Downtown potentates want taxpayers to provide a massive subsidy for a new Chargers stadium. If it ever happens (here’s hoping it doesn’t), the team and whatever governments are involved will draw up a contract. If this one is like many others, it will state that the Chargers promise to stay X number of years if the stadium remains up to or above National Football League standards, or verbiage to that effect.
The bottom line is that the contract will be so nebulous that the team will actually not be making any promises to stay. Generally, a pro team having “a stadium built by a community has a clause that the facility must meet or exceed the standard of other stadiums in the [National Football League] or [Major League Baseball],” says Philip Porter, professor of economics at the University of South Florida. “But only in Lake Wobegon is every stadium above average.”
Ergo, at any time during the period it pledged to stay, the team can enforce the murky clause and demand a new or upgraded facility, although there is usually a practical limit on how soon the team can leave. Should it face objections from taxpayers, the team can and usually will threaten to move. Examples abound, including in San Diego, where the Chargers promised to stay at the stadium now named Qualcomm until 2020 but soon after occupying the refurbished facility were claiming it didn’t meet contract requirements and had to be replaced with a new version. More on that below.
Contracts between governments and sports teams invariably have similar deceitful details, and the teams are the winners. It’s not just that governments are snookered by team lawyers; local politicians, responding to the smell of money and the fear of fan zealotry, want taxpayers to lose and teams to win. “Why do public officials do this?” asks Roger Noll, economics professor emeritus at Stanford who has written extensively on the futility of pro sports subsidies. “A mayor asks, ‘Do I have to be the mayor who got the city in financial trouble or be the mayor who lost the team?’” Voters tolerate massive deficits but not teams moving.
A classic example is St. Louis. It lost a team after the 1987 season. The City, anxious to get an expansion franchise or woo a team from another location, began building a domed stadium in 1993 that was 96 percent funded by taxpayers. The Los Angeles Rams, futilely trying to wangle a new Southern California stadium, moved to St. Louis after the 1994 season.
The Rams suggested a contract inclusion: the facility would have to be “first tier” — in the top 25 percent of league stadiums — or the team could move in 2005 or 2015. City fathers were so hungry to land a team that they overlooked this devastating hooker. After some improvements, the Rams waived a move in 2005. The lease “doesn’t offer much clarity on what constitutes first tier,” says stltoday.com. It could be argued that “just about every inch” of the domed stadium could have to be first tier. One professor of sports economics says it will take $200 million to $300 million to put the stadium in the top 25 percent.
It’s little wonder that the St. Louis Rams are one of the prime candidates, along with the Chargers, to relocate to Los Angeles if a stadium is ever built there — no sure thing.
Cities that capitulated to team demands for a “first tier” or “league standard” clause didn’t contemplate the major changes taking place in stadiums, says Noll. Now there are huge screens following the action, fancy restaurants, play areas for children. “Profits come from things happening inside the stadium other than the game,” says Noll. “So everything built before the year 2000 is obsolete.”
Says Porter, “The life cycle of stadiums is now ten years, even though their economic lives are about 30 years.”
In 1995, the Chargers and San Diego drew up a contract for converting the then–Jack Murphy Stadium (now Qualcomm Stadium) to a “state of the art” football-only stadium. Former councilmember Bruce Henderson, a contracts lawyer, noticed many flaws, including clauses that gave the team a chance to get out of town if the stadium was not kept competitive with other National Football League facilities. In a very short time, Chargers owner Alex Spanos and his executives were declaring that the stadium “was not even close to state of the art; it didn’t provide proper fan experience; locker rooms were something out of the dark ages; the press facilities a major embarrassment; the corporate boxes couldn’t be sold because they were antiquated,” recalls Henderson.
But the Chargers had known all about the stadium before they agreed to the deal, had hired the architects and overseen construction. In the years since, the team has been angling for a taxpayer-financed new facility.
The state-of-the-art clause, when combined with other features such as the 60,000-seat guarantee, meant that the contract “was an agreement designed to blow up to the Chargers’ advantage.… It was a road map out of town. If certain financial criteria were not met, the Chargers could give notice they were leaving. But [reliably verifiable] numbers were not available to the City.”
Ah, sports financial numbers. Leagues conceal them. The Miami Marlins baseball team (formerly Florida Marlins) just got a new ballpark 80 percent financed by taxpayers. Government leaders didn’t even ask the team to open its books. The Marlins had cried poverty; two years ago, a sports website revealed that the team was actually healthy, thanks to generous league revenue sharing. The Securities and Exchange Commission is investigating the Marlins deal, particularly to see if bond buyers got accurate information.
It’s too bad the agency didn’t look into the Chargers football stadium and Petco Park bonds; it found false statements in other kinds of San Diego bonds but overlooked the pro sports financing finagling, for a reason an agency official wouldn’t share with me.