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Sticker shock ahead for would-be fans of L.A. Chargers?
John Gastaldo/San Diego Union-Tribune
NFL commissioner Roger Goodell and team owner Dean Spanos were on hand when the San Diego Chargers kicked off their Citizens Initiative signature gathering in a parking lot south of Petco Park.
NFL commissioner Roger Goodell and team owner Dean Spanos were on hand when the San Diego Chargers kicked off their Citizens Initiative signature gathering in a parking lot south of Petco Park. (John Gastaldo/San Diego Union-Tribune)
Unless a five-star caterer is serving free food and drink, unless the package includes Hollywood-level swag and de factoNFLstock options, why pay several hundreds of dollars to attend an NFL game when the alternative is to watch the same game and click to other NFL games from the comforts of home or another gathering spot?
That is my peasant-like reaction to a release this week from the formerSan Diego Chargersdetailing some of their pricing plans for the L.A. palace thats to open in 2020.
Team Spanos seeks fees between $10,000 and $75,000, just for the right to buy one Premium Seat in the massive venue going up in Inglewood some 120 miles north of Mission Valley.
Tickets for each of the 13,000 Premium Seats will cost $350.
Thats $350 per game. (The price is fixed for just the first three seasons, 2020-22.)
My sticker shock is irrelevant, of course, as is my disdain for a fake-grass NFL field in Southern California.
How will Angelenos react? Thats the rub.
Will the stadium seat license (SSL) fees induce sticker shock?
The Dodgers and Lakers are L.A. royalty in comparison to the Rams and especially the Chargers, yet theyve never asked fans to deposit thousands of dollars just for the right to buy a ticket.
Many San Diegans love to razz Team Spanos. They rejoiced in the teams failures and goofs last year following the relocation.
The mockers would delight in a Spanos flop at the Kroenke Dome. Theyd love to see tens of thousands of empty seats for Chargers games there.
It could happen. Capacity will be 70,240. The team was unable to sell out all eight games this past season at the 27,000-seat soccer stadium in Carson.
How will ticket brokers respond in months ahead? Will they buy as many tickets to Chargers games this year? Though the team should be favored to win the AFC West now that theChiefshave shifted to more of a long-term approach, the schedule is less attractive and the small-venue novelty has worn off.
Something for San Diegans to consider: Its looking more likely that one of their own will play a lead role in the grander L.A. venture.
Philip Rivers started all 16 games last year in his age-35 season, had a good season overall and told me that the commute from San Diego to Orange County went better than expected. Rivers has hinted of playing another three or four years, long enough, barring construction delays, for him to quarterback the team in the Kroenke Dome starting in 2020.
While Team Spanos faces tall odds to turn its L.A. scene into a vibrantly pro-Chargers environment, which means the visuals in the Kroenke Dome would appear a failure, the NFL economics to this L.A. venture are a different story.
Team Spanos wont take a bath, if only because the NFL, for all of its ills and coming challenges, is probably too big to fail. Not not only a revenue giant, its still growing its TV pie and stands to tap into the burgeoning live-streaming market. In the meantime, the leagues labor pact allows teams to disappear huge paper salaries of its players.
L.A.s indifference to the Chargers notwithstanding, most of the financial risk to Dean Spanos and family is accounted for elsewhere in this relocation.
If the seat-license fees fall short, Rams owner Stan Kroenke, the lead developer on the $2.6-billion stadium-and-mixed-development project, will be on the hook to cover the construction costs. Because of the risk, Kroenke also stands to collect rewards via revenues and real-estate appreciation within the surrounding development, and all of the revenues from non-football events in his pleasure dome.
While Team Spanos will have to pay off a $650-million relocation fee, eating into its profits for 10 years, NFL revenue-sharing ensures the team at least some $250 million per year. By the time the Kroenke Dome opens, the annual largesse could be near $300 million and still headed upward, in light of the extra tens of millions of dollars the new contract for Thursday Night Football fetched from Fox TV this winter.
So, there is a realistically bright financial scenario where in, say, 15 years, Chargers Football Company, LLC is clear of the relocation fee and no longer funneling chunks of its stadium-related revenues into construction-cost funding.
Factoring in franchise valuation gains, not only as an NFL club but as a team in the countrys second-largest market in a venue that will host Super Bowls, college football national championship games and events in the 2028 Summer Olympics, Chargers Football Company, LLC, could be worth $4 billion or $5 billion in a decade-plus.
What the market will bear on the seat-license fees remains to be seen, but NFL economics shaped by stadium subsidies elsewhere demanded a new venue if not in San Diego than in L.A. or Orange County.
Is it not more fair to have the users of a football stadium pay for the construction than to use public money for it, as was the ask in San Diego?
In addition to the seat-license fees, monies from a stadium naming-rights deal and other sponsorships and suites sales in the more-lucrative L.A. market will defray construction costs.
Further showing what San Diego was up against, two NFL teams bring a combined $400 million in NFL building loans to the construction, and the lead private financier and risk-taker, Kroenke, is a mega-billionaire who has a vast portfolio of sports-facility projects.
There was a San Diego solution: Go small. A 45,000-seat stadium downtown wouldve cost 20 to 40 percent less than the roughly 65,000-seat venue proposed for the East Village.
If creative thinkers had aligned, San Diego couldve been at the forefront of downsizing of NFL venues. Less can be more in the stadium industry, because beyond a certain size, each seat costs more yet brings in less revenue. By that logic, the Kroenke Dome appears some 20,000 seats too big.
But, this is far more than a football-stadium project. And L.A. economically is a world apart from San Diego, which has a relatively tiny corporate base. L.A. can serve up scads of entertainment and law firms that want to be seen on the L.A. scene.
Because the Rams have first dibs on the markets NFL dollar, however, its still an uphill fight for the Chargers. The Rams are charging a higher price on seat-license fees, a logical outgrowth of their deeper and wider footprint, and a reminder that L.A. didnt want the Chargers.
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