It’s true: God did tilt the world on its axis, and all the nuts rolled into Southern California. Proof: entrepreneurs in Los Angeles are discussing a billion-dollar retractable-roof football stadium downtown. Not to be out-loose-screwed, the San Diego establishment is now talking up the same possibility for the subsidized downtown stadium it is pushing with the mayor’s help. Such a facility would almost certainly raise the cost of a new Chargers’ stadium to close to $1 billion, three-fourths of which would probably be financed by taxpayers of an insolvent city.
Like San Diego, Los Angeles is teetering on the brink of bankruptcy. But unlike San Diego, the L.A. taxpayers are not likely to pick up a significant (if any) part of the tab for the stadium, although the public could chip in for infrastructure. Los Angeles learned long ago that if the politicians hold out, the team will eventually cough up the money. The latest proposal is for a stadium with a retractable roof near the Staples Center. It’s just a wild idea now, particularly with developer/casino magnate Ed Roski still claiming he intends to build a stadium in the little town of Industry. It’s quite possible neither will get off the ground because of the weak economy, lack of capital, and the possibility of a players’ strike or lockout in 2011.
As soon as the word leaked in L.A., San Diego real estate moguls started talking up a stadium with a retractable roof on the tiny ten-acre footprint downtown. Tub-thumpers want the technically bankrupt City to subsidize it. Earlier this year, Chargers spokesman Mark Fabiani said the team and the National Football League would put in $250 million to $300 million, although the league’s participation was very iffy.
Iffy indeed. The league had a slush fund to give loans to stadium builders, but it “exhausted the funds” mainly on the new Giants/Jets stadium in the New York metro area, says Rob Baade, economist at Lake Forest College near Chicago. He is an expert on sports stadium financings. Fabiani claims, “We will be working to persuade the NFL to reinstitute a version” of the old loan program. Baade strongly doubts it will happen.
So how much might the Chargers ante up: $250 million? Earlier, Fabiani said the stadium (without a retractable roof) would cost $700 million to $800 million. Initial estimates are almost always very low for political reasons. Peter Fervoy is the business development manager for Minnesota-based Uni-Systems, which creates the lion’s share of mechanization systems for retractable-roof stadiums. He has seen estimates that a pro sports stadium roof would cost anywhere from $65 million to $450 million, but both ends of the spectrum are not realistic, he says. “I would say $100 million to $150 million is pretty accurate,” says Fervoy. That would put the total San Diego cost close to a billion dollars — the same as the estimate in downtown L.A. Maintenance typically runs $250,000 a year.
If the Chargers put in only $250 million, San Diego taxpayers’ wallets will be emptied in a hurry.
And for what? A stadium with a retractable roof in a Mediterranean climate? “It boggles the mind,” says Baade. “It’s crazy,” says Rodney Fort, sports economist at the University of Michigan, who once lived in San Diego.
The Association for Retractable Roof Operators Worldwide, an organization that touts the product, has done a 17-page white paper on all the advantages of the roofs — exulting, for example, how such stadiums in Houston and Phoenix keep out the heat and those in Indianapolis and Milwaukee protect the fans from the cold. But even the white paper admits that these roofs are good for extreme climates but are of questionable usefulness in moderate climates. “Clearly, the retractable roof decision is not right in all cases,” allows the paper, noting that New Yorkers don’t feel they need such roofs.
Says Baade, “In cities like Milwaukee, a retractable roof might attract larger crowds in April and May. But study after study has shown that the way to put fannies in the seats is to win games. Success on the field determines success at the gate.”
But the cheerleaders insist that with retractable roofs, the stadium can be used for things like championship prize fights, National Collegiate Athletic Association Final Four basketball games, concerts, conventions, and the like, even though both the proposed L.A. and San Diego stadiums are a stone’s throw from their cities’ convention centers.
The argument is fallacious. “An NCAA Final Four competition has as much economic impact as a basketball tournament for girls 16 and under,” jokes Philip Porter, economist for the Tampa-based University of South Florida. “The Final Four attracts people, but so would a convention for left-handed used-car salesmen. Hotels would be able to raise prices for a Final Four, but that money doesn’t stick in the community.” It goes to the hotel chain, which is probably based elsewhere. Hotel workers don’t see their paychecks increased.
Baade coauthored a recent study on the economic impact of hosting the Final Four. “We did not find that the NCAA Final Four made a big economic difference,” he says. One reason is that other visitors are crowded out. The NCAA gets a huge chunk of the revenue, and the hotels repatriate their increased cash flow back to their headquarters city. And, of course, the opportunity to be host would come once in a decade — maybe. “It would certainly not be enough to pay for a retractable-roof stadium.”
What about concerts? “There are not enough megaevents that require 60,000 to 80,000 seats,” says Fort. If the stadium owners “made $2 million a gig, which is unheard of, it would take 50 gigs over several years” to make the roof economical. In my own opinion, those events might not even cover the $250,000 annual maintenance.
Fabiani claims that a retractable-roof stadium could host events now held at Qualcomm Stadium and the Sports Arena. Then the City could sell the land at those places. Oh? To whom? For what purpose? The construction of condos? (Has Fabiani noticed the huge glut downtown?) For more retailing? (Doesn’t Mission Valley have enough?) For hotels? (Those built or refinanced in the last five years are underwater.) For office buildings? (Commercial real estate is in the doldrums.)