Santa Clara council okays $1B 49ers stadium plan

As expected, the Santa Clara city council voted unanimously last night to approve the plan for a $1 billion San Francisco 49ers stadium, $850 million of which will be borrowed by the city and then repaid (hopefully) by the team.

According to the San Jose Mercury News, this leaves “one final obstacle” to the stadium project, which is for the NFL to agree to put up $150 million towards the plan as part of its Son of G-3 fund. There’s also the little matter of actually negotiating a lease, which is supposed to take place “in coming months,” but given the unanimous backing of the council, that’s unlikely to present much of an obstacle, though how precisely it goes down could have momentous impacts in terms of who’s on the hook if stadium revenues fall short of projections.

The Merc News also reports that the 49ers are now expected to try to break their Candlestick Park lease after the 2013 season, and open their Santa Clara stadium in 2014. That’s an ambitious timetable, but certainly doable given California’s year-round construction climate. Assuming the NFL acts quickly on its $150 million, we could actually see the 49ers playing in a new stadium before the water riots start.

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33 comments on “Santa Clara council okays $1B 49ers stadium plan

  1. Good news according to the Merc is by the structures of the loans it looks like the Niners will be taking on the risk if there is ever a default or revenue shortfall.

  2. Well the city put in the 150 or so million directly that the voters approved a few years ago. But the rest is being paid by the team and league through the loans, both bank and G3.

  3. There won’t be water riots. What will happen is that the price will rise quite a bit, and then suddenly desalinization will become economical and California’s water issues will be alleviated.

    Instead of paying $7/m^3 you will pay $8/m^3 (plus capital costs which initially are quite significant). Not a huge catastrophe.

    That will also raise energy costs as it will increase energy demand. That said tap water will still be hundreds of times less expensive than bottled water and people still buy that.

  4. The NFL will push the Raiders hard in the upcoming meetings hard so they can put more $$ into it.

    The 49ers got it done and it is win-win. The 49ers and their rich fan base will easily make a profit in this stadium and Santa Clara has forced the team and NFL to assume the risk.

    For a municipality to do this is amazing. If the 49ers default the NFL is on the hook and can be sued by Santa Clara based on the new agreement.

    The NFL knows the Bay Area needs a stadium for Super Bowl rotation and for the 49ers to climb in value to the level right below the Cowboys and Redskins. Top 5 in the NFL.

    I see a hold up on the NFL vote until the Raiders make a decision…rot in Oakland? Move to LA, or share in SC with the 49ers?

    I think the Raiders thought SC would fall through and it would force the 49ers to move into a new stadium in Oakland with them….Not the case as one can see.

    It is a great day to be a 49ers fan!

  5. Dan is way off in his defintion. Of course, he’s going off media reports. The Santa Clara Stadium Authority, a city run agency, will be responsible for the $850 million in stadium related loans. The 49ers obligation was via a loan of $400 million and a dummy corporation they formed called StadCo. That $400 million will now the obligation of StadCO, which is a Delaware based LLC which may fold at anytime. I know people want to believe the 49ers are ultimately responsible for the stadium’s debt. Nothing could be further from the truth. Let’s see who’s signatures are on the loan papers.

  6. My mistake. The $400 million loan, which was a stadium debt obligation of StadCo, will now be the responsibility of the Santa Clara Stadium Authority.

  7. I know the media has been trumpeting this, but let’s see in writing that the “NFL will be on the hook’.

    The NFL hasn’t been on the hook for stadium debt or O/M costs for any other host city. And wouldn’t the other NFL owners have to agree to be ‘on the hook’ for the 49ers stadium debt payments and stadium operations costs?

  8. I’m interested to see how the 49ers can commit $30 million per year in annual rent when: a)their operating income has averaged $2-$4 million per year for the past few years b) no other NFL team is paying anywhere near close to that amount in annual rent.

  9. Footballphds dot com states that the debt service on the Stadium Authority loan will be more like $60 million/year. There is no guarantee that even $30 million/year in facility rent will pay for the loan principal/interest plus operating/maintenance costs.

    And the DDA says they will pay up to $30 million/year. That doesn’t sound like $30 million/year is a fixed number.

  10. SCT, the $60m/year estimate is for the whole $850m in loans, not just the passthrough loan. If the city gets $30m a year in rent and $30m a year in naming rights/PSL sales, they’ll break even.

    The big question remains whether the 49ers have actually contractually committed to the $30m and $30m, or whether they’ve just said they’ll do their best. The Merc News article just says “the team has pledged to make up the difference if those revenues fall short,” but that’s the same thing reporters have been saying since the DDA came out – and the DDA just says rent is “expected” to be “in the range of” $30 million a year, and “anticipated” to pay off the passthrough loan. So that could be something that’ll be firmed up in the lease … or not.

    Finally, apologies for initially leaving out the Merc News link – I just added it.

  11. Neil: What incentive will a naming rights sponsor have for paying $30 million per year when there won’t be any Thursday or Monday Night football games? Given there will only be Sunday games at the Santa Clara stadium, won’t the 49ers broadcasting be limited to a local audience? In addition, won’t that audience be limited in the future once the NFL returns to Los Angeles?
    Also, can anyone believe the 49ers will be paying $30 million per year in rent? There isn’t one other NFL team in the country paying anywhere near that amount in annual rent at their home stadiums. In addition, as I previously mentioned, the 49ers have averaged operating income of $2-4$ million over the past few years. They pay little to use Candlestick Park. This being the case, the $30 million rent value appears to be severely inflated.

  12. Neil: What incentive will a naming rights sponsor have for paying $30 million per year when there won’t be any Thursday or Monday Night football games? Given there will only be Sunday games at the Santa Clara stadium, won’t the 49ers broadcasting be limited to a local audience? In addition, won’t that audience be limited in the future once the NFL returns to Los Angeles?
    Also, can anyone believe the 49ers will be paying $30 million per year in rent? There isn’t one other NFL team in the country paying anywhere near that amount in annual rent at their home stadiums. In addition, as I previously mentioned, the 49ers have averaged operating income of $2-4$ million over the past few years. They pay little to use Candlestick Park. This being the case, the $30 million rent value appears to be severely inflated.

  13. The naming rights sponsor will almost certainly not be paying $30m/year. That’s the hoped-for figure from naming rights plus PSLs plus some other stuff. Can they get there? Mmmmaybe, but I’ll agree it’s ambitious.

    As for the 49ers paying more in rent than any other team, that’s because it’s not really rent, it’s paying off the city’s loan. Similarly, the Yankees pay more “rent” than any other MLB team, because their bond payments are considered rent (actually payments in lieu of taxes) for tax purposes, but it’s really just them paying off stadium construction costs.

    Forbes has the 49ers’ operating income averaging $18m a year over the last ten years, and it was at $21m as recently as 2010. To raise an extra $30m a year, they’d basically have to go from 17th to 9th in NFL teams in revenue. Could they do that with a new stadium, even if naming rights and PSL money is pledged to paying off bonds? Mmmmaybe. But it’s not out of the question.

  14. Right now, the people who want to save Santa Clara have to join forces with the people who want an NFL team in Los Angeles if they have any hopes of succeeding. It will be for the benefit of both cities.

  15. It doesn’t matter who borrows the money, it matters who commits to paying it back. That’s why the lease is all-important here.

  16. So if all the Mmmmmmaybes work out what does Santa Clara get?

    It’s hard for me to see outside of a limited use stadium.

    And if things don’t work out so hot (and Stadco disappears in thin air) what do we lose?

    Does the risk/reward ratio make sense for anyone w/o an axe to grind in this?

  17. “Well the city put in the 150 or so million directly that the voters approved a few years ago. But the rest is being paid by the team and league through the loans, both bank and G3. ”

    Dan is completely wrong – the entire $850,000,000 is debt repayable entirely by the Santa Clara Stadium Authority.

    Having failed to make the argument for the ballpark in their own city, people making the utterly ridiculous claim above are somehow qualified to tell Santa Clarans about the 49ers’ ripoff of our city? I just don’t think so.

    Dan, Bottomline, Sid, San Jose A’s and the rest should probably actually read the Santa Clara City Council Agendas on which they claim to be such experts. The commentary here indicates that not one of them understands the inane ideas behind this “deal.”

    Not even close, and no cigar, Dan.

    Sincerely,
    Bill Bailey, Treasurer,
    SantaClaraPlaysFair.org

    -=0=-

  18. Neil, you wrote: “To raise an extra $30m a year, they’d basically have to go from 17th to 9th in NFL teams in revenue.”

    I thought the whole point of a new stadium with club and luxury box seating collected by the team (not the city) was to increase the team owner’s profits?

    It’s not the 49ers team/owners who will have a contract with the Stadium Authority, it’s their LLC, Stadco. There’s a degree of separation there.

    The more that Stadco pays in facility rent, the less the owner gets to keep. This sounds like an incentive to make the facility rent as low as possible to increase the team owner’s profits. And the $30 million is supposed to cover not only debt principal and interest payments, but also operations and management costs. $30 million doesn’t sound like enough. And no one on our city council will say what happens when the debt/OandM expenses exceed $30 million. ‘Pledges’ in media articles don’t mean anything unless they are in the written contract.

  19. Okay, fine: To increase revenue by $50 million, which would give the 49ers an added $20 million a year in profit, the 49ers would have to go from 17th to 7th in the NFL in revenue. Again, not a slam dunk, but not impossible, either.

    I agree that the written contract needs to spell out who’s paying for what, and I’ll continue to be skeptical until we see that. But it does look like it’s at least possible that the 49ers could have the cash to pay off this thing, if that’s really what they intend to do.

    In short: I wouldn’t distrust the 49ers because what they’re promising is impossible, I’d distrust them because they haven’t put it in writing yet.

  20. If the increase in revenues will pay for the facility why exactly don’t the 49ers just get this project underwritten by a bank then? Oh that is right! It is because a bank would think it an incredibly foolish risk and tell them to go screw.

  21. Right, it’s all about the risk. This way the 49ers can tell the banks, “Don’t worry about your money, it’s a city borrowing it, not us, and they’re not gonna default.” While they tell the city, “Don’t worry, we’re promising to pay off the loans, not you, so you’re not on the hook.”

    The question is which of the two the 49ers are being dishonest with.

  22. “In short: I wouldn’t distrust the 49ers because what they’re promising is impossible, I’d distrust them because they haven’t put it in writing yet.”

    “The question is which of the two the 49ers are being dishonest with.”

    Very prophetic, Neil. So far, all we’ve heard about are pledges from the 49ers and what they may do. However, there isn’t one written promise. Santa Clarans have good reason to be on edge. After all, wouldn’t you be skeptical of dealing with an LLC (StadCo) which has registered its corporation in the state of Delaware?

  23. “In short: I wouldn’t distrust the 49ers because what they’re promising is impossible, I’d distrust them because they haven’t put it in writing yet.”

    “The question is which of the two the 49ers are being dishonest with.”

    Very prophetic, Neil. So far, all we’ve heard about are pledges from the 49ers and what they may do. However, there isn’t one written promise. Santa Clarans have good reason to be on edge. After all, wouldn’t you be skeptical of dealing with an LLC (StadCo) which has registered its corporation in the state of Delaware?

  24. Neil, we who have lived here through the campaign in which the 49ers partnered with pro-stadium council members to keep any and all costs/debt/loans/risk to the Stadium Authority off of the ballot, (because $850 million in loans no way would have passed), don’t trust anything they say. Read the stuff on the santaclaraplaysfair.org website to see why.
    If there was no risk to the Stadium Authority and city, there would have been no reason to keep that information off of the ballot. CA has a unique situation in that city-wide ballot measures don’t require cost disclosure. The 49ers campaign (paid for by the 49ers) and our city council pro-stadium majority exploited that loophole in the law to give us Measure J. What people voted for doesn’t match the DDA by a long shot.

  25. “If there was no risk to the Stadium Authority and city, there would have been no reason to keep that information off of the ballot.”

    Well, sure there was: Because it would look bad to ask people to vote for $850 million in bonds, regardless of who was paying it back.

  26. The Mexican national soccer team will probably show up once a year or so. That will generate a couple of million or so.

  27. “But it does look like it’s at least possible that the 49ers could have the cash to pay off this thing, if that’s really what they intend to do. “

    Neil, you mean after the Santa Clara Stadium Authority either goes into default, or until it gets in so deep that the 49ers will take over the stadium permanently , right?

    Please note that the 49ers are only down for $150 million of the ONE BILLION DOLLAR total. The other $850 is Santa Clara Stadium Authority debt, and it must be paid back by that Agency.

    The 49ers do nothing but pay the interest on approximately $400,000,000 of the $850,000,000 our city’s Agency will owe.

    In Lee Iacocca’s words, “Who wants to live just to break even?”

    Barely breaking even: That’s the Santa Clara Stadium Authority all over.

    If it were otherwise, the six-month triple net lease never even would have been proposed – much less the twelve-month version.

    Our City Council has all but acknowledged that the Santa Clara Stadium Authority is being set up to fail – leaving the ***City*** of Santa Clara with only the crumbs and peanuts from the Fixed Rent Ground Lease – A miserable eight million over forty years.

    It’s when the Santa Clara Stadium Authority exercises the twelve-month triple net lease that the 49ers have to assume all of that debt – not until.

    Sincerely,
    Bill Bailey, Treasurer,
    SantaClaraPlaysFair.org

    -=0=-

  28. It would be in our interests to have a Santa Clara ballot measure so we can vote in a new law which prohibits any use of our city’s general fund, or any taxpayer funded account for that matter, in paying for stadium related debts.

  29. I understand the Cal Memorial Stadium is also a very big deal. Will Santa Clara Jay tell us how much Rosendin made on the deal, while other electric companies were planning to bid less.

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