The estimated cost for a new Chargers stadium has risen to more than $800 million – double the original estimate five years ago – but team officials say they are still committed to the project. Back in 2002 when the team was proposing a stadium on part of the Qualcomm Stadium property in San Diego’s Mission Valley, it estimated the cost at $400 million. But the cost of materials, higher demand for construction contractors and escalating insurance rates are among factors that have driven up the price to as much as $850 million.
“It was difficult from the very beginning to build a stadium and the related infrastructure with private money, and it’s no exaggeration to say it’s doubly difficult now,” Mark Fabiani, the team’s general counsel and point man on stadium issues, told the San Diego Union-Tribune. “But we’re not saying it’s impossible – if we thought that, we wouldn’t keep spending so much money on this.” The team is spending more than $220,000 for a study on possible stadium sites in Chula Vista that may be released this month. In addition, the Chargers recently commissioned a study of Oceanside’s Center City Golf Course, the other site in the county the team is considering.
With the steep increase in stadium development costs, one thing is becoming crystal clear: The Chargers will need a profit-making project adjacent to the new stadium and a second one elsewhere in San Diego County. The team wants any property that’s part of a stadium deal to be provided to them at preferably a below-market price or to get zoning allowances from whatever city or cities that participate in a stadium deal. An alternative might possibly be county property, Fabiani said, although the county has not been asked to find a development site.
The Chargers have hired the HOK architecture firm of Kansas City, Mo. HOK has designed more than a dozen stadiums, including those for NFL teams in Houston, Foxborough, Mass., Miami, Baltimore, Tampa Bay and the Phoenix suburb of Glendale. Dennis Wellner, an architect at HOK, said the cost of structural steel is increasing because of demand worldwide and in the United States, fueled by the post-Hurricane Katrina rebuilding along the Gulf Coast and the building blitz in Las Vegas. A general rule of thumb in the development industry is that costs are split between labor and materials. Wellner said building contractors are in such high demand “that they can name their price.” The cost of liability and other design and construction insurance also is increasing. It runs “into the millions when you add them together,” Wellner said.
Financing a stadium is hard for any NFL team and is even more so for the Chargers in California’s economic and political environment, said David Carter, executive director of the USC Sports Business Institute. “The cost of real estate is expensive, and the appetite for public investment is next to nothing,” Carter said. “Cities are willing to give tax breaks and zoning concessions, but that’s not enough to narrow what appears to be a dramatic gap of several million dollars (in stadium financing).” Last year, the NFL’s Arizona Cardinals began playing at University of Phoenix Stadium in Glendale, a facility built at a cost of $455 million, with $300 million coming from a car-rental tax imposed by the state. Also, a Dallas Cowboys stadium is under construction in Arlington, Texas, at a cost of $1 billion. Of that total, about $325 million of that is coming from the city.