, Daily Transcript
Thursday, Oct. 30, 2014
I really don’t care much for football and therefore can be totally objective when I opine on the team’s future. I have taken the opportunity, however, to study the team’s economics over the past decade and have a few thoughts on the subject.
About a decade ago, the Spanos family assembled a team to evaluate the possibility of rebuilding Qualcomm on the current city-owned property and turning the parking lot into 5,000-6,000 multifamily residential units, plus retailing, hotels and a 20-acre park.
As part of the team, I was responsible for determining the marketability of the product to be built on the site (once the Kinder-Morgan environmental problems had been cured).
The plan was to level the existing stadium, build a new stadium on the southwest corner of Friars Road and Interstate 15, build a 5,000-space parking garage with affordable housing on top and then use the rest of the land for vertical development.
The plan made brilliant sense and resulted in an enormous increase in the city’s sales and property tax base. The plan assumed, of course, that the I-15 and Friars Road interchange would undergo substantial modification. And, of course, the Spanos family would do OK, too. And we would once again be candidates for the Super Bowl.
Lennar Homes also assembled a team to look at the situation and came up with the same positive financial conclusions that we did.
The current suggested plan is to build the stadium downtown. I do not favor that plan for several reasons, the two most important of which are aesthetics and tax revenues.
Imagine plopping Qualcomm into 10 square blocks of East Village. It would form a vertical visual blockade that would sit like a lump in the neighborhood, cost almost hundreds of millions of dollars (paid by whom?) and be used a couple of weeks a year. Even Frank Gehry could not hide the stadium.
The financial aspects are stunning. Imagine taking 10 square blocks that could generate enormous property and retail sales taxes, and take them off the tax roll. Conversely, those blocks could hold 2,000-plus residential units, which, in turn, would support a substantial number of retailers and help turn East Village into a real neighborhood.
The economics of vertical residential development are wonderful. A typical block would hold 300 high-rise units. At a per-unit value of $400,000, a 10-block area would generate $1.3 million dollars in property tax revenue annually and accelerate as units turn over at a higher price. In addition, the folks who live there would generate substantial retail sales taxes from their shopping.
The third option, of course, is for the team to move to Los Angeles. Right now the team is worth about $1 billion, which relates to its revenues from tickets sales and media rights.
Geographically, those rights extend throughout San Diego County and partially into Orange and Riverside Counties. Reportedly, one-third of the team’s value comes from those rights and ticket sales from the two counties north of us.
If the team were to move to Los Angeles, it would serve a market five times that of San Diego County, and therefore would be worth perhaps $5 billion. Look at what prices the Lakers and Dodgers attracted.
Should Los Angeles attract a team other than the Chargers, it would probably cause much of its market in Orange and Riverside counties to dissipate, thereby reducing the team’s current value.
So, when I say “Go, Chargers, Go,” they probably will.
And because Chargers is not an Indian name, they will be able to maintain their current name, saving millions of dollars in rebadging the team.
Nevin is a team leader in market research and forensic services at Xpera Group, the West Coast’s largest source of experts in construction and real estate. He can be reached at email@example.com