History of Professional Sports Franchise in California
Building new stadiums and moving into new stadium homes have been all the rage of American professional sports franchises.1 The change and movement of professional sports franchises has particularly been a California-thing for some time. The San Diego Chargers, for example, began in Los Angeles in 1960 and then moved to San Diego for the 1961 – 2016 seasons.2 The Chargers will now be back in Los Angeles from 2017 until who knows when.
Similarly, the Los Angeles Rams (1946 – 1994, 2016 – present) were once the Cleveland Rams (1936 – 1942, 1944 – 1945), but were the St. Louis Rams (1995 – 2015) for twenty years before moving back to Los Angeles in 2016. The Los Angeles Clippers (1984 – present) were once the San Diego Clippers (1978 – 1984), and before that the basketball franchise was known as the Buffalo Braves (1970 – 1978). Of course the Los Angeles Dodgers (1958 – present) moved west from Brooklyn (1884 – 1957), and the Oakland Raiders (1960 – 1981, 1995 – present) were in Los Angles for twelve years (1982 – 1994) before now are moving to Las Vegas, Nevada.3
The Los Angeles Lakers (1960 – present) moved from the “Land of Lakes” state in Minnesota (1948 – 1960). The Sacramento Kings (1985 – present) were once the Rochester Royals (1948 – 1957), Cincinnati Royals (1957 – 1972), Kansas City-Omaha Kings (1972 – 1975), and the Kansas City Kings (1975 – 1985). The Oakland Athletics (1968 – present) were once the Kansas City Athletics (1955 – 1967) and the Philadelphia Athletics (1901 – 1954). The Golden State Warriors (1971 – present) were once the Philadelphia Warriors (1946 – 1962), then the San Francisco Warriors (1962 – 1971), and now are moving back to San Francisco from the Oakland area.4
The California / Anaheim / Los Angeles Angels of Anaheim (1961 – present) were an expansion franchise, along with the San Diego Padres (1969 – present). However, all Major League Soccer and National Hockey League teams in California (e.g., the Los Angeles Galaxy, San Jose Clash / Quakes / Earthquakes (1994 – present)), Chivas USA (2014), Los Angeles Football Club “FC” (2014 – present / first season in 2018), Mighty / Anaheim Ducks (1993 – present), Los Angeles Kings (1967 – present), and the San Jose Sharks (1991 – present) are expansion franchises.5
By the way, the Houston Rockets (1971 – present) were once the San Diego Rockets (1967 – 1971). Of course, the San Francisco Giants (1958 – present) were once the New York Giants (1883 – 1957).6
That is a lot of cities, a lot of moves, and a lot of stadiums. That is also a lot of taxpayer and private dollars going in private and public-private partnerships to build those sports stadiums. How much exactly? Let us look at the numbers on a few stadiums.
Older & More Recent Sports Stadiums in California
Qualcomm Stadium — Former Home of the San Diego Chargers and San Diego Padres
(Opened in 1967)
Cost: $27.75 million USD7 ($199 million in 2017 dollars)8
Financial Source: Bonds9 (The City of San Diego still owes $47 million on previous stadium renovations)10
Government Approval(s) Needed: San Diego City Council and San Diego Taxpayers,11 with additional litigation12
Site: Mission Valley, San Diego, California
Taxpayer approval: Yes
Petco Park — San Diego Padres
(Opened in 2004)
Cost: $456.8 million USD
Financial Source: Public-Private Partnership, $225 million financed with municipal bonds repaid by hotel taxes; $57.8 million from redevelopment funds generated within the project area; $21 million from the Port of San Diego and $153 million from the Padres13
Government Approval(s) Needed: San Diego City Council, San Diego Taxpayers after private litigation14
Site: East Village/Ballpark Village, Downtown San Diego
Taxpayer approval: Yes
Levi’s Stadium — San Francisco 49ers
(Opened in 2014)
Cost: $1.31 billion USD
Financial Source: Public-Private Partnership, the Santa Clara Stadium Authority (e.g., Santa Clara City Council is responsible for up to $950 million in construction loans to be repaid by the Levi’s naming rights deal and seat licensing, where the 49ers were responsible for construction overruns and the team’s annual rent is $24.5 million on a 40-year lease, and finally the National Football League provided a $200 million loan)15,16,17
Government Approval(s) Needed: Santa Clara City Council and Santa Clara Taxpayers18
Site: Santa Clara, California, South of San Francisco, California
Taxpayer approval: Yes
Proposed Sports Stadiums in California
Banc of California Stadium19 — Los Angeles Football Club “FC”
(Exp. open date 2018)
Cost: $250 million USD20
Financial Source: Privately financed21
Government Approval(s) Needed: Coliseum Commission and the Los Angeles City Council22
Site: Sports Arena in Exposition Park, Downtown Los Angeles23
Taxpayer approval: N/A
Chase Center24 — Golden State Warriors
(Exp. open date 2019)
Cost: $1 billion USD25
Financial Source: Privately financed26
Government Approval(s) Needed: Various Local Regulatory Agencies27 after private litigation28
Site: Mission Bay, Downtown San Francisco29
Taxpayer approval: N/A
Los Angeles Stadium at Hollywood Park30 — Los Angeles Rams and Los Angeles Chargers
(Exp. open date 2020)
Cost: $2.66 billion USD (currently the most expensive sports stadium project in the world)31
Financial Source: Privately financed32
Government Approval(s) Needed: Inglewood City Council and Federal Aviation Administration (FAA) (because the stadiums height and proximity to the Los Angeles International Airport (LAX)33
Site: Inglewood, California, Los Angeles, California34
Taxpayer approval: N/A
Note: The STAPLES Center was privately financed for $375 million USD35 through asset-backed securitization financing.36 The Lakers, Clippers, Kings, Sparks, and other professional sports teams play/played at the 1999-built arena. However, recently, Clippers owner Steve Ballmer expressed an interest in moving his franchise to Inglewood, California, to be near the Rams in a new arena.37
The Future of Professional Sports Stadiums in California
The figures in the above examples are enormous — more than the gross domestic product of some small nations. In analyzing the sports stadiums in California, what is interesting is that the three proposed stadium projects in California are all privately financed, not requiring direct taxpayer funding. It is, however, the publicly-financed and public-private stadium development partnerships that have been passed through increased hotel taxes on tourists or bonds that have created issues. These deals have created issues in terms of buyer’s remorse, interest payments on bonds, and sports teams leaving town with the city and its taxpayers holding the proverbial bag.
In addition, what the numbers do not tell us are the infrastructure (parking, roadways, highways, and public transportation costs), land donations or discounts, and tax breaks that were given to team owners and developers to build the projects. However, giving business owners tax breaks and the like is as old as the nation. It is an accepted part of doing business with the government. This is especially true for capital projects that deal in community relations, specifically sports stadiums or other developments where citizens gather in what would generally be public spaces (think shopping malls and large apartment/condo projects with grocery stories, etc.).
Let us also not forget about tax-free bonds.38 Legislation was presented a few sessions of Congress ago that would have prevented certain tax breaks and dollars from being used towards sports stadiums, but it was not passed.39 Then again, it looks that taxpayers in California have caught on and refused, at least directly, to be responsible financially for private sports stadiums. Moreover, and maybe more directly, it looks as if team owners of the California variety have looked to privately finance their home venues with some tax incentives and revenue sharing partnerships from local and state governments. Whether those incentives are provided in the future is yet to be seen.
Is it any surprise though that sports franchise owners and league commissioners want to build new stadium homes? It has been proven that teams with new and/or greatly renovated stadiums perform better than their stadium-lowly counterparts. More specifically, professional sports franchises that have new stadiums and/or greatly renovated stadiums put more fans in the seats, sell more merchandise, host more non-sports events, and even obtain more wins and championships.40
Why it is Important to Lawyers and Our Clients
The building of a multi-million or billon dollar sports stadium may seem of little significance to the average client of a solo lawyer. After all, the lawyers and clients involved is such stadium deals are small in number and highly experienced.
Nevertheless, our clients and we are all taxpayers and how we vote matters, especially to our pocketbooks. In addition, whom we elect in the ballot box to make decisions for us at the local level matters. Remember the phrase “All politics is local” by former Speaker of the House Tip O’Neill? It rings especially true in this circumstance because all of the taxpayer-funded stadiums in the charts above were approved by local city council men and women. Therefore, it is important to be informed.
For those who navigate the real estate, land-use planning, and commercial development space, which includes may solo lawyer and our clients, the professional sports stadium government approval processes teaches us a lot about getting things done and being prepared. Each of the projects listed above required environmental impact reports, coastal and port approvals, and the signing-off of building permits just to break ground and to continue building once third-party groups enter the picture to litigate over land use.
In the end, sports are a part of the American Dream, our psyche, our culture, and assimilation into this country. Whether the part it plays in our lives is financial or not will be seen in how we vote with our feet and how team owners and the market respond to the three proposed privately financed stadiums in California.