What Can The NFL Do About The Chargers?
Today, ESPN’s Seth Wickersham sent a tweet which set Southern California buzzing with speculation about what the NFL will do regarding the Chargers’ struggles in Los Angeles. San Diegan Jeff Siniard speculates on the matter with some fantasy and a fair amount of reality
Prior to the 2017 NFL season, I was a San Diego Chargers fan. From 2010–2016, I covered stadium issues (among other things) for the SB Nation blog Bolts From The Blue. Much of what I wrote regarding the stadium issues was speculative, based on the rumors and reporting which surrounded the Chargers from January 2015 until Team Chairman Dean Spanos decided to relocate the team to Los Angeles in January 2017.
I currently root for the Miami Dolphins.
All that acknowledged, I can’t help but follow the stories of the Chargers’ struggles in Los Angeles, both out of a deep love of schadenfreude and because I spent years researching and studying the stadium question from as many angles as I could think of.
I’ve avoided wading back into these waters, but the tweet below is too much of an invitation to pass up.
Here’s the tweet from ESPN’s Seth Wickersham which started the whole mess:
Now, let’s consider some questions which must be asked before we speculate at all on the future of the Chargers or San Diego.
Question #1 — Will the Chargers return to San Diego?
Answer: Not without a new stadium deal. The whole reason the Chargers left for Los Angeles was because they were done playing in Qualcomm Stadium, which was completing its 50th year of service in 2016. Qualcomm is a relic of the multipurpose stadium era, and by any modern standard needs to be replaced or completely overhauled from the bottom up. There’s years worth of deferred maintenance, the video boards are terrible, there are leaks everywhere, and some of the sight-lines (especially near the field) are awful. Even if the Spanos family wanted to return the Chargers to San Diego, there’s no reason to consider it unless Qualcomm could be suitably replaced.
Question #2 — Can San Diego get a new stadium deal done?
Answer: Not if you believe in history. Setting aside the Spanos family’s historical failures as well as San Diego’s pension crisis and credit issues from the last decade, San Diego’s current leadership has shown repeatedly that they aren’t equal to this task (or any other task, if we’re being honest). Nothing the current Mayor has set as a priority has resulted in victory, from the ballot box to the City Council; this includes a new Chargers stadium, the SoccerCity Proposal for Mission Valley, a Convention Center expansion, significant assistance to deal with San Diego’s homeless (note that I’m not arguing for or against any of these items, just that the current Mayor hasn’t gotten anywhere with any of these goals).
Question #3 — What would a successful San Diego stadium deal look like?
Answer: First, San Diego would almost certainly be negotiating directly with the NFL and not the Chargers themselves, who are under no obligation to give up their deal in Los Angeles or accept a deal from San Diego. Also, would San Diego’s citizens approve a stadium plan without having a team to go with the stadium? Most importantly, San Diego’s voters would have to agree to some amount of public financing — going into the pockets of an ownership group which relocated the team less than four years earlier (as of a November 2020 vote). Loosely based on the parameters of a supposed desperation deal which was being floated at the time the team relocated, the voting public would have to be willing to contribute $400-$500 million (at bare minimum) in public financing.
Question #4 — Why did the Chargers’ San Diego stadium plan, Measure C, fail in 2016?
Answer: There’s several factors, but we’ll focus on a few key elements. First, there was a lot of anger and apathy in San Diego toward the Spanos family following the relocation fight which consumed all of 2015. Through Special Counsel Mark Fabiani, the Chargers were brutally relentless in making the public case that they deserved the privilege of moving to Los Angeles, while being equally relentless in attacking the City of San Diego for their failures in getting a new stadium built. Maybe most importantly, Measure C provided for a downtown stadium/convention center hybrid to be mostly paid for with a large tourism tax increase, which antagonized San Diego’s political establishment and other established city power brokers and industries, as well as relocating a stadium from the (community and politically preferred) Mission Valley location. On top of it all, the team was mired in a 9–23 stretch of football with a deeply unpopular head coach.
Question #5 — If a new stadium deal could be reached in San Diego, where would the new stadium be located?
Answer: Unknown. There are currently two competing ballot measures for the existing Mission Valley site. One is SoccerCity, which is a large commercial development along with a stadium for an MLS expansion franchise. The other is a plan to provide future space for San Diego State University, along with a new football stadium for the SDSU Aztecs. Recent polling in San Diego suggests that “SDSU West” has a better chance of winning. The larger point is that if either proposal passes, the 160+ acres in Mission Valley may not be available for a new NFL quality stadium, and there’s no other obvious stadium site available and waiting to be used.
Question #6 — Now that we’ve acknowledged how unlikely a stadium deal is in San Diego, let’s say they got a deal passed in 2020 anyway. Would the team move back to San Diego?
Answer: I don’t think it’s likely. Here’s a few thoughts & questions I’d have:
6a — Even if a San Diego stadium deal were somehow approved in November 2020, it would still be at least 3–4 years until construction was completed. That means the earliest possible use would be the 2024 season. The Chargers will have been in Los Angeles for 7 years by that time, with 3 years in StubHub and 4 years in Inglewood. What if they start making headway in the market? What if they’ve won a Super Bowl or two? If they’re finding success in Los Angeles, should they be forced to give it up?
6b — Even if the team agreed to return in San Diego following a successful vote in 2020, that means they would have 3–4 years as a lame duck in Los Angeles. If they’re having trouble selling PSLs now, imagine the trouble they’ll have selling tickets and generating revenue if everyone in Los Angeles knows they’re leaving soon.
6c — The Spanos family is paying about $640 million in relocation fees over 10 years, beginning with their 1st season in Inglewood. If they were to move back to San Diego, how much of that do they have to pay? How much does the league have to give back? Do the Spanos family have to pay a new relocation fee to return to San Diego? What about the G4 stadium loan the NFL provided to the Chargers for Inglewood — do the Chargers get another G4 loan for a new stadium in San Diego? Do they still get the extra $100 million the NFL offered to help keep them in San Diego in 2016? How much of the original G4 loan would be paid back to the NFL or to Rams Owner Stan Kroenke?
6d — The Inglewood lease is only $1 per season, but how much PSL and other revenue generated by the Chargers in Inglewood has to stay with Kroenke to help cover construction and maintenance costs? All of the Chargers’ PSL sales are supposed to help cover the construction costs in Inglewood. How does the NFL ensure that Kroenke is financially compensated and/or isn’t financially compromised in Inglewood if the Chargers were allowed to leave?
6e — Who pays the Chargers’ physical relocation (team headquarters, practice facilities, training equipment, etc.) costs back to San Diego, after they’ve already spent millions moving their operation to the Los Angeles area?
Question #7 — Can the NFL force the Spanos family to sell the franchise to a San Diego ownership group?
Answer: Maybe, but it’s probably not an option the NFL wants to broach. That said, we have seen sports leagues force poor owners out in the past. For instance, we had the NBA force a sale of the Clippers from Donald Sterling to Steve Ballmer. We’ve also seen MLB push Frank McCourt out of his ownership of the Dodgers, as well as quash Jeff Moorad’s purchase plan for the Padres. However, none of the issues which forced those owners out currently applies to the Spanos family. Also, one thing team owners can’t possibly want is a precedent allowing the NFL League Office or fellow owners to strip ownership of a club. Things may not be great for the Chargers right now, but they’d need to be much worse for NFL Commissioner Roger Goodell and the other 31 owners to contemplate pushing the Spanos family out.
Question #8 — What if the Spanos family decided to sell right now on their own?
Answer: They could, but they’d incur significant losses in the process. The NFL has a policy in place to discourage team owners from moving to more lucrative markets, then selling immediately based on the increased value. This is usually referred to as a “Flip Tax.” The Spanos family would be forced to pay a 20% tax back to the NFL off any agreed sale through the year 2020. From 2021 through 2025, it drops to 10%, then dropping 1% each following year until expiring in 2036. According to Forbes, the current valuation of the Chargers is $2.275 billion dollars. Assuming the Spanos family sold the team for $2.5 billion before 2021, they’d have to pay $500 million of that sale back to the NFL. Further, anyone purchasing the team is purchasing them at current market rate — which means Los Angeles. New ownership would likely want to keep the team in Los Angeles for the same reasons the team left San Diego.
Question #9 — How did the NFL screw this up so badly?
Answer — Interestingly enough, it’s mostly about the Stan Kroenke and the Raiders. My personal opinion is that with Kroenke, the Rams, and the Inglewood site, the NFL finally had an owner with deep pockets, a team with established history in Los Angeles, and a (mostly) privately-funded stadium site which could realistically be approved and provide a huge revenue stream related to nearby development. Secondly, they also had a team which could block Raiders’ Owner Mark Davis from returning the Raiders to Los Angeles. Dean Spanos was a complicating factor — a well-liked owner who’d (from the NFL’s perspective) been loyal about helping in league matters and patient in trying to get a new stadium in San Diego.
The NFL ownership vote in January 2016 was (crucially) to approve the Rams + 1 unnamed team to relocate. The 1st option was awarded to Spanos, which forced the Raiders to pursue their deal in Las Vegas. I genuinely think the NFL’s hope in January 2017 was that with the Raiders secured in Las Vegas, they could assist Spanos with securing a deal in San Diego, even following the failure of Measure C in San Diego in November 2016. I don’t think they actually expected Spanos to exercise his option to relocate to Los Angeles.
Question #10 — How can the NFL fix this?
Answer: I’m not sure they can. Not without fundamentally changing the way they do business and not without establishing strict new rules for NFL ownership. As bad as things may be for the Chargers and the NFL right now, the best option right now is probably to ride it out and hope for the best.
There’s one option I think the NFL could consider, and that would be forcing the Spanos family to re-brand the franchise when they move into the Inglewood Stadium in 2020. The NFL could then allow San Diego to keep the Chargers name, colors, and history in trust, possibly even with a timed agreement that if a suitable stadium deal can be reached in San Diego within the next 10 years, San Diego could be awarded a new franchise — similar to what happened when Art Modell relocated the Cleveland Browns to Baltimore in 1996.
Wrapping Up
The Chargers existence in Los Angeles is largely the unintentional by-product of a power struggle among league owners to ensure they got the team owner and stadium project they wanted, while simultaneously blocking the Raiders from returning to Los Angeles. Throwing a bone to an ownership group which had been steadfastly-loyal from the NFL’s perspective was simply the cherry on top.
Of course, in practice, this meant fans in Los Angeles got a team they largely didn’t want, while destroying the relationship between San Diego and the Chargers, a relationship which had endured for 50+ years.
As things stand today, there’s no real path back to San Diego for the Chargers, and even if there was a clear path, there’s complicated financial and legal issues which make a return to San Diego difficult for everyone involved.
In conclusion: this isn’t going to be over anytime soon, and it may get worse before it gets better.
Jeff Siniard is a (former) Chargers fan and a huge cinephile. You can keep up with Jeff on Twitter here.
