Chargers, Raiders team up for $1.7B Carson stadium announcement (actual stadium not necessarily included)

Well then:

On the field, the San Diego Chargers and Oakland Raiders have had as bitter a rivalry as any in the NFL but in a sense, they’re now partners.

The teams will officially announce Friday that, while they work on stadium deals in their current cities, they will jointly pursue a shared, $1.7-billion NFL stadium in Carson as an alternative…

The Chargers and Raiders will continue to seek public subsidies for new stadiums in their home markets, but they are developing a detailed proposal for a privately financed Los Angeles venue in the event they can’t get deals done in San Diego and Oakland by the end of this year, according to the teams.

In a statement given to The Times on Thursday, the Chargers and Raiders said: “We are pursuing this stadium option in Carson for one straightforward reason: If we cannot find a permanent solution in our home markets, we have no alternative but to preserve other options to guarantee the future economic viability of our franchises.”

There are two possibilities here: Either this is the biggest NFL stadium news in the history of ever, or Chargers owner Dean Spanos and Raiders owner Mark Davis just issued a mindbendingly huge bluff. Let’s examine each of the possibilities:

  • It’s for real: $1.7 billion is an awful lot of money to spend out of your own pocket for a stadium, but if you squint, it just might possibly work with two teams sharing the load. The New York Jets and Giants owners managed to build a stadium that cost almost as much on their own dime (mostly), and if Spanos and Davis can piece together, say, $400 million from naming rights, and $800 million from seat license sales (about what the New York teams managed) to fans who don’t notice what lousy investments seat licenses are, and $400 million in NFL G-4 fund money, then that’s … still not quite enough to break even, but it’s in the ballpark, as it were.
  • It’s a bluff: Both Spanos and Davis are having a bad time of it in stadiums talks in San Diego and Oakland, though much of that is their own doing. What better time to announce that you’re moving to L.A., really you are, any day now, if you can’t get a deal done in your hometown, and if the other team also can’t get a deal done in theirs? (The team statements didn’t say what happens to this “stadium option” if one team decides to bail on it.) Actually moving to L.A. would require huge risks: Not only might the PSLs not sell like hotcakes, but the NFL could demand as much as $250 million in relocation fees per team (Spanos and Davis could try to fight it, but that would involve a lawsuit, which again means risk), plus the G-4 fund stipulates that “the project must not involve any relocation of or change in an affected club’s ‘home territory.’” Suddenly you could be looking at a $1 billion funding hole, which ain’t pretty.

There is one other likely reason for Spanos and Davis to announce this now, whether bluff or for real: What with St. Louis Rams owner Stan Kroenke announcing his own maybe-a-bluff-maybe-not stadium in Inglewood last month, and the NFL unlikely to approve more than two teams in the L.A. market (not to mention the L.A. market not likely to support more than two teams at a level sufficient to pay off two stadiums), there’s a bit of a land rush going on now to be the first to stake a claim to the market just so no one else does. Spanos, in particular, really doesn’t want two teams that aren’t his on his Southern California doorstep, so this serves as a bit of a shot across Kroenke’s bow: We’re going to build a stadium but split the price, and we don’t have a stadium offer back home like you do, and do you really want to gamble that the league will approve your plan over ours?

That’s not the worst thing for California taxpayers, frankly, since it means the three owners are so busy trying to outmaneuver each other that they can’t spend as much time and energy trying to exact tribute from local governments. (Chargers and Raiders execs claim that the Carson stadium wouldn’t require any public funds, but we’ve heard that before.) Though the prospect of Spanos and Davis using this as leverage in San Diego and Oakland could be bad news for taxpayers there, of course.

We may know slightly more once the two teams and their Carson development partners hold a press conference this afternoon. (Friday afternoon, the traditional time for dumping news that you don’t want fact-checked too thoroughly: Add that to your conspiracy bucket.) In the meantime, just enjoy the fact that one side of the stadium would apparently look like a giant, translucent, luxury-box-filled shuttlecraft:

Ah, vaportecture, where would we be without you?


55 comments on “Chargers, Raiders team up for $1.7B Carson stadium announcement (actual stadium not necessarily included)

  1. The fact they do not even put forth the effort to do a completed Photoshop rendering does not make this seem any more likely, it looks like they artist just gave up at some point.

  2. OK, now is the time for San Diego, Oakland, and St. Louis taxpayers to sign a non-agression pact where all 3 entities agree that not one more dime of public money will go toward improving existing stadia or building new stadia for their respective NFL teams. Best case, all 3 teams have to move to LA area to stadia 100% paid for by the them/NFL, thus breaking the vicious evil cycle of taxpayer transfer of wealth to billionaires.

  3. “now is the time for San Diego, Oakland, and St. Louis taxpayers to sign a non-agression pact where all 3 entities agree that not one more dime of public money will go toward improving existing stadia or building new stadia for their respective NFL teams”

    Well first you need to get all the cities, suburbs, counties and states all on board too; not an easy task. Second there is the fact these cities are not the only players in the stadium game, LA is of course the major scare tactic but for the teams in a market around 2 million there is at least another half dozen cities without teams that outside of having team history are quite capable of building a stadium and some might even have better demographics for high end tickets. This is not even considering moving a second team into some of the largest markets.

  4. Lance: Not sure if it was linked to anywhere above, but click over to the LA Times’ report. They have a handful of complete artist renderings.

    Neil you touched on it, but I wonder what agreements there are between the Chargers and Raiders if this causes one of San Diego or Oakland to blink, but not the other. Then one team has zero leverage. I can’t imagine that’s a very strong partnership if one gets what they want in their current market. And how much does the value of a franchise actually increase if it’s suddenly in LA with a total of three teams?

  5. The L.A. Times story is linked at the very top of this item.

    I can’t imagine either the Chargers or Raiders would go ahead with this deal if they got an offer from their current city. That’s one of the many reasons I’d tend to put my money on it being a bluff, or at least a last-ditch fallback “break glass in case of stadium emergency” option. As with Kroenke and Inglewood, it costs them nothing to put out a press release and some renderings, and it has the potential to scare the crap out of city officials in San Diego and Oakland.

  6. The press releases might be cheap, but Kroenke has dumped six-figures into Inglewood political donations (which, yes, for him is a quarterly rounding error).

    http://www.latimes.com/sports/la-me-0216-nfl-stadium-money-20150216-story.html

    I do love where the mayor basically calls money speech (as our Supreme Court has done routinely) and says he’d be more surprised if Kroenke wasn’t trying to buy influence. Something tells me that I can’t afford “free” speech in Inglewood.

  7. When I read this last night, I knew it was a bluff. No way either franchise would put themselves in a situation in which they could be hold the bag if the other team balks. So, let’s say Mark Davis decided to be a hardhead in negotiations and decides he wants the Carson deal where on the other end the Chargers who believed San Diego was ready to let them walk get the sweetheart deal they have been waiting years for and they put out of the Carson deal. MD would lose any leverage he has left because the entire world knows that he don’t have the money or the juice to move by himself. I’m looking forward to see what happens next.

  8. I’m surprised at this strategy by both parties. I would think Davis would have every incentive to ally with Kroenke against Spanos.

  9. Kroenke’s Inglewood plan has progressive much further than this idea. If (more likely when) the vote passes in Inglewood and he can break ground at the Hollywood Park site, that basically kills the Carson plan. Then it becomes a race to be the 2nd team in Inglewood. My money is on that 2nd team being the Raiders with San Diego ultimately giving the Chargers a big handout.

  10. @DGA
    I agree. It seems like that would be a much more sure fire plan. Plus it would avoid realignment issues.

  11. If you wish to squash the Inglewood stadium project, read this article.
    It’s multi-billionaire Stan Kroenke’s worst nightmare.
    Top article on agsaf dot org

  12. A vote passing in Inglewood doesn’t necessarily mean groundbreaking, though. We have zero idea whether Kroenke has the financing in place to build it, or if he’d go ahead with it without NFL approval. Either *might* be the case, but we simply don’t know.

  13. Neil, excellent commentary, as always. You are calling this vaportecture, but wouldn’t blufftecture be more appropriate?

  14. It still seems infinitely more plausible than this joint plan does at this point. The Carson plan has no observable political, planning, or financial advantages over the Inglewood plan.

  15. The partner the Raiders need is not the Chargers but the A’s. With technology and new design features, the Raiders and A’s can join forces to build a multi-use stadium at the current site…roll out the football field, roll in the baseball field. Instead of a retractable roof, use retractable seats to reconfigure the stadium. It would bring state-of-the-art to a whole new level in stadium design, efficiency and profit.

  16. Kroenke owns the land that would be the parking, right? Assuming some naming rights money, PSL sales and G4, what’s left to cover.

    I think Jones in Dallas gets $100 for close in parking and $50 for the lots farther out. Assuming people in LA have the same willingness to pay (and we’ll just simplify and say all parking is at $50 per car per game), then 20,000 cars is $1M per game in revenue. You get 10 football games a year and I imagine that Kroenke could back a good chunk of whatever additional money is needed from bonds backed by parking revenue.

    I’m too lazy to go look at comparables from SF/Atl/NYC on what naming and PSLs might max out at but how much left would he need to come up with? A couple hundred million?

  17. Assuming NFL approves G-4. The G-4 regs explicitly say it can’t be used for relocations, though the owners could always vote to make an exception.

  18. @Neil
    Right, but two teams with comparatively little money.

    @Dean
    Neither league or team will ever agree to a multipurpose stadium. That era is dead and gone.

  19. If a stadium makes financial sense, you can get a bank to loan you money. If not, then it doesn’t make sense even if you can do it with money from your petty cash jar.

  20. The endzones are red – an odd choice if the Chargers and Raiders are leading this effort, maybe these are previously unreleased Farmers Field reject concepts hastily repurposed? And FFS, is that structure floating off the ground?

    My guess is bluff. The Chargers have locked down Inglewood #2 as their fallback, and this is their last all out offensive on San Diego. It is completely reckless to make a final stand on a concept as poorly put together as this. Inglewood is s solid fallback, but probably doesn’t put the fear of God into the City when you’re threatening to relocate somewhere else as a tenant.

    Davis probably knows they are #3 on the NFL’s LA preference list, which probably explains why they are going along with it as a silent partner while San Diego makes the heavy move. If SD caves and builds a new stadium, the Raiders slide in to Inglewood #2. If SD holds firm, Chargers move to Inglewood and the Raiders are out of luck with LA but can initiate flirtation with SD. San Diego is probably preferable landing spot to Davis than Oakland, San Antonio and St. Louis. Lots of existing Raiders fans in SD and close to LA, where there are many more. That’s an advantage SD has over SA and STL.

  21. Major bluff. So major, in fact, that I don’t even consider this a bluff. These guys have the worst poker-faces I’ve ever seen. Everyone involved here could turn a royal flush into a $5 win.

    RaidersChargers: “Wow, would you look at this hand? Woohoo!”

    Everyone else: “Fold.”

  22. The fact that the Carson rendering just looks like a gussied up Soldier Field does not inspire confidence. That said, the location makes sense, especially if the Chargers plan to keep the San Diego name.

  23. Oh, right… and didn’t G4 have getting some public money as a precondition? Or did that go away when (maybe the Eagles?) got some for renovations without public contribution?

    Still, it’s rather amazing how much owners can raise without dipping into their own pockets at all. But if it’s parking and PSLs, then it’s the people ultimately using the stadium, which is totally fine. I actually think PSLs might be underpriced. I have friends who pay what amounts to that EVERY YEAR just for the right to buy football tickets to their alma mater’s college games. But shh… don’t tell the NFL owners that.

  24. Michael: While I would never underestimate Americans’ love of going to football games and doing whatever it is they do there, the PSL resale market says otherwise:

    http://www.forbes.com/sites/danalexander/2012/09/05/nfl-psls-have-become-very-risky-investments/

  25. With his net worth, certainly Kroenke can get a loan tomorrow. I was trying to figure out how he might plug the largest hole/s in the funding gap without having to dip into his own pockets. Because he won’t.

    Also, it’s mildly amusing how nobody in LA is talking about how two of the three teams that are potentially relocating are bad teams that are not likely to win, well ever. The Raiders are just an organizational clusterfuck. And Kroenke’s teams almost make no attempt to win, or rather they make the playoffs just often enough so that nobody notices they hardly win anything ever (1 MLS Cup, 1 Stanley Cup and 1 FA Cup in like 30 or 40 seasons-worth of ownership).

  26. I know the resale market is bad. But for the people whose demand for football is inelastic, it’s REALLY inelastic. Give owners time and they’ll figure out a way to both tier the PSL and have it be a recurring membership cost, not a one-time rights purchase.

  27. Ack, I wish I could correct. PSL sales are already tiered. But I still think they could bilk more people for an annual revenue stream.

    Also, Ben… that was my exact thought. It looks like Soldier Field (only without the old facade hemming it in).

  28. Don’t think this is a bluff at all. They know that San Diego and Oakland voters will never support a tax hike (2/3 required support) that will pay for a one team stadium. If the want a new stadium in CA, a joint stadium in LA is the only thing that can work without tax hike vote. They also need something to ward off Kronke and make him accept the gifts St. Louis will try to bestow on him. I just don’t see PSL’s selling well in LA for two teams that have no (recent) history there.

  29. If this turns out to be more than the bluff I assume it is, would the NFL even want two teams in the same division playing in the same stadium?

  30. I can tell you, as someone who lives in SD, that a vote that includes San Diego proper won’t come near 2/3rds. What about including the county? Maybe even lower than just the city. People are being nickeled and dimed in taxes and general cost of living already. Is that the Chargers fault? No, but there are other issues here that are may be more worthy of a vote to increase taxes, if you were to have a vote (infrastructure or the city pension issue). SD is full of transplants too, which doesn’t help the Chargers case in a vote.

    Kroenke can always build a new stadium or renovate the current dome in STL. LA is going to make him a lot more money sure, but the STL option is always there. I doubt STL will say no to a privately funded stadium AND get to keep the Rams… I may be missing something here but if I’m in STL I wouldn’t be too disappointed with that.

  31. The Raiders will be the secondary tenant in whatever stadium gets built, and are not really a significant factor in this war. This is all between Spanos and Kroenke. They’re the property developers. They have the money.

    The Oakland deal was never realistic, and Mark Davis doesn’t have enough money to be more than a minority partner. His only goal here is to keep control of the team and increase revenues.

  32. Paul G., as a miserable, suffering RAIDERS fan I want the team to stay in Oakland but it is not possible because Mark Davis has no juice and no money to move mountains.This is going to sound morbid but I believe the NFL is counting down the days until Mrs. Davis makes her final transition. I am not saying they want her to die but they want the Davis’ ownership in the RAIDERS to die. Everyone knows that Mark Davis cannot get a million dollar stadium much less a billion dollar stadium built and he knows that. So what do you do when the mafia (NFL) is shaking you down because your customers (municipality) are broke? You sell. You sell to the highest bidder and MD’s RAIDERS are worth…more in L.A. Time to accept that MD never intended to keep the team in Oakland. Oakland, Los Angeles, it does not matter. When he inherits the shares, he will have to sell to settle estate taxes. Why not get the team in the LA market ahead of the curve to get that jackpot?

  33. I don’t know where all this 2/3 nonsense comes in. We just did this in Sacramento with no vote at all.

    If these are revenue-anticipation bonds, it turns out you don’t need a vote. Yes, I think it’s a stupid law that needs to change, but there you go anyway. All they need to do is perform a study and conclude, yeah, it’d pay for itself, and boom, not only do you not need a 2/3 majority, you don’t even need a vote.

    What a country!

  34. Did anyone notice the Carson NFL stadium proposal fails to state who would own the stadium? Paying for the construction costs of the stadium is one thing. Paying for its operational expenses is another.

  35. Mark Fabiani, the Chargers general counsel on stadium affairs, appeared on the radio yesterday afternoon for about an hour. According to him, the Chargers drove this particular bus, hiring Goldman Sachs to figure out the land purchase and financing, and the Chargers also hired the architectural firm that rendered the drawings. The deal with the Raiders happened over the past couple of days. He also *claimed* that the team did not begin pursuing this avenue until Kroenke made his announcements regarding Inglewood; though that does not jibe with some things that the Goldman guy said at the press conference. Fabian was posed the question as to what happens if one team solves their local problem and backs out of LA. He claimed (again) that the financing plan would work for one team as well as two.

    I see this ploy as a big bluff — something Fabiani basically admits to without using that specific word (or the word “threat”). On the radio he claimed that the plan is an option intended to quicken the pace of work undertaken by the mayor’s task force to settle on a site and financing plan. And, of course, this ploy has worked, as the task force quickly decided that they will be able to come up with a plan in 3 months instead of 7. So, basically, the bluff/threat has worked and the Chargers are counting on all this being forgotten by the time a plan is produced and vetting begins. They have, however, burned all kinds of local bridges. People in SD are seriously angry with the way the Chargers are behaving.

  36. San Diego isn’t building anything for the Chargers, it’s ignorant to think otherwise. Our mayor is the king of empty promises. In 1 year he’s said “Lets get this done” for every issue in San Diego while doing absolutely nothing to get anything done. He’s the perfect choice if you want the Chargers to leave San Diego. The Chargers are NOT bluffing, they have no other option.

    Both stadiums are priced at $1.7 billion. The 2 team plan is the only model that is viable financially. The 2 team plan will win and reportedly Kroenke wanted to strong arm the league. The other owners will put him in his place if he acts out.

  37. G-4 Financing is available

    ““A stadium project can be eligible for league financing provided the project and its sponsors meet certain criteria,” NFL senior vice president Eric Grubman told the Register on Friday. “A Carson project would be eligible and could apply if it met those criteria.””

    http://www.ocregister.com/articles/stadium-651853-raiders-carson.html?page=2

  38. If Inglewood City Council green lights the stadium project this Tuesday (which I believe that they will), my guess is that the Rams will be the first team to move into America’s second largest city. It should be interesting to see who between the Raiders and Chargers will be the AFC tenant in Stan Kroenke’s stadium. Then again, maybe the cities of Oakland & San Diego will get deals done to keep their respective teams in their markets. Things will get interesting in the coming days, weeks and months.

  39. L.A.: Where proposed stadiums go to die, hehe.

    There’s just no con quite like our L.A. game, is there? Year after year, it’s the old reliable Timex watch of NFL stadium maneuvers–it takes a licking and keeps on ticking, while the public stadium cash rolls in from cities all across the land.

    Hurry folks, step right up and see the shiny new stadium that will soon rise at City of Industry, errrr, Farmer’s Field, errr, Chavez Ravine, errrr Inglewood, errrr Carson! That’s it, Carson! What’s in Carson anyway? From that pic it looks like dirt and giant metal utility towers from a Godzilla movie set.

    I can’t wait till we’re sipping champagne in our shiny new palace there, unless of course the good citizens of various other places will pony up some public stadium cash, like, yesterday! It’s happened before, after all, hehe.

  40. @ Matt Keep dreaming, LA’s going to lose the Rams again if Kroenke expects someone to be his tenant.

    The Inglewood plan is a joke if you think Carson a bluff. Explain how the Rams are going to generate the PSL, luxury suite, and naming rights revenues needed to pay for a $1.7 billion stadium.

  41. It’s more accurate to think of both of these stadiums as somewhere between “real” and “bluff” – they’re negotiating ploys/back-up plans. Maybe paying most of the costs yourself can work in LA, but the economics of the NFL (TV money!!!) are such that a mostly-subsidized stadium in STL, SD or OAK beats a mostly-unsubsidized stadium in LA-ish in a rout.

  42. David Benz – all these threats are bluffs. $1.7 billion is way too risky. At the end of the day, the Chargers, Raiders & Rams still have stadiums to play in. It’s all about trying to scare the public & politicians to give them money. Don’t fall for it.

  43. What Keith said. Though I would add that whether it can work to pay most of the costs yourself in L.A. remains a pretty big maybe.

  44. Correct me if I’m wrong, but weren’t most of you saying the same thing about the 49ers stadium in santa clara?! How did that turn out? Exactly……..

  45. Anonymous, you’re missing the point: Innovation in stadium design technology makes a “multi-use stadium” a state of the art proposition. Thinking that a certain era is over is silly. And why would either league care?

    Creative minds coming together jointly in Oakland can save the day for both the Raiders and A’s. The key is getting Wolff and Davis to put their giant ego’s aside for the greater good – granted that will take some doing!

  46. Neither the NFL nor MLB will ever accept one of their teams sharing a stadium with a team from the other. Period. End of story. No amount of your wishful thinking changes that. Baseball and football are fundamentally incompatible for common stadium design if your aim is to design a stadium that isn’t total garbage. The NHL and NBA can and do easily share arenas. Even the NFL and MLS can and sometimes do share stadiums. Baseball has a fundamentally different setup that makes sharing a professional quality facility with an NFL team an impossibility on a practical level if you care even slightly about proper design. Every shared NFL/MLB stadium of the past 50 years is proof of this.

  47. @MP34 – Was Metlife stadium a bluff? That cost $1.6 billion and was 100% privately financed minus infrastructure. You guys need to do your research.

    The Chargers know they are NOT getting a new stadium in San Diego, The real bluff is our Mayor playing CYA politics and the Chargers trying to put the blame on city hall for the last 13 years of inaction. The soonest anything could make a ballot in San Diego is June 2016 and that’s too late.

    The Carson plan looks like a copy of the $1.3 billion Levis Stadium with a different wrap, I don’t know who came up with the $1.7 billion price estimate. The price of construction materials like steal have dropped drastically from the 2007 to 2010 peaks that skyrocketed Metlife stadiums cost.

    Naming rights, 2 sets of PSLs, 2 sets of luxury suites, and 2 NFL loans will more than cover a $1.3 to $1.5 billion price tag.

  48. MetLife Stadium got free land and about $200 million in property tax breaks:

    http://www.npr.org/2014/01/18/263767372/the-nfl-big-business-with-big-tax-breaks

  49. The NJSEA owns the land the stadium is on

    “The Stadium Project is sponsored by the NJSEA, a state agency which owns and manages the Meadowlands Sports Complex. The New Meadowlands Stadium Company, LLC (NM Stadco) will enter into a ground lease with the NJSEA. The ground lease and related project documents will set forth the terms for construction and operation of the Stadium Project”

    http://www.njsea.com/stadium/meadowlands_stadium_njsea_consultation_process_scoping_document.pdf

    What specific land are you talking about?

  50. That land — the Giants and Jets got to build on it without having to purchase it. Digging further, I’m seeing conflicting reports on whether the teams are paying no rent or just substantially reduced rent from the old stadium, so maybe “discounted land and $200 million in property tax breaks” is more accurate — but either way MetLife Stadium was not 100% privately funded.