The five reasons why San Diego pro sports teams are perennial losers — in the past, present and particularly in the future. Taxes play a big part in this tradition.
San Diego is a great place to play outdoor sports — terrific weather, low humidity, little rain (let alone snow) and no wind. But for a star professional athlete making big bucks, economically San Diego is a bad choice. And recently it’s been getting worse.
To be fair, our city’s loser tradition dates back generations. Wikipedia lists only one major league championship in San Diego’s history — in 1994 the Chargers won the AFC Championship, putting the team in the Super Bowl (where the San Francisco 49’s kicked their butts, final score: 49-26). No other significant American city has as few championships over the years.
https://en.wikipedia.org/wiki/List_of_North_American_cities_by_number_of_major_sports_championships
Pro teams have figured out that San Diego is not a good sports town in which to make your fortune. Remember the San Diego Rockets (now Houston Rockets)? The San Diego Clippers (now the LA Clippers)? The San Diego Conquistadors (now defunct)? If the Chargers could have put together an L.A. deal, they would have left in a heartbeat.
The losing tradition continues. The San Diego Padres (harboring high season expectations) were just trounced by the LA Dodgers 15-0 in their 2016 season opener — setting local and MLB records for lop-sided opening day losses. Meanwhile the Chargers are acquiring journeymen players in the off-season to patch up the team’s many weaknesses. Truth is, journeyman players are all the Chargers can afford — NFL stars avoid San Diego.
So why is San Diego such a poor pro sports town? I see five reasons:
1. While the CITY of San Diego is now the 8th largest in the nation (San Antonio recently passed us), our DEMOGRAPHIC area is awful for pro teams. Outside of the 3.1 million person San Diego County, no one comes to San Diego sport events from the west (Pacific Ocean), south (Mexico), or east (depressed farmland economy with sparse population).
Only the north offers some fans. But only for football, because L.A. has no NFL team. For now.
That’s coming to an end. The NFL is moving back to L.A.
According to the Chargers, 25% of their ticket sales have been to drive-distance fans north of Camp Pendleton — primarily Orange and LA counties. It’s likely that many if not most of those carpetbagging fans will shift their NFL allegiance to the NFL team(s) shortly relocating in that area.
As a result, the San Diego team revenue from ticket sales and advertising in this “backwater” region is less than most other pro teams receive. That means less money for the players as well.
2. San Diego is a “branch office” city. Without corporate HQ’s, we have trouble selling premium seats and especially skyboxes, compared to other cities. While San Diego has been a good place for new companies (especially “biotech” companies), these start-ups seldom spend six figure rents on skyboxes.
The Chargers report that about 25% of their skyboxes are rented to L.A. area corporations. Uh oh.
3. San Diegans are on average poor pro team fans, for demographic reasons. Most of the more affluent, aging members of the city came from somewhere else, so they have divided loyalties to pro teams. More important, many locals are not “American sports” fans — we have very large Hispanic and Asian populations that is not overly-enamored with (American) football, basketball, baseball, or hockey. Finally, our great weather tempts many locals to themselves be sports participants, lessening the vicarious dependency found in dismal places like Green Bay.
4. Because of the small market and the lack of national media, San Diego is a terrible place to get endorsement contracts. LaDainian Tomlinson, the premier San Dan Charger runner who set NFL records, was relegated to doing primarily local car dealership commercials. If he had played in NY, L.A. or SF, doubtless he would have had much more lucrative national endorsement contracts, like Chris Paul and Blake Griffin of the L.A. Clippers
5. The new factor that’s still not widely recognized is that California’s new 2012 sky-high state income tax pummels the well-to-do with a 13.3% tax rate on income above one million dollars, 34% higher than the second highest state (Oregon). While this rate is currently a “temporary tax,” it’s become clear that it will be put on the ballot as a permanent levy, subject to simple majority voter vote of the state electorate. Doubtless oddsmakers (and pro athletes) anticipate that in this heavily Democrat state, this “soak the rich” permanent tax will pass handily.
A pro athlete on a team sport knows that their career is both short and uncertain. It can literally end on any single play. While perhaps not the brightest folks, these young players have agents (and mothers), and these guardians better understand that taxes drain the accounts of their charges.
Assuming such athletes are also state residents (sometimes it can be avoided, but hard to do), the CA state tax penalty applies not only to their entire salaries and bonuses, but also their endorsement and investment income. This factor can be offset with higher salaries and better endorsement contracts in the two major media/HQ California markets (L.A. and SF), but for Sacramento, Oakland and San Diego, it’s a major penalty to be stuck in this high tax state.
Ask the Padres and Chargers owners about this, and (if they are candid) they will tell you the tax problem is real. Especially so because Washington, Tennessee, Florida and (most important) Texas have no state income tax on earned income.
Indeed, the California income tax is a lot higher than all the other states. Shucks, we are 161% higher than “Taxachusetts” (home of the Patriots, Celtics, Red Sox and Bruins).
This high CA tax gives teams in the other state a built-in recruiting advantage. Logically our pro teams should suffer a stately decline in the coming years.
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BOTTOM LINE: Hapless San Diego pro sports team fans should resign themselves to defeat. While it’s always possible that the exceptional season might come along, one shouldn’t bet on it. Sadly, when it comes to pro sports, San Diego is where one finds “America’s Finest Losers.”