Chargers lease is open for the next 60 days | Team could trigger renegotiation talks

December 1, 2002

Abstract:
Under the team's 1995 lease agreement with the city, the Chargers can reopen negotiations once every four years if player salaries cross a financial bench mark. The first day they can trigger the renegotiation clause is Dec. 1, but they can initiate it any time during the 60-day period.

The Chargers signed a 20-year lease with the city in 1995 but earlier this year announced their need for a new stadium amid talk that a Los Angeles stadium-building project was trying to draw the team away from San Diego. When the Los Angeles project stalled last summer, the Chargers reiterated their calls to city leaders to continue pressing forward with negotiations for a new stadium in San Diego.

A city consultant has been talking with the Chargers and has received some trigger information. But Assistant City Attorney Les Girard said the Chargers have not turned over any written documentation, adding that any trigger notice would be met with a financial audit. The length of time for that review, Girard said, "depends on how cooperative the Chargers are."

Full Text:
Copyright SAN DIEGO UNION TRIBUNE PUBLISHING COMPANY Dec 1, 2002

Today marks the opening of a 60-day window that could determine the Chargers' future in San Diego.

Under the team's 1995 lease agreement with the city, the Chargers can reopen negotiations once every four years if player salaries cross a financial bench mark. The first day they can trigger the renegotiation clause is Dec. 1, but they can initiate it any time during the 60-day period.

Mayor Dick Murphy said last week that the city will press the team to prove its case of financial hardship.

"I do not concede that the Chargers have the legal right to trigger," Murphy said.

Murphy also wants the team to defer a decision on renegotiating until after Super Bowl XXXVII, which will be played in San Diego Jan. 26.

He has urged the Chargers to continue talking with a citizens task force he created to examine the stadium issue.

The Chargers signed a 20-year lease with the city in 1995 but earlier this year announced their need for a new stadium amid talk that a Los Angeles stadium-building project was trying to draw the team away from San Diego. When the Los Angeles project stalled last summer, the Chargers reiterated their calls to city leaders to continue pressing forward with negotiations for a new stadium in San Diego.

The most controversial element of the team's lease requires the city to guarantee revenue equal to 60,000 general admission seats for each home game. Through 2001, the city has paid more than $25 million for the guarantee. This season, the team has billed the city more than $5 million under the guarantee.

Chargers officials have said they are in a financial position to pull the trigger this year, but they are staying silent on when and if that will happen.

"We're focused on football, and we have no comment on the trigger for now," Mark Fabiani, special counsel to Chargers President Dean Spanos, said Monday.

Fabiani also reiterated the team's frustrations with the lack of progress at City Hall and past concerns about the short timeliness in the 1995 lease for renegotiations.

"We believe we have tried everything possible to avoid being in the trigger situation, but the mayor's response has been to defer completely to his task force, which from the beginning was not scheduled to finish its work until after the trigger period," Fabiani said. "So, we are where we are."

The Citizens' Task Force on Chargers Issues is expected to see a presentation by the Chargers in mid-January on the team's redevelopment options for the city-owned 166-acre Qualcomm Stadium site. The panel is then scheduled to issue a report on its recommendations to the City Council in February.

If the team takes advantage of its trigger option during the next 60 days, it would activate a 90-day period in which the city and team could renegotiate the lease. If the two sides can't reach agreement, the team would then have 18 months to market itself to other cities.

If another city offers the Chargers a deal, the city of San Diego would have 90 days to match it.

The trigger provision in the team's lease is unclear on how the player salary and team revenue figures would be verified, or whether negotiations can start before such a verification occurs.

This month, lawyers working with the mayor's task force submitted a report to the City Council outlining legal options on the lease. Those include offsetting the impact of the team's higher salaries with a check covering the difference, or attacking the entire trigger concept as misleading.

David Watson, the task force's chairman, said the Chargers have not provided the group with requested financial information nor has the team confirmed a date to present its redevelopment proposal in January.

"That just makes it difficult to do our job," Watson said.

Even so, he said he thinks the task force can complete its work and isn't worried about the trigger deadline.

A city consultant has been talking with the Chargers and has received some trigger information. But Assistant City Attorney Les Girard said the Chargers have not turned over any written documentation, adding that any trigger notice would be met with a financial audit. The length of time for that review, Girard said, "depends on how cooperative the Chargers are."

Complicating the issue is that verifying the Chargers' trigger figures may require the National Football League to release financial information from other teams, Girard said.

The NFL doesn't like to do that.

"As private businesses generally, the NFL and its clubs have a strong interest in maintaining the confidentiality of their respective financial information," wrote NFL Vice President Frank Hawkins in a Nov. 18 letter responding to a request from the mayor's task force for financial documents.

"For example, NFL clubs' ability to compete with each other for talent depends on team-by-team financial information not being disclosed," Hawkins wrote.

Girard said the San Diego City Council will have to decide whether to move forward with talks before a full confirmation of the trigger figures is complete.