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NFL and Stadium Funding

Willie Casey

University of Arizona Global Campus

SRM300 – Sports Facility Management

Professor Eric Dybvig

June 11th, 2022

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Introduction

First and foremost, it is crucial to understand the importance and explanation of appraisal

in the field of construction whether it is stadiums for NFL or any other sports facility. This will

give everyone an idea off the monetary input and requirement for the NFL stadium or any

facility in question, thereby improving as a justification for acceptance or rejection of a

construction proposal by those that fund what are supposed to fund the project under the

proposed circumstances, for instance, public taxpayers funding construction of a new NFL

stadium. Appraisals on its own simply mean a way to ensure that the price the lender or the

funder is not over the actual market value. It has been estimated in the recent past that before

2007 over $7 billion would be invested or utilized for construction (Noll & Zimbalist, 2000).

Appraisal, Funding and Perspectives of the Stakeholders

For the construction of any stadium especially modern one it should always be

categorized as a serious challenge to all the responsible authorities. The complexity of such a

project comes from extremely high number of different factors that are taken into account as well

as the end time construction while achieving the constructive goals set out by either the

government or the authorities involved, any such project is firstly thought of as a vision, for

instance it can be the vision of a new home stadium for a home team or a new era in modern

stadium construction for enhanced recreation and entertainment of the community etcetera. For

that part there are three questions that need to be answered, especially catered towards the key

stakeholders; what do we want? What do we really need? And lastly but certainly not the least,

what can we afford? With that being answered by the proposal and the feasibilities the actual

first task is the identification of key stakeholders (Sartori & Nienhoff, 2013).
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During the SRM-300 class, multiple discussions and course text as well as further

research, multiple stakeholders as well as sources of funding have been identified and discussed

upon. To put it into perspective, a stakeholder is someone that has an interest in a business,

company or investment with direct affect by these investments, business or companies’ operation

and performance. They benefit from the success of what they have invested in and will

ultimately be negatively impacted if it fails to perform or deliver on what the proposal actual

project actually showed or illustrated in the proposal. These include the government, private

investors, suppliers, communities and most importantly the customers.

After all of that has been identified and thought out, the next and probably the most

important part comes into play which is the planning and feasibility fees. This is where the

appraisal also comes into play. There is quite a bit of faces that come into play here and this

essay would briefly go over all of them before taking on the sources of funding and reasoning

behind them as well as the stakeholders perspective. The first phase comes with the location and

site assessment where all the issues including the location, accessibility, presence and planning

of infrastructure I sorted out. Then analysis is carried out for example the PEST analysis or smart

analysis for the project here comma analysis of the pricing etc. are carried out. Similarly, the

smart test may be carried out to identify project scope, a critical part of the project which helps in

determination of goals and objectives. The SMART test refers to five key points, Specifics

clearly defined, Miserable quality of construction that can be managed, that the project remains

Achievable with the available resources, the community, government and all the stakeholders

would be Rewarded with improved reputation as well as return on investment etc., and lastly

The bound or another ones the deadlines to meet for the construction (SMART) (IvyPanda,

2021).
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After all that sorted out then comes the part of funding and budgeting taking into

consideration all the involved parties such as the government, private investors and public funds.

Here is where the appraisal of costs come into play where Realtors and appraisal experts can

come in identify the market value of all the materials, equipment and all the other factors related

to the project and give the involved and funding parties an accurate idea according to the actual

market value of all and everything that shall be utilized in the construction. This is also where the

sources of funding can be talked about or explained. Although there can be many the four major

sources all funding that have been discussed in the class as well as during the discussions; the

major distinction being its division into two main groups that is the private and the public

funding, furthermore the public funding can then be divided into parts of it coming from the

state, city, directly paid by taxes of the taxpayer and public funds.

When it comes to the government part of the funding, it is essentially the public funds

that it paid through taxes etc. however it can take form of other initiatives that the government of

the state or city take in order to fund the project, for instance, the downtown stadium initiative by

the government to fund the operations and maintenance of the proposed stadium facility in east

village for San Diego Chargers. Such initiatives take form of increases or replanning of the tax in

a way that more revenue is generated so that the construction or operations of the new projects as

explained above can be funded, for instance the downtown stadium initiative increasing the

transient occupancy tax from 10.5% to 16.5% generating around $120 million dollars to be used

for the construction and operation as well as maintenance of the stadium facility in question

(Measure C: Downtown Stadium Initiative) (Garrick, 2016).

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Taking all of that into consideration and now joining the dots back to the San Diego

Chargers of the National Football League, a new proposal of a new stadium for the team was

proposed replacing the San Diego stadium as the franchise is home venue. The attempt was

initiated by the team management as well as the city bringing in business partners as well as the

public funds to a proposal of $1.8 billion in total invested, of which over $650 million were

asked from the charges themselves for the construction of the stadium and the remaining were to

be paid by the new downtown stadium initiative and increases in tax primarily the TOT or

transient occupancy tax which came close to be around $1.05 billion, in the parking lot of the

current stadium to upgrade the area as well as infrastructure, however, it was a massive failure

for both. This total investment would be financed by the charges making profits on the

development as well as the government and city backed initiatives proposed as ballot measure C

(downtown stadium initiative) and ballot measure D known as Brigg’s initiative (The Sand

DIego Union Tribune, Retreieved, 2022).

Summary of Cost Funding: $1.8 Billion Total, $1.05 Billion Public (Measures C & D or

TOT) and $650 million Privately funded (San Diego Chargers)

Both of these aimed at generating revenue where tax increases would help pay for the

construction as well as the operations and management of the new San Diego Chargers stadium.

Funding via ballot measure C is explained above and valid measure D primarily gave permission

to the charges to construct a stadium in either downtown or the Mission Valley turn would

increase San Diego’s hotel stay tax from 12.5% to 15.5% for hotels and 14% for small hotels.

This meant that the primary source of funding for the new stadium would be the charges profit as
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well as the tax increases coming in form of public funds with decreased revenue from taxes

generated to pay for the construction as well as operations in management for the new stadium

(The Sand DIego Union Tribune, Retreieved, 2022).

The support came from the San Diego regional Chamber of Commerce stating that the

increases of tax would not cause harm to the community or the tourism economy on which the

city thrives with its 200,000 visitors yearly for conventions (Showley, 2016). The support was

also given by the government as the measure D of the Briggs initiative was written by Cory

Briggs, a public interest attorney. The forces joined in January 2009 by the name of San Diego

stadium coalition paved the way for the proposal and idea of construction of this new stadium

and the ultimate desire to keep the home team of San Diego Chargers in the region working in

coalition with the taxpayers’, politicians, developers as well as the community and leveraging

social media to garner support and following. By April 2016, after approval and acceptance of

the proposal to all the concerned and authoritative organizations as well as permissions granted

for the constructions etc., the charges unveiled the stadium Convention Center adjacent to the

Petco Park (The Sand DIego Union Tribune, Retreieved, 2022).

An initiative was launched by the San Diego Chargers where the chargers claimed to

have collected 110,786 signatures to put the stadium proposal by November on the ballots. By

July 2016, the City Council voted to allow both the plans set forth by the chargers for the

stadium on the ballot. Government as well as the chargers were convinced that this would be a

revenue generating as well as an opportunity for the homes team to stay so as far as these

stakeholders were concerned it was the right way to go, however, not the entirety of the

stakeholders were on the same page as should be discussed in the following pages of this paper,
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it was the citizens of the San Diego that decided the fate of this new ambitious and proposed

project by the city, Regional Chamber of Commerce and the home team of San Diego Chargers .

Why the citizens of San Diego voted against the proposed new stadium?

It may seem like all went well as far as all the governmental, team management and the

team itself is concerned as stakeholders however, the issue and problems started to came in when

the most important stakeholders which is the public rejected and protested the idea of such a

project. The first public opposition start flooded in from the voice of San Diego which stated that

the new Chargers stadium is not going to make any money for the city of San Diego as the city

continues to owe millions in tax dollars for the ongoing and renovations to the current Chargers

stadium known as the Qualcomm stadium with its repair from 1997 to the tune of almost $12

million yearly. This didn’t account for the additional $2 million annually for all the required

emergency services such as fire service and police during the Chargers games and the day-to-day

repairs of the stadium and its facilities none of which were compensated by the Chargers (Dillon,

2016).

Furthermore, on May 2016, the renowned American Institute of Architects San Diego

wrote up an entire article in the opposition of the newly proposed downtown stadium for the

chargers citing significant unanswered questions about the cost overruns and not to mention the

negative environmental impacts that would cause the San Diego taxpayer millions of dollars

(AIA San Diego, 2016). Combination of all these factors and the general public showing distrust

in the proposal from the beginning the coalition known as the “No Downtown Stadium - Jobs

and Streets First” was formed. The central idea or mission statement for the coalition was quoted

as follows;
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“We should not raise taxes to build a stadium and subsidize a billion-dollar corporation,

especially when we have so many needs in San Diego, including street repairs. Additionally, this

tax measure puts our economy and tourism jobs at risk, and it threatens an important revenue

source the city relies on to pay for street repairs, 911 dispatchers, libraries and other

neighborhood services. All this to help a billionaire build a new workspace for millionaires”.

(Editor TOSD, 2016).

To make things worse, on August 15 2016 San Diego’s public resources advisory group

went forward in publishing a report which was independent claiming estimates that the new

proposed stadium plan would certainly require a public contribution of over $2.3 billion for the

next 30 years. Is the public distrust hey all the aforementioned opposition wasn’t enough the

chargers also faced the heat of being in the controversy of using targeted Facebook ads to target

politicians that were fighting against the construction of the stadium and the ballot measure C.

This was justified response after the attorney named Cory Briggs that authorized the citizen plan

clearly stated that the ballot measure C did not create any special tags for San Diego however as

it turned out it was a new special text and would require a two third majority of the referendum

to even come close to pass (Schrontenboer, 2016).

Talking about the actual decisive day and period dirt ended the proposal of the new

stadium to be constructed, it was the day of the voting referendum on the new measures. When

the ballot measure was announced especially the parade measure see it went on to have a

decisive blow at the poles 57% to 43% officially closing all the line of funding that the proposed

plan had where these initiatives generated where new taxes on the people almost 60% of the

funding of the new constructions (Garrick, 2016).

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References

AIA San Diego. (2016, May 31). A Football Stadium in East Village? Not so Fast. AIA San

Diego. Retrieved from

https://en.wikipedia.org/wiki/San_Diego_Chargers_stadium_proposals#cite_note-

24:~:text=%22A%20Football%20Stadium%20in%20East%20Village%3F%20Not%20so

%20Fast%22

Dillon, L. (2016, March 15). How San Diego Loses So Much Money on Qualcomm Stadium.

Voice of San DIego. Retrieved from https://voiceofsandiego.org/2015/03/11/how-san-

diego-loses-so-much-money-on-qualcomm-stadium/

Editor TOSD. (2016, August 2016). Spanos Plan for Stadium Would Cost San Diego Many

Ways. TOSD; Times of San DIego. Retrieved from

https://timesofsandiego.com/opinion/2016/08/09/opinion-spanos-plan-for-stadium-

would-cost-san-diego-many-ways/

Garrick, D. (2016, August 20). Chargers dispute risks of stadium measure. The San Diego Union

Tribune. Retrieved from https://www.sandiegouniontribune.com/sdut-chargers-stadium-

money-fred-maas-ballot-measure-c-2016aug20-story.html

IvyPanda. (2021, July 3). Mega Stadium Construction Projects. Retrieved from IvyPanda:

https://ivypanda.com/essays/mega-stadium-construction-projects/

Measure C: Downtown Stadium Initiative. (n.d.). Measure C: Downtown Stadium Initiative.

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Noll, R., & Zimbalist, A. (2000). Sports, Jobs, and Taxes: The Economic Impact of Sports

Teams and Stadiums. American Political Science Association.

doi:http://dx.doi.org/10.2307/2586420

Sartori, A., & Nienhoff, H. (2013). A Blueprint for Successful Standium Development. KPMG.

Retrieved from https://assets.kpmg/content/dam/kpmg/pdf/2013/11/blueprint-successful-

stadium-development.pdf

Schrontenboer, B. (2016, Aug 18). San Diego Chargers go on the attack in stadium campaign.

USA Today. Retrieved from

https://www.usatoday.com/story/sports/nfl/chargers/2016/08/18/chargers-stadium-

campaign-councilman/88973650/

Showley, R. (2016, July 28). Chamber endorses chargers downtown stadium. The San Diego

Union Tribune. Retrieved from https://www.sandiegouniontribune.com/sdut-chamber-

stadium-endorse-2016jul28-story.html

The Sand DIego Union Tribune. (Retreieved, 2022). Taxpayer group opposes Briggs initiative.

The Sand DIego Union Tribune. Retrieved from

https://www.sandiegouniontribune.com/sdut-briggs-convention-stadium-measured-

taxpayers-2016aug22-story.html