With the San Diego Chargers ownership decided to play the 2016 season at Qualcomm Stadium and work toward a new stadium, the economics of the two main alternatives — downtown and Mission Valley — are considerably more complicated than partisans on both sides are arguing.
You know the outlines of the debate, which has been repeated ad nauseum since the NFL approved the move of the Rams to Los Angeles and the potential move of the Chargers: the team has been arguing for a Palace of Football in the form of a downtown Chargers stadium, while city and county officials have been pushing for a more moderately priced stadium in the Mission Valley area, perhaps directly next to Qualcomm Stadium.
But the reality doesn’t quite comport to those tidy storylines. The Spanos family has indeed been pushing for a downtown Chargers stadium that costs more than a Mission Valley stadium would — but that downtown project would have some potential funding sources not available in Mission Valley, would generate far more income, and would potentially have a much higher payoff than a modest Mission Valley project. Plus, putting a stadium in Mission Valley could also preclude a proposed San Diego State University project that would have a much larger payoff than an NFL facility. In many ways, comparing the two proposals is a matter of comparing apples and oranges.
Let’s begin with a look at what’s being proposed for a downtown Chargers stadium. The team has been pushing a downtown Chargers stadium next the Gaslamp District and Petco Park, perhaps at the site of a current bus-storage facility. The cost of the project would approach $1.4 billion, but $600 million of that would go toward a convention center built as part of the facility. This project would have a development partner — JMI Realty, led by John Moores, former San Diego Padres owner and the impetus behind Petco Park — and it would also be able to potentially tap into hotel taxes as a funding source. It would continue the red-hot development in the greater Gaslight District, and it would also address what is perceived to be the substandard convention-center situation downtown.
In comparison, a new Mission Valley stadium would cost at least $1.1 billion, per the parameters set by Mayor Kevin Faulconer for a facility seating 67,500 with 120 suites, 7,500 club seats and 250 in loge boxes. He’s proposing the NFL and the Chargers pay $750 million, with the city coming up with $350 million. There’s no way the NFL would sign off on that deal — the Minnesota Vikings are paying 50 percent of the cost of U.S. Bank Stadium, and that percentage was considered a lot in NFL circles for a smaller-market team. From the San Diego Union-Tribune:
However, the downtown idea has hurdles. Getting to construction requires an estimated $275 million to buy adjacent private land, along with covering cost inflation, financing and other “soft” costs. Whether the project should include the cost of moving a public bus yard from the site isn’t at all clear.
In any case, critics won’t have trouble raising questions about cost estimates for either scenario.
So I’d expect the Chargers and JMI to make a case for wider economic benefits.
Moores, the JMI owner, wants the Mission Valley site to end up with landlocked San Diego State University. A 2007 study projected that adding the equivalent of 10,000 full-time students would nearly double SDSU’s economic contribution to $4.5 billion a year by 2025.
Back downtown, hoteliers argue the tourism industry is hobbled by an insufficient convention center. With the mayor’s bayside plan moribund, the Chargers can credibly claim to solve his problem across the street.
Staying in San Diego represents a potential financial hit for the Spanos family. With Stan Kroenke offering to share revenue and charge $1 for rent (reportedly) if the Chargers move to a new Inglewood stadium, any new Chargers stadium will probably be a less profitable venue than setting up shop in Los Angeles.
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