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Chargers: Look at Petco Park Failure

Padres attendance is worse than it was at Qualcomm, even though the team had a great 2010 season and is slashing ticket and concession prices. So why do the Chargers want a stadium a stone’s throw from Petco, which is not working out for the Padres?

There are several theories on this, but the most salient one is that the Chargers really don’t want a stadium downtown. They prefer to occupy a stadium in Los Angeles, but because that is no sure thing, they want the backup possibility of remaining in San Diego. Since the team intends to put only $200 million into the proposed new local stadium, and taxpayers of an insolvent city would have to pick up the rest (at least $500 million and probably more like $700 million), what’s to lose by lobbying for a highly subsidized facility?

Although pro baseball and football respond to different economic forces, the Chargers should be paying attention to the Padres’ attendance afflictions.

During the 2010 season, when the Padres were in first place in the National League West for most of the season and were in play-off contention until the last day of the season, attendance averaged 26,318, up modestly from 23,699 in 2009, when the team had a losing season. But between 2000 and 2003, when the woeful Padres won 285 games and lost 363 and were last in the league three times and next to last once, attendance at Qualcomm averaged 27,720 — more than 1000 a game higher than in 2010 at Petco, when the team was in first place most of the year.

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Even in 2002 at Qualcomm, when the last-place team won 66 games and lost 96, attendance averaged 27,415 — much better than last season at Petco, when the team went 90–72.

Attendance surged when the Padres opened Petco in 2004 but steadily dropped off, even though the team won two National League West titles during the period.

The Padres dropped ticket prices an average 27 percent in 2009 and 15.4 percent in 2010, according to the publisher of sports marketing information, Team Marketing Report. The team will lower prices again for 2011 — for example, the number of tickets costing less than $18 will go up 65 percent. The Padres have slashed concession prices dramatically too, according to Team Marketing Report.

Observers cite a number of factors for declining attendance: parking and traffic are much worse than at Qualcomm; despite the cuts, prices are still quite high; the recession hurts; tailgating is difficult; it’s a pitcher’s park and fans may prefer the long ball, among many things. The trading away of star slugger and hometown hero Adrian Gonzalez will not help 2011 attendance.

The top line has suffered, but the bottom line is another story. According to Forbes magazine, the Padres were worth $226 million in 2003. They were worth $408 million in 2010. That’s a hefty return during a period when other assets rattled along a rocky road. The team payroll dropped from $73.7 million in 2008 to $38.2 million in 2010.

Petco has basically followed the trend of other new parks: owners jack up prices tremendously for the initial novelty period, but then comes a steady falloff. “Petco Park hasn’t done all that badly compared to other parks,” says Neil deMause, who runs the website fieldofschemes.com. “The typical baseball-stadium honeymoon is two to eight years, depending on how the team does on the field.”

Says Rodney Fort, a sports economist at the University of Michigan who formerly lived in San Diego, “There is so much to do in San Diego. I suspect it is these other activities that drive much of the attendance issue for the Padres.”

Some of the Padres’ downtown problems would not be so nettlesome for the Chargers should they succeed in getting their downtown stadium. Traffic and parking might not be so bad on Sundays, for example.

Because in pro football there are far fewer games and more TV revenue than in baseball, says deMause, “You could put an NFL stadium in Kuala Lumpur and still make money so long as you could sell half a million tickets and get a share of national TV money.”

However, the differences between the Los Angeles and San Diego markets are stark. The L.A. metro market is 12.9 million versus 3.1 million in San Diego. More significantly, the Los Angeles market is home to the entertainment industry, which doesn’t suffer from the kind of foreign competition plaguing other industries. Los Angeles is satiated with billionaires. Any team locating there will have the pricing power to utilize such ploys as multiple luxury boxes and very expensive club seats.

Since back in the mid-1990s, when the Chargers lobbied for and received the makeover of the stadium now named Qualcomm, the team has left a trail proving that its first love is Los Angeles. Its original contract had a clause permitting it to shop the team around; when it agreed to drop the unpopular 60,000-seat guarantee, the team wangled three-month windows every year to announce any relocation; the cost of a notice of termination has dropped sharply; and there is no requirement that the team disclose that it is negotiating or has already signed a commitment to relocate. “Why would the Chargers ask for provisions like that if they are not intending to move?” asks former councilmember Bruce Henderson, who warned from the outset that the contracts San Diego was signing were “road maps to Los Angeles.” But he was vilified — and still is.

The economics of pro baseball and pro football differ. Consider: the two teams with the highest-priced tickets and concessions in baseball are the Boston Red Sox and Chicago Cubs. Their ballparks opened in 1912 and 1914, respectively. According to Forbes, the Red Sox are the second-richest team in baseball, worth $870 million, and the Cubs are fifth, worth $726 million. Football is a different story. The Dallas Cowboys, who have an obscenely glitzy new stadium, sport the highest-priced tickets and concessions and are worth the most in the league at $1.8 billion. The National Football League is hinting to Atlanta that it won’t get further Super Bowls because its stadium is so ancient. It’s all of 18 years old.

Former city attorney Mike Aguirre, who also warned that the Chargers contracts were the team’s ticket to Los Angeles, notes that Qualcomm seats 70,500 and the new stadium would seat 62,000. The Chargers would have to raise prices inordinately, and the Padres’ experience at Petco suggests that would be difficult in San Diego, where incomes are moderately above the national norm but the cost of living is far above average. San Diego is not loaded with billionaires or companies with money to burn on luxury boxes.

“San Diego is [the Chargers’] second choice; their first choice is L.A.,” says Aguirre. But everybody knows that — except San Diegans, who apparently enjoy getting fooled twice, three times, four times, five times…

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Padres attendance is worse than it was at Qualcomm, even though the team had a great 2010 season and is slashing ticket and concession prices. So why do the Chargers want a stadium a stone’s throw from Petco, which is not working out for the Padres?

There are several theories on this, but the most salient one is that the Chargers really don’t want a stadium downtown. They prefer to occupy a stadium in Los Angeles, but because that is no sure thing, they want the backup possibility of remaining in San Diego. Since the team intends to put only $200 million into the proposed new local stadium, and taxpayers of an insolvent city would have to pick up the rest (at least $500 million and probably more like $700 million), what’s to lose by lobbying for a highly subsidized facility?

Although pro baseball and football respond to different economic forces, the Chargers should be paying attention to the Padres’ attendance afflictions.

During the 2010 season, when the Padres were in first place in the National League West for most of the season and were in play-off contention until the last day of the season, attendance averaged 26,318, up modestly from 23,699 in 2009, when the team had a losing season. But between 2000 and 2003, when the woeful Padres won 285 games and lost 363 and were last in the league three times and next to last once, attendance at Qualcomm averaged 27,720 — more than 1000 a game higher than in 2010 at Petco, when the team was in first place most of the year.

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Even in 2002 at Qualcomm, when the last-place team won 66 games and lost 96, attendance averaged 27,415 — much better than last season at Petco, when the team went 90–72.

Attendance surged when the Padres opened Petco in 2004 but steadily dropped off, even though the team won two National League West titles during the period.

The Padres dropped ticket prices an average 27 percent in 2009 and 15.4 percent in 2010, according to the publisher of sports marketing information, Team Marketing Report. The team will lower prices again for 2011 — for example, the number of tickets costing less than $18 will go up 65 percent. The Padres have slashed concession prices dramatically too, according to Team Marketing Report.

Observers cite a number of factors for declining attendance: parking and traffic are much worse than at Qualcomm; despite the cuts, prices are still quite high; the recession hurts; tailgating is difficult; it’s a pitcher’s park and fans may prefer the long ball, among many things. The trading away of star slugger and hometown hero Adrian Gonzalez will not help 2011 attendance.

The top line has suffered, but the bottom line is another story. According to Forbes magazine, the Padres were worth $226 million in 2003. They were worth $408 million in 2010. That’s a hefty return during a period when other assets rattled along a rocky road. The team payroll dropped from $73.7 million in 2008 to $38.2 million in 2010.

Petco has basically followed the trend of other new parks: owners jack up prices tremendously for the initial novelty period, but then comes a steady falloff. “Petco Park hasn’t done all that badly compared to other parks,” says Neil deMause, who runs the website fieldofschemes.com. “The typical baseball-stadium honeymoon is two to eight years, depending on how the team does on the field.”

Says Rodney Fort, a sports economist at the University of Michigan who formerly lived in San Diego, “There is so much to do in San Diego. I suspect it is these other activities that drive much of the attendance issue for the Padres.”

Some of the Padres’ downtown problems would not be so nettlesome for the Chargers should they succeed in getting their downtown stadium. Traffic and parking might not be so bad on Sundays, for example.

Because in pro football there are far fewer games and more TV revenue than in baseball, says deMause, “You could put an NFL stadium in Kuala Lumpur and still make money so long as you could sell half a million tickets and get a share of national TV money.”

However, the differences between the Los Angeles and San Diego markets are stark. The L.A. metro market is 12.9 million versus 3.1 million in San Diego. More significantly, the Los Angeles market is home to the entertainment industry, which doesn’t suffer from the kind of foreign competition plaguing other industries. Los Angeles is satiated with billionaires. Any team locating there will have the pricing power to utilize such ploys as multiple luxury boxes and very expensive club seats.

Since back in the mid-1990s, when the Chargers lobbied for and received the makeover of the stadium now named Qualcomm, the team has left a trail proving that its first love is Los Angeles. Its original contract had a clause permitting it to shop the team around; when it agreed to drop the unpopular 60,000-seat guarantee, the team wangled three-month windows every year to announce any relocation; the cost of a notice of termination has dropped sharply; and there is no requirement that the team disclose that it is negotiating or has already signed a commitment to relocate. “Why would the Chargers ask for provisions like that if they are not intending to move?” asks former councilmember Bruce Henderson, who warned from the outset that the contracts San Diego was signing were “road maps to Los Angeles.” But he was vilified — and still is.

The economics of pro baseball and pro football differ. Consider: the two teams with the highest-priced tickets and concessions in baseball are the Boston Red Sox and Chicago Cubs. Their ballparks opened in 1912 and 1914, respectively. According to Forbes, the Red Sox are the second-richest team in baseball, worth $870 million, and the Cubs are fifth, worth $726 million. Football is a different story. The Dallas Cowboys, who have an obscenely glitzy new stadium, sport the highest-priced tickets and concessions and are worth the most in the league at $1.8 billion. The National Football League is hinting to Atlanta that it won’t get further Super Bowls because its stadium is so ancient. It’s all of 18 years old.

Former city attorney Mike Aguirre, who also warned that the Chargers contracts were the team’s ticket to Los Angeles, notes that Qualcomm seats 70,500 and the new stadium would seat 62,000. The Chargers would have to raise prices inordinately, and the Padres’ experience at Petco suggests that would be difficult in San Diego, where incomes are moderately above the national norm but the cost of living is far above average. San Diego is not loaded with billionaires or companies with money to burn on luxury boxes.

“San Diego is [the Chargers’] second choice; their first choice is L.A.,” says Aguirre. But everybody knows that — except San Diegans, who apparently enjoy getting fooled twice, three times, four times, five times…

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The latest copy of the Reader

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