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San Diego Union-Tribune
NORBERTO SANTANA JR.
Task force sees way to lock in Chargers | City could write check, cancel
`trigger' event
November 11, 2002
Abstract:
Chargers' officials have repeatedly said they are confident they could use
the "trigger" to re-negotiate their lease, which keeps the team
here through 2020. The trigger, a complicated formula set out in the 1995
lease, allows the Chargers' to re-open lease negotiations once every four
years if its players' salaries are high enough to cross a bench mark tied
to the team's revenues.
Assuming the Chargers trigger the renegotiation clause this year, task
force lawyers suggest the city could write a check covering the salary difference
instead of agreeing to a new stadium or allowing the team to leave San Diego.
Should the Chargers refuse, the lawyers say the city could take the team
to court.
"The litigation-prone Task Force members are misguided," said
Mark Fabiani, special counsel to Chargers President [Dean Spanos]. "We
should all work together to find workable solutions while enjoying the exciting
Chargers season. Reckless litigation talk will do nothing except cost the
taxpayers money by depressing fan interest and driving up the cost of the
ticket guarantee."
Full Text:
Copyright SAN DIEGO UNION TRIBUNE PUBLISHING COMPANY Nov 11, 2002
The exit clause that Chargers' owners Alex and Dean Spanos believe they
could use to move their team to another city might be turned into the
legal stumbling block that keeps them in San Diego through 2020, say lawyers
studying the team's lease with the city.
The legal subcommittee of the 15-member Citizens Task Force on Chargers
Issues believes the city could find a friend in the courts if the team's
owners apply an aggressive approach toward a lease provision, known as
the "triggering event."
Chargers' officials have repeatedly said they are confident they could
use the "trigger" to re-negotiate their lease, which keeps the
team here through 2020. The trigger, a complicated formula set out in
the 1995 lease, allows the Chargers' to re-open lease negotiations once
every four years if its players' salaries are high enough to cross a bench
mark tied to the team's revenues.
Assuming the Chargers trigger the renegotiation clause this year, task
force lawyers suggest the city could write a check covering the salary
difference instead of agreeing to a new stadium or allowing the team to
leave San Diego. Should the Chargers refuse, the lawyers say the city
could take the team to court.
The San Diego City Council created the task force in July to examine what,
if anything, might be done to keep the Chargers in San Diego, including
building a new stadium with or without public financing. The full task
force is expected to vote Thursday on sending the subcommittee report
to the City Council.
For years, the trigger has been the team's ace in the hole that might
be used to to apply pressure for a publicly financed stadium or move the
team.
Because other National Football League owners are increasingly making
more money from new stadiums -- in higher concessions, ticket prices and
luxury seats -- the Spanoses say they are falling behind. They argue that
over the long term, the gap means they won't be able to lure top players
by paying competitive salaries and bonuses.
The trigger clause helps the Chargers make that case, as well as set up
a renegotiation of their lease, and potentially creates pressure for a
new stadium.
Task force lawyers say the provision can be turned around by focusing
on a section of the 1995 lease that requires both sides to negotiate in
good faith over a way "to offset the impact" of the team's higher
salary costs, if the team invokes the trigger provision.
Every Dec. 1 during a trigger-event year, a 60-day window opens where
the Chargers can notify the city if trigger conditions have been met.
Once verified, city leaders have 90 days to negotiate a way to "offset
the impact." If both sides can't agree, then the team gets an 18-month
window to consider offers from other cities, with the city retaining the
right to match.
The task force lawyers say the city's legal strategy should center on
the trigger and on preventing the Chargers from ever reaching the "shopping"
clause.
After reviewing the task force subcommittee recommendations, a Chargers
spokesman warned that a win-win deal, not litigation, is the best way
to ensure the team stays in San Diego for the long haul.
"The litigation-prone Task Force members are misguided," said
Mark Fabiani, special counsel to Chargers President Dean Spanos. "We
should all work together to find workable solutions while enjoying the
exciting Chargers season. Reckless litigation talk will do nothing except
cost the taxpayers money by depressing fan interest and driving up the
cost of the ticket guarantee."
Under the 1995 lease, city leaders are required to pay the Chargers for
game tickets any time attendance falls below 60,000. Since 1997, city
coffers have paid out more than $25 million for the ticket guarantee.
However, task force chairman David Watson -- who worked on the draft --
says the report is not necessarily a call to arms.
"It is an attempt to demonstrate to the city that their bargaining
position is stronger than some might believe," Watson said. "You
have more leverage in negotiations when you believe you can enforce your
rights in court."
Observers credit task force member Len Simon, who chaired the lawyers'
subcommittee, with the innovative idea that may neutralize the triggering
clause. The full subcommittee has endorsed Simon's suggestion.
Deputy City Attorney Les Girard declined comment on the options presented
in the draft report. However, Girard was present at all subcommittee meetings
and previously said, "There are very bright and capable lawyers on
that subcommittee, and their comments and suggestions have been helpful."
A task force consultant estimates the team could exceed the trigger by
between $2 million and $5 million this year. If those estimates are correct,
the task force subcommittee believes the city could write a check for
that amount to offset the trigger.
"Should the Chargers reject such an offer and instead demand something
more, such as a new stadium, that does not appear to us to be good faith
negotiation over an 'offset' to the impact of the triggering event,"
the report concludes. "A court ultimately could force the Chargers
to accept such an offer, and, more important, block them from shopping
the team (to another city) or leaving town."
The report also suggests city officials could question the meaning of
the trigger provision itself, and whether the Chargers ever truly intended
to stay in San Diego until 2020. That might mean the city could attack
the public statements made by team officials as misleading when they described
the trigger.
For example, Chargers chief financial officer Jeanne Bonk wrote a January
1997 letter to the editor published in The San Diego Union- Tribune saying,
"We signed this deal because of the Chargers' commitment to San Diego.
Only in the case of severe financial hardship for the team -- defined
by very narrow, specific and confining conditions -- could we request
to renegotiate with the city."
While the task force report calls this approach a long shot, it also points
out that a court could possibly agree with those who "feel that the
clause is unfair and one-sided, and permits the Chargers to invoke the
trigger whenever they wish, without regard to any financial hardship."
Norberto Santana: (619) 718-5069; norberto.santana@uniontrib.com
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