Sat, 24 Aug 2019

Chargers take long-term view with ticket pricing

Sports Xchange
20 Oct 2018, 02:38 GMT+10

If NFL owners have an issue with revenue projections for when the Chargers join the Rams in the new Los Angeles-area stadium in 2020, they have only themselves to blame.

A lot of barbs have been tossed in the Chargers' direction this week after reports surfaced from the league's fall meeting in New York that owners are concerned about the team's presence in Los Angeles. That led to the misguided notion that they might soon abandon the market. Nothing could be further from the truth.

The reality is that complaints from some owners are based solely about money (surprise, surprise) after the team unveiled its reasonable pricing structure for SSLs (stadium seat licenses) and "general seating" (about 70 percent of capacity). Ticket revenues go into a pool that is shared by all teams, so there was grumbling that prices were too low.

Said Chargers president of business operations A.G. Spanos: "We're excited that every seat inside the new stadium is finally on sale. Each decision throughout this process has been made with the fan in mind, and we think the pricing announced today reflects this fact. When you look at the pricing levels for general seating, you can confidently say there is a season-ticket opportunity for just about everyone.

"I think this model also reflects our view that it's not just about pricing for one person. A family of four should be able to buy season tickets for the entire family and not need a second mortgage to do so."

One criticism leveled at the club was that it was hypocritical to have low prices when tickets at the 27,000-seat StubHub Center, where they play now, is the highest average in the league.

However, that occurred because of the limited seating in the team's temporary home and the intimacy of the venue. Many teams have high prices in the lower bowl, but the average decreases when the upper-level seats are factored in. The Chargers sold out season tickets, but it seems clear that ticket-holders are able to recoup some of the money spent by selling tickets to fans from other markets.

The club doesn't want that to be the case in the new stadium, and they realize they have to build a mostly new fan base with a lot more seats to sell.

About 70 percent of the general seating will have SSLs ranging from $100 to $3,000 per seat with ticket prices as low as $50 and ranging up to $150. Around 26,000 seats are priced at $50-$70 along with that $100 SSL.

The Chargers are able to do that because of the agreement they reached with Rams owner Stan Kroenke to play in the new stadium in Inglewood.

First, though, let's revisit how this all came about. During the frenzy of 2015 after Kroenke first announced in January his intentions to privately finance the stadium, what followed was efforts to produce a financing plan in St. Louis to keep the team there followed by the Chargers and Oakland Raiders joining forces for a new stadium in Carson, Calif.

The latter eventually captured the support of the league's relocation committee after St. Louis put together a plan for $400 million in public money that was approved by the end of the year. It's notable that San Diego and Oakland had no stadium plan to keep their teams, despite efforts for more than a decade to play in a venue that was up to modern standards.

As owners gathered in mid-January in Houston for the decision, that committee had voted 5-1 for the Carson plan. The one dissenter, Kansas City Chiefs owner Clark Hunt, did so because he did not support the league putting two teams in the Los Angeles market.

Chargers owner Dean Spanos had support from more than 20 owners, but was slightly short of the 24 needed to win the day. That's when Dallas Cowboys owner Jerry Jones began wielding his power, putting all of his support behind Kroenke. It's no coincidence that Legends Hospitality Management, which Jones co-owns with the New York Yankees, would have the contract to market premium seating at the new stadium.

Behind the scenes, it was then agreed to have a secret vote on relocation, so when the votes changed on the first ballot, Spanos wouldn't know who flipped.

He was thrown under the proverbial bus, but was tossed a bone giving him the first option to join Kroenke at a later date. That's what Spanos did a year later.

Now, rightfully so, Spanos is trying to appeal to as many potential fans as possible in the short term to benefit the team in the long term. And that long-term should be lucrative because of the deal he struck with Kroenke.

Most important, the Chargers are not responsible for any construction costs at the Inglewood stadium and the only debt incurred was a $650 million relocation fee that is paid over 10 years. They also signed a 20-year lease with Kroenke and share joint stadium revenues that include naming rights, luxury suites and sponsorships.

The lease is crucial because that other stadium revenue will be priced based on there being 20 games in the stadium each season.

Do the Chargers realize there is a lot of work to be done? Absolutely. But the value of their franchise will sky-rocket based on being in Los Angeles, and Spanos surely won't (and can't) give up this soon.

No matter what some vocal owners say.

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