NFL Team Values Show Bad News for Chargers - NBC 7 San Diego

NFL Team Values Show Bad News for Chargers

Forbes annual list shows Bolts not increasing as they had hoped

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    NEWSLETTERS

    Chargers Make Unexpected Kicking Change

    For the last 21 years Forbes has ranked the estimated value of NFL franchises. This is of particular interest for folks in San Diego and Los Angeles who are curious as to whether or not the Chargers did, as some economists predict, double in value after moving to L.A.

    The short answer there is: They did not.

    The long answer there is: Somehow the Bolts have found a way to lose money by moving into the nation’s 2nd-largest market.

    How is this possible? Well in 2016 the Chargers were worth $2.08 billion. We did not know it at the time but that would be their final year in San Diego. In 2017, after a failed ballot initiative asking for more than $1 billion dollars in public tax money, they moved to L.A. and were worth, according to Forbes … $2.275 billion.

    Not exactly the economic windfall they were expecting. But after a season at the StubHub Center in Carson and getting a foot-hold in their new market that number would surely rise, right?

    In 2018 Forbes says the Chargers are worth … $2.275 billion, a 0% change for an NFL franchise that should really be a license to print money. So why did the Chargers stay flat?

    It’s not because of a lack of fans or tiny attendance in a soccer stadium. It’s because of a simple, tried and true economic principle of risk and reward.

    “The Rams will operate the stadium and therefore benefit the most (as well as assume the most risk) while Chargers will be tenants as benefit less (and assume less risk),” said Forbes Executive Editor Michael Ozanian, who wrote about the 2018 NFL franchise values.

    Since moving from St. Louis to Los Angeles in 2016 the Rams have MORE THAN doubled their value to $3.2 billion and are now America’s 4th-most valuable professional football team. The reason for that is Stan Kroenke is building his own facility.

    By doing that his business gets the revenue from non-football related events. Taylor Swift plays in front of 80,000 at the stadium? Kroenke gets a cut. The College Football National Championship Game or NCAA Final Four is in Inglewood? He gets a cut.

    Since the Chargers are renting a place in that stadium they get exactly zero revenue from events that are not their football games so their earning potential is, in essence, capped. So they will very likely not move up much from their $2.275 billion valuation outside of any increased revenue sharing that comes from renegotiated TV deals.

    But it gets much worse for the Chargers.

    Starting in 2019 the team has to start paying its $650 million relocation fee. Plus they spent several million dollars on moving their facilities to Orange County (on a 10-year lease), leasing StubHub Center for games, and a $12.75 million payment to the city of San Diego to get out of their lease at Qualcomm Stadium.

    Let’s estimate that’s about $700 million they paid to move from San Diego to Los Angeles in order to increase their franchise value by $267 million.

    Now, had they used that money instead to … I don’t know … let’s say try to build their own stadium in San Diego would it make a difference? Yes. Yes it would.

    The NFL offered $300 million to build something in the Chargers’ existing home. Add that to the $700 million the Bolts obviously have access to since they’re paying it in L.A. and you have a cool $1 billion.

    That leaves them $200 million short of the estimated $1.2 billion San Diego stadium build. It would stand to reason that all these developers who are trying to get their hands on the Mission Valley site right now through Measures E and G could probably have jumped on board with that kind of cash influx and VOILA!

    The Chargers have themselves a brand new privately financed stadium that they own a majority of, allowing them to get a nice chunk of the revenue from all of those non-football events that would be held there, drastically increasing their franchise value because the earning potential rises exponentially.

    The old adage is true: you have to spend money to make money. Stan Kroenke is doing just that and it seems to be paying off in a big way. Dean Spanos is not doing that and … well you know.

    By the way for a look at the whole list of NFL team values you can find them here.