(NOTE: SEE UPDATE IN ADDENDUM BELOW) 

SAN DIEGO CHARGERS BID FOR LOS ANGELES

 

This is the month of NFL playoffs. On the football field, the wild card and Super Bowl playoffs are in progress to pick teams for the February 7 final blowout event. Off the football field, the NFL executives and the powerful team owners are playing their own game to pick a winner for the Los Angeles franchise.

The next few weeks are going to be intense in selecting the Super Bowl teams but is equally intense over the choice of the team or teams to relocate in Los Angeles. At this posting time, a decision should be made on January 13 unless there is too much controversy on the selection of the new franchise teams to make a final choice.

San Diego is on the edge of anticipation to know if it will lose its football team after 55 years of good and bad times. The bad times seemed to have started when the Spanos family took over in 1984. Their relationship with the city government and citizens who are not avid football fans has been deteriorating ever since the Chargers demanded a new stadium to keep up with the other NFL teams. Many of the other franchises found local support into the billions of dollars to support their professional football team to the style in which team owners have become accustomed.

In all respects, the transfer of the San Diego Chargers to Los Angeles is a good business deal for the Spanos family. Football pundits believe the franchise will double in value by getting into the second largest television market in the US. It is been over 20 years since Los Angeles had a professional team after all three of the current potential candidates left the area over a period of years for greener pastures.

Even though the loyal Charger fans would like to believe that there is some team loyalty to remain in San Diego, they should realize football is not a primarily a gaming entertainment, it’s a business, a very big business, run by a ruling hierarchy that is tantamount to a monopoly.

Recent surveys of the entire football league by Forbes have reported that the average value of the franchise is $2 billion, a 38% increase in just the last year. The most valuable franchise is the Dallas Cowboys. San Diego is estimated at $1.5, which experts predict will double if moved to Los Angeles. That’s a good business deal for the Spano’s family, and that’s why they are in the game.

 

 

Since the negotiating team from the Chargers eventually cut off any discussions with city officials about constructing a new stadium, it would appear that having a new venue with all the bells and whistles at a cost of over $1 billion is not really the main reason for the Chargers to leave San Diego. The team is proposes a partnership with the Oakland Raiders to share a new stadium in the city of Carson, a suburb of Los Angeles.

Even if the Chargers were given the nod to transfer to Los Angeles, it would take a year or more to construct the fancy new stadium they desire. Does that mean they will play their games at the Los Angeles Coliseum or perhaps the Rose Bowl in Pasadena? Both of these venues are considerably older than Qualcomm Stadium in San Diego which would be a temporary sacrifice for the team, so obsessed with its dissatisfaction with the “deteriorating” Qualcomm.

I will admit that I’m not a keen professional sports fan. However, it is beyond my comprehension of what more is needed to play football than a 100-yard-plus grass area with two goalposts and enough seats to accommodate the expected audience. Those few very wealthy fans, the press corps and the players could certainly get by with comfortable seating at good vantage points and modern convenient locker rooms for the players. Those billion-dollar stadiums elsewhere and  now proposed for San Diego expect to provide much more.

The reality is, football was made for television, and that’s where the money and the audience is. They do not benefit from a gold-plated entertainment facility with bells and whistles installed in the stadium.  The TV audience only sees the playing field and the team benches.

Another major issue that has not shown any media coverage in the local press is: who will pay for the new stadium in Carson? I doubt the owners of the Chargers and the Raiders are willing to pony up over $1 billion, but do they have any guarantees from such a small community that there can be enough private support? At least in San Diego, the Spano’s family has never suggested putting any money into a new stadium and expect wealthy fans and the citizens to come up with the construction funds. Suggestions of how much the NFL would put into a new stadium is also very vague.

The same issue exists over in Inglewood where the St. Louis Rams are planning to construct a fancy new $1.86 billion stadium as part of a 236-acre multi-use development and sports center on the grounds of the former Hollywood Race Track. Again, media coverage has not specified if the owner of the Rams, Stan Kroenke, plans to provide a turn-key stadium if the NFL gives him the Los Angeles franchise.

Since the Chargers came to town in 1961 under the ownership of Barron Hilton, changes in the professional football business have skyrocketed to multi-billion-dollar deals. Of course that is primarily due to the advent of television revenues which currently pay $226 million a year to each NFL franchise. Gene Klein bought the Chargers in 1966 for $48.3 million and was able to sustain a good game record. Alex Spano’s acquired a controlling interest in the team for $70 million in 1984. With the prospect of acquiring the Los Angeles franchise worth an estimated $3 billion, it’s been a very good investment.

 

The most recent rating by Forbes ranks San Diego 26, Oakland 28 in St. Louis 32 in the value of the team among the 32 members of the NFL. That certainly indicates that all three franchises need a boost that they claim is not available in their present location. It will be a tough decision for the team owners to choose a winner among losers. To make the choice easier each team applying for the franchise must pay $500,000.

I guess none of these issues will really be discussed and resolved until the NFL team owners make their decision in a few days. In the meantime, San Diego will just have to seat it out and hang on to the thought that the Chargers may still be playing in that old dilapidated Qualcomm Stadium for a few years to come.

 

ADDENDUM

As a follow-up to this commentary posted two days before the meeting of the NFL team owners, here are the results of the contentious ballot that determined which team got the valuable franchise to the Los Angeles market area. Right up to the announcement late on January 12, it appeared that there would be no consensus among the 32 team owners. A super-majority of 24 was required to designate which of the three teams would get the franchise. The NFL Los Angeles Committee of 6 owners gave a nod to the Carson proposal by the San Diego Chargers and Oakland Raiders. Most insiders to the discussions among the team owners in the previous week and then in Houston indicated this would be the decision, if they could get 24 votes.

Much to everyone’s surprise, the owners voted 30-2 to award the franchise to the St. Louis Rams for the proposed development in Inglewood, the site of the former Hollywood Park                                                                                       Racetrack. That left the Chargers owner, Dean Spanos, standing out in the hall as the number- two choice for Los Angeles when he had expected approval for the Carson joint venture. Spano’s was given the option to make a deal with Stan Kroenke to share the Rams stadium, but probably as a tenant not as a partner. Local sports columnist Kevin Agee reported that the Spanos family the Chargers team and its San Diego fans were condemned to “relocation purgatory.”

The Los Angeles transfer option period is for one year to January 2017 to make a deal with Kroenke or to stay in San Diego with a “bonus” incentive of $100 million from the NFL towards a new stadium. This would require Spanos to come crawling back to city officials and Charger fans and beg for the new stadium that the taxpayers of San Diego do not wish to support. Several medea releases of the last few weeks refer to the way Spanos and his negotiating team have treated their hometown that supported the team for 55 years. Most reporters suggest a little humility is due.

Dean Spanos has not had a cozy relationship with Stan Kroenke. He believed he had a firm commitment to be a joint partner with the Oakland Raiders at Carson.  The NFL option will be a very difficult decision for Dean Spanos, trapped between two disagreeable choices: being second to the Rams in Los Angeles or coming back to San Diego.

 

 

Neither of these options were in the Spanos’ carefully planned transfer to Los Angeles with prospects that the value of his franchise could double in value. After all, a professional sport team is a business. In San Diego, the Chargers received $225 million as its share of the NFL television commissions which could go to $300 million in 2016. The team also gets all of the proceeds from parking, concessions and corporate box sales. The city receives a paltry rent that hasn’t even covered deferred maintenance on the Qualcomm Stadium. That’s a good business for the team owner.

If Spanos stays in San Diego, he will save a $500 million transfer fee required by the NFL for relocation. Add to that the $100 million that the NFL committed as a “bonus” to stay in San Diego along with a $200 million loan towards a new stadium. The question is, would Spanos contribute the $500 million that he did not  pay  to to go to Los Angeles?

Some of the media reaction to the NFL decision has been revealing. Kevin Acee asked, “Do we celebrate? Grown? Scream? Or yawn?” John Wilkins and David Garrick reported that the Chargers wanted a divorce from San Diego, but they got mediation instead. A San Diego Union-Tribune editorial speculated that Kroenke doesn’t even want Spanos in Los Angeles.

So begins the Battle of the Billionaires as the owners of the three prospective teams maneuver to make their deals under the terms of the NFL mandate. Spanos is outclassed by Kroenke who is estimated to be worth $12 billion (his wife is the daughter of Sam Walton). The Rams new stadium is estimated to cost $1.8 billion and will be the largest in the NFL with three million square feet of luxurious quarters for the each team and the corporate box holders. Kroenke will deliver the facility without any cost to the residents of Los Angeles. Will he share any of this bonanza with Spanos?

 

 

 

 

 

 

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