As negotiations between San Diego State and FS Investors intensified last year about partnering on a mid-sized stadium in Mission Valley should the Bolts bolt for Los Angeles, the group of rich guys from La Jolla mentioned that, uh, this was more than just a 20,000- or 30,000-seat facility on 12 acres at the east end of the Qualcomm Stadium parking lot.

They intended to develop the entire 200-plus acre plot, or as much as humanly possibly given the limitations of the river, hillsides and flood plain.

To hear SDSU officials tell it, that was news to them. They expressed their decades-long desire to one day expand their impacted campus into Mission Valley, three trolley stops away, and were told that, no problem, they could purchase land for the cost of developing it.

SDSU asked how much, and soon a document arrived detailing FS Investors’ costs and a commensurate price per developable acre: $13 million.


It’s an exorbitant amount, when you consider the land was valued between $2 million and $4 million per acre depending on its state of development by the task force appointed by Mayor Kevin Faulconer in 2015 to propose a new Chargers stadium on the Qualcomm site.

Nick Stone of FS Investors insists the university wanted the land for free, and the document was merely a means to show the land was “incredibly expensive” – a characterization wholeheartedly disputed by SDSU Athletic Director John David Wicker.

“And people wonder why we don’t trust them,” Wicker said.

But the more telling numbers in the one-page document – about the intentions of FS Investors and about why SDSU has refused to partner with them, despite the mayor’s endorsement Friday – are contained in how they arrived at that figure.


FS gets to the $13 million value by dividing the developable acreage (57) by the total “land securing costs” ($767 million). There are 15 entries for land securing costs, most of them standard development fees as well as $10 million for the demolition of Qualcomm Stadium and $336 million for parking lots to accommodate the estimated 70,000 additional daily trips into an already gridlocked traffic corridor.

There’s no entry for actually, you know, paying the city for the property, supporting cries of opponents that FS Investors are essentially getting it for free (something they and the mayor deny.)

Then there’s this: a $150 million “team franchise fee” for Major League Soccer expansion, plus $40 million in “team losses,” plus $18 million for a 35-bed “SoccerCity facility” that would be built at the old Chargers practice facility up Interstate 15 (and that is somehow part of this initiative as well). Those are land securing costs?

It’s an interesting form of accounting, to be sure. It’s a single document in stacks of them, a snapshot of months of back-and-forth negotiations, but it speaks to the objectives of a development group headed by Mike Stone, a hedge-fund gazillionaire from the East Coast, and the role of soccer in its lust for prime real estate.


Is the $150 million expansion fee for an MLS team and accompanying operating losses an inconvenient price for the shiny object needed to swoop up what many consider the most lucrative piece of urban property remaining in Southern California? Or are the 450 hotel rooms, 4,800 residential units and 3.1 million square feet of commercial space merely a slick way to use a city asset to bankroll a soccer team that will perpetually operate in the red?

They even admit this last point themselves. In the margin notes next to the $40 million entry for estimated losses by their MLS team, it says: “Will never get above breakeven.” The document doesn’t articulate the time over which those losses would accumulate and, when asked, Stone said “it doesn’t matter.” According to SDSU officials, however, FS folks referenced a projected $8 million annual loss for the soccer operation.

Insiders have long known this about MLS, which Deputy Commissioner Mark Abbott let slip in October 2014 loses “in excess of $100 million per year.” And which, with TV ratings flat and salaries soaring, relies heavily on expansion fees to survive (hence the rush to grow from the current 22 to 28 teams in the next five years).

Stefan Szymanski, a University of Michigan professor and co-author of the book “Soccernomics,” wrote a detailed blog in 2015 in which he estimated teams lose about $7 million per year. He concluded: “MLS starts to sound like a pyramid scheme. You can fund a loss-making enterprise from the entrance fees of new buyers for a while, but without making money, the only reason for doing this would be glory, not profits … I predict that MLS will collapse, and probably sooner rather than later.”


Stone concedes that obtaining an MLS team is a key reason their proposal is “compelling” to the city of San Diego and “absent the soccer franchise we’re just like every other developer,” adding: “There is no path to the site control without soccer, if you look at it from our standpoint.” He also notes that many companies lose money for years, and MLS is still a relatively young league.

But passing along those costs to SDSU in inflated price of land?

Said Wicker: “We looked at them and said: ‘We’re not paying for your soccer program.’ And they looked back at us and said: ‘If you want to buy land, that’s what you’re paying.’ As we aim to expand the educational mission of San Diego State, why should we be paying for a private developer’s losses from his soccer team?”

The trust issues go back months earlier, to a time when SDSU genuinely regarded this as the best option to solve its football team’s stadium dilemma once Qualcomm closes. Wicker, in his most candid and expansive comments yet about the negotiations, explained Friday:


“I would like to think if they had been upfront with us from the very beginning, years ago, that they wanted to develop the whole site and didn’t approach us about a stadium only, then it would be a different situation.

“They’re talking stadium, stadium, stadium, and then at some point they show up with a drawing of the stadium and there are two office buildings in the end zone. Wait, where did the office buildings come from? What are those for? They said: ‘Well, we have to build those to get a good enough return on investment to help pay for our soccer program.’

“Then they show up with a stadium plan and everything else is developed, too, the whole (Qualcomm) site. And it’s, hey, where did this come from? What’s the whole development? What’s this all about? They had never said a word to us.

“At that point, we’re like, hold on, we’d like to develop some of that property for university uses. That’s when they said, ‘OK, you can do it but you have to buy it at our cost.’”


They dispute the timeline – Wicker says this was going on in late summer and fall, Stone says they revealed their intentions months earlier. And they dispute whether SDSU asked to purchase land or wanted it for free.

It’s not hard to see why talks formally ended this week and they’ve been lobbing verbal grenades ever since. The mayor moved forward with his widely expected and politically leveraged endorsement on Friday after releasing one final offer. Some of the terms were tweaked, but it amounted, Wicker said, to “the same old, same old” that, in their estimation, would jeopardize his football program’s long-term viability and condemn his university to its overbuilt campus on the mesa.

They passed.

“Our visions,” Wicker said, “just don’t align.”


Aztecs × On Now Video: Aztecs make history with upset over No. 6 Nevada On Now Aztecs prepare for Fresno State On Now Aztecs beat New Mexico, 97-77 On Now Dutcher, Aztecs prepare for Air Force On Now Aztecs beat Wyoming, 84-54 On Now Aztecs prepare for conference game against Boise On Now Aztecs beat Texas Southern, 103-64 On Now Rocky Long: "This team has overachieved" On Now SDSU West bests SoccerCity as voters embrace a new vision for Mission Valley stadium site On Now Aztecs win season opener, 76-60

mark.zeigler@sduniontribune.com; Twitter: @sdutzeigler