple question which should be placed before voters is

"Do you want to San Diego taxpayers to pay 1.15B - most of which will go to the Spanos family - to attempt to keep the Chargers in San Diego for the next 30 years? "

I'd have no problem with that initiative being placed on the ballot. I wouldn't vote for it but it would be an honest proposal and we live in a democracy so if a 2/3 majority of voters approved such a measure I'd be OK with that.

ImJustABill: But what if there were evidence that the election had been rigged? Best, Don Bauder

Well certainly if the election were rigged people should go to jail.

ImJustABill: They won't. Corporate welfarists, part of the establishment, have permanent Get Out of Jail Free cards. Best, Don Bauder

What is the Attorney pushing the Convadium getting out of all this?! Must be some big bucks hidden somewhere for that guy...who has made a lot of $$$$ blocking some of these corporate welfare deals. Now, he has switched sides! Sounds like that movie "The Sting" with Robert Redford and Paul Newman..

SportsFan0000: Attorneys are always behind corporate welfare scams. And attorneys ALWAYS get a big chunk of the money tossed around. Best, Don Bauder

David Elgier:

I like the Grand Canyon, craft beer, and football too. I don't think people should criticize you for any of those things.

There's enough to criticize in your misleading statements about the stadium proposal, foremost of which is the widely repeated deception that San Diego residents shouldn't care how much TOT's are and how TOT revenue is spent.

ImJustABill: Anybody who uses the argument that spending TOT tax revenues on a convadium doesn't cost the city anything because it comes from tourists is either dumb as a stump or crooked as a dog's hind leg.

If money from the TOT tax goes into a stadium, then it is NOT used for conventional, legitimate functions of government: infrastructure, police, fire protection, libraries, roads, streets, sewers, etc. The city will have to go to another source for money for these necessities. Or the city will continue doing what it has been doing: ignoring the infrastructure, police, fire, etc. Best, Don Bauder

Don brought up a great about about the 200M G- 4 contribution from the NFL. It has generally been reported that this is a loan from the NFL. But it's a lot more complicated than that. I don't have the expertise nor time to figure out exactly how to characterize the 200M from the NFL. It seems to be a loan but the team can repay a lot of the loan using money that they would have had to pay to the NFL anyway. So it's sort of a complicated grant / loan. I think.

Here's a couple of links - I'm sure Don ran across these at some point. If Don or someone else can figure out what the G-4 program really does that would be very interesting.

http://media.signonsandiego.com/news/documents/2011/12/14/NFL_on_its_new_stadium_loan_program.pdf

http://www.fieldofschemes.com/news/archives/2011/12/4761_nfl_establishes.html

This story helps a little to understand the G-4 loan program. The NFL will adjust the amount of the loan based on how well the franchise gets the public to commit funding.

http://newballpark.org/2013/10/17/the-limits-of-the-nfls-g-4-stadium-loan-program/

and http://newballpark.org/2012/02/02/49ers-get-200-million-g-4-loan/

Thanks for the references. I still don't understand the repayment terms for the teams to repay the loans. Like there's something called "incremental VTS" that the team is allowed to use to pay back. But then the NFLPA is fighting the NFL over the VTS so who knows what will come of that?

ImJustABill: I haven't figured out the terms of those G-4 loans. I haven't done enough homework on the topic. Are they grants or loans? Supposedly, that depends on the terms. Best. Don Bauder

Now that the L.A. relocation threat has outlived its usefulness, I'm guessing the threat of relocating a team to London will be used in future stadium blackmail schemes.

The LA threat is still active - there's still room for one more team to board with Uncle Stan (who will SUPPOSEDLY give great terms to a tenant).

London threat is definitely active, St. Louis, San Antonio threats are active.

Beijing threat next?

ImJustABill: If Kroenke had given Spanos terms that he could afford, the Chargers would have announced their departure months ago. The very notion that Spanos gave up a chance to boost the team's value by $1 billion to $2 billion because he suddenly decided he loved San Diego so much that he couldn't leave, is utterly preposterous. I am shocked that anybody believes that.

Spanos was never offered a deal in which he would prosper as a Kroenke tenant. He had nowhere to go but back to San Diego, to beg forgiveness and beg for a stadium, which is what he is now doing. If San Diego falls for this ruse, it will be the laughingstock of the nation. Best, Don Bauder

People believe because they want to believe. Chargers stay in town, no San Diego taxpayer money.

ImJustABill: San Diego has to negotiate a new contract with the Chargers in 2020. What do you bet that it will be another rip-off for the Chargers? Their rent will be low, they will put little or nothing in the rehabilitation of Qualcomm, they will go on raking in big bucks from playing at Qualcomm with slight expenses.

In fact, if you look at what the Chargers claim they will play in the convadium deal, you have to wonder if they can add 2 plus 2. In the convadium scheme, they are paying $15 million a year, while they are paying effectively nothing now. That's just one reason that many suspect this is just a disguised real estate deal and has little to do with a football stadium. The Chargers profits will go down, not up, with the convadium, but, of course, the terms will be altered so that they will rake in plenty. Best, Don Bauder

I would have to assume that NFL teams are able to charge a lot more per seat at a new stadium than an older stadium. Otherwise the NFL wouldn't push so hard for new stadiums for every team.

It will give new meaning to the term "Scam Diego".

Ponzi: Oh, there are several relocation sites that can be used to scare the local population: St. Louis, San Antonio, Portland, London, Mexico City, etc.

Spanos is trying to use L.A. as a scarecrow. But he can't afford L.A. now. Possibly terms -- unaffordable ones -- could be cooked up if San Diego demanded to see the possible terms on which the team would go to L.A. Best, Don Bauder

back with hat in his hand ( but held behind his back) this time

Murphyjunk: The Chargers' attempt to get to L.A. was a model of disingenuousness -- dishonesty on steroids. The attempt to mislead San Diegans into financing a new stadium is even worse -- a complete insult to the community. Best, Don Bauder

Don: If/when this convadium nonsense loses at the polls, I look for Spanos to sell the Chargers in short order.

aardvark: I think it is possible the Chargers will be sold long before any stadium scam even goes to the polls. If Kroenke can find a multi-billionaire with whom he is compatible, the Chargers might be sold at any time to a superrich nabob with money burning holes in his or her pockets. Then the team would be moved to Inglewood quickly. Best, Don Bauder

I doubt it. The kids and grandkids look at the team and revenue steams as their gravy train... Not sure if any of them has ever really worked for a living outside the family business.

You may just be correct. The Spanos clan will keep the franchise for as long as they can--to the detriment of any remaining fans of the franchise.

SportsFan0000: Good point, Alex's wife might be opposed for sentimental reasons, too. But a couple of billion dollars could go a long way in soothing such pains. Best, Don Bauder

well the con part of convadium is accurate

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