The departure of the Chargers has prompted San Diego officials to explore whether it makes sense to continue operating Qualcomm Stadium after leases end in 2018 with San Diego State, the Holiday Bowl and the Poinsettia Bowl.

The city projects annual losses of more than $11 million per year on the stadium moving forward, the facility needs at least $90 million in long-term upgrades and the potential for a new naming rights deal shrunk with the Chargers leaving.

The Chargers must pay the city a lump sum of $12.575 million for breaking the team’s lease at the 70,000-seat stadium before it was due to expire in 2020.

But that money won’t cover even one third of the city’s $38 million in remaining debt for two projects in the late 1990s: stadium renovations to add seats and luxury boxes, and construction of a new training facility for the team on Murphy Canyon Road.


San Diego State’s athletic director said Thursday that the university has begun discussions with the city on a two-year lease extension at Qualcomm that could allow the school to use skyboxes, premium seats and advertising space previously controlled by the Chargers.

The extension would be necessary because a new stadium the university might build on the site wouldn’t open for at least three or four years, said the athletic director, John David Wicker.

But a spokesman for Mayor Kevin Faulconer said the city is still analyzing whether to keep Qualcomm Stadium open beyond 2018.

“The city is still obligated to maintain the stadium for its other tenants, including San Diego State University and the Bowl Association, through 2018,” said the spokesman, Craig Gustafson. “Given the anticipated ongoing expense to the general fund, the city is undergoing review of the financial feasibility of continuing stadium operations beyond that point.”


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The city doesn’t make enough from the bowl games, San Diego State football, monster truck rallies, motocross, international soccer and other events to cover the maintenance and operating expenses of the stadium, which opened in 1967.

San Diego State’s lease generates only about $150,000 per year for the city, and the bowl games pay only $10,000 each.

While other events, particularly soccer games, can generate significantly more revenue, the stadium has been hosting fewer such events in recent years as some promoters have begun opting for Petco Park instead.


Gustafson said the net overall loss for the stadium, which is revenue minus operations and maintenance costs, is estimated to be at least $11.7 million for the fiscal year that begins on July 1.

That doesn’t include $4.7 million the city is scheduled to pay every year through 2027 to retire the $38 million in debt from the 1990s. But the city must pay that money regardless of whether the stadium continues to operate.

And the departure of the Chargers for Los Angeles may actually save San Diego money.

The city has been spending more than $1 million per year for firefighters and police officers on Chargers game days at the stadium, an expense it will no longer need to incur.


And while the Chargers lease includes payments of about $3 million per year to the city, various rent credits and litigation settlements have forced the city to actually pay the team to play at the stadium every year since 2006. The city’s payment has varied but usually has been around a few hundred thousand dollars annually.

The rent credits are for concessions revenue, use of suites, parking, property tax rebates and other things.

In addition, the team has received a separate rent credit each year because a 2001 Americans with Disabilities Act lawsuit forced the city to remove 985 seats and make other upgrades.

In response to the lawsuit, the city agreed to make $5.3 million in upgrades, prompting the team to request and receive compensation for the reduction in seats and for the obstruction of views at some seats caused by the renovations.


A consultant determined in 2011 that the stadium needed $80 million in immediate upgrades, a number city officials said in late 2015 would be at least $90 million when adjusting for inflation.

And the city estimated at that time that it would cost $240 million, excluding the debt from the 1990s bonds, to operate the stadium over the next two decades.

San Diego State and the bowl games would like the city to continue operating the stadium beyond 2018.

“With the heavy lifting that needs to be done, I can’t see us having a new stadium before 2020,” said Wicker, the university’s athletic director.


He expressed confidence the university could generate more revenue at the stadium with the Chargers gone.

“We’re currently working with the city to understand how we’ll move forward with sky boxes and premium seating,” he said. “And yes, I think there’s a market for that. There was a market for that with the Chargers, and we’ll be reaching out to local businesses, corporations, our fans, our alumni, to understand what their interest is, not only with the sky boxes, but also the club-level seating.”

University spokeswoman Gina Jacobs noted that the 10-year lease with the city requires SDSU to cover all game day expenses, including security and janitorial services.

“We’re appreciative of the support we continue to receive for Aztecs football from both the mayor and City Council,” said Jacobs, adding that university officials hope to discuss future options for the stadium site in addition to the lease extension. “We look forward to working together for many years to come.”


Mark Neville, executive director of the San Diego Bowl Game Association, said the two bowl games also reimburse the city for all game day expenses.

Neville said it’s unclear where the bowl games would be played in December 2019 if the city ceases operating Qualcomm at the end of 2018, but expressed confidence a solution could be found and noted that it’s only been a week since the Chargers decided to leave.

“We’re pretty effective at rolling with the changes here,” he said, mentioning Petco Park as a potential alternate venue. “There are other places we can explore playing in, but for now we’re going to concentrate on playing in Qualcomm Stadium. Beyond that, we are going to see how things play out.”

Neville said there are no talks scheduled between the city and the bowl games, but that he speaks frequently with city stadium officials.


He said the bowl games would also be interested in additional revenue opportunities at the stadium.

“There could be some short-term opportunities we have not had in the past,” he said. “We’d love to work with the city or whomever to mutually benefit from selling signage or what have you.”

The Chargers must formally terminate their lease with the city sometime between Feb. 1 and May 1. The termination will also make the future unclear for the $11 million training facility the city built the team on Murphy Canyon Road, which the Chargers must vacate by July 31.

The 14-acre complex includes a 70,000-square-foot building, practice fields, a locker room, a weight room, rehabilitation facilities, a video room and other amenities.


The departure of the Chargers also makes it doubtful the city could negotiate a new naming rights pact for the stadium when Qualcomm’s 20-year deal ends in May.

National experts told the Union-Tribune last fall that stepping down from an NFL venue to a college football venue would make the stadium significantly less appealing for such a deal.

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The end of the Qualcomm deal won’t cost the city an annual revenue stream because the company gave the city a lump sum payment of $20 million in 1997 to help cover stadium renovations.


A Qualcomm spokeswoman said Thursday that the company was disappointed the Chargers are leaving and that their departure will leave a void in the community. She also said the company has enjoyed the naming rights opportunity over the last two decades, but hasn’t decided whether it will explore a new deal.

Staff Writer Tod Leonard contributed to this story

david.garrick@sduniontribune.com (619) 269-8906 Twitter:@UTDavidGarrick