A Chargers move to L.A. won`t be cheap - Ingles

Don't tell our friends at Dunder Mifflin that I didn't print out all 111 pages of a proposed deal, made public Monday, between Los Angeles city officials and developers from AEG to build a National Football League stadium in downtown L.A.

But I did print out a few pages as I mined the document Tuesday for interesting nuggets beyond the broad financial details reported here by The Los Angeles Times.

Read the entire 111-page document out of L.A. here, or read on for a gem or two.

For starters, Los Angeles city officials say the NFL could charge more than $500 million for a team relocation fee, forcing a team to operate at a loss for years.

The L.A. city officials' consultants, from Conventions Sports & Leisure International, wrote that, "It is almost certain that AEG will be responsible for at least a portion of those fees." But any team wishing to move would have to weigh the impact on its bottom line. For sure, "$500 million or even more," as the consultants pegged it, is a large number.

To help put that figure in perspective, I give you two more.

L.A.'s consultants estimate that the annual operating income for an NFL team at Farmers Field would be $53 million. Forbes' latest estimate for the Chargers' income is less than half that, $24.7 million.

That Forbes analysis ranked the Chargers 24th among the league's 32 teams.

More numbers? OK. The Los Angeles city officials' consultants prepared this chart that ranks NFL teams according to their potential premium seating revenue, which is how much money they stand to make if every one of their club and suite seats is filled. (You'll want to check out that chart; it's an eye opener.)

The chart puts the Chargers 21st among 32 NFL teams. It says the Bolts have the potential each year to raise $29.5 million in revenue via premium seats. By comparison, the NFL average is $40.5 million, and Farmers Field is estimated to generate $122.5 million.

In other words, the Chargers in San Diego earn 3/4 of the league average. And the Chargers in Los Angeles could earn three times it.

Also worth noting is this: the $1.2 billion Farmers Field financing proposal relies on $150 million in NFL loans. Locally, the Chargers hope to get $100 million, if not more, to help finance construction of a potential new San Diego stadium. But neither amount is guaranteed as I wrote here on Monday.

More on L.A.'s proposal? It says: Construction on the project would not proceed until an NFL team has signed a contract to use Farmers Field. It says: Construction would begin in the summer of 2012.

If that were to happen, a team could end up announcing a move after the end of this coming season, likely playing elsewhere in the Los Angeles area for a few years before moving downtown for the 2016 season.

Under the AEG/city of L.A. tentative timeline of sticking a shovel in the dirt by summer, if the Chargers were to leave San Diego, an announcement would have to come between February and April. That's the window the team has each year to quit playing at Qualcomm Stadium.

For those who forgot, the Chargers would have to pay the city of San Diego $24 million to break its lease next year, a termination fee that decreases by about $2 million dollars a year until the lease ends in 2020.

For context, the team continues to maintain San Diego is its desired home.

The L.A. city document also importantly spells out that AEG would operate the venue "but is not expected to own a majority interest in the team." Note: That doesn't rule out a minority stake. (Speaking of which: Remember this? It wasn't that long ago that two countries were speculating about Alex Spanos selling AEG namesake Philip Anschutz a minority stake in the Chargers....)

This kind of unusual operating arrangement for an NFL venue makes AEG want to share in revenues from premium seating, sponsorship sales and other sources, including events other than football. That revenue would be substantial. Los Angeles city consultants estimated an NFL team in L.A. "would generate approximately $336 million in revenues annually, with expenses of $283 million." That amounts to annual income of about $53 million for the team.

Worth noting, that $53 million figure doesn't include an estimated $54 million of additional annual income from stadium operations having to do with holding other on-site events, such as concerts, soccer matches and college football games.

Conventions Sports & Leisure International wrote:

The projected combined net income from operations between the Stadium and the Team would equal more than $107 million in 2016 dollars. This would be among the highest in the NFL. However, this does not take into account any debt service payments on the stadium, acquisition of the team or any relocation fee that would be required to move an existing franchise to Los Angeles. That fee could be as much as $500 million or more which would cause the team to operate at a loss for a number of years if the fee was amortized.

In closing, here's something I shared on Twitter Tuesday about California's NFL stadium plans:

A) L.A. $1.2b, all private

B) City of Industry $800m, all private

C) Santa Clara $873m, 88% private

D) San Diego ???

This article was written by Matthew Hall and appeared in The San Diego Union-Tribune.

Posted by Necesitamos Mas Football on 10:50 a. m.. Filed under . You can follow any responses to this entry through the RSS 2.0