Stadium quest:

Qualcomm bleeds red on City books

Qualcomm Stadium sits lonely in a vast plane of asphalt, empty, solitary and losing money in vast quantities every minute. At the center of the field, where green turf normally grows, there's a vast pile of dirt waiting to be shaped for the motocross event that takes place in Qualcomm every year. Toss in 10 Chargers games, six San Diego State University Aztecs games, the Holiday Bowl, a day of high-school football, two weekend-long Jehovah's Witnesses events and you've got pretty much the full roster of events held on the field at Qualcomm. For those of you counting, that's 28 days of use a year. Or, to put it another way, that's 343 days of squat, forlorn stadium.

Perhaps that's why the place doesn't make any money.

“According to our studies, the only taxpayer-funded stadium that makes money is the Meadowlands in New Jersey,” said Erik Stover, the city-employed manager of Qualcomm.

Stover went further. Not only is Qualcomm losing money annually, each individual Chargers game hurts, rather than helps, the bottom line. To be clear: The stadium would make more money if the Chargers weren't in it. How bad does a deal have to be for it to make more money sitting empty an extra 10 days a year?

Pretty bad.

Here are a couple of problems: The Chargers have the right to collect parking fees during games, even though the city maintains the lot. They collect fees for stadium advertising signs, even though the city maintains them. The Chargers sell the luxury boxes, which are on an annual contract, but they don't have any incentive to sell those seats for non-Chargers games.

Plus, the opportunity cost of having a deadweight stadium is very high. San Diego City Council President Scott Peters said he'd love to see a park on that site. Mayor Jerry Sanders' chief of land-use policy, Jim Waring, said he could imagine a park, plus some grade-A office space, and shopping. All of that would bring money in, rather than sending it out.

The Chargers' main man

Mark Fabiani may be the Chargers' most important hire since they drafted LaDanian Tomlinson. As the public face for the team and apparent adviser-in-chief in the stadium negotiations, Fabiani has been tireless in interacting with the public and with government officials. He shows up in a conservative suit and tie, his appearance tidy and well-manicured without coming off as excessively slick.

With the exception of Mike Aguirre, he treats his opponents with respect. He stays behind at every public meeting to talk to the public, and he hands out his business card liberally. He never ignores calls from the press. But most of all, he has a way of speaking, making frequent use of numbers and argument that makes everything sound logical and reasonable, even obvious, like you should have thought of it yourself.

If you ever feel like you've drunk the Chargers' Kool-aid, Fabiani probably poured the cup.

Chargers Screwed City
And everyone knew it!

Not only did the Chargers get the better of the city with its lopsided lease in 1995-everyone from city leaders to team officials knew San Diego had been swindled.

Let's go back in time a bit, shall we? The stadium was built in 1967 with a $27 million bond, approved by initiative and pushed by sportswriter Jack Murphy. Stadium design at the time tried to maximize use by having football and baseball teams share a home. Candlestick Park in San Francisco held the 49ers and the baseball Giants, and Yankee Stadium held the Yankees and the football Giants. San Diego Stadium, as it was then known, had the Chargers and then, in 1968, the Padres, which had just upgraded from the Pacific Coast League to the Majors.

This system functioned reasonably well until the Chargers started getting antsy in 1994, looking ahead to the expiration of their lease in 1999. Among other trends, NFL football had become so incredibly popular that the teams could demand their own stadia, complete with luxury boxes and rotating advertising signs around the park. The peak of NFL bargaining power may have been in 1996, when the Cleveland Browns fled under cover of night to Baltimore to become the Ravens. Baltimore had baited the hook with both a publicly funded stadium and the right to collect revenue on any event held in that stadium. How could Browns owner Art Modell resist such a tasty offer?

Before we get to the gory details in San Diego, understand that what the Chargers wanted then-and want now-more than anything was a new stadium. All of the team's actions pointed at that goal. Here in San Diego, the city didn't have the money to put up a new building, so the team used its leverage to bludgeon the city into a renovation that added luxury boxes.

“Both sides were talking past each other, directly to the public,” Waring said. And no San Diego politician could beat the Chargers at the publicity game. By now, everyone, from the city to the Chargers to the public, agrees the 1995 contract was terrible. To add the boxes, the city needed to issue $60 million in bonds. It also inserted a lulu of a clause, the state-of-the-art guarantee. It required the city to keep everything in the stadium at the leading edge of technology and comfort.

“The problem is that no matter how nice a stadium it is, it's obsolete six months after you built it,” Stover said. “Some executives go to a new stadium and see marble counter tops-now they want marble counter tops. They see digital signs-they want digital signs. It never stops.”

Cynics argue that the whole affair derived from the political ambitions of then-Mayor Susan Golding. Bruce Henderson, a former member of the City Council and longtime critic of the city-Chargers relationship, said Golding wanted to run for U.S. Senate, so she had to placate Chargers owner Alex Spanos, a wealthy and well-connected Republican.

“I got a hold of a copy of the 1995 contract,” Henderson told CityBeat. “I spent 50 hours studying it. I read it again and again, before it revealed itself to me. When I finally understood the contract, I almost cried. The Chargers put together one of the most destructive contracts in the history of San Diego-a contract that constituted the greatest lie that's ever been told in this city.”

Henderson ultimately sued the city, represented by current City Attorney Mike Aguirre, claiming that the attempt to issue bonds without a public vote was illegal. The suit forced a new negotiation, this time mostly handled by then-City Attorney Casey Gwinn. The 1998 contract introduced the notorious ticket guarantee, requiring the city to purchase unsold tickets to games. Making matters more complicated, the NFL refused to recognize these tickets as contributing to a sold-out game. That meant the black-out rule, which allows sold-out games to be broadcast locally, could not be applied and those games would not be seen on TV. As the public got a handle on what its leaders agreed to on their behalf, the bad blood began to flow between the Chargers and the city.

Five years later, the team approached Mayor Dick Murphy to work out a new deal to quell the outcry over the ticket guarantee. Mark Fabiani, special counsel to the team owners, advised Spanos that he would have to cleanse the bad blood with the public.

“Pretty clearly, almost from the day I took this assignment, people were not going to talk to us about anything until we got rid of the ticket guarantee,” Fabiani said. “It had spoiled our relationship with the community and our fans.”

He characterizes the 2004 negotiations as a big giveaway by the Chargers.

“We got rid of the ticket guarantee, we got rid of the state-of-the-art clause,” he said. “If we hadn't done that, we could have sued the city for breach of contract and left it with nothing.”

What he doesn't mention is the rent break Murphy gave the Chargers in the ticket-guarantee swap: eliminate the unpopular guarantee in exchange for a $5-million-a-year rent reduction. People like Henderson, Aguirre and Libertarian activist Richard Rider often talk about how the guarantee was doomed to expire this year, anyway, and they're right about that. But consider this: The city had to buy unsold tickets, a heavy burden when the Chargers sucked eggs. But the last two years the Chargers have been record-breakingly terrific. Stover, the city-employed stadium manager, believes that if the ticket guarantee were in place and the rent paid in full, Qualcomm would have turned an operational profit this year. Given that the annual operational loss is $4 million (add $6 million for bond debt service to get the full flow of red ink), the city punted away around $8 million over the last two years.

No wonder, then, that Waring told CityBeat that the city would be willing to contribute city assets to any regoinal solution to get out from this lease.

“It's just mathematical,” he said.

Spanos Tries to Milk San Diego
Sanders says Nay!

The Chargers and the city agree the team should leave, but Chargers official yearn for a new home on the old site. Alex Spanos' son Dean, the team president, and Mark Fabiani, the Spanos' special counsel, want more than anything to build on the Qualcomm site in Mission Valley. In his interview with CityBeat, Fabiani kept coming back to the many advantages the Chargers could offer the people who live in and around the current Qualcomm site, and it was the only subject that rattled his natural calm. They had this whole plan in which the city would give them the 166-acre site and they would partner with a huge condo developer, build up the infrastructure-roads and entrance ramps from the highways and whatnot. The Chargers would get a new stadium, the city would get new roads and taxes, and everyone would be happy. Except that the Chargers couldn't find a partner.

According to Fabiani, developers wouldn't do the deal for a variety of reasons: the softening housing market, the instability of San Diego government (this was 2005, the year of four mayors) and Mike Aguirre.

Aguirre had already sued the Chargers once, when he represented Henderson, and he'd sued the Padres and the city over the Petco Park deal. But in 2004 he became the city attorney, striking fear and loathing into the hearts of Dean Spanos and Fabiani.

“We had people telling us, ‘You mean we could go through an election and an [environmental-impact report] and everything else, and after all that, we could still get sued by the city of San Diego?'” Fabiani said. “And they backed out.”

Waring offers another reason for the collapse of that deal.

“If you look at the development analysis for the Qualcomm site, it had 5,000 to 6,000 [housing] units,” he said. “Try to visualize that level of intensity out there. It was a nonstarter.”

So in January 2006, Mayor Sanders declared that the city of San Diego would not be working with the Chargers to build a new stadium at the Mission Valley site. Under the terms of the team's lease with the city, the Chargers are allowed to shop themselves to cities across the country, but in an apparent gesture of good will, the team so far has limited itself to discussing stadium sites with cities within San Diego County.

Chargers to Bolt Qualcomm

The Chargers want out of their Qualcomm deal, but local citizens wonder why. By all accounts, they've had their wicked way with the city; shouldn't they be sitting back on a pile of cash, stroking their collective mustache and laughing maniacally?

Among other things, the Chargers say the stadium needs about $50 million in maintenance. On a visit to the empty SDSU locker room recently, CityBeat heard showers dripping in the background and not all the lights came on. Rumors abound of leaky pipes dripping on to the home teams' heads.

But more to the point, the compromises to fit a baseball park into a football stadium left glaring flaws for a football configuration. Go back to those rows of empty seats in front of a dirt field. The tenth row on the 50-yard line should be the best seats in the house. Stover said they sell in other stadia for $200 a piece. But at Qualcomm the shallow incline ideal for sitting in the outfield bleachers leads to obstructed views on the football sideline. All those beefy men pacing the sidelines block the fans trying to watch the game

“The guy in that row stands up. The guy behind him stands up. Pretty soon, everyone is standing the whole game,” Stover said.

Up in the retrofitted luxury seats, an overhang blocks the window of the suite, obstructing the view of punts or desperate hail-Mary passes down the field. In the perhaps more democratic '60s, designers worried about pushing fans in the cheap seats too far back, so they built the overhangs. In the modern stadium, these fans are pushed away from the field so the wealthy may have a clear view of play. In Qualcomm, those seats have to be sold at a discount.

In the modern NFL, most revenues are shared-most notably ticket receipts and television rights. But not luxury seating, and not advertising. Thanks to the bad high-end seats, the Chargers rank 28th out of the 32 teams in revenue. Fabiani points to wealthy baseball teams like the Red Sox and Yankees and says how low revenues will keep the Chargers from being consistently competitive. But football has a salary cap, which means teams spend about the same amount on salaries. The bottom line is the bottom line: The Spanos family wants to make more money.

The current stadium flaws may hurt San Diego, too. Though the city hosted Super Bowls in 1988, 1999 and 2003, Stover thinks the NFL has too many other brand-new stadiums to choose from, and it won't return to the aging Qualcomm, despite broadcaster John Madden's on-air praise of the stadium in 2003.

But with a new stadium in the city or county, the Super Bowl could make frequent return trips. With world-class golf courses, great weather and a huge hotel inventory, San Diego is ideal for Super Bowl week.

“The city of San Diego would absolutely be in the rotation,” Stover said. “The weather is great, the beaches are good. The Super Bowl is all about the corporate sponsors that have supported the league who want to come for two weeks before the game and play golf and host parties.”

Team Needy,Demand Subsidy

The Chargers have offered to build a stadium on a new site with their own cash, and they've offered to pay for infrastructure improvements. All they want in exchange is development rights on property that will net them a subsidy of about 65 percent of the total cost. With the stadium now expected to run about $750 million, a $57 million fee owed to the city for escaping the lease and assorted other moving expenses, the Chargers want 65 percent of about $1 billion, or $650 million.

Fabiani says 65 percent is the average public subsidy enjoyed by most other sport steams in the last 10 years or so. The Chargers need that much to remain financially competitive, he said.

Development rights aren't the same as getting that amount in cash, or tax breaks, or even straight-up value for the land. It means providing the Chargers with enough land, whether by lease, deed or partnership, so they can try to earn that much money reselling it to developers. The amount of value that can be derived from a given parcel of land would be a subject of much negotiation and public outcry.

But before negotiations begin on land, the team will examine sites to make sure there's enough highway access, sufficient public transportation, room for parking and convenience for their major fan centers in North County and the city of San Diego.

“We're looking for sites where we can add value to a property the city is perhaps not using or underutilizing,” Fabiani said.

Perhaps this is why the Chargers pine for the Mission Valley site-access to Interstates 5, 805, 15 and 8, plus trolley access, and in the heart of San Diego. The site is large enough for all that development, and building a new mixed-use entertainment-stadium-complex extravaganza would bring a lot more money for the Chargers and the city than the current stadium and parking lot. To the Chargers way of thinking, rebuilding Qualcomm would be like making improvements on urban blight.

The site is so good that the three cities vying for the stadium-National City, Chula Vista and Oceanside-can hardly believe their good fortune. But the message is consistent. All the people interviewed by CityBeat, from city staff to Fabiani to officials from the three cities, believe the Chargers are sincere in wanting to stay in the county and not go to Los Angeles or Las Vegas. Fabiani doesn't want to even consider what the team will do if these deals all fall through.

An aide to Oceanside City Councilmember Rocky Chavez asked CityBeat, “Is [San Diego] really out of it?” Chris Zapata, city manager of National City, seemed, in his interview with CityBeat, to practically assume the deal would end up back in San Diego. Ultimately, all three will be relying on San Diego to help with a contribution to the “regional solution” to keeping the Chargers in the county.

Chargers screw city continued

Not only did the Chargers get the better of the city with its lopsided lease in 1995-everyone from city leaders to team officials knew San Diego had been swindled.

Let's go back in time a bit, shall we? The stadium was built in 1967 with a $27 million bond, approved by initiative and pushed by sportswriter Jack Murphy. Stadium design at the time tried to maximize use by having football and baseball teams share a home. Candlestick Park in San Francisco held the 49ers and the baseball Giants, and Yankee Stadium held the Yankees and the football Giants. San Diego Stadium, as it was then known, had the Chargers and then, in 1968, the Padres, which had just upgraded from the Pacific Coast League to the Majors.

This system functioned reasonably well until the Chargers started getting antsy in 1994, looking ahead to the expiration of their lease in 1999. Among other trends, NFL football had become so incredibly popular that the teams could demand their own stadia, complete with luxury boxes and rotating advertising signs around the park. The peak of NFL bargaining power may have been in 1996, when the Cleveland Browns fled under cover of night to Baltimore to become the Ravens. Baltimore had baited the hook with both a publicly funded stadium and the right to collect revenue on any event held in that stadium. How could Browns owner Art Modell resist such a tasty offer?

Before we get to the gory details in San Diego, understand that what the Chargers wanted then-and want now-more than anything was a new stadium. All of the team's actions pointed at that goal. Here in San Diego, the city didn't have the money to put up a new building, so the team used its leverage to bludgeon the city into a renovation that added luxury boxes.

“Both sides were talking past each other, directly to the public,” Waring said. And no San Diego politician could beat the Chargers at the publicity game. By now, everyone, from the city to the Chargers to the public, agrees the 1995 contract was terrible. To add the boxes, the city needed to issue $60 million in bonds. It also inserted a lulu of a clause, the state-of-the-art guarantee. It required the city to keep everything in the stadium at the leading edge of technology and comfort.

“The problem is that no matter how nice a stadium it is, it's obsolete six months after you built it,” Stover said. “Some executives go to a new stadium and see marble counter tops-now they want marble counter tops. They see digital signs-they want digital signs. It never stops.”

Cynics argue that the whole affair derived from the political ambitions of then-Mayor Susan Golding. Bruce Henderson, a former member of the City Council and longtime critic of the city-Chargers relationship, said Golding wanted to run for U.S. Senate, so she had to placate Chargers owner Alex Spanos, a wealthy and well-connected Republican.

“I got a hold of a copy of the 1995 contract,” Henderson told CityBeat. “I spent 50 hours studying it. I read it again and again, before it revealed itself to me. When I finally understood the contract, I almost cried. The Chargers put together one of the most destructive contracts in the history of San Diego-a contract that constituted the greatest lie that's ever been told in this city.”

Henderson ultimately sued the city, represented by current City Attorney Mike Aguirre, claiming that the attempt to issue bonds without a public vote was illegal. The suit forced a new negotiation, this time mostly handled by then-City Attorney Casey Gwinn. The 1998 contract introduced the notorious ticket guarantee, requiring the city to purchase unsold tickets to games. Making matters more complicated, the NFL refused to recognize these tickets as contributing to a sold-out game. That meant the black-out rule, which allows sold-out games to be broadcast locally, could not be applied and those games would not be seen on TV. As the public got a handle on what its leaders agreed to on their behalf, the bad blood began to flow between the Chargers and the city.

Five years later, the team approached Mayor Dick Murphy to work out a new deal to quell the outcry over the ticket guarantee. Mark Fabiani, special counsel to the team owners, advised Spanos that he would have to cleanse the bad blood with the public.

“Pretty clearly, almost from the day I took this assignment, people were not going to talk to us about anything until we got rid of the ticket guarantee,” Fabiani said. “It had spoiled our relationship with the community and our fans.”

He characterizes the 2004 negotiations as a big giveaway by the Chargers.

“We got rid of the ticket guarantee, we got rid of the state-of-the-art clause,” he said. “If we hadn't done that, we could have sued the city for breach of contract and left it with nothing.”

What he doesn't mention is the rent break Murphy gave the Chargers in the ticket-guarantee swap: eliminate the unpopular guarantee in exchange for a $5-million-a-year rent reduction. People like Henderson, Aguirre and Libertarian activist Richard Rider often talk about how the guarantee was doomed to expire this year, anyway, and they're right about that. But consider this: The city had to buy unsold tickets, a heavy burden when the Chargers sucked eggs. But the last two years the Chargers have been record-breakingly terrific. Stover, the city-employed stadium manager, believes that if the ticket guarantee were in place and the rent paid in full, Qualcomm would have turned an operational profit this year. Given that the annual operational loss is $4 million (add $6 million for bond debt service to get the full flow of red ink), the city punted away around $8 million over the last two years.

No wonder, then, that Waring told CityBeat that the city would be willing to contribute city assets to any regoinal solution to get out from this lease.

“It's just mathematical,” he said.

Tiny towns Offer Chargers...
Posh pads

Each of the contending cities approaches the stadium idea with a certain clear-eyed optimism. Though everything is preliminary, each of the contenders offers good reasons for bringing in the Chargers.

National City

The first to the table, National City has hired a consultant who worked with Glendale, Ariz., to get the Arizona State University Sun Devils' stadium built.

Goal: Get access to the waterfront. Currently, the city has only a tiny corner park trapped between giant unloading terminals.

Offer: Put a stadium on the waterfront, near I-5 and the Coaster train.

Upside for the Chargers: Near the 5; near the train; on the water; near downtown San Diego.

Upside for the city: The Chargers become the bulldozer needed to extract Port District land for local benefit. It would also diversify the city's tax base from mainly importing to include a tourism component.

Downside: The port brings in thousands of new automobiles and millions of board-feet in lumber each year. The site would require parking garages, which are less efficient for moving concentrated numbers of cars, and it would need the auto shippers to be into the idea of storing cars in the garages during the off-season. Also, it would cost $400 million in infrastructure improvements.

Progress: Mayor Ron Morrison sent written requests to neighboring cities soliciting contributions to a package of development opportunities for a possible Chargers deal. Waring told CityBeat that Sanders is considering how to contribute, but no formal reply has been sent, and time is running out on the bid.

Chula Vista

Chula Vista was approached by the Chargers. The team has been working with City Councilmember John McCann to locate a stadium. There are several possible sites, including on the waterfront on property owned by the Port District, and in the east side of the city on Otay Mesa.

Upside for the city: The Chargers could serve as an anchor tenant on Otay Mesa to perhaps draw San Diego State University into building its satellite campus there. Together, the Chargers and SDSU would spur residential and mixed-use development, which would grow the tax base.

Upside for the Chargers: Lots of property available near the stadium, near downtown San Diego.

Downside: Only I-15 runs near the Otay Mesa site, and there is no public transit. There would need to be massive road building and parking structures.

Progress: Chula Vista is entering what Mayor Cheryl Cox calls “a quiet period” as they await the results of a land-use study funded entirely by the Chargers to examine possible sites in the city.

Oceanside

Oceanside hadn't even been considered a site until January of this year. Labor leader Jerry Butkiewicz decided he'd organize a meeting with Mayor Jim Wood and City Attorney John Mullen. The two Oceanside officials arrived on time, and Butkiewicz came in, followed by Fabiani and Dean Spanos.

“I certainly didn't expect them,” Mullen later told CityBeat.

Butkiewicz claims he was just bringing together a couple of good friends. “We're not some shill for the Chargers.”

Labor wants to keep the stadium in the county and keep the discussion pro-labor. The construction jobs plus the many jobs supplying and maintaining the building would likely be union.

Upside for the city: The golf course on the site now currently earns the city just $48,000 a year. Chavez wants to use the Chargers to spur interest and development in Oceanside. He sees a free development zone along Oceanside Avenue with the Chargers and the city partnering up to substantially increase density.

Upside for the Chargers: Access to I-5 and Highway 78, plus the Coaster and the soon-to-be built Sprinter train that would stretch to Escondido. Something like 25 percent of the Chargers' season-ticket holders live in North County.