Hope Consulting Group

Stadium expansion plan

Well, every game is completely sold out, which is some indication. And you can’t drive anywhere around town for more than five minutes without seeing a Charger Power bumper sticker. Caps and T-shirts and beer-can holders and sun visors: Chargers! Even city hall loves the Chargers — officially. Who can count the number of proclamations, special days, honorary this and that. Didn’t Pete Wilson take up a bet with the mayor of Oakland prior to a tough game? Or was it Deputy Mayor Bill Cleator wagering with the mayor of Pittsburgh? Football madness. Everybody loves the Chargers.

Who loves Gene Klein?

Not the same question, I know. Maybe it’s not a fair question anyway. Klein, however, loves San Diego, as he’s said on many occasions. And why not? The city has always treated him well — and continues to do so. If the council does as it’s expected to do and votes in favor of a proposal to expand San Diego Stadium — forty-four new “skyboxes” and about 7800 additional public seats — Klein will be provided with a couple of million dollars extra per year, for the next twenty years. Those millions will be in addition to the money you and I now give him every time we fight the stadium parking lot mess, or when we buy the cap or T-shirt or the hot dog once we finally get inside his stadium. (Oops. I mean our stadium.) Nonetheless, everybody involved appears to be quite pleased at the prospect of a bigger stadium. Everybody is happy, it seems, but me.

Gene Klein demanded a retroactive adjustment of his rent at the stadium.

John McDonough

I’m not unhappy for feeling left out. No, I too enjoy watching the Chargers (though about half the gray hairs on my silver head are the result of stadium traffic jams). I’m unhappy because I can’t get my calculator to work right, and I use the damn thing to make myself a living. I’m also in the habit of playing around with it, which is supposed to be fun. For instance, this stadium expansion business has occupied much of my spare time lately — just for the heck of it. But my machine must be broken, because if it were working right, I’m sure that nobody down at city hall would be very happy about these plans to expand.

But the fact is, I haven’t seen this many happy people since the stadium was first proposed way back in 1964. If you were here then, you’ll remember that the entire city was gone-bonkers happy because they could have a beautiful new stadium and, as city officials were loud to shout, they could have it without cost to the taxpayers.

As early as 1971, the Stadium Authority deplored the lack of money being earned by the stadium.

Photo by Robert Burroughs

Of course, this never turned out to be true. There hasn’t been a single year in the stadium’s history that the money it brought in came close to paying off the money due each year to pay for its construction. The extra cash needed annually has come from the sale and leasing of city property — that is, property you and I own. It’s true, technically, that we haven’t suffered any special new taxes to help bail out the stadium, but I would argue that the sale and lease money heading over to the stadium’s bank account is a form of indirect taxation. After all, the stadium was supposed to support itself, and the money from our property could have, or should have, gone for other things, such as parks, or policemen’s salaries, or street maintenance.

This new stadium-expansion scheme is also being promoted as a no-cost benefit. But my calculator (which the repairman just assured me is working fine) says that there will be a cost, a substantial one — perhaps half a million dollars the first year. The city manager’s office has told members of the city council something quite different, and thus far the council has asked no questions. Whether or not my figures are ever taken seriously, however, there remains another interesting question: Why is everybody so blasted gung-ho about expanding the stadium? Who needs it?

Football fans needed more seats.

John McDonough

Not the Padres. Their 1982 average attendance was a few heads over 20,000 (better this year), and the stadium holds about 52,000 people. The Padres have enjoyed but two sellouts in their history. Even with special promotions and giveaways, the team rarely draws more than 35,000 fans.

That’s not to suggest that someday they might not need every one of those 52,000 seats — playoffs, a pennant, even a World Series. Anything is possible. But is that possibility, sometime in the future, justification enough for going further into debt to add 8000 very expensive seats way out in their deep right field?

Do the San Diego State Aztecs need a larger stadium? My answer: No. Even in their Don Coryell glory days, Aztec fans numbered fewer than 50,000. In recent years they’ve been averaging fewer than 18,000 people per game for their six contests at home each year.

Everybody loves the Chargers.

John McDonough

Not the Sockers. Definitely not the Sockers. Sad to say, they draw many, many more people indoors to the Sports Arena than they do to the stadium.

What about the Holiday Bowl? Well, maybe. Last year, with Ohio State as the main attraction, that postseason game filled the stadium. The Holiday Bowl, however, is played only one day per year. Is that justification for expanding the stadium?

And those boisterous crowds that show up to hear rock-and-roll superstars? The fact is, most of those who attend such events stand around on the playing field; the stadium seats are always nearly empty.

The new 52,000-seat beauty came with a 15,000-car parking lot.

So, then, who needs an expanded stadium? Eugene Victor Klein’s San Diego Chargers, and no one else. For the past several seasons, since the team has become a front-runner, every single game has been sold out. More than that, consider the Chargers’ season-ticket sales: 48,000 plus. That’s right, every seat except the 3080 first-come, first-served places in the bleachers. Season-ticket holders in every seat in the stadium’s horseshoe, top to bottom. If the stadium is expanded to 60,000 seats, there is every likelihood that Klein could sell 60,000 season tickets. (As long as the Chargers keep winning, that is.)

But please, don’t let anyone tell you that the expansion is going to bring a lucrative Super Bowl to San Diego. There was some talk of that early on, when the idea was being hoisted up the flagpole of public opinion. Nobody saluted, least of all football czar Pete Rozelle. Even if the skyboxes are added and the bleachers tom out and replaced with additional seats, there will be no Super Bowl in San Diego. Period. Sixty thousand seats just aren’t enough.

So if the stadium is expanded, it will be exclusively for the benefit of Gene Klein’s Charger football team. Fair enough. Fair enough especially if, in fact, the multimillion-dollar project will pay for itself, which is what the city manager’s offer repeatedly has told members of the city council.

The city’s eagerness over the years to please and accommodate the Chargers has been matched only by official efforts to keep the stadium itself financially solvent. It all began in 1964, when San Diego had claim to a struggling Chargers AFL football team, owned by hotel magnate Barron Hilton. The team played in the old Balboa Stadium behind San Diego High School, a handsome but obsolete structure that has since been demolished.

The more sports-minded citizens of that era, apprehensive of losing the Chargers, and hopeful of attracting to town a major-league baseball team (the Padres were then minor league), began stirring up interest in building a new sports stadium worthy of a growing city. Mayor Frank Curran appointed a committee of prominent citizens to develop ideas. There commenced one of the greatest feats of community promotion since the town of Shelby, Montana, sponsored the Jack Dempsey-Tommy Gibbons heavyweight title fight.

After relentless publicity in the San Diego Union and Evening Tribune as to the benefits of a new stadium, the proposal was completed and put to a vote of the citizens on November 2.

Total construction cost was estimated to be $24 million, which would be financed by the sale of $28 million in tax-exempt revenue bonds. The results: seventy-two percent voted in favor of selling the bonds.

Construction began on April 12, 1966, and on August 20 of 1967, the San Diego Chargers opened their season against the Detroit Lions before 35,988 exuberant fans — the largest crowd to witness a sports event in San Diego’s history. The rooters were not pleased with the score (Lions 38 — Chargers 17), but at least there was now a shiny new 52,000-seat stadium of which they could be justly proud.

From that very first day, however, the stadium began losing money. And while city officials have held true to their words — in the narrowest sense — that no new tax subsidies would be required to pay off the bond holders, they all knew even before ground was broken that financial help would be required. Just twenty-one days after the city-wide election approving stadium construction, the council unanimously passed Resolution #185576. This obscure resolution did two important things: first it created something known as the Stadium Fund, which essentially would become a bank account from which would be drawn annual bond payments, of about one and a half million dollars. (This figure remains constant every year, give or take a few thousand, due to the schedule for bond redemption and interest payments.)

The second thing Resolution #185576 did was to insure a steady flow of money into the Stadium Fund, money expected to be required in order to meet the annual bond payments. The money would come from the sale and lease of city-owned land known as the Midway-Frontier properties. This land initially consisted of about 150 acres stretching roughly from the site of the old Midway Drive-in Theater at Midway Drive and West Point Loma Boulevard to the intersection of Interstate 5 and Interstate 8 in Old Town.

Every year since the first construction bonds came due, in 1968, the city has relied on income from that property to pay its debt. There wasn’t much development in the area then; little money came in from leases. So the city was forced to sell off parcels and send the cash over to the Stadium Fund. Notable among those early sales was that of the old FedMart property along Sports Arena Boulevard, forty acres of which the city sold for $2.6 million in 1969. (The Stadium Fund immediately got $1.6 million from that transaction.) Such outright sales certainly came to the rescue of the stadium in the early years, but the sales also depleted the city’s holdings in Midway-Frontier, an area that has since become prime real estate.

In spite of the sales and the subsequent commercial development of the Midway-Frontier land (resulting in some profitable leases for the city — $668,000 in 1982), at times even more money was needed to help pay off the stadium’s construction debt. This money has come from the city’s Capital Outlay Fund, a reserve of cash that can be used for nearly any purpose, including such things as road and sewer construction. Over the years, millions of dollars have been “borrowed” from the Capital Outlay kitty and deposited into the stadium’s bank account to help pay off the original bonds. In theory at least, the stadium will someday pay back to the city treasury all of its borrowed millions.

As early in the stadium’s operation as 1971, the Stadium Authority (the group that formally administers the stadium for the city) deplored the lack of money being earned by the stadium. In the 1969-70 fiscal year, chairman Bill Black noted in his annual report, the money from stadium leases (after all expenses had been paid) came to only $280,000, almost $1.25 million short of what was needed that year to pay off the bond holders. In 1972 Richard Silberman, upon retiring from the stadium board, revealed similar results: money earned by leasing out the stadium came up short by about $1.3 million, and that $ 1.3 million had to be drawn from the Midway-Frontier properties and from the city’s Capital Outlay Fund. Overall, from 1975 to 1980, the stadium’s deficit has ranged from between a million to a million and a quarter dollars — each year. Last year, though, the stadium did much better, the result of anxious efforts to make greater use of the facility — more rock concerts and so on. Still, the latest fiscal year showed a deficit of almost half a million dollars. Naturally, members of the Stadium Authority were pleased with this good news — yes, it’s still a deficit, but at least it’s a smaller deficit — and they spoke as if the stadium were finally on the verge of paying for itself. (Never mind the huge debts to the city treasury for borrowed money, and never mind that desperately needed cash for municipal services continues to flow from the Midway-Frontier properties into the stadium’s bank account.)

This city — we citizens — have made a few sacrifices in order to keep our stadium’s financial head above water, and we’re about to do so once again with the proposed expansion. But then, doing things to help out the stadium generally — and Gene Klein in particular — has almost become a full-time job at city hall. The tradition began the moment Klein and his partners purchased the team from Barron Hilton back in August of 1966.

Hilton himself had been treated very well by the city. When he brought the Los Angeles Chargers to San Diego in 1961 and signed up to play in Balboa Stadium, the city waived his rent the first year. Thereafter he handed over only five percent of his receipts to the city as lease payment — a very generous arrangement. (His final year at Balboa, 1966, cost him only $49,800.) When the town began buzzing with talk of a new stadium, Hilton’s position became crucial; without his commitment to move the Chargers into the new facility, the entire project would have been in jeopardy. Hilton used his leverage to strike a deal with the city, a deal that by all standards was considered to be quite advantageous to his interests. For the privilege of having his team play in the new 52,000-seat beauty, which came with a 15,000-car parking lot, Hilton would pay the city ten percent of the money he took in from ticket sales and, in turn, he would receive one-third of the money made from the parking lot and from concessions sold during Charger games.

If it wasn’t the greatest possible deal for the city (remember, they soon realized they’d need to supplement the stadium’s income in order to pay for its construction), at least San Diego now had a professional football team in a professional stadium. For Hilton’s part, no sooner had the ink dried on his contract with the city than he entered into negotiations to sell the Chargers to Gene Klein, a multimillionaire entertainment mogul from Beverly Hills. The transfer of controlling interest from Hilton to Klein and some nineteen token partners from both Los Angeles and San Diego was announced with great fanfare on August 25, 1966. The price was ten million dollars, described then as the largest financial transaction in professional football history.

Another sports transaction was soon to take place. E.J. “Buzzie” Bavasi announced in 1968 that he had ended his long association with the Los Angeles Dodgers and had formed a partnership with San Diego’s C. Arnholt Smith to operate the Padres baseball team. The big news, though, was that together they had obtained a prized franchise from the National Baseball League. Smith and Bavasi then entered into a lease with the city for use of San Diego Stadium. Now there were two professional teams; sports fans couldn’t have been happier.

But Gene Klein took a look at the Padres’ lease agreement with the city and decided he was unhappy. What he saw were more favorable terms for the Padres than for his team. He quickly pointed to the fine print in his contract: the Chargers were entitled to adjustments in the terms of their lease should any other stadium tenant get a better deal. (This no-lose provision was wrangled earlier by Barron Hilton.) Among other things, the Padres had signed on for only eight percent of their ticket sales as lease payment (to the Chargers’ ten percent), and also it appeared to Klein that the Padres got a better deal with the concessions sold during games.

Klein then took the offensive. As reported in large, bold headlines in the October 23, 1968 issue of the San Diego Union, Klein demanded a retroactive adjustment of his rent at the stadium; by that he meant he should get seven years’ free rent at the stadium. He also demanded a preferential right to all the net income from concessions during Charger games. (He expected to continue receiving his one-third share of the parking revenues.)

This thunderous blast from Klein was answered with nearly equal force by City Manager Walter Hahn, who told the city council that to accept Klein’s demands would cost the city some $300,000 per year. Hahn emphatically recommended to the city council that they say no to Klein. Then it went back and forth: Klein withheld his rent money; the city filed a lawsuit; Klein filed a lawsuit. Just as the Chargers were about to face a court order to pay the city $215,446 in back rent. Mayor Frank Curran, along with City Manager Walter Hahn and City Attorney John Witt, announced that the warring parties had reached an “amicable” settlement. Suddenly, Gene Klein was happy again. And no wonder: city officials had come around to seeing Klein’s point of view. (And likely had heard his threat that he would move his team to Seattle rather than capitulate.) The settlement resulted in the Chargers’ lease being extended from its 1978 expiration to the end of 1988; a reduction in Klein’s lease terms to the eight percent the Padres were paying; and the back-rent sum being reduced from the court-ordered $215,000 to $118,000.

There followed some losing seasons for the Chargers, and with the bad times came lean attendance figures — as few as 25,000 discontented and vocal diehards per game. This put a greater pinch on the stadium’s ability to pay its own way, and more money was needed from the Midway-Frontier properties and from “loans” taken out of the city’s Capital Outlay Fund. But in the late Seventies the team began to shape up and the stadium filled up. Filled up, that is, for Charger games; the Padres and the Aztecs and the Sock-ers continued to have room to spare at their games. Gene Klein’s football fans needed more seats, however, so he began to push for stadium expansion.

In early 1980 he appeared before the Stadium Authority and presented a plan outlining a $12 million project that would close the open, eastern end of the stadium; where there had been 3000 bleacher seats, Klein would put up 16,000 new seats. Also included in the plan was the conversion of certain suites on the press level to skyboxes, complete with air conditioning, living-room furniture, and wet bars — all at no cost to the city’s taxpayers. The scheme in part would be financed, Klein said at the time, by increasing the cost of all Charger tickets by one dollar. He was vague on needed additional financing. (Somewhat cryptically he added that he’d twice discussed his plans with Mayor Wilson and City Manager Ray Blair.) Members of the Stadium Authority were skeptical about the 16,000 new seats, just as they had been skeptical of several previous expansion proposals that all seemed financially unreasonable. However, they did show interest in the sky box idea.

Events moved quickly from there, and in mid-February the city entered into a lease agreement with Klein for the construction and rental of twenty-nine skyboxes. The cost of the project was never publicly revealed, but it was financed entirely by Klein and his partners. Klein’s lease with the city didn’t change with the new skyboxes; he’d sell them by the season for what he could (he got between $ 17,000 and $20,000 for each of them) and would give the city eight percent of the money.

Klein’s dream of adding more seats to the open end of the stadium didn’t really die, it just went underground and resurfaced at city hall in August of 1981, when the council decided to order up a set of studies that might point the way for stadium expansion. Not long after. Mayor Pete Wilson appointed a committee whose task was to develop a specific plan. Several months later the committee reported back that, in effect, if ever there were to be an expansion of the stadium, now was the time — when the Chargers were a hot team and large crowds could be expected.

Working with architects from the Hope Consulting Group (who designed the stadium in the first place), this is what Wilson’s committee, in concert with the Stadium Authority, devised as a plan: Using the score-board as a focal point, there would be built below and to each side of it approximately 8900 permanent seats, replacing the 3080 existing bleacher seats, for a net gain of about 5800 seats in the Charger end zone. Extending the loge level on either side would provide an additional 1252 public seats, for a total increase of 7100 end-zone seats.

And there would be more skyboxes, forty-four of them containing seating for 678 people. These would be leased to Klein just as he leased the older twenty-nine boxes. Klein would then sell them to corporations or individuals for an average of $30,000 per box each year. (At least he hopes he’ll get $30,000 for them.) The boxes would be located in the eastern end zone (thirty), above the western end zone (ten), and at about the thirty-yard line (four).

These new skyboxes are supposed to be more luxurious than the twenty-nine older ones, though the older ones would be upgraded (entirely at the city’s expense) under the plan. More amenities, richer decor, some with private bathrooms, and of course wet bars and comfortable furnishings. For those who can afford the $150 to $300 per person per game, they will offer the ultimate in privacy and prestige.

The expanded seating and the additional skyboxes may not be enough to bring a Super Bowl to San Diego, and they definitely are of questionable value to the owners of the Padres and the Sockers, but they won’t cost the taxpayers a penny. At least that’s the official word.

So how will the project be financed? According to a report from the city manager’s office, submitted to members of the council on September 29, 1982, this is how it would be done: extend the Chargers’ lease to the year 2003, increase by one dollar per vehicle the parking fee during Charger games (with the city keeping all the money), rent out office space to be built within the stadium as part of the expansion (an anticipated $100,000 would come to the city each year from this, according to the report), take fifty percent of the money Klein gets for his forty-four new skyboxes for the first ten years (forty percent for the next five; thirty percent for the last five), and increase the Charger rent from eight percent to ten percent beginning with the 1989 season. In summary, the report said, "The proposed project can be financed from Stadium revenues and no tax subsidy would be required.” Total cost: $11 million, which money would be raised by selling up to $13 million in revenue bonds.

Assistant City Manager John Lockwood is San Diego’s in-house expert on stadium matters. He and his staff have been working for several months now to prepare the details of the expansion project, and together they have tried mightily to persuade the city council that the financial side of things will pencil out nicely. On March 28 of this year he submitted a memorandum to the council that was supposed to help them in analyzing the proposal. It is a brief document, only two pages, and in its simplicity there is a disarming sense of confidence; the figures line up neatly, it is easy to comprehend, and it presents a seductively appealing conclusion that murmurs, Vote yes.

There has been surprisingly little discussion of that Lockwood memorandum, and even less criticism. Critics do exist, however, and I — of course — am one of them. As an example of my gripes, nowhere in any report is there this basic figure: the per-seat cost for the expansion project. I think I know why. The cost is outrageous. Sixteen years ago, when the stadium was completed, the cost per seat came to $513. (Total cost was $25.6 million.) That included everything: a 52,000-seat, floodlit structure, built from raw land to a finished, turn-key project, complete with a 15,000-car parking lot, playing field, gates, walls, elevators and escalators, ramps, restaurants and offices, landscaping — everything. Even cranking in the inflation that has bumped up the price of everything, the new cost per seat is enough to make one’s eyes bulge: $1410. That’s an increase of nearly 300 percent.

Then there is Lockwood’s estimated total cost itself: $11,000,000. Keep in mind that this figure is not just the cost of construction; it includes all the architectural and administrative fees, furnishings and equipment, together with the required legal cash reserves. Lockwood has told the council that the cost of simple construction alone will be about $8,900,000, though no bids have been received. (The final architectural drawings aren’t yet finished, though there has already been grumbling in the architects’ office that the $8.9 million figure they’ve been ordered to meet isn’t nearly enough.) I’m willing to bet my heretofore good reputation with a calculator that $11,000,000 will not cover the total cost.

Lockwood’s office has also shown great optimism in the projected interest rate for paying back the bonds. He’s said that they will sell at 8.5 percent, and he has based all his calculations on that low figure. My conservative guess: at least nine percent, maybe more than ten percent. Merrill Lynch Pierce Fenner & Smith, the giant stock and bond firm, has been engaged by the city as consultant and possible underwriter for the proposed new revenue bonds. As of this week they have not submitted their report to the city and they have declined to make public any prediction of their recommendations for marketing the sale (up to $13 million). They also decline to speculate on the rate of interest necessary to make the bonds attractive to buyers. But other knowledgeable bond firm executives with whom I’ve spoken, including those from Stone & Young-berg, who acted as consultants for the original bond sale that built the stadium, are quick to note that the current market for municipal bonds is nearly saturated; the competition out there is keen. They expect, and I agree, that a leisurely thirty-five-year retirement schedule for the bonds will be impossible. More likely, all buyers will have to be paid back within fifteen to twenty years, and that means higher annual payments by the city. Also, they think 8.5 percent is not realistic; maybe nine to 9.5 percent. (Interestingly, the city manager’s report from September, 1982, estimated a rate of twelve percent but was lowered sometime between then and the latest report, a change that has certainly made the financing look much more attractive.)

Just a week prior to the Lockwood memo, a manager’s report on the stadium expansion had informed council members that the city could expect annual bond payments of $1.4 million. Lockwood’s staff, however, adjusted that figure to a more acceptable $1.16 million per year. When on April 11 the council finally voted to approve a number of proposals related to the expansion plan, not a single word of the discussion was directed at the discrepancy; in fact, there were almost no critical questions asked whatsoever. But perhaps that isn’t too surprising given the optimistic statistics officially provided. Lockwood’s two-page analysis showed a net loss to the city for the first five years after the expansion, but the losses were relatively inconsequential, ranging from $98,810 in 1985 to about $40,000 in 1989. Then in 1990, the memo showed, the city would start raking in the cash: from minus $40,000 in 1989 to plus $296,000 in 1990, and continuing on yearly in a steady upward curve that would please the most hard-nosed businessman.

I’ve got a number of other gripes about that memorandum of March 28. There are several calculations from Lockwood’s office that just don’t make sense. For example, the expected city revenue from sales of sky-boxes is weirdly distorted; the money to come from tickets in the expanded end zone is deceptively exaggerated; the profits from concession sales are apparently pulled from thin air; and even the nonsports matter of office-space rental is mathematically incorrect.

In my opinion, the figures contained in the Lockwood memo are nothing more than speculative fiction. In the accompanying box below, I examine the memo in detail, but suffice it to say that a more realistic analysis of costs and revenues shows a first-year loss to the city of more than $500,000, not the $98,810 Lockwood estimates.

Furthermore, Lockwood’s optimism shows itself in more ways than just numbers on paper. All his projections are founded on the premise that capacity attendance will be achieved for each Charger game, producing the maximum possible income for the city. Certainly that assumption seems a realistic one for the moment and perhaps for the immediate future. But since the revenue bonds, both the new and the old ones, will have to be paid off over the next twenty years, one can only hope that winning seasons continue . What if Dan Fouts doesn’t sign a contract? (Minor problem, maybe.) Suppose Kellen Winslow leaves? (Again, minor perhaps.) But what about the crafty, aging Gene Klein? Or Don Coryell? Remember Halas, Lombardi, Rosenbloom? Don’t forget the old L.A. Rams or the high-flying Baltimore Colts with Johnny Unitas and company — once at the top of their divisions. Look at them now.

If all this sounds a bit shaky for us city taxpayers, it couldn’t be sweeter for Gene Klein. Almost literally without investing a dime, and with virtually no liability, he stands to make an additional two million dollars per year from the end-zone expansion and the new skyboxes. But then, it’s always been like that when the city sits down to haggle with the Chargers; the outcome of sending a city committee to negotiate with Eugene Klein is as predictable as tossing a bunch of carrots into a Cuisinart.

Still, nearly everyone seems exceedingly happy about marching ahead. Sometime next month the city council is expected to vote again on various aspects of the expansion, and I expect that they will continue to believe the manager’s office and smile as they offer approval. Barring the unexpected — a serious question or two — construction will begin in October of this year, and by the opening kickoff of the 1984 Chargers’ football season, we’ll be able to salute the arrival of 10,000 new end-zone seats and forty-four opulent skyboxes. Farewell bleacher bums. Good-bye cheap seats. So long two-dollar parking. Congratulations Mr. Klein.

THE BOTTOM LINE

Listed below are excerpts from a memorandum to the city council prepared by Assistant City Manager John Lockwood and his staff. Council members received the memo on March 28. Attached to it was a note from Lockwood explaining that he intended this summary of the proposed stadium expansion to be an aid in analyzing the financial implications of the project.

While the Lockwood memo carried calculations for ten years (from 1985 to 1994), I have restricted this examination to the first year, 1985. It is.that first year from which all succeeding years are extrapolated. Lockwood’s figures and my own figures are first presented side-by-side, then followed with an item-by-item analysis.

LOCKWOOD and STAFF ROBERTS and CALCULATOR

City revenues City revenues

Ticket sales $ 234,071 Ticket sales $ 124,555

Skybox sales $ 660,000 Skybox sales $ 622,985

Office space $ 59,148 Office space $ 43,200

Concessions $ 62,158 Concessions $ 35,520

Pafking $ 176,000 Parking $ 176,000

Mini-tickets $ 9,200 Mini-tickets $ 27,324

Total revenues $1,200,577 $1,029,584

City expenses City expenses

Bond payment $1,160,000 Bond payment $1,400,000

Seat maintenance $ 18,012 Seat maintenance - $ 18,012

Office maintenance $ 6,375 Office maintenance $ 6,375

Mini-ticket plan $ 115,000 Mini-ticket plan $ 136,620

Total expenses $1,299,387 Total expenses $1,561,007

Net city revenue $ -98,810 Net city revenue $- ■531,423

Ticket sales: Lockwood says $234,071. No way. Not from the additional seats minus the replaced seats. There will be a total of 10,200 new public seats in the eastern end zone, which Chargers ’ management has told the city are expected to sell for $17.50 per seat per game. So 10,200 x $17.50 = $178,500 x eleven games = $1,963,500, of which the city will receive eight percent, or $157,080.

The existing 3080 bleacher seats will be sold this upcoming season for twelve dollars each, for a total of $36,960 per game. The total for the eleven-game season: $406,560. Of this, the city will receive eight percent, or $32,525.

Thus the net increase to the city (deduct the bleachers’ income from the new income) will be $124,555, not the $234,071 claimed in the Lockwood memo. The net increase is what counts.

Skybox sales: Lockwood says $660,000. This figure has been used since the first detailed manager’s report, submitted in late September of last year. The forty-four skyboxes were calculated to sell for an average of $30,000 each, and the city would get fifty percent of that (for the first ten years; then the city’s share would drop). Simple arithmetic: $30,000 x 44 = $1,320,000 divided by half = $660,000. However, somewhere in the negotiating process Klein convinced the city that it would be much simpler to combine all the skyboxes and take a flat rate for the total of seventy-three (twenty-nine old ones and forty-four new ones). The result: For the first five years the city will get 33.3 percent of all money from the seventy-three skyboxes. It may be simpler to do this, but it’s no bargain for the city.

The older twenty-nine boxes, which the city will “upgrade” at its own expense as part of the expansion, command excellent viewing positions from goal line to goal line — better views than the proposed new boxes. This upcoming season the twenty-nine old boxes will have cost their owners from between $22,000 and $30,000 each. Using a conservative average of $25,000 each, the twenty-nine boxes this year will bring in a total of $725,000, of which the city will receive eight percent, or about $58,000.

Under the original formula (before Klein tossed the city’s negotiators into the Cuisinart), that $58,000 would have been added to the $660,000 from the forty-four new skyboxes, for a skybox total of $718,000. But lo, the new formula at 33.3 percent of revenue of $2,045,000 (twenty-nine old boxes at $725,000 and forty-four new ones at $1,320,000) results in only $680,985 for the city from all seventy-three skyboxes. Subtract from that the $58,000 the city should have gotten (at least) for the old boxes, and the amount attributable to expansion is my figure of $622,985. Touche, Mr. Klein.

Office space: Lockwood says $59,148. This should be another example of simple arithmetic. Hope Consulting Group says (and all manager’s reports repeat) there will be a total of 9000 square feet of office space developed below the plaza-level area at the eastern end of the stadium. Lockwood claims this will rent for $4.80 per square foot per year. So 9000 x $4.80 = $43,200. Where did $59,148 come from? (As an aside. I’ll add my own opinion here regarding this unfinished office space in the bowels of the stadium. I’ve been in the real estate business long enough to know a dog when I see one, and if Lockwood can get $4.80 per square foot for those new spaces, I ’ll dismantle my calculator and eat it circuit by circuit. And to think that the report of September 29, 1982 promised $100,000 per year!)

Concessions: $62,158 in the first year, says Lockwood’s memorandum. This confused me, so I asked Lockwood about it. He said it was based upon a per-person expenditure of $1.10. But he fumbled badly when I asked where he got that figure and whether it was gross income or net income. He could offer me no evidence whatsoever. So I went to the 1981-82 fiscal report from the stadium operations and punched in their own numbers. Attendance totaled 2,457,718. Concession income (net, not gross) was $1,017,891. The average was 41.4 cents per person. If you put one person in every additional seat to be created by the expansion (7800), and if all of those people attended each of the eleven Chargers’ home games (7800 x 11 = 85,800), and if they spent as much money as they did last year, the net income to the city would be $35,520. Not $62,158.

Parking: $176,000. I’ll give Lockwood this one, though I really shouldn’t. The money will be derived from bumping by one dollar the cost of parking in the stadium lot for Charger games. The math is simple, but the facts are something else. A stadium parking lot holding 16,000 vehicles will bring in $16,000 extra per game, and there will be eleven games. Thus $176,000. The fact is that nobody, not even executives from Ace Parking, concessionaires for the parking lot, could tell me precisely how many paid customers they cram in fora Charger game. The city’s lease agreement with the Chargers allows for 500 complimentary parking spots, and anyone who has ever attempted to squeeze in between two parking stripes on game day knows that tailgate parties and behemoth recreational vehicles pay no heed to painted stripes. Furthermore, it’s anyone’s guess just how Ace Parking or Lockwood’s office expects to accommodate the additional vehicles that would result from stadium expansion. This one, however, isn’t worth arguing about.

Mini-tickets: Lockwood and I are in disagreement here by only $3496 per year, which perhaps is not significant. What is significant is that this “miniticket” plan is an item at all. Under the plan, the city will purchase tickets to Padre games and then sell them (at a substantial discount) to Klein's organization. The idea came about after Ballard Smith grumbled in 1981 that his Padres weren’t going to benefit from Klein’s twenty-nine newly converted skyboxes. In fact, some of the best seats in the house from which to view Padre games were lost in that skybox conversion. (Klein’s customers bought boxes and tickets for Charger games only. If they wanted to see the Padres, they had to buy tickets like everyone else, but then they could use their skyboxes to watch the game.)

To ease his continuing pain. Smith negotiated these deals with the city in relation to the new plans for expansion: If the Padres should be able to sell out the stadium but are prevented from doing so because of expansion-related construction problems, the city will pay the Padres for the unavailable seats. And secondly, Smith made the city promise to purchase $148,000 worth of Padre tickets for the upcoming season (and in subsequent years as well, though the price may change).

Yes, the city will buy $148,000 worth of Padre tickets for the 1984 baseball season. The Padres, in turn, will give back to the city eight percent of that ($11,880) as they normally do whenever they sell a ticket. So the net cost of the tickets will be $136,620. The plan is then for the city to sell the tickets to Klein’s organization at a bargain rate: one-fifth of the city’s net cost. That is expected to account for the “revenue” of $27,324. Klein’s marketing people will use their cut-rate tickets as inducements to potential skybox patrons.

My quibble with Lockwood’s figure is relatively minor. (I’ve deduced that he wasn’t listening too closely when the Padres’ Elten Schiller said the tickets in question would sell for $148,500.) What bothers me is that the city will spend more than $ 100,000 next year for the purchase of Padre tickets — in the name of skyboxes and end-zone football seats being built for the benefit of the Chargers.

Bond payment: Lockwood says we can expect annual payments of $1,160,000. He came to that sum by means of $11 million in bonds being sold at an interest rate of 8.5 percent. He also assumed that the pay-back schedule would be twenty years. This, as I’ve noted in the preceding story, is unrealistic. Instead, I’ve chosen to use an annual payment of $1,400,000, which is precisely the figure used by Lockwood himself in the city manager’s report of last September. I arrived at this number by assuming a bond sale of $13 million issued at 8.75 percent and running for twenty years. (Again, if I may interject here. I’ll bet that the interest rate will be nine percent or higher, which will mean the city will have to come up with something quite a bit more than $1.4 million every year.)

As for the other remaining expenses — the seat and office maintenance — I am relieved to let them be. I have no reason not to believe Lockwood here, but I’m also prepared to learn later that I was being naive.

If you’ve gotten this far, you probably have a calculator at your side. Good. Our figures should match. I say that if the city council votes in favor of expanding the stadium as that project currently is devised, it will mean a deficit for the city of $531,423 — for the first year alone. I also say that Gene Klein will make an extra $2.1 million that first year as a result of the expansion. Everybody loves the Chargers.