We already knew that the mighty Los Angeles market offered a clear profit advantage for an incoming National Football League franchise, or even two. The city is flush with corporate executives who can rely on shareholders to tolerate lavish payments for stadium suites and vanity naming deals.
As I wrote in January 2015, the better question was why the Chargers weren’t in L.A. already, having enjoyed a two-decade opportunity — without competition — to build a fan base throughout Southern California.
The most likely answer was that the NFL, a legal monopoly, conspired to keep Los Angeles teamless. Now the focus has shifted to the public’s willingness to directly subsidize private industry, particularly in San Diego.
Sure, Nevada’s legislature just voted to contribute $750 million toward a Raiders stadium, backed by higher hotel taxes. Yet history may reveal such largesse as an outlier, with San Diego’s frugality the start of a national trend. It’s too early to know.
Other team owners had extracted many hundreds of millions in taxpayer stadium subsidies since the 1990s from smaller cities by threatening to leave. Because the L.A. market held such promise, the league demanded rich compensation from any colleague that genuinely wanted to move. Small-market owners, as they negotiated with local politicians, counted on the caution and thrift of the Spanos family to keep their Chargers locked in place.
Then, in 2015, came Stan Kroenke, the inscrutable billionaire who’s privately funding a $1.9 billion Inglewood stadium ($2.6 billion including financing) for his Rams and reluctantly sharing with the Chargers.
Some analysts say Kroenke was able to break up the league’s conspiracy of L.A. lock-out because he was much bolder than Chargers Chairman Dean Spanos. But he may just have been richer. The wave of football stadium building has crested, with the next maybe 20 years in the future, so the usefulness of teamless Los Angeles has expired for the NFL.
In this sense, San Diego’s decisive rejection in November of public subsidies for a downtown stadium was a vote heard around the league.
To be sure, the Charger’s Measure C was far from perfect. It may not have withstood legal challenge, because it came perilously close to the state’s constitutional prohibition against raising taxes for a specific private purpose.
Politically, however, its core strategy was deft. It would have raised taxes on hotel guests only. Because hotels are subject to robust rate competition on most nights, in economic terms this means hotel owners ultimately would absorb the higher cost in the form of lower profits.
That’s why the Chargers attached a convention center to the project. The team could share or avoid big costs on common slabs of concrete foundations, concourses and such.
And this wouldn’t be some empty stadium used just 10 days a year. Tourism dollars would flow from conventions. Why, the project would pay for itself, consultants projected.
Indeed, Measure C effectively offered a $1.8 billion convadium with $1.15 billion coming from hoteliers, indirectly, and $650 million coming directly from the Chargers, its fans, and the NFL.
Fatally for the measure, the team failed to convince the hotel industry, which preferred a waterfront expansion of its existing center. In the late 1990s, the industry had convinced politicians to bill taxpayers directly for the last expansion through the city’s general fund. If hoteliers were going to pay this time around, they wanted to run the show.
Yet the death blow was delivered by voters, 57 percent of whom rejected Measure C in November. We can safely infer that ordinary people understood that tax dollars, even those effectively paid by hoteliers, are tax dollars. Once hiked, taxes can just as easily go to roads, pensions and the poor in San Diego instead of further enriching the NFL.
Indeed, we can probably rule out “not-in-my-backyard-ism.” Voters who lived in downtown precincts — the very people who would live amid the traffic jams and reveling conventioneers from a 15-acre convadium — supported the project by 52 percent to 48 percent, according to data from the county registrar.
No, this was a vote against handouts to billionaires. With, perhaps, a message to the hotel industry.
Last night, Mayor Kevin Faulconer announced in his “state of the city” address that he will ask voters to raise hotel taxes to expand the waterfront convention center. To make the medicine go down, a third of the proceeds would also improve roads and get more homeless people off the streets.
Unless California courts rule otherwise, this tax hike would require a two-thirds super majority on Election Day.
History suggests the odds are poor. In 2004, voters soundly rejected a measure to raise hotel taxes for the general fund that was sold as improving police and fire protection. Now the mayor wants them to embrace the homeless and hoteliers.
Voters may reasonably ask why downtown hotel owners, mostly giant corporations, can’t simply form a nonprofit and assess themselves to fund any convention center improvement that helps their industry. The only government role would be granting permission.
Another consequence: With the Chargers really, actually gone, hoteliers may live to regret their opposition to Measure C. It may be that having sunny San Diego splashed on national television’s most-watched sport every autumn weekend is more valuable than the $30 million or so in tourism marketing dollars the industry spends now.
San Diego will do fine without the Chargers, economically. But the hotel industry may miss them as much as fans.
dan.mcswain@sduniontribune.com (619) 293-1280 ▪Twitter: @McSwainUT
