"If the Padres can get a stadium, why can't we? I've never thought for a minute that we couldn't get something done, honestly. I've always thought we would be able to get one." This statement two months ago from Chargers owner Alex Spanos to a reporter from TodaysSports outraged San Diegans.
Spanos's statement generated denials and "clarifications" from the Spanos camp and San Diego city officials about whether there had been secret negotiations regarding Qualcomm Stadium's fate. Spanos, who told TodaysSports that he was already talking with the city, later claimed to the North County Times that his words had been taken out of context.
His son, Dean Spanos, president of the team, also denied contact with San Diego officials. "There have been no discussions with the city whatsoever," he told the Union-Tribune, "and there is no one down there who could tell you otherwise." A spokesman for Mayor Susan Golding was quoted by the Union-Tribune, "She is adamant that there have been no discussions."
Behind closed doors, at city hall, the story was different.
On March 27, the day before the Spanos story was reported on the Union-Tribune's front page, city officials entered into a contract with Manhattan Beach consultant Daniel J. Barrett of the Barrett Sports Group. Barrett's contract was not negotiated by City Manager Michael Uberuaga, but rather by City Attorney Casey Gwinn. An internal city memo attached to the document notes, "It is recommended that the City Attorney execute the contract to protect sensitive material under the attorney work-product privilege."
The contract is in the form of a letter from Barrett to San Diego Assistant City Attorney Leslie J.Girard. "The City is interested in evaluating stadium lease alternatives in connection with the San Diego Chargers' existing lease at Qualcomm Stadium. In this phase, BSG will develop alternative lease proposals to be presented to the Chargers and assist in negotiations, as necessary."
The contract adds that "BSG will develop a stadium cash-flow model to evaluate various lease alternatives to be presented to the Chargers. The model will be developed to allow for sensitivity testing of key variables under a variety of scenarios. The model will calculate the impact of lease revisions on both the City and the Chargers. BSG will meet with City representatives to present preliminary draft lease alternatives. The lease alternatives will be delivered in presentation-style format. BSG will meet with City representatives to develop a strategic approach to present the lease alternatives to the Chargers."
Barrett's letter goes on to say, "at the direction of the City, BSG will meet with City and Charger representatives to discuss the various lease alternatives. BSG will also be available to participate in negotiations with the Chargers."
Barrett, who charges $250 an hour for his services, declines in his letter to provide a firm total cost estimate for the project. "The fees for professional services of this nature are difficult to estimate due to the nature of the scope of services. Many tasks and sub-tasks described above are such that they may be completed quickly or after an extended period of time due to reliance on the interest, activities and performance of other parties." Although Barrett's letter says that "we would expect that our professional fees would not exceed $20,000," he also adds that "the fees described above do not include fees for major subcontractors."
Thus, protracted dealings with Spanos could run up a big bill for city taxpayers, with no guarantee of anything in return. Taxpayers are left to guess at what is going on. Is Spanos willing to make concessions to the city on the current stadium lease, perhaps giving up the controversial ten-year-long ticket guarantee that last year cost the city at least $6.7 million?
Not likely, says Bruce Henderson, one of the original critics of the Spanos deal, adopted by the city council in May 1995. "The contract was written by the Chargers for the Chargers. The contract doesn't give the city any bargaining power. The only thing the city can do is take Spanos at his word that he has no intention of leaving San Diego and ask him, as a sign of good faith, to eliminate the team- shopping clause. But that's just a fantasy. Alex isn't going to deal. There's simply no question that the contract puts a process in place whereby the Chargers leave San Diego by the end of the 2003 season and go up to Los Angeles or Orange County. The only question is, can the Chargers cut themselves a deal in Los Angeles or Orange County?"
Since Henderson took his stand against the Chargers agreement, some city council members, including Christine Kehoe, chastened by public outcry against the ticket guarantee, have abandoned support for the deal and called for renegotiation.
"It's time to admit that the city council made a major mistake in agreeing to the current, unacceptable lease arrangement with the Chargers," Democrat Kehoe, then running against Brian Bilbray for Congress, told reporters in February 1998. Kehoe's statement drew an attack from Union-Tribune editorial writers, "She apparently believes voters who are unhappy with the Chargers' seat guarantee will remember her splashy press conference this week but are dumb enough to forget her long-standing support -- and multiple votes -- for the stadium expansion. The truth is that, despite Kehoe's pandering, the stadium expansion is actually a very good deal for San Diego." Kehoe lost to Bilbray.
Since then, as losses to the city caused by the ticket guarantee mounted into millions of dollars and the threat of moving the team became more public, the U-T's endorsement of the deal has been muted and critics have multiplied. The lease became a major issue during the run-up to this March's mayoral primary. Almost all candidates, with the exception of Councilwoman Barbara Warden, who received substantial financial backing from Alex Spanos, tried to distance themselves from the deal.
Last December Councilman Byron Wear, then a mayoral candidate, called for an audit of the team's ticket sales. Chargers president Dean Spanos fired back a letter claiming, "We are in full compliance with our obligation to maximize stadium occupancy." Wear reportedly once again broached the idea of renegotiating the contract and got a negative response from the team, according to an account in the U-T.
Wear, along with Warden and fellow city councilmember George Stevens, went down to defeat in the mayoral primary, in part, most observers agree, because they were closely linked to the Chargers deal. County supervisor Ron Roberts, who came out on top of the primary pack, followed by Superior Court judge Dick Murphy, has made opposition to the stadium lease a cornerstone of his campaign.
"The Chargers ticket guarantee is a bad deal for city taxpayers not just because it eliminated normal market forces in the sale of tickets, but also because it didn't accomplish its stated purpose, which was to keep the Chargers in San Diego through the year 2020," Roberts wrote in an April 4 op-ed piece for the Union-Tribune.
"As team owner Alex Spanos' recent statements demonstrated, the Chargers agreement with the city actually encourages the team to solicit offers from other cities beginning in the year 2002, and makes it all but certain that a future city council will face a Faustian choice between either building an expensive new stadium or losing the Chargers to another city."
The solution, Roberts maintains, is to put the stadium lease up for bid. "Owner Alex Spanos says he needs more revenue to remain competitive with other National Football League teams that have new stadiums. I say, more power to him. But if he wants more revenue, he, not San Diego taxpayers, should invest the capital and take the risk.
"A competitive-bidding process should be developed that allows the Chargers, and other prospective users of the property, to submit proposals to the city. One -- but not the only -- criterion in evaluating these proposals should be the desirability of keeping the Chargers in San Diego. But the bottom line should be to generate the best return for San Diego taxpayers."
But Bruce Henderson is skeptical. He doubts that Spanos could ever be induced to surrender the benefits he enjoys from his current deal with the city. "When Roberts makes a proposal like that, he fails to identify who would bid for Qualcomm Stadium. It's obvious the Padres aren't bidding for it. We don't have any reason to believe the Dallas Cowboys are going to bid for it. There isn't any reason to believe that the NFL is going to move a team here and leave Alex in limbo.
"You can go to Alex and say, 'Let's forget about the contract and let's engage in the following theoretical negotiations.' And Alex's response is going to be like any sane and normal person's: We can't forget about the contract. We entered into this contract and here is the way these negotiations are supposed to proceed.
"That's the problem. You can come up with all sorts of suggestions for things you'd like to renegotiate, but if they benefit San Diego, they aren't going to have anything to do with the contract, nothing to do with reality. You're just talking because you like to see your lips move. It's a brutal contract from San Diego's point of view, sort of a contract from Hell.
"Alex Spanos would have to be a fairly foolish businessman not to go to other cities and obtain offers," Henderson concludes. "The only thing we don't know here is whether or not other cities will make offers."
So what to make of the city's $20,000-plus contract with sports consultant Barrett to negotiate with Spanos? Henderson speculates that Spanos may have already given the city notice, as required under the contract, that the Chargers have exceeded the NFL salary cap and he is therefore planning to move the team to another city unless the City of San Diego can make a suitable counter-offer.
"What I make of it is that Alex, under the contract, may have initiated negotiations to move the team to Los Angeles, so the city has to respond, but there isn't much to talk about," says Henderson. "So they hire a consultant who presumably, coming from the Los Angeles area, knows that market. Because this is all about waiting for the other shoe to drop -- or, I should say, the inevitable leaden boot to fall. What is there to negotiate? Alex has already laid out that he needs a new stadium and Qualcomm is unacceptable to him. I guess he could say to them, 'We can meet and go over point by point why I have problems with Qualcomm.' The only thing the city can do is give. They don't have any bargaining power.
"The question is, has Alex actually delivered to the city a Notice of Renegotiation, which is required in the contract to start the clock running? Of course, he doesn't have to do that right away. He could say to the city, 'I'm ready to give you a Notice of Renegotiation, but I won't do it yet if you'd like to have a little time to think about it; maybe you want to hire a negotiator. I just don't want it to come as a shock to you.'
"Part of the problem is, has a triggering event occurred? In other words, has the salary cap been exceeded? Under the contract, the first time that the city would hear for certain that a triggering event has occurred would be when Alex delivers the notice. If I were the city manager, and I had this extremely expensive contract with the San Diego Chargers, and I had this contract provision with this triggering event, I'd try to monitor it carefully to see if it happened. That would be the prudent thing to do.
"The manager has two choices, he can play the ostrich and put his head in the sand and say, 'If it's bad news I don't want to know it,' or he can take the position that forewarned is forearmed. If Alex starts implementing this provision, and the city doesn't hire a negotiator, and then suddenly they get a notice that the team is going to leave unless they match this $500 million offer, then the public is going to be terribly upset if the manager can't cover his what-not.
"And why hide it from the public? It isn't as though the public doesn't know this clause exists, so the fact that a triggering event has occurred just prepares the city ahead of time for that big boot to drop. If there's a deal to be done in Los Angeles or Orange County, the team is gone."
Even if a better deal were do-able, would Barrett be the one to do it? Barrett has played a sometimes behind-the-scenes, frequently supportive role in packaging new, taxpayer-financed stadiums to cities all over the country. He has been quoted describing the benefits that new stadiums bring to municipalities. He is often pitted against stadium critics, who describe the economic studies of his employers as flawed and artificially designed to sway public opinion in favor of publicly financed stadium proposals.
In November 1996, Barrett attempted to refute charges by critics that taxpayers would end up footing the bill for a new stadium for the Atlanta Hawks hockey team. "For the city and county to be on the line, the Hawks basically would have to declare bankruptcy," Barrett told the Fulton County Daily Report after critics claimed the facility would threaten the county's solvency.
"To generate the cash to pay for the debt, Barrett projects, the new arena will host at least 174 events per year, compared with an average of 159 at the Omni," the newspaper reported. "Barrett explained this reflected the experience of other cities with new arenas, where the novelty of the building helps generate business for at least the first couple of years after opening. He predicts a similar attendance bounce for the Hawks. The financial plan shows an average attendance of 14,620 per game, higher than any season since the 15,714 in the 1988-89 season. Last year the team drew only 12,114, one of the lower figures in the league."
In December 1996, Barrett told the Los Angeles Downtown News that there was a limitless market for expensive stadium skyboxes at the Coliseum, where some local boosters hope to lure the Chargers. "The L.A. market has one of the highest inventories of major corporations in the country and an extremely limited number of premium seating products. Whatever comes out, whether a new arena or stadium, will meet a pent-up demand."
In April 1997, the Post-Dispatch of Columbus, Ohio, where a new stadium and arena were proposed, paraphrased Barrett as saying, "Arenas and stadiums create jobs and keep money flowing in a community. He calculated that 600 full-time equivalent jobs will be created at the arena itself, plus 374 at the stadium."
In May 1997, Barrett, who then worked as a sports specialist for the accounting firm of Deloitte & Touche, spoke in favor of a new stadium for the San Francisco 49ers.
"This project seems to have a significant potential benefit to the city and county," the San Francisco Chronicle quoted him as saying. Deloitte & Touche had performed an economic study of the project on behalf of KGO radio, which had a broadcast contract with the team. According to the newspaper report, "Despite the study's link to 49ers interests, Deloitte & Touche officials said neither the football team nor the mall developer, the Mills Corporation, had any influence over its outcome."
In October 1997, Barrett was quoted by the Dallas Morning News defending the objectivity of a study the firm had done, touting the beneficial economic impact of a proposed $125 million stadium for the Mavericks. Robert Baade, a professor at Illinois' Lake Forest College and a decade-long opponent of claims made by Deloitte & Touch studies, told the paper, "The only purpose of these studies is to sell the project to the public, and I'm very concerned about the extent of the misinformation." Baade complained that a Deloitte & Touche study had overly inflated the estimates of jobs and tourist traffic that the project would create.
Barrett responded by saying, "We tried to utilize estimates that are reasonable based on the Dallas market and our experience with other arenas across the country. You can make these reports as aggressive as you want. We try to make estimates that are reasonable."
In March 1998, a year before Spanos publicly voiced his demand for a new stadium, Barrett told the Union-Tribune that the Chargers' 1995 stadium deal was "comparatively good because the Chargers agreed to a long-term contract with a $78 million stadium renovation -- not following other cities and building a new stadium. New stadiums can cost more than $200 million." Barrett, the paper reported, went on to argue that "NFL teams must have a new facility to remain competitive, and noted that 22 of 30 franchises have approved or are seeking new stadiums."
Reached by phone last Friday, Barrett declined to identify any clients of his firm other than the City of San Diego. But he maintained he has no current conflicts of interest with NFL interests that would compromise his role as a city consultant in its ongoing attempts to keep Spanos and the Chargers from moving out of San Diego to more lucrative playing fields in Los Angeles or beyond. "Absolutely not. There is no conflict of interest whatsoever. None at all."
Barrett refused to discuss the specifics or the status of his current consulting activity on behalf of the city, other than to assert that he has not yet met with Alex Spanos or other representatives of the team to begin the renegotiation process. He said he had no knowledge of whether Spanos had triggered the renegotiation clause in the stadium agreement. "I have not attempted to contact him, nor have I had any contact with him. That is not my role.
"I have a contract, okay, to help the city," Barrett continued. "We have not pursued anything at this time simply because there hasn't been anything done at this point. The city has made it clear that they would like to improve the situation with the Chargers lease and I was retained to help them in those efforts, but no significant progress has been made to date.
"It's something that I think would be nice if it could be resolved. We're looking at alternatives to try and improve the situation, but at this time nothing has been presented nor has anything been discussed, as far as I know," Barrett said. He added that he had not yet received any payment for his services and asserted that he didn't know when he would be compensated under the terms of his agreement with the city. City officials did not return phone calls.
Henderson says that he is not persuaded that Barrett can keep the Chargers in San Diego. "Barrett or anyone else would have to be a pretty good magician to conjure up a new Chargers agreement that would benefit the city and get Alex Spanos to accept it," the former city councilman says. "Alex will drop the other shoe when and if he wants to. And then the team will be gone. The timing is all up to him. It's a very sad, familiar story."