San Diego has made what I consider an initial offer, and it sure looks pretty.

On Monday, officials representing San Diego provided a presentation to the NFL owners who comprise the committee on relocation to Los Angeles. While that was wrapping up, Mayor Kevin Faulconer, County Supervisor Ron Roberts, and City Attorney Jan Goldsmith held a press conference releasing the plan to San Diego.

They also announced the completion of a 6,000 page draft Environmental Impact Report (EIR), intended to allow the project to comply with the California Environmental Quality Act (CEQA).

It goes without saying that the Chargers want no part of it — par for the course for most of the last 2 months. As I've said many times before, the team is committed to the Carson stadium project, and will not pursue any option in San Diego until the fate of Los Angeles is decided by NFL Ownership.

So, with that enormous caveat in place, let's take a look at the plan and see whether or not the offer is viable.

What Is the City's Proposal?

For this analysis of the City's plan, I am relying on the following document: San Diego Chargers Stadium Design Concept - NFL Relocation Committee Presentation. This was the document used during Monday's presentation to NFL.

Here are the basics about the proposed new stadium, which will be situated in the northeast corner of the current Qualcomm Stadium site.

Table 1 City's Proposed Stadium General Seating 57,350 Club Seats 7,500 Suites 120

2,400 seats Loge Boxes 50

250 Loge Box Seats Total Capacity 67,500 Super Bowl Capacity 73,000

Personally, I think 67,500 seats is a bit too big. I'd prefer 63,000 total seats, as the average attendance per Chargers game at Qualcomm Stadium over the last 15 years is 62,854. Still, it's an improvement over Qualcomm Stadium's fixed capacity of 70,561.

More importantly, here's the City's Plan on how to pay for it:

Table 2 City's Financing Plan (in millions) Public Funding City

via Lease Revenue Bonds $200 County

Cash $150 Private Funding Chargers $362.5 NFL

via G4 Stadium Loan $200 Personal Seat Licenses

PSLs $187.5 Totals Public $350 Private $750 Sum $1,100

Considering the Chargers have never publicly offered more than $200 million towards any stadium proposal in San Diego, I think it's dubious to suggest that they'd accept the city's offer to pay an additional $162.5 million more than they've publicly offered.

Secondly, it's difficult to imagine the Chargers paying $162.5 million more than they've offered, especially when this offer indicates the team will be on the hook for cost overruns, as well as maintenance and capital improvements.

If the $187.5 million worth of Personal Seat Licenses (PSLs) aren't sold, who precisely will cover the gap in funding? Since it appears the public spending is capped at $350 million, it's likely the Chargers would have to cover this gap as well. According to the City's Fact Sheet, this PSL figure is based on an NFL analysis. For what it's worth, I think this number is unrealistic, and this estimate is $67.5 million higher than the estimate provided in the final report of the Citizen's Stadium Advisory Group (CSAG).

One thing which does slightly sweeten the pot in the Chargers' favor is the mention of a nominal rent, used only to cover the operation of the Joint Powers Authority (JPA) created by the City and County.

As pointed out in the article by Liam Dillion in Voice of San Diego, the plan presented by the City is more expensive than the current Qualcomm Stadium situation.

Now, for the sake of comparison, let's take a look at what the Chargers' initial offer for the same project might look like:

Table 3 Chargers' Ideal Financing Plan (in millions) Public Funding City

via Tax Increase $400 County

Cash $300 Private Funding Chargers $200 NFL

via G4 Stadium Loan $200 Totals Public $700 Private $400 Sum $1,100

As you can see, there's essentially a difference of $350 million between the amount of public money offered, and what the Chargers might consider ideal. This is literally double what the City is offering at this time.

Remember, the Chargers have said they don't believe PSLs are a viable revenue source in San Diego, therefore they are not likely to even propose such an item as a means to raise revenue for stadium construction.

If the Chargers received a subsidy of this size, it would be much more likely they'd be willing to cover cost overruns and/or annual maintenance and capital improvements.

Now, we know the Chargers aren't interested in negotiating, and the odds are fair they've already decided to go to Los Angeles, no matter what. However, let's see what an actual finished deal might look like.

Go to Fantasy Land - Negotiations for a November 2016 General Election vote

Let's stage a negotiation between the Chargers and the City, using the following concepts as our starting points:

For whatever reason, the Chargers stay in San Diego for the 2016 season.

We'll use the City's proposal as their starting line, and Table 3 above as the Chargers starting line.

We'll presume the City has until November 2016 to put this deal together, which allows for either a) a full EIR on the Qualcomm site with a potential land sale and future development or b) a Citizen's Initiative, which bypasses the need for an EIR completely.

Here's my guess for what a realistic deal might look like for the current Mission Valley proposal. For those who are interested in downtown, click the link to see my post about the proposed stadium in downtown San Diego.

Table 4 Negotiated Financing Plan (in millions) Public Funding City

via Lease Revenue Bonds $100 County

Cash $132 Land Sale

150 total acres $375 Private Funding Chargers $275 NFL

via G4 Stadium Loan $200 Personal Seat Licenses

PSLs $75 Totals Public $607 Private $550 Sum $1,157

This deal results in a 52/48 split between public and private sources. It becomes 50/50 if you remove the additional $57 million I plugged in to pay off the Qualcomm Expansion debt.

The Chargers' initial cost is reduced by $87.5 million.

The PSL amount is reduced by $112.5 million, which reduces the risks associated with not selling enough PSLs. This also allows for targeted PSL sales (e.g. club seats, high cost general admission, etc.), and helps keep thousands of seats affordable.

Because the City is selling land to raise money, I reduced their General Fund element to $100 million, and saved $100 million, which would actually cost more considering the interest on the bonds. The County's cash contribution is reduced to $132 million, saving $18 million.

I'd suggest in this particular agreement, the City and Chargers split the risk for cost overruns at 50/50.

Here's where the question of operation, maintenance, and capital improvements becomes a critical question. Surely, there would have to be some sort of rent plan from the Chargers to at least help cover maintenance, or the possibility of the Chargers assuming maintenance and capital improvement risks in exchange for zero rent.

As you can see, I put back in the sale of 150 acres of city land (split between the Qualcomm and Sports Arena sites). This would be 2 parcels of 75 acres each, which avoids a public vote requirement. I used $375 million as the total raised (approximately $2.5 million/acre), based on this document referenced in the final report issued by CSAG.

Selling this amount of land allowed me to throw in the remaining debt on the Qualcomm Stadium Expansion, and pay it off.

Now, back to reality.

Barring intervention from the NFL, we'll never know what a final deal might look like.

In Closing... was the City's Stadium Deal Worth the Time?

Yes.

First, for San Diego to have any possibility of keeping the Chargers in San Diego, the City had to come up with a plan which could be credibly shown to NFL Owners. Failing to follow through on any of the promises made to NFL executives would have instantly destroyed San Diego's credibility in the eyes of the NFL, and guaranteed the Chargers' departure.

Secondly, should San Diego find itself in the unenviable position of pursuing another relocating team, or an expansion franchise, much of the financing outline and EIR work is already finished. Part of this plan is clearly designed to keep San Diego on level playing ground with St. Louis, in the event both cities lose their teams.

In my view, it doesn't matter (for the moment) that the City's initial offer wasn't perfect. It was good enough to demonstrate to the NFL that San Diego wants to keep their team.

Now, we will wait until the beginning of January, when the NFL decides who goes to Los Angeles, and who stays home.