Sports Law Blog
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Tuesday, January 27, 2004
 

More on Chargers Lawsuit: The city of San Diego has responded to the lawsuit filed in November by the NFL's Chargers, arguing that the team has not met the financial-hardship requirements needed to get out of its stadium lease, and thus, should not be allowed to shop themselves to other cities.

The city has also sent letters to officials in Portland, Carson, Anaheim, Long Beach, the Rose Bowl in Pasadena and the Anschutz Entertainment Group in Los Angeles, warning them that the Chargers are under lease at Qualcomm Stadium and that the city would do what was necessary to protect its rights. The team has responded that it has not yet entered into any negotiations with other possible cities.

The lawsuit centers on the question of the Chargers's revenues. The trigger clause in Qualcomm lease allows the team to start a renegotiation period with the city and shop itself to other venues "if it meets a financial-hardship benchmark that measures the team's player salaries and benefits against a team salary cap." The team claimed in March that it exceeded this amount by $4.3 million; however, it has failed to release any detailed profit or loss statements to support this claim. The city's cross-complaint asks for an "accounting of the books and records" to determine the accurate amount under the agreement.

In addition, if the court finds that the renegotiation period was indeed triggered, it must then determine the ambiguous language in the contract that deals with the city's obligations to offset the Chargers' financial hardship. The Chargers have asked that the city build them a new stadium, or pay the team an annual fee of $20 million coming from parking and concession revenues that are not shared with the league.

The city's answer and cross-complaint.