Sports Teams Gain Upper Hand With Cities : Franchises: San Diego’s $60 million in concessions to keep Chargers illustrates growing trend. But city can benefit too.

It was on the heels of their first appearance in the Super Bowl that the San Diego Chargers announced in February that their home, Jack Murphy Stadium, would be expanded from 60,000 to 72,000 seats--thus ensuring that the team would remain here until the year 2020.

At a time when the fate of their National Football League neighbors--the Rams and the Raiders--was hanging fire, the Chargers managed to win more than $60 million in concessions from their host city, which gets to keep them for another 25 years.

As if San Diego needed reminders of its concern, the Rams--a fixture in Los Angeles for decades--suddenly made good on their threat to leave and bolted for St. Louis. And although the NFL has discussed building a new stadium for the Raiders near Hollywood Park, the fate of Al Davis’ team now, as always, remains a question mark.

Whether the threat is implied or real, professional sports teams are using the possibility of leaving to extract better-than-average deals in a free-market economy that is clearly stacked in their favor.

San Diego is only one example of what has become something of a big-city phenomenon. That trend is coupled with the increasing desire of baseball and football franchises to have separate stadiums and mounting pressure for cities to build large indoor arenas, as well.

In San Diego, a city that the National Basketball Assn. has abandoned twice , the mere thought of another team leaving is viewed as a civic concern.

“The only way to get and keep major league sports franchises in this day and age is to subsidize them. It’s as simple as that,” said Roger Noll, professor of economics at Stanford University. “There are so many cities willing to court them, and many fewer franchises than cities who want them.”

The most recent chapter was played out several weeks ago, when Art Modell, owner of one of the most storied franchises in professional football, the Cleveland Browns, hinted at moving to Orange County unless improvements are made to Cleveland’s Municipal Stadium, which is nicknamed “the mistake by the lake (Erie).”

San Diego officials, who announced their new deal with the Chargers in February, admitted that they feared their city would follow in the footsteps of Anaheim, which, in getting the Rams to sign off on the construction of a new arena, The Pond, enabled the team to shop and eventually move elsewhere; or Los Angeles, which has yet to satisfy the nomadic Raiders.

They also cite San Francisco, which, at the eleventh hour, managed to keep baseball’s Giants from fleeing to Florida, even after various Bay Area stadium proposals were rejected.

In other words, giving the Chargers what they wanted was an insurance policy to keep San Diego as one of 30 members of a most elite sports club--the NFL.

A bigger, bolder facility also means that San Diego has a chance to join the regular rotation of cities playing host to the Super Bowl, which annually offers a multimillion-dollar influx to host cities.

The expansion of Jack Murphy Stadium--as well as the city’s promise to finance a new multimillion-dollar practice facility for the Chargers--is already affecting the San Diego Padres, whose officials say that 72,000 seats is far too many for a small-market baseball team.

Two years ago, the Padres, whose lease expires in 1999, threatened to leave unless the city builds them a baseball-only stadium modeled along the lines of Baltimore’s enormously successful Camden Yards--which cost taxpayers more than $290 million.

Although the team has never made a formal proposal for such a stadium, Padres officials pointedly note that, by the year 2000, fewer than half a dozen cities will have dual-purpose stadiums and that baseball-only facilities will have become a market necessity.

“It’s too premature to talk about that sort of thing,” club spokesman Bill Adams said, “but since those new (baseball-only) stadiums started appearing, it’s fair to say that we in San Diego have looked at those with a lot of envy.”

Adams referred not only to Camden Yards (48,445 seats), but also to Coors Field in Denver (50,000 seats, $215.5 million), Jacobs Field in Cleveland (42,400 seats, $169 million) and The Ballpark at Arlington, Tex., a 49,292-seat structure that cost $186.5 million--and that voters decided to build with elevated sales taxes while rejecting new funds for schools.

Such facilities--which seek to blend the best of the old and new by combining the classic architecture of baseball’s most historic parks with the plushest amenities--generate vast sources of revenue in the form of sky-box suites and club seating. The Ballpark at Arlington has 120 sky boxes that lease for between $50,000 and $200,000 a year.

Such stadiums give a team total control over its own domain. The improvements to Jack Murphy won by the Chargers include club seating on the loge level near the scoreboard. The Padres are less than thrilled, though, saying such seats will be of minimal benefit to baseball fans.

For the Chargers, the benefits are a much-needed shot in the arm. The renovation--which should be completed by 1997--will add 2,000 general admission seats, 7,800 club seats and 31 sky boxes, the revenue from which flows directly to the Chargers. The city will add two large Sony Jumbotron screens, mounted at each end of the stadium.

The practice facility promised by the city is part of a trend in the NFL. St. Louis offered to build a $15-million practice complex as part of the $200-million package that induced the Rams to move, and the Philadelphia Eagles hope to build one that will include a museum, movie theater and interactive theme park.

The Dallas Cowboys, Arizona Cardinals and Washington Redskins already have sprawling suburban facilities financed in part by municipal governments and local developers. The Cowboys hope to persuade the city of Irving, Tex., to finance the expansion of Texas Stadium to 104,000 seats and to build an adjacent theme park and museum, which may include “virtual reality” exhibits, allowing fans to simulate playing professional football themselves.

In San Diego, the stadium renovation will be financed in part through additional revenue from club seating, sky boxes and increased capacity, as well as higher prices from concessions and parking. But the city also plans to issue $2.5 million a year in bonds to finance a major portion of the cost. The total 30-year debt service, City Manager Jack McGrory said, will be $7 million a year.

City officials committed themselves to improving the stadium not only to lock up the Chargers for as long as possible but also with an eye toward the Super Bowl, which brings an estimated economic impact of more than $200 million to the host city.

Jack Murphy, or The Murph, as it’s locally known, last played host to a Super Bowl in 1988 and will again in 1998. (In 1988, the 60,000-seat stadium was stretched to a capacity of more than 73,000 bodies--crammed sardine-like into bench seating on the field level.)

The Padres, with the help of a New York investment firm, Wertheim Schroder & Co., have countered with their own figures, noting the boon that new baseball parks have been to Baltimore, Cleveland and Arlington, Tex.

Even Phoenix is building a $238-million baseball-only stadium with a retractable dome, which will, upon completion, be home to the Arizona Diamondbacks, one of two expansion franchises awarded by Major League Baseball in March. The other, the Tampa Bay Devil Rays, will play in St. Petersburg, Fla., which has an indoor stadium sitting empty. Its value up to now has been in tempting other teams--such as the Chicago White Sox and San Francisco Giants--to leave. Both used the Florida threat to extract sweeter deals back home.

In San Diego, the Padres may have signaled their own plans by vowing not to contest the Chargers’ expansion--which, as co-tenants, they could have done.

The threat, veiled or otherwise, has had the effect of dimming one of the city’s other grand plans--building a 20,000-seat, “state-of-the-art” downtown sports arena in the largely undeveloped Centre City East area near the San Diego Convention Center.

Despite lacking an NBA or National Hockey League tenant, the San Diego City Council gave preliminary approval last year to the arena’s master plan and to a preferred site.

The city approved an increase to 10.5% of its hotel-room tax, which eventually will be used to help finance the new arena. But otherwise, plans for the building are on hold.

“Until we get an NBA or NHL team to be a full-time tenant, I don’t see how we can do it,” McGrory said.

McGrory conceded that losing the Padres would be too steep a price to pay for getting an arena built, noting: “A bird in hand is always worth more than two in the bush. We don’t want to lose any of our professional sports franchises. That would cause major damage to us.”

Barry Lorge, a spokesman for Arena Group 2000, which is trying to get the arena built, concedes that “there definitely has been a shift in thinking. Perhaps it’s prudent to protect the franchises you have, to ensure their continuity in town, rather than bet on the come for a new franchise.”

Ron Hahn, the head of the arena group and a prominent developer, spoke out in favor of a combined baseball stadium-indoor arena near the city’s eastern waterfront. Cleveland’s experience offers insight into the economics of such a project: Its natural grass baseball park is part of a $425-million undertaking that includes a 20,750-seat arena built to lure the NBA Cavaliers from neighboring Summit County.

Noll, the Stanford economist, said the current market rate for luring a professional football or major league baseball team is between $200 million and $300 million, while the price to draw a hockey or basketball franchise is at least in the $50-million range.

In the case of big cities and big-time sports, where there’s a will, there’s usually a way, Noll said, even if the taxpayers’ general fund has become an ever-shrinking pie for what really makes a city run--firefighters, police, libraries and street improvements.

“You just can’t have the franchises these days unless you’re willing to provide a subsidy,” Noll said. “So, San Diego is no different from any other city in America. . . . I doubt that any city is aching to throw money at sports franchises, but they really have no choice. The reason the subsidy is politically viable is that people in this country really care about sports.”