Deep in our own territory

The San Diego City Council was shocked—shocked—to discover that Qualcomm Stadium is a money-losing operation. This was at a meeting two weeks ago, when the council heard a presentation (PDF) from the city auditor that noted that every year, San Diego taxpayers pump $10.8 million into the stadium to cover expenses. The revelation caused City Councilmember Carl DeMaio to declare that the city “got hosed” in its lease with the Chargers, who make the stadium their home, and City Councilmember Todd Gloria to say that if the person who negotiated the deal was still working for the city, we “should keep a close watch on their work from now on.”

The fact that Qualcomm is a money loser has been public knowledge for years. Improvements to the stadium, now one of the oldest in the National Football League, made in 1998 have cost the city millions in annual bond payments.

Qualcomm was built as a dual-use facility to house both the Chargers and the San Diego Padres, guaranteeing the stadium would be in use 99 days a year. But in 2003, the Padres decamped for Petco Park, and, suddenly, the city, which owns and manages the stadium, had to find 81 more nights of events to keep the operational budget above water. And it just couldn’t.

Confounding matters, the city has negotiated a series of terrible deals with the Chargers. The lease is so bad that between rental credits and a judgment against the city resulting from a claim under the Americans with Disabilities Act, the auditor said the city actually paid the Chargers $492,000 between 2005 and 2007 and will continue to pay the team until either the Chargers opt out of their lease or the lease ends in 2020.

The presentation of the report prompted the City Council, on the recommendation of its Audit Committee, to ask a group of volunteers known as the Qualcomm Advisory Committee to develop a business plan with “creative ways” to get the stadium into the black—or, at the minimum, onto that fine colorless line known as “break even.” But stadium management experts interviewed by CityBeat suggest that making up nearly $11 million a year is a near impossibility.

“Stadiums aren’t economical unless they’re publicly supported,” said Aaron Amster, a financial value expert who did some work for the city on this issue two years ago.

Amster looked at stadiums nationally and found that few turn a profit on their own operations.

“At this point, it is what it is,” said Erik Stover, former general manager of Qualcomm Stadium and now managing director for the New York Red Bulls soccer team. “There’s no magic bullet of events out there to bring in.”

The experts mentioned the same list of potential events: concerts, exhibition soccer games, “dirt shows” like motocross, parking-lot shows and small indoor events like business meetings or bar mitzvahs. These are the same events every stadium, including Qualcomm, is trying to lure, and competition is fierce.
When it comes to concerts, the big stadium tours of the 1980s and ’90s are over.

“There are not that many acts out there that warrant a 50,000- to 60,000-seat facility,” said Rick Nafe, an executive with the Tampa Bay Rays and the program chair for the Stadium Managers Association. “And the acts have a paranoia about seeing empty seats.”

Stover said he and current stadium manager Mike McSweeney tried hard to bring in big stadium acts, but current touring acts like Madonna and Miley Cyrus don’t believe they can fill 60,000 seats in San Diego. So, when Cyrus came to town in 2007, she played the Sports Arena, and, last year, Madonna played Petco Park. Stover said they tried to persuade promoters to bring smaller shows to the Chargers’ former practice field, on the southwest corner of the lot, but with little luck. CityBeat’s attempts to reach McSweeney were unsuccessful.

Qualcomm hosts a couple of soccer games a year, like the recent exhibition between the Mexican and Guatemalan national teams. But Stover said Major League Soccer has been positioning itself as the main promoter of soccer games, and it prefers to hold them in cities that field teams. Qualcomm will likely get some games every year, but it probably won’t suddenly draw in a lot more.

The motocross events already at Qualcomm pose special challenges because they destroy the sod on the field. Thus, they can only be held in the spring to allow time to re-grow the grass for the fall NFL season. Stadium management books as many events in its parking lot as it can, things like classic or used-car shows. These are among the stadium’s most profitable, because the stadium building can remain closed, so expenses are low. Stover said there was even talk of hosting a big carnival on the site, but the politics of the San Diego County Fair made that prospect difficult.

Nafe said modern stadiums, like Gillette Stadium in Foxboro, Mass., or the renovated Lambeau Field in Green Bay, Wisc., make serious money hosting small, indoor gatherings. But Qualcomm’s luxury suites don’t offer the amenities available at newer stadiums, and, complicating matters, the Chargers own the rights to the suites. The Chargers also own rights to all signs on the stadium, voiding Stover’s idea to put up billboards that would face nearby Interstates 805, 15 and 8.

“Another side of profitability is not only revenues, but operating costs. What’s facing that facility is years of neglected maintenance,” Stover said.

Stover said that, for years, there hasn’t been enough money to do proper upkeep on Qualcomm, and now some of those bills are coming due. He doesn’t really see how the stadium can expect to suddenly cut costs.

So, with few options to increase revenue or cut expenses, the city finds itself in the position of wanting to get the Chargers out of Qualcomm as much as the Chargers want to leave (Chargers officials say they can’t stay financially competitive in the current stadium).

“We’ve been saying this for seven years—exactly this! We’ve used exactly these numbers,” said Mark Fabiani, spokesperson for the team.

In 2007, Jim Waring, then the head of land-use planning for the city, told CityBeat that the city would be willing to donate some land to a development deal that would get the team out of the stadium. In recent weeks, discussions have resumed between the city and the Chargers to find ways to resolve this problem in the midst of the city’s budget problems. Some of those meetings have included the idea of putting a stadium at the Tenth Avenue Marine Terminal or somewhere else in San Diego.

“The other idea is to try to privately acquire land,” Fabiani said. “Four, five years ago, that’s not something you could think about because land is so expensive. But the price of land has come down significantly, and maybe we could put together 25 acres Downtown.”

Fabiani emphasized that nothing is beyond the idea stage, but the Chargers would love to play Downtown because, with so much infrastructure already in place, construction costs would be lower. The team is also in talks about a site in Oceanside.

Meanwhile, a committee of volunteers have 90 days to come up with business ideas to fix the problem.

Write to ericw@sdcitybeat.com and editor@sdcitybeat.com.