The recent decision by the NFL ownership to allow the relocation of the Rams to Los Angeles has left two franchises, the Oakland Raiders and the San Diego Chargers, with uncertainty regarding their future in either of those markets. It is rather unusual for a multi-billion dollar entity such as the NFL to have such instability with their franchises, let alone with two of them in the same geographic region.
The Raiders and Chargers also bid to move to Los Angeles in a joint project for a new stadium proposed in Carson, California; this measure was defeated by a resounding vote of the full ownership panel of the NFL. However, as part of the Rams winning bid to gain the foothold into LA, the Chargers have a full calendar year to determine if they will join the Rams in their stadium in Inglewood.
The Chargers have an agreement where they will play the upcoming 2016 season in San Diego and could move to LA in 2017 because they struck a tenant agreement with the Rams. However, many NFL insiders think that it is unlikely that the Chargers would want to move to LA under that deal because they will not be entitled to the full revenues available in the terms of that tenant arrangement.
The Chargers are focusing their efforts on securing a long term stadium solution in San Diego which is anything but a sure bet. The people in San Diego are rather upset (understandably so) at the Chargers ownership for their willingness to move the team to Los Angeles. Both the Chargers and the city politicians are harnessing their energy on passing a citizen’s initiative which is a mechanism in California which allows for the public to vote in a combined measure over the new stadium and the land involved in that project. If the measure successfully passes the public vote, the lengthy environmental review process is voided.
It should be noted that this procedure was the same technique used by Dean Spanos and the Chargers management in gaining a faster approval process for the land in Carson for the proposed stadium there in the “race to LA”. It circumvents the rather cumbersome and time consuming environmental review which could delay the land for a stadium site for development for years.
The stadium quest between the Chargers and the San Diego politicians has revolved around a couple of central issues over the past fifteen years. The first issue is the location of the stadium and the second issue is the funding for the project. When you consider that those are the two main issues to moving a stadium construction forward that is why the two sides have remained in limbo for a decade and a half.
The condensed version of each issue can be summed up in this way. First, the location of the stadium has revolved mainly around two areas of San Diego (I do not believe that the team was ever going to move to the suburbs – that was strictly a tool for leverage by the Spanos family) and both sides have disagreed over that stadium location. The two areas proposed in this situation are: Mission Valley and downtown San Diego.
The essence of the situation regarding the site proposals is that the politicians favored the Chargers build a stadium on the same site in Mission Valley where the current stadium is located. The Spanos family favored the downtown site and wanted similar concessions to those given by the politicians to the Padres ownership when they built the downtown baseball stadium now known as Petco Park.
The second issue is the funding for the site and for many years the Spanos family was trying to gain public dollars for the stadium project by requesting that the politicians attach the new stadium proposal to the measure to renovate the convention center downtown. The politicians refused to combine the two proposals and felt that essentially the family had billions of dollars and should foot the bill for the stadium. The politicians also wanted the stadium in Mission Valley so that stalemate continued for years.
The current situation is still pretty messy. The Chargers formally announced their proposal for a downtown stadium adjoining the convention center site last week. The politicians responded with their rationale behind why they believe the Mission Valley site is a better fit for all sides. The main issue is that the land that the Chargers would need to fulfill the downtown project is not owned by either party in this scenario. The costs, the risks, and the potential for public approval are all significantly greater with the downtown proposal because of the purchase of the land and the associated legal costs. The financing for that endeavor becomes tricky because the public has to vote by a two-thirds majority to approve any ballot initiative that includes a tax increase. The public support may not be there for this project which will set back the entire time frame of getting the stadium built.
Meanwhile, the Mission Valley site is where both the city and the county proposed a $1.1 billion stadium project on land that is city owned. The viewpoint of the city officials is that this project site will provide a smoother and more cost effective option to development of a new stadium. The Chargers, according to ESPN and other news outlets, have been working with JMI which is the same real estate developer that helped the Padres develop Petco Park.
According to JMI they estimate that the cost of the expansion of the convention center and the new football stadium downtown to be at around $1.4 billion. In a move to push back against the city and county officials, JMI claims that the cost to develop both sites, the convention center and the Mission Valley stadium would cost the city close to $1.8 billion dollars for two separate, stand-alone buildings.
The Chargers are pushing for the downtown site for two reasons: better access points for fans and the inclusion of the convention center and the other areas surrounding it in the downtown Gas Lamp district would provide for a great setting for the Super Bowl and other large scale events. The Chargers know that to keep the franchise in San Diego they need to be able to compete with Los Angeles for those big events, and a new stadium in Mission Valley will not achieve that objective. The public vote in November is the next big hurdle in this scenario.
Out of Oakland?
The Oakland Raiders have also been left without a long term solution for a place to call home for their franchise. They did just agree to a new stadium lease that allows them to keep playing in Oakland Coliseum until another arrangement can be made.
The team owner, Mark Davis, has explored relocation to San Antonio and has just met with officials in Las Vegas recently as well. The main issue with remaining in Oakland is that the city and county have basically zero money to allocate for the stadium project and the public appetite towards public finance of a stadium in any form, whether it comes from an increase in a hotel tax or via another mechanism, is not very likely at this point.
Davis has scaled back his proposals to Oakland with the last proposal seeking land for a smaller venue that was more intimate for fans. The Oakland politicians are concerned about the viability of any project because they also feel pressure from Major League Baseball to figure out a new stadium solution for the A’s.
The developers in Oakland had once pitched the Coliseum City project which would have encompassed 800 acres and included new stadiums for both teams. That proposal, which you can read plenty about if you wish because many news outlets in the Bay Area covered it extensively, died out and is no longer an option.
In all my research and in covering both the NFL’s “race to LA” and the Raiders and Chargers over the years, I just do not see a way for the Raiders to stay in Oakland. I also thought they had a slim chance of going to LA because of the grudge that the NFL owners have for the Davis family built over years of hostilities.
Conversely, I have had a gut feeling over the years that the Chargers could wind up staying in San Diego. The community there is very supportive of the team and they have built a history there spanning decades. It is a great city for the Super Bowl because of the climate and location, but it needs an upgraded stadium to host that event in the future. I think that the Chargers could end up making it work there with the downtown site.
In the event that the Chargers and the San Diego officials cannot make it work, then I think the Raiders have a chance of going there next year if the Chargers leave for Los Angeles (they have a one year option to do so). The Raiders could end up going to San Diego and leveraging the city and county into a new stadium once the Chargers have moved on.
The San Antonio option for the Raiders is interesting because Mark Davis owns land halfway between San Antonio and Austin where he could build a stadium and take advantage of a rapidly growing area in football crazy Texas. However, the political NFL reality is that it is unlikely that Dallas Cowboys owner Jerry Jones or Houston Texans owner Bob McNair would vote to approve such a move. They are both powerful owners with friendships with other owners, so Davis probably faces a steep hurdle to gaining approval for that endeavor.
The Las Vegas option is interesting and could gain some traction. The Raiders had discussions there regarding a new project that potentially would build a domed stadium on land on the Vegas Strip for a facility that would be shared by the UNLV football team and an NFL team and cost close around $1 billion. The big casino and hotel resort owners are backing the project because they see the potential for that investment to be paid off by having new visitors who would otherwise not come to Las Vegas. This new untapped customer base could be worth a significant return in hotel rooms and additional tourist dollars for having a stadium capable of hosting large scale events.
Mark Davis came away impressed and called Las Vegas “a global city” so that is speaking directly to the league office which has sought different ways to grow the NFL internationally in recent years (i.e. games played in London, Canada, and Mexico). That is a subtle play by Davis to try to leverage that sentiment from the owners for a potential relocation bid.
In my view, I would be surprised if the Chargers left San Diego at this point, unless the whole thing falls apart with the public financing for the downtown site, because even if the team could play in a bigger market in L.A. they would be sharing that market with the Rams. Furthermore, the Rams will have had a full year in the L.A. market and have gained all the top sponsorships. The Chargers would be a tenant in L.A. and stand to make less on the ancillary revenue streams due to that type of arrangement; where by staying in San Diego they are the only team in the market and they would have their own stadium with full access to more revenue streams.
The situation bears watching as it is very fluid in the case of both franchises involved. The end game will be that both Oakland and San Diego work with the teams to keep them in those markets, or two new cities will be on the NFL map in the future.