Chapter 4
Shared Risk, Shared
Returns: San Diego’s
Unique Partnership
for a Ballpark and
a New Downtown
4.1 Introduction
e 1980s and 1990s was an era of unprecedented public investments for sports
facilities. Arlington (Texas), Baltimore, Chicago, Cincinnati, Cleveland, Dallas,
Detroit, Green Bay, Jacksonville, Milwaukee, Phoenix, Seattle, St. Louis, St.
Petersburg, Tampa, and Toronto raised taxes to ensure the presence of teams. ese
tax increases repaid the bonds sold to pay for the public sector’s share of the cost of
building arenas, ballparks, and stadiums. With the teams given control of most, if
not all, of the new revenue generated from luxury seating, naming and sponsorship
rights, and the expanded retail venues included in these new facilities, it might be
imagined that each franchise had the revenue needed to repay any debt it incurred.
Instead, teams argued that without an investment from the public sector, their
nancial success would be unlikely. As Forbes would report each year, however,
136Reversing Urban Decline
the additional revenue led to substantially increased values of most franchises. As
a result, several owners were able to realize a substantial return on the money they
had invested in the team when they decided to sell their franchise. In Cleveland,
for example, the owners of the Indians and Cavaliers sold their teams in the years
after the opening of new facilities. Richard Jacobs (Indians) and the Gund Brothers
(Cavaliers) each enjoyed substantial gains from the sale of franchises that played
their home games in facilities that oered numerous new revenue streams.
Ironically, in no instance where a public sector partner provided a substantial
investment in a facility was there a commitment or assurance given that similar
returns in the form of new private investments in the downtown area would take
place to produce additional tax dollars (or a return for the public sector’s invest-
ment). Each city could follow in Indianapolis’ footsteps and put forward a sports
and entertainment strategy that included new venues for arts and culture and then
actively broker additional real estate development deals that might generate addi-
tional tax revenues to oset its investment. But those returns were the responsibil-
ity of the government. While each city assured residents it would try to enhance
development and secure new taxes, in essence, taxpayers were left to hope some-
thing positive in terms of real estate development and new tax revenues would
occur. Voters in San Diego would not support a typical ballpark deal—a public
investment without an assured rate of return. San Diego had a strained relationship
with the San Diego Chargers. e Chargers secured a change in their lease prior to
the Padres seeking a new ballpark that included a guarantee that the public sector
would buy any tickets that were not sold for any Charger regular season game. at
guarantee would, after its acceptance, create a substantial political backlash that
made any public participation in the nancing of another sports facility contingent
on substantial investments by a team owner.
e San Diego Padres needed a new ballpark to ensure its scal viability. Unlike
the Chargers, who enjoy an equal share of the benets of the NFLs very large
national media contracts, the Padres, like all other MLB franchises, have to rely
on locally generated revenues to be nancially secure. While San Diego has an
extraordinary climate and an unparalleled coastline, the metropolitan area is rela-
tively small. e market area available to the Padres has an estimated population
of 3.2 million (2012). To the north of this market area lies Orange County, the
home of the Los Angeles Angels of Anaheim, a team that also draws fans from San
Bernardino County. To San Diego’s south lies Mexico, and the wealth of its resi-
dents has not allowed that market to be a robust source of income for the Padres.
e Padres must rely on the revenues they generate from businesses and residents
of San Diego County.
For many years the team was owned by Ray and Joan Kroc. eir fortune from
the McDonalds hamburger franchise business provided a degree of exibility to
address the team’s nancial requirements independent of the revenues generated
from baseball operations. A few years after Mr. Kroc died, Mrs. Kroc decided to
sell the team. A group of local businesses leaders who purchased the team could not

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