The Best Places In San Diego™!

I was proud when San Diego served as a great host for Super Bowl XXXVII on Sunday, January 26, 2003. (Mother nature helped by providing perfect weather for the two weeks leading up to the game.) Announcer John Madden commented during the ABC Broadcast that the Super Bowl should be held in San Diego every year.

So, I started scratching my head when the Chargers started their quest to build a new stadium.  Qualcomm Stadium, which opened in 1967, had just hosted an amazing Super Bowl. What was wrong with it? Couldn’t a few modifications fix any imperfections?

I kept searching for a satisfactory answer in the ensuing years, reading news stories about the search and even attending a community presentation in Mira Mesa by the Chargers organization on why they needed a new stadium. The main argument I heard (beyond fixing up the locker rooms and normal wear & tear of an aging stadium) was the desire to build luxury suites and attract more corporate clients. To do so, studies showed that it would be cheaper to build a new stadium than it would be to renovate Qualcomm Stadium.

Considering San Diego is headquarters for only a few Fortune 500 companies, it was hard for me to see where all the well-heeled corporate clients were going to come from to make it worth the effort and community cost to build a new stadium. Granted, the Chargers want to make this a privately funded stadium so it would be their risk on whether the corporate clients opened up their wallets.

From the community perspective, even if the stadium is privately funded, there is the concern on whether taxpayer owned land would be given up for free or at a discount to help support a new stadium.  To resolve this concern, proposals have recommended the development of land surrounding a stadium to generate new tax revenues. But, in turn, that would burden the local infrastructure, which would need to be upgraded and hopefully paid for by new tax revenues generated by the project. In the end, nearby citizens would be upset with the additional crowding of their communities. So, this returned me to the questions of ‘Why do the Chargers really need a new stadium?’ and ‘Is it really worth the community impacts?’.

As a football fan, I want the Chargers to stay in San Diego. Not only does it help tie a large part of the community together with a common interest, but it is also a huge boon for our third largest industry, tourism. Friends and family back East and in the Midwest are always reminded of the great Southern California weather and lifestyle when the national TV networks broadcast the Chargers games. The networks show clips of surfers riding the waves of the Pacific, bathers frolicking on the beaches, and kids enjoying themselves at the local theme parks. There is no better time for San Diego to receive this free advertising than during football season when the rest of the country is stuck inside their homes with howling winds outside and ice pellets hitting their windows.

So, why can’t things continue to be the way they are with the Chargers staying in San Diego and continuing to play at Qualcomm Stadium?

I finally found my answers reading Friday’s (October 9, 2009) transcript of an online chat hosted by the Chargers point-man on the search for a new stadium, Mark Fabiani. Here, in my words, are the points that stuck out for me in helping to understand why things can’t stay the way they are.

Why the Chargers need to attempt to attract more corporate clients: I had heard the argument over the years that the Chargers needed a new stadium to remain competitive with the other teams in the NFL. I never appreciated what that meant in real dollars until Fabiani explained the salary cap in detail. For those who don’t know, it’s the salary cap that provides parity in the NFL.  No team can just outspend all the others to attract the best players. (Think about the Yankees in baseball, which draw big revenues from its huge New York fan base and far outspends all other teams for the best players.) The NFL has revenue sharing and a spending cap so all teams can remain competitive.

The problem is, “The salary cap is determined by overall League revenues, so when new stadiums come on line, League revenues go up, and the salary cap goes up.” “With new stadiums opening for Dallas, New York Jets and New York Giants, the salary cap will increase — because of the new stadiums alone — by $10 million.” Thus, the Chargers hope that when they build a new stadium and attract more corporate clients, they too will earn additional revenues and continue to have enough money to meet the rising spending cap figure allowed for all NFL teams.

Doing some research, I found that by next year, 23 of the 32 NFL teams will be playing in stadiums that have been built since 1992. Only four teams have older stadiums than the Chargers.  However, two of the four, Green Bay’s Lambeau Field and Chicago’s Soldier Field, underwent several-hundred million dollar renovations in recent years. The other two are the stadiums for San Francisco and Oakland.

Thus, the Chargers are at a distinct disadvantage when it comes to stadium revenues. I now appreciate their argument of why they can’t just maintain the status quo with Qualcomm Stadium.  I’ll also respect their decision that based on extensive studies, building a new stadium is more cost effective than renovating Qualcomm Stadium.

Can the Chargers attract corporate clients?: As I noted earlier, relative to its size, San Diego is the headquarters to very few large companies. Assuming the stadium is privately funded, it is their risk on whether the plethora of smaller companies and professional service firms in San Diego will spend more money at a new stadium. Fabiani and the Chargers believe they will. I’m a little skeptical about the luxury suites but then again, a lot of new razzle dazzle technology features and creature comforts may just get them over the top. One thing San Diego does have going for it from the corporate side is that it serves as a corporate home for consumer technology divisions of major corporations like Sony and HP. Hopefully they’ll want to show off their newest stuff just like Sony did with their flat screen TVs when the Padres opened Petco Park.

One thing Fabiani pointed out in his chat that I think will work to attract corporate dollars is digital advertising. “If all of the signage in a new stadium were electronic, would a company be willing to pay more to have its name flashed on all of the signs at once for a minute?”

Should San Diego keep the Chargers?: Now that I can appreciate, and hopefully you do too, that the Chargers need a new stadium to continue to pay for a competitive team and that the Chargers are willing to take the risk to attract more corporate dollars, the question is whether or not they are still a good fit for San Diego. As a football fan and knowing how much free advertising San Diego gets for its tourism industry, I say yes. For those who are not football fans, I’m curious what you think. If you were against a new stadium, are you now more indifferent as to whether one gets built when you understand why they want a new stadium? Would you rather have the Chargers move to another city and lose the tourism dollars that come with visiting team fans? Would you prefer to have the free tourism advertising that gets broadcast nationally and the resulting tourism dollars go to another city? Would you reconsider if you read that “a study by the Federal Reserve Bank in Philadelphia showed that NFL stadiums generate more for their cities in property tax revenues than the cities put into the stadiums.” Fabiani also noted, “Interestingly, the study did not find that baseball parks or basketball/hockey arenas had any correlation to increases in property taxes.” You can email Fabiani at mdf@markfabiani.com to get a copy of the report.

I hope you will take all of this into consideration as you decide whether to support, oppose, or be indifferent on the effort of the Chargers to build a new stadium in San Diego.