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Hopes dampen ahead of San Diego meeting

With San Diego Chargers Chairman Dean Spanos set to meet with city and county leaders this week, the last ditch effort being made to keep the team from moving to Los Angeles appears unlikely to bear fruit in its current state.

According to reports prepared for the team by outside firms and obtained by SportsBusiness Journal, the Chargers have concluded that the recently released report from the mayor-appointed task force that is the starting point for this week’s talk has several critical errors and that the earliest a vote could come on the use of public funds in San Diego is next April.

The Chargers have played at Qualcomm since 1967.
Photo by: GETTY IMAGES
The NFL’s timeline for moving to Los Angeles, if it were to make that move for the 2016 season, is considerably earlier.

The developments underscore the possibility that the Chargers could move to a planned stadium in suburban Carson, Calif., which the team and the Oakland Raiders jointly unveiled in February. The teams have described Carson as a fallback option.

Headers in the team report on the stadium task force plan read “Stadium Cost Estimates Badly Flawed,” “Land Value Not Defendable” and “Unprecedented Team Contributions Required.”

The source who provided this study requested anonymity and conditioned disclosing the findings on not naming the firms that wrote the report.

Goldman Sachs is the team’s financial adviser.

The task force, which is no longer involved with the stadium-development process, estimated the team’s contribution at $300 million in its report, which came out last month.

“If you look at the report, it shows how [the] team gets the $300 million repaid and also generates $25 million more per year,” said Jim Steeg, a former NFL and Chargers executive and one of the task force’s members, writing in an email defending the task force report. “Naming rights to [the] old building during construction of [a] new building.”

The analysis supplied to the team vigorously disputes the $300 million cost and puts it likely at up to four times more. That is because the task force also puts the NFL down for a $200 million contribution, an amount the team would have to pay back.

The club considers a proposed $10 million annual lease payment with 3 percent annual accelerators over 30 years as another $487 million obligation. The team-commissioned study also said the team is on the hook for overruns and that the $950 million estimated cost of the new San Diego stadium is, according to the report, far too low.

The Carson stadium has an estimated $1.7 billion price tag.

In addition, the NFL considers revenue from tickets and parking taxes directed for stadium costs as a team contribution, and the task force report does not ascribe that sum to the club.

Meanwhile, a separate political timeline projection that the team commissioned concluded that even if the city and team could hammer out the economics by the start of the 2015 NFL season, the earliest public money could be put to a vote is April 5, 2016.

When Spanos and special adviser Mark Fabiani meet San Diego Mayor Kevin Faulconer this week, members of the task force will not be there. Instead, new advisers from Nixon Peabody and Citigroup will flank Faulconer. That’s because unlike the stadium task force in St. Louis that is seeing the process of pursuing a new NFL stadium in that city through to conclusion, in San Diego the task force, by design, worked six months and walked away.

A team source said the club urged the mayor not to set up the process that way but to forgo a task force and instead begin negotiating last year with an eye on having a proposal in place that might convince the NFL to delay moving to Los Angeles by another season.

While nothing is set in stone, the NFL process to relocate to Los Angeles instead is on a fast track. In fact, the NFL told owners at its May league meetings that it is likely to both move up and shrink the six-week period that right now is set to start Jan. 1 for when teams can submit relocation bids.

St. Louis Rams owner Stan Kroenke has a stadium proposal in Inglewood, Calif., while the Chargers and Raiders have their Carson facility plan. The Raiders and Rams are year-to-year on their leases, while the Chargers can break their lease at Qualcomm Stadium at minimal cost.

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