After the Failed Stadium Vote, What Now for the Chargers?
Business of Football

After the Failed Stadium Vote, What Now for the Chargers?

The initiative to fund a new football venue in San Diego was soundly defeated. Now the Chargers’ options are: Move to L.A., consider somewhere else, or try to somehow stay and make it work. None are appetizing

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The ripples from the NFL’s long-awaited return Los Angeles continue. The latest swell comes from Tuesday night’s vote in San Diego on Measure C, a tax initiative to fill the funding gap necessary to build a sparkling “Convadium,” a combined convention center and stadium (with a retractable roof) for the Chargers

As expected, Measure C did not come close to the two-thirds threshold to pass, falling in at about 43%. Once again the future viability of the Chargers in San Diego remains uncertain.

However, as I have said with the Raiders, let’s hold the phone on the moving vans; it’s still too early to say the Chargers are going to be leaving their longstanding home.

Before assessing their options, let’s review.

The Loyalist

Of the three teams and ownership families that applied for relocation to L.A. last year, the Chargers and owner Dean Spanos have been most loyal to their home market. Rams owner Stan Kroenke was intent on getting to Los Angeles no matter the obstacles, resisting local city and state officials’ diligent efforts to finance a new stadium in St. Louis. And we continue to watch Raiders owner Mark Davis go all-in on Las Vegas, after some flirtations with San Antonio, in trying to extricate his team from Oakland.

Compared to those two teams, the Chargers—playing in a clearly deficient stadium—have appeared to be downright devoted to their home market. Loyalty, however, only goes so far, as Dean Spanos learned in the L.A. relocation saga: He was left at the altar after watching dozens of his “partners” shift their loyalty to Kroenke.

While Davis cast a restive eye elsewhere, Spanos returned once again to San Diego city officials, now with an additional $100 million in his negotiating toolbox, the NFL’s consolation prize to him to use toward a stadium financing deal in San Diego.

After months of negotiations, a deal was crafted with the good news (financing would come from outsiders in the form of hotel taxes) and bad news (the mountainous 66.7% vote threshold that California requires for public tax hikes).

As I noted last week, my experience told me how hard it was to even get 50% in Packers-crazy Green Bay; getting 66.7% in San Diego, even if paid by outsiders, was a colossal “ask.” And, alas, it did not come close.

Chargers’ Options

The fact that only 43% of voters said Yes to Measure C indicates a populace that resistant to any form of public financing to subsidize the Chargers This, however, is not surprising in an era of limited public resources and so many other needs. The question, of course, is how Spanos—a true loyalist to his city compared to Kroenke and Davis—responds to this “referendum on the referendum.”

While there are options, none are truly good. Let’s examine.

Stay in San Diego

Spanos, who reportedly spent $10 million on Measure C, can certainly continue to try in San Diego, hopefully with a lower voting threshold, at a later time. There is an unrelated matter before the California Supreme Court that could eventually lower the threshold for tax hikes on citizens’ initiatives (like this one) to 50%. While a favorable result here would certainly be beneficial—the Chargers have submitted a brief to the court in support of the change—the time lag would be significant. Courts do not move at the pace that NFL owners and fans desire. And even if a change were made retroactively, there would then be appeals (and lawyers). This could take years.

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Qualcomm Stadium: Is an upgrade the Chargers’ best hope?

Of course, Spanos can continue to try to figure out another solution with the NFL and San Diego to finance a new stadium without seeking public money. However, we are several years into talks between the team and the city that have at times been contentious, and there is little reason to be optimistic on this front.

The option that may be most realistic but least satisfying would be the negotiation of a new lease to stay at the deficient Qualcomm Stadium, with as many improvements/upgrades as possible. This would be a band-aid approach, but in the financing climate we are in it is perhaps the most doable.

Move North

The team has the continuing option—through January 15, 2017—of joining the Rams in Los Angeles in the Shangri-La that Kroenke is developing. Up to this point Spanos has resisted that notion, preferring to focus on San Diego. Now we will see.

There are pros and cons to his moving the team 75 miles to the north.

On the plus side, NFL ownership already negotiated terms between the Rams and Chargers when the decision on the Rams was made last January, terms that are more favorable to the Chargers than if Spanos were left to negotiate directly with Kroenke.

In addition, there would be ancillary revenue opportunities—marketing and sponsorship deals, suite sales, entertainment synergies, etc.—from being in L.A that are not currently available in San Diego.

And, of course, the Chargers’ franchise value would rise dramatically with a move to the nation’s second largest market, eventually far eclipsing the $550 million relocation fee that the NFL will require for the move.

Besides loyalty to San Diego, however, there are reasons why the Chargers have still not embraced the L.A. option green-lighted by the NFL almost a year ago.

Despite a (relatively) fair deal to join the Rams, the relationship between Kroenke and Spanos is not strong, and bitterness still lingers from what happened in January. At the NFL relocation meetings, Spanos (and Davis) would stake out one side of the lobby and Kroenke would set up camp at another side, both casting sideways glances at each other while lobbying owners for support. Spanos and Kroenke certainly did not want to be partners a year ago or six months ago; it is hard to see them being partners now.

Spanos also may believe his team would clearly be the ugly stepsister to the Rams, who are already playing in the L.A. market while Kroenke develops the stadium and entertainment complex around it.

And even though the $550 million relocation fee—paid over 10 years—would eventually be offset by the rise in franchise value, that sum is more formidable for the Spanos family than for Kroenke and his $12 billion net worth.

Theoretically, an additional option could be a move to another stadium in Los Angeles, perhaps the Carson project that Spanos (and Davis) lobbied for last year. However, my sense is that ship sailed in January; even the support of Disney CEO Robert Iger could not sway NFL owners to support that location.

As for Kroenke and the Rams, they will say all the right things, but they would obviously prefer having the keys to the massive L.A. market to themselves.

As for the NFL, although it did force Kroenke and Spanos together to make a potential deal, the official stance is that it prefers teams to stay where they are (as St. Louis fans snicker).

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Dean Spanos’ loyalty to the town will be tested now.

A final note here on the January 15 deadline. In theory the right to move to Los Angeles defaults to the Raiders at that time. However, Spanos has announced that no decision will be made until after the season, which, assuming the Chargers are out of the playoffs, is the first week of January. That would not allow much time.

While the option to move to L.A. technically reverts to the Raiders at that point, perhaps, with the Raiders all in on a move to Las Vegas, there could be mutual agreement—between the NFL, Spanos and perhaps even Davis—to extend the deadline. This would give the Chargers one last-ditch attempt to see if they can work things out in their home market.

Look Elsewhere

Like Mark Davis, Spanos can always start flirting with other markets, whether to realistically negotiate or simply to leverage San Diego into coughing up more funding. That seems unlikely for a few reasons: (1) Spanos has never shown an inclination to do so; (2) it is unclear what markets would be fawning over the Chargers. San Antonio? Toronto? Oakland? I don’t see it. (3) San Diego is not going to panic if Spanos looks elsewhere.

Simply, there are no great options here.

And whatever they are, the Chargers will be playing in the substandard Qualcomm stadium for the foreseeable future.

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Fan support at the Chargers’ home game on Sunday didn’t translate at the ballot box.

As I know from my time in Green Bay before the Lambeau Field renovation, stadium economics is an important driver in team revenues; the teams without new or renovated facilities will eventually be unable to compete in league-revenue rankings without that important source. New and improved stadiums provided necessary revenue streams in the big business of the NFL.

So the aftershocks of the Rams’ victory in last year’s renovation race continue to reverberate. The Rams are now playing in the Coliseum anticipating arrival in their shiny new home in 2019. The Raiders have lobbied for and achieved a stadium funding deal in Las Vegas, ignoring city officials in Oakland, and may well apply to the NFL for relocation for the second time in two years. And the Chargers, alas, continue to try to make it work in San Diego, although the clock may be running out.

Brandt’s Rant

Like many of you, I watched Tuesday’s election results wondering, “How is this happening?” The answer was in front of us all along.

Donald Trump tapped into a palpable anger and feeling of neglect from far more people than we knew. Throughout every outrageous comment over the past 16 months, he remained not only still standing but also thriving. Now that he will become president, let’s hope that Trump can become “more presidential”: less combative and inflammatory, and more respectful and guarded.

Spinning this to most powerful person in the NFL, Roger Goodell has the opposite problem: He is perceived as being too presidential, never showing vulnerability, always guarded and unrevealing.

And does have a softer side: I saw him show compassion for a couple of our troubled players when I was with the Packers, even arranging a quiet visit with one of them. Perhaps we do not see a more human side of Goodell because NFL owners and sponsors do not want us to. Indeed, over the years it appears that Goodell has become less, not more, revealing in his public persona.

So here is a wish for the leader of the country and the leader of the NFL: that Donald Trump can become more “presidential” and Roger Goodell can become less “presidential.”

Question or comment? Email us at talkback@themmqb.com.