Qualcomm Stadium: Is San Diego Supercharged or Overcharged?

By Michael Strickland
Motions, University of San Diego School of Law
October 2002

The Chargers want a new stadium.

Over the past decade, 17 new football stadiums have sprouted up across the country. Five new stadiums opened for business this season alone. It's understandable why Chargers owner Alex Spanos wants one for his organization; everyone else is doing it.

Also understandable is the lack of public support for the issue. Just five years ago, Qualcomm Stadium underwent a $78 million renovation, $60 million of which was publicly funded. In addition, a controversial "ticket guarantee" clause in the Chargers' current contract has cost San Diego taxpayers over $28 million since 1995. Add the fact that the team hasn't had a winning record since that same year, and it becomes obvious why the organization is facing an uphill battle.

For law students, the stadium issue has something for just about everyone: contract law, sports law, property law, land use planning and more than a little local politics. At the heart of the matter is the Chargers' 1995 contract with the city, which contains a loophole that gives the organization a certain degree of leverage over the city.

In July, Mayor Dick Murphy formed the Citizens' Task Force on Chargers Issues to investigate "fiscally responsible" ways to keep the team in San Diego. A number of local attorneys serve on the task force, including Karen Heumann, a 1997 USD graduate. Next February, the task force will submit their final report to the city council.

Evaluating the Q
There is little consensus between the various parties on the viability of Qualcomm Stadium. The Chargers claim they can't compete financially against teams with new stadiums. NFL consultant Rick Horrow called the stadium "economically, competitively and physically obsolete" at a recent task force meeting. New stadiums with more luxury boxes and club seats can keep more local revenue, so the argument goes—though Horrow presented no actual revenue numbers, citing confidentiality reasons.

Task force members questioned the causal link between new stadiums and higher revenues. In particular, task force member Bill Largent questioned how the Chargers would sell more tickets in a new stadium if they can't sell out Qualcomm Stadium now.

After a recent tour of the stadium, task force chairman David Watson opined that the facility is "in good shape." During the same tour, Assistant Stadium Manager Steve Shushan reported that fans have generally given the stadium good marks, and that there was nothing structurally wrong with the facility.

Though the stadium has minor problems one would expect from a 35-year-old multi-use facility, some task force members suggested they could be corrected with renovations. As Watson commented, "it seems like a design problem, not a 'new stadium' problem."

The Super Bowl further complicates matters, however. In 1999, an NFL official said "it may be difficult for San Diego to get another Super Bowl without a new stadium" after the big game is played here next January. A 1998 study by PricewaterhouseCoopers concluded that Super Bowl XXXII infused $295 million into the local economy. Such numbers add weight to the argument for keeping the NFL happy.

If the task force does recommend a new stadium, the issue will face voter approval—and almost certain litigation, if the history of the downtown ballpark project serves as any indication.

Reopening Old Wounds
When the Chargers renegotiated with the city back in 1995, they extended their lease of Qualcomm Stadium to the year 2020. Thus, when rumors started flying last year, many San Diegans wondered how the organization could talk about leaving so soon. The answer is a "reopener" clause in the 1995 contract, which gives the Chargers the right to reopen negotiations with the city every four years if certain economic prerequisites are met.

Essentially, if the Chargers and the city cannot agree on an amendment to the contract which offsets the economic factors causing the renegotiation in the first place, the Chargers have the right to terminate the contract. In plain terms, the organization can say "pay up or we're outta here."

It seems as if the Chargers are searching for a way to say just that. In April, they brought special counsel Mark Fabiani onboard to "explore opportunities" for a new stadium. In a recent speech to the task force, Fabiani affirmed the organization's desire to play "championship caliber football in San Diego," but repeated the assertion that the Chargers cannot compete economically for players and coaches against teams that have new stadiums.

The team's performance so far this season seems to contradict that claim, however. Highly regarded head coach Marty Shottenheimer took the helm this year, and new quarterback Drew Brees has led his team to a 4-0 start. A stunning victory over the Super Bowl-champion New England Patriots put the team at the top of the league's standings, a place it hasn't been for a very long time.

The "new stadium equals better team" logic seems to be a chicken-or-the-egg question. Do the Chargers need a new stadium to get a better team? Or a better team to get a new stadium?

Ironically, a team that wins games could satisfy all parties. With more wins, attendance at home games would rise, thus increasing the Chargers' revenue. With higher attendance, the city wouldn't have to buy out games under the ticket guarantee. With a championship-level team again, the organization might eventually find the public amenable to financing construction of a new stadium.

After all, everyone loves a winning team.

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©2003 Michael Strickland


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