Wednesday might deliver a wake-up call to San Diego’s long Chargers stadium nightmare.

The NFL’s 32 owners will meet in Dallas to discuss, among other topics, which team or teams can move into the lucrative Los Angeles market. It’s the league’s last regularly scheduled such meeting until March.

Commentary

More columns about Business by Dan McSwain

Contradictory reports and rumors are flying. Owners are said to be struggling over whether to vote on relocation at a special meeting in January or to wait until March, which may effectively punt the whole decision for another year.


Really? San Diego either loses its team, or endures yet another cycle of drama?

Yep. From the local fan’s perspective, the major players have essentially wasted 2015.

This is no vindication of Mark Fabiani, the Chargers counsel who predicted precisely this outcome back in January. After all, Fabiani and his boss, team CEO Dean Spanos, engineered the fans’ Lost Year with relentless focus on their Carson stadium partnership with the Oakland Raiders.

But their collaborator was San Diego Mayor Kevin Faulconer, who until June shunned the bargaining table in favor of deploying a task force. Then, in August, he largely ignored its findings to float a “framework” financing concept for a Mission Valley stadium.


Since then, we’ve been told, the mayor has been tirelessly negotiating directly with NFL relocation honcho Eric Grubman, having been rejected by the Chargers.

Now we know better. The intervening months have been mostly theater, the negotiating equivalent of a half-time show; the kind with a marching band, not Beyonce.

Last week, the city released — after trying to keep it secret — a 24-page “term sheet” Faulconer gave NFL officials, apparently in late September. League executives required just two pages to point out that his opus of legalese didn’t offer many terms at all, especially those required to actually build a stadium.

Sure, Faulconer says in the document that the city could borrow $200 million toward stadium construction, while the county might chip in $150 million.


Taxpayers, take note of a bright side: He wants the Chargers to bear the risk of cost overruns on the project, which he estimates at $1.1 billion. In addition, the mayor touted progress on environmental permits to replace Qualcomm Stadium.

By my count, that’s three terms, mixed with a progress report.

However, the mayor doesn’t propose a timetable for asking his city council or the county board of supervisors to approve any public financing. Sames goes with the public vote Faulconer deems necessary.

And, if taxpayers borrow $350 million using lease-revenue bonds, where is the lease? The mayor’s term sheet leaves a blank, quite literally, in the section that discusses the Chargers’ rent for their new stadium, after they presumably raised $750 million or more in private funds to build it.


Today the team’s rent is effectively zero. Fully supporting $350 million in municipal bonds requires roughly $22.5 million a year in revenue, assuming a 30-year note at 5 percent interest.

The number of parking spaces is also blank, as are “civic events” each year for which the team couldn’t collect revenue. Aztec games? Capital reserves? Blank, blank.

I could go on, but you get the point. The terms of Faulconer’s term sheet reveal it as a political document, not the outlines of a stadium deal.

When he runs for reelection in June, the mayor honestly can tell football fans he offered public money to keep the Chargers. And, just as honestly, he can tell bond-fatigued taxpayers he didn’t promise anything, especially to a billionaire family that refused to negotiate.


From the NFL’s perspective, such non-promises of public money guarantees a non-negotiation. That’s why, despite Grubman’s polite encouragement, the term sheet shows little movement from Faulconer’s summer outline.

The mayor’s political consultants have argued strenuously that San Diego had no choice. The Chargers refused to talk, so leaders would be nuts to “negotiate with themselves.”

It’s a great argument. Yet in the real world, people make blind offers all the time: I promise to pay you $500,000 for that house, provided you throw in the patio furniture, treat for termites, etc. If you agree, let’s close the deal in 30 days, please.

Indeed, St. Louis has taken roughly this approach to persuade the NFL to block Stan Kroenke from moving his Rams to Inglewood.


Led by Missouri’s governor, local officials have worked all year to raise $550 million toward a $1 billion stadium from a list of state agencies, city bonds, naming rights and fan seat licenses. Certainly, it could all fall apart tomorrow. But Missouri is holding hearings, scheduling votes and taking political heat.

I’m not accusing Faulconer of insincerity, let alone lack of sophistication. Compared to other uses of land, new stadiums are generally economic negatives for a city. Taxpayers may thank him someday.

In any case, such facts are beside the point. Until the NFL closes the door to L.A., there is no business reason for the Chargers to seriously consider staying in San Diego.

Of course, the same calculation applies to Kroenke in St. Louis. This brings us back to Wednesday’s meeting in Dallas.


Owners are said to favor a “relocation fee” of $500 million to $600 million for each team that gets to move.

The figure raises a natural question for a Chargers fan: If Spanos is willing to pay $500 million to move — and pays no such fee for staying — then why won’t he spend that money on a San Diego stadium?

Alas, the NFL is primarily a business, one that exhibits great skill at growing profits.

The Chargers reasonably could expect a new stadium in San Diego to boost their revenue by $50 million a year. But a new stadium in Los Angeles might generate $300 million annual revenue, maybe $500 million if the Raiders tag along. Those projections come from John Vrooman, the Vanderbilt University sports economist who correctly predicted the lowly Buffalo Bills would sell for $1.4 billion last year, an NFL record price.


So playing football in Carson, comfortably within the nation’s second-largest media market, could conceivably repay a fee of $500 million to $1 billion in two or three years.

To be sure, forecasts aren’t facts. And the Chargers, with or without the Raiders, also must privately finance their $1.7 billion Carson stadium — $600 million more than Faulconer’s proposal.

Yet such costs barely dent the L.A. incentive.

Put another way, San Diego’s mayor has asked the team to raise $750 million to generate $50 million in new revenue. In rough terms, if everything went right, it would take Spanos 15 years to break even on Faulconer’s very conditional offer.


Meanwhile, a $2.2 billion investment (stadium plus fee) in Carson could generate $300 million a year for a single team. That breaks even in just over seven years, leaving cash flow to compound for years after. Splitting costs and revenue with the Raiders changes the equation, but not the general result.

With so much money available in L.A., you could conclude that a $500 million relocation fee is too low. This is revealing: Owners appear to have opted against taxing away the advantage of moving.

For 20 years, the league has left Los Angeles empty, helping owners use the threat of moving to extract local stadium subsidies. Now the NFL appears to be serious about occupying this market.

One more thing. If owners do impose a per-team moving fee, this creates a rich incentive to allow two teams. Why split $500 million when you can split $1 billion?


A strategist might argue for just one team, allowing other owners to dangle the prospect of a second team during the inevitable next round of hinterland stadium negotiations. But, that’s a decade or more away in most cities, and aging billionaires tend to be greedy.

Wednesday’s meeting probably won’t deliver satisfying answers for fans. But owners may schedule a January season finale for their vexing stadium drama.