Major American cities have long had close partnerships with their professional sports teams, but news that the San Diego Chargers can privately finance a new stadium near Los Angeles shows how raw business potential can trump civic pride.
The reality is that professional football teams are very big businesses with a national reach. Loyal local fans are nice to have, but the real money to be made is in advertising to a national audience.
Forbes Magazine estimates that in 2014 the Chargers franchise had revenue of $242 million and a market value of $995 million. That made the team only the 26th most valuable in the league.
Money from national TV is the biggest part of a team’s revenue. Ticket sales are less than 20 percent of revenue for the average team, and by some estimates less than one percent of the fans watching any single game are actually sitting in a stadium.
So how do you make more money? Move to a market with more people. In an interview on the official Chargers website, the team’s special counsel Mark Fabiani explained very succinctly why the team could benefit financially from a move to Los Angeles:
“A stadium can be financed in Los Angeles because the LA-Orange County-Inland Empire marketplace is able to support the sale of hundreds of millions of dollars of Personal Seat Licenses (PSLs) or Stadium Builder Licenses (SBLs),” Fabiani said.
“In addition, the LA-Orange County-Inland Empire area is the second-largest media market in the country, and as a result, revenues from the sale of naming rights, advertising, and sponsorships will be significantly larger than they would be in San Diego. Taken together, simple economic realities make a financing reliant solely on stadium-generated revenues possible in a large market such as Los Angeles.”
Simply put, there are more people in the Los Angeles metropolitan area who will pay up-front for the opportunity to buy season tickets. And once a new stadium opens, there are far more television viewers to be reached with advertising messages.
San Diego may be full of loyal Chargers fans, but with over 13 million people living in Los Angeles and Orange Counties, compared to just over 3 million in San Diego County, the raw numbers win.
The Chargers don’t have to actually be in Los Angeles. Smallish Carson is close enough. And there’s precedent in the 49ers recent move from San Francisco to Santa Clara, a city equal in size to Carson near San Jose.
Mayor Kevin Faulconer and the stadium task force continue to work with the Chargers, but the lure of Los Angeles’ 13 million people may be unbeatable.
Chris Jennewein is editor and publisher of Times of San Diego.
