How the 49ers will save $120m or so by having Santa Clara sell their PSLs

San Francisco 49ers personal seat license sales for their new Santa Clara stadium continue to go well: After hitting $310 million last September, they’re now at $400 million, with still another year and a half to go before the place opens. The Niners may yet have to trim prices a bit to sell the last few thousand seats, most of which are in the end zones, but it looks like the city of Santa Clara should be able to pay off its first $450 million in stadium debt without much trouble. And with 49ers rent payments set to pay off the rest, it looks like the worst fears that the public would be saddled with humongous risk won’t come to pass.

As Bloomberg Businessweek points out, though, there’s still a big tax benefit being hidden amidst the PSL sales:

When the Carolina Panthers sold the first PSLs in 1993, the team had to pay a $50 million federal tax bill on $160 million. That didn’t sit will with NFL owners, who came up with the idea of having a government entity sell the licenses and own the venue. (In Santa Clara, the stadium authority contracted with a company called Legends to broker the sales. The team will pay about $30 million in annual rent to the stadium authority.) Figuring on a federal tax rate between 30 percent and 35 percent on the $400 million in revenue, the 49ers stand to save from $120 million to $140 million.

Basically, by having the (tax-exempt) city sell the PSLs instead of the team, the 49ers are able to use the pre-tax proceeds of PSL sales to pay off their stadium, not the after-tax proceeds. There’s nothing illegal about all this, but it is a massively lucrative favor that the city is doing for the team, in exchange for nothing at all. Santa Clara (or other cities contemplating similar PSL sale dodges, like Atlanta for the Falcons) could legitimately say, “Hey, we’d be happy to sell those PSLs for you and save you $120 million or so, but how about then you cut us in on some of your profits via, oh, let’s call it a PSL sales commission?” They don’t, but they could — so while you probably shouldn’t really consider this a subsidy (unless you consider the fact that the IRS doesn’t crack down on this sleight of hand to be a tax loophole, which you could make a pretty decent case for), it’s still very much an opportunity cost.

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76 comments on “How the 49ers will save $120m or so by having Santa Clara sell their PSLs

  1. You can’t spell sucker without SC – Santa Clara.
    Remember this when all you Cali’s file yor income taxes for the state of insanity.

  2. Not very surprising, at least to me…

    The bay area has money, sorry paul people like to live in the state of insanity like me :). There is a very high number of people in the bay area that can go shopping to the local mall and drop $5k like nothing. Like i said before thats only a couple of high end purses. People spend money on the 49ers, I don’t have any numbers but i think this is a very fast pace to sale PSLs…

    I am sure if they can sell $400 million in a year, they can sale $30million plus naming right in 1.5 years.

  3. Neil, did owners lobby to pass a law to make cities tax exempt in situations like this? Or did the panthers not have a very good CFO? this move is very interesting.

    Maybe brining the former CFO at facebook and youtubeto work for the 49ers paid off lol

  4. Cities don’t pay income taxes, because they’re not for-profit corporations. Pretty sure that’s been true since the income tax came into existence in … 1915, was it?

    My guess is either the Panthers didn’t think about trying to get around paying the tax, or for some other reason they didn’t want to get the government involved. (This was an entirely privately built stadium, remember.) They’d only just invented PSLs, cut them some slack on not coming up with a tax loophole for them too.

  5. The Mercury article is another press release from the 49ers being published as reportage. No independent verification of any of of what’s written here.

    Even if true, 50% of the $400 million in license sales by the article’s own admission is the luxury suite sales, 100% of which goes to the 49ers, and not the SA.

    So there’s still a long way to go and no word on naming rights (which the SA expects to be at $330 million). Even being $100 million short is going to be significant in our city of 120,000 (by comparison Houston’s general fund is 27x larger than Santa Clara’s).

  6. The amount of seat licenses being reported by the Merc, is INCORRECT and deceptive. The percentage sold is actually 66.82% and the amount of money collected (and available to pay the City’s debt) is just $98 million. No one has collected the other $392 million and, if history is any indication, there is a huge chance that the remainder may never be seen. (Example Oakland stadium up the road and others)

    And, another factoid that the public needs to know, and the legislature needs to fix … The NFL is a non-profit organization too. That is an absolute insult and should be immediately repaired, especially with the hundreds of millions that they make.

    The Santa Clara Stadium’s financial status is indeed still in jeopardy, especially considering all the Club seats and Suite being sold, not a single cent goes to the City either during NFL or Non-NFL events. SC suckers are paying to build them, but don’t get a cent (except for the 35 cents per ticket which will be split three-ways and has an annual cap).

    SC does stand for suckers, first poster has it correct.

  7. The merc article says they have sold $403 million in seats and north of $400 million in luxury suites. So they have sold about $800 million worth.

    Either way looking good.

  8. jj-slug: I don’t believe that any of the luxury suite money goes to pay off Santa Clara’s bonds.

    Jay and James: If you have documentation of how much of the money collected so far is from seat licenses, can you provide a link?

  9. James,

    46,500 sold seats/61,500 seats = 0.7495%

    Where do you get 66%?

    Total stadium capacity is 68k, that also includes luxury boxes.

  10. Correct Neil, I was going to post that the luxury money is kept by the 49ers like the poster above had said. So the team has made $400 million and the SA has made $403.

  11. The newspaper article says that $100 million in cash will be transfered to the SA based on what people have already paid in PSLs…

    My co worker has 2 seats, he was given 2 years to pay it of with no interests. Once the stadium opens the interest will kick in. Its like buying a car, the finance company pays the dealer the full amount up front, buyer pays finance company.

    So in this case, the finance company (One of the partner banks ;) ) would transfer the remaining $300 million to the SA. Until financed amount is paid off the SA technically owns the seat. So if you default on payment, they will “repo” the seat and make available for purchase to any one who wants it.

    Again i tried to get him to let me post his PSL docs but he would not :(…

  12. Short term PSLs, non winning team, diluted fan base and a fan base with less disposable income = disaster.. Thats the difference between the PSLs used to “renovate” the stadium for football in Oakland and the PSL sold by the 49ers.

  13. There are 1,600 club seats left at about $25k per seat plus 13,800 reserved seats at about $3,500 per seat, that’s about $90 million more. I didn’t think they would come close to the $500 million mark.

    What’s the % down payment on the PSLs? Wonder what amount of sales will default.

    There shouldn’t be any tax on PSLs because per Atlanta PSL sales are public revenue. Insert “sarcasm a-hole smiley face” here.

  14. Geuy: Right, only $100 million has been collected so far for the city. That’s not the same as saying that only $100 million in PSLs have been sold.

    I’d be extremely surprised if any significant numbers of PSL buyers default. The only reason to spend the money in the first place is to get the equity in the perpetual right to the seats, which you’d give up entirely if you defaulted. Unless we’re in some sort of PSL speculative bubble and the whole thing ends up underwater somehow, the thing to do if you don’t want your tickets anymore is to sell your PSL to somebody else, not to stop payments on it.

  15. 46,100 sold seats/68,500 total = 67%
    The merc has a typo with 61,500 seats. It’s 68,500.
    If you use a % sign you must multiply by 100 (i.e. 67% not 0.67%).

    On tomorrow night’s Santa Clara City Council agenda is the transfer of the SBLs to the Stadium Authority:
    sireweb.santaclaraca.gov/sirepub/cache/2/3ag4krhshyspvahzjp3fqvds/63120203112013084141219.PDF

    Looking at this document – and comparing it to the Merc article – it sure looks like the Merc once again reproduced a 49ers press release which is less than honest.
    The document says that as of March 2013 the stadium construction costs have reached $400 million, and that there was an agreement in place to start the transfer of sbl proceeds to the Stadium Authority once $400 million in construction costs was reached. See page 3 – The amount for 38,984 reserved seats is $171 million. Right now $98 million in deposits has been received “from the purchasers of SBLs being submitted to the Stadium Authority” and that money will transfer to the Stadium Authority. BUT not all seats have SBLs which will transfer to the Stadium Authority – the 49ers get to keep the club and luxury suite income even though Santa Clarans are paying to build the tower which holds the suites. Note that for the 6,789 club seat SBLs that have been sold the amount is $220 million. I think it’s only the SBL income from the regular reserved seats – not the club seats – which will go toward the SA’s debt.

    None of this is proof that the Stadium Authority can service its $950 million in debt, which is the real problem for Santa Clarans once the construction loans come due in 2014.

    Also on tomorrow night’s council meeting – the city is going to spend $350,000 for traffic lights around the stadium – more money spent on items the public was never told about. And there will be 2 streets named for Bill Walsh and Marie DeBartolo.

  16. Neil,

    I don’t know of any public information about money collected from BSLs. Legends is playing this close to the vest. I’d like to see verified documents about how the sales are really going. Just taking the 49ers word for everything and publishing it as fact is what the Mercury does because they are desperate to curry the team’s favor.

    jj-slug, I believe the article says $400, not $800 in sales of which half is from luxury boxes…

    A huge wildcard is how the naming rights negotiations is going. There’s been nothing released to the public on this, and yet it’s supposed to be about 25+% of the construction costs. If it comes in significantly under, what then?

  17. The article at the top talks about the sale of $403 million of SBLs for “seats”. Then in the middle of the article it mentions that the team will keep the revenue of luxury suites which have all been sold in the tower with revenue north of $400 million. “Seats” and “Suites” are different.

    The stadium capacity is 68k, including suites and seats.

  18. Lol commenting on mobile site …

    Continued from last post.

    But I could be miss reading the article….

  19. @ SantaClara, Some of those 68,500 are part of the 165 luxury suites. Is it about 40 seats per suite? That would account for the 7,000 seat difference.

  20. What jjslug said. When they say “seats” they mean SBLs, when they say “suites” they mean suites.

    And given the history of naming rights sales, I don’t think you want to get too impatient. There are a limited number of companies will to pay through the nose for these things, so it can often take a year or two (see: MetLife Stadium) to find somebody who’s willing to pay top dollar. The 49ers will need a little over $20 million a year from naming rights to pay off that share of the construction costs — that’s possibly doable, but if so they may need to wait it out a bit until the right buyer shows up.

    And if it falls short? That’s a great question, but at least we’re still not looking at the worst-case scenario here. Any shortfall would likely be in the tens of millions (present value), not the hundreds.

  21. Just looked at the down payment for those financing, 10% down, 10% due on Jan 1 2014. Can’t imagine many defaults.

  22. David, you beat me to it,,. 10% down, 10% Jan 2013 and 10% Jan 2014. Finance charge is 8.5% after that.

    Neil, yes not the worst case scenario. I mean we arguing over 66% or 75% either one is still a lot of SBLs sold and still a year and half before it opens.

    If you going to default on the SBL you might as well sale it even if you only recover 1/4 of what you paid, thats better than defaulting and losing what you paid.

  23. I’ve only been in a suite once and it did have about 20 to 25 stadium seats, I can imagine the 165 suites averaging about 42 stadium seats. That would be the 7,000.

    newsantaclarastadium.com/reserved-seat-financing says 10% down, 10% on 1/1/2014.

  24. While I believe the existence of PSLs to be an egregious form of usury on the sports fan (or designate…), I have to say as a method of stadium funding I’m entirely ok with it.

    If people or corporations want to plunk down vast sums of cash for the opportunity to sit in a nicely appointed new stadium, I think that’s wonderful. It’s people paying for something they want voluntarily (or at least voluntarily under duress).

    I’d like to think that only PSLs and ticket taxes should ever be used to fund stadium developments…

    While much of what has been said about the Yorks and the 49ers is no doubt true, the fact that the PSLs are selling does seem to indicate that there is an appetite for the facility in Santa Clara, and that the thing might actually come close to paying for itself.

  25. I don’t believe anything that the SJ Murky News has to say, they have been the mouthpiece for the Yorks/49ers since November 2006…Until I see it in black & white from another source other than the Yorks, or Murky News, all bets are off!

  26. From the linked report “1,000 seats will be left unsold for single-game sales”, those don’t have PSLs. There are seats for the visiting team as well that wouldn’t have PSLs. The 61,500 number sure looks correct.

  27. There’s publicly-funded stadium cynicism (which possesses most commentators on this site) and then there’s pure hatred of football and/or sports in general. From the news I’ve read on this site about this facility as it’s progressed, I can’t help but think those crying afoul of this particular stadium are in the latter group.

  28. Neil:

    I really, really don’t want to sound like I’m defending the Yorks… but just one point: You say that the IRS hasn’t cracked down on the loophole that allows ‘teams’ to use the pre tax funds raised… but surely by having the city set up the agency that sells the PSLs (and perhaps sets up other financing instruments) the NFL/Yorks have avoided the tax that would be due if they were selling the PSLs privately in a completely legal fashion.

    I may not understand how they did this fully, but it seems to me that they have convinced the city to take on that debt obligation… so it is very much a city obligation (If I recall correctly, you once noted that the city would be on the hook for any shortfall if the PSLs didn’t sell etc) all the way through.

    I agree that the city should have received something other than a hearty thank you in return for taking this risk (higher risk always leads to higher interest in borrowing in my experience), but since the city itself was the one issuing the financing instruments (IIRC) and not the Yorks it might walk, quack and swim like a duck, but actually isn’t.

    Am I missing something here?

  29. As I said above, there’s nothing illegal about all this. When setting up a stadium deal, you can assign the PSL proceeds to whoever you want, so if having the tax-exempt party (the city) sell the bonds and collect the PSL sales saves on taxes, why the hell not do it? I guess the IRS could conceivably make the case that because the 49ers are getting the benefit of the PSLs they should be getting taxed on the income, but on those grounds you could claim that any stadium subsidies should be counted as taxable income, and that’s clearly not happening.

    This is a lot like those LILO (lease-in lease-out) deals that were popular for a while: private developer leases property to a government agency to get the tax benefit, then leases it back so they can actually use it. It’s all tax-exemption arbitrage, and while it definitely costs US taxpayers, it’s tough to crack down on without wholesale changes in what’s considered “income.”

  30. They differ somewhat. Some give you the perpetual right to buy tickets, others are time-limited. And, of course, prices vary wildly. But the principle is the same in every case: You’re paying for your spot on the ticket-buyers’ line, but you can resell that spot to someone else if you so choose.

  31. Thank you, Neil. They seem like a reasonable way of raising revenue from those that would use the stadium instead of from the taxpaying public in general. Is that a fair assessment? Do you have concerns about them other than the risk transfer to cities that is currently occurring?

  32. Well, it’s a way to monetize something that otherwise was given out for free: a spot on the season-ticket list. It’s sort of a problem if you’re a fan and don’t have $5,000 to put in escrow for the entire time you want to own season tickets, but given the ubiquity of StubHub and the like these days, it’s not like you’re locked out of tickets entirely.

    So, yeah, I’d say that while I’m not fond of PSLs as a sports fan, they’re a far more legitimate way of raising money than most — sort of like how I’m annoyed by “premium” memberships to free public concerts that give donors the best seats, but I’m willing to hold my nose and accept them if that’s what it takes to make sure rich folks who want VIP treatment are paying the bills, and not me.

  33. The SJ Merc is adding together the SBL revenue from regular seating (which goes to the Stadium Authority to help pay off the loans) with revenue for club/suites (which goes only to the 49ers.)
    Check the contract, called the DDA/Joinder .PDFs : Go to page 128 in the DDA/443 in the Joinder and see section13.4. Note that the ‘sale of the rights to occupy’ means seat licenses. In this section they’re talking about club/suit seats:

    13.4 Premium Seating Revenue. All gross income and revenue from the sale of the rights to occupy Suites or other Premium Seating for NFL Events, plus the premium received, if any, by Tenant from the sale of the rights to occupy Suites or other Premium Seating for Non­ NFL Events (“Premium Seating Revenue”).

    Article 13 is all “Tenant” or 49ers revenue, and the definition on pg. 154 makes clear that this includes Club Seating.

    The Stadium Authority isn’t getting the SBL income from club seating. It’s $400 million with the club and regular seating SBLs added together, according to the table in the city’s document I cited earlier. That’s why, tonight, the city council will accept the transfer of the SBLs from Legends to the Stadium Authority, and only receive $98 million.

    After all of the lying to the public and manipulation of the public in the Measure J stadium ballot measure, the spending of $5 million to dupe voters, and the pro-stadium bias in the press and lack of publication of accurate financial information, it is understandable that many people here don’t trust what the Merc/49ers PR machine tell us.

  34. PSLs/SBLs sure seem nice and all but if you’re in the SF/SC area shouldn’t you be looking at Carolina right now? That PSL money is (depending on the terms of the license) a one-time deal. So when it comes time in 15-20 years to modernize/repair/upgrade the stadium, the 49ers won’t be able to sell additional PSLs and the owners sure won’t want to pony up the money out of their own pocket. That leaves selling bags of magic sand or taxpayers as the only likely sources for those funds, no?

    This comes with a giant caveat: I am not familiar enough with the specifics of the SC/49ers deal to know if future upgrades are part of the current financing plans. But the point remains: PSLs are basically a one shot deal. Nice that the public is relieved of a larger burden by those that will actually buy tickets to the 10 games every year, but it is only delaying the (mostly) inevitable.

  35. It’s a one-shot deal unless you put a time limit on the PSL terms. Or tear down the stadium after 20-30 years, which amounts to pretty much the same thing, only in a more indirect way.

  36. Yeah a one time deal, I like how Neil put it “You’re paying for your spot on the ticket-buyers’ line, but you can resell that spot to someone else if you so choose.”

    Teams go up and down, so I think that if in 10 years the team is down that still guarantees owners that fans will still buy season tickets because they have already paid the SBL and dont want to lose that money.

    So not only do SBLs raise revenue up front but also keeps buyers buying tickets for the long term. Especially if the SBL is for the life of the stadium…

  37. SCTaxpayer, thanks for posting. That is an interesting document, either way the sales of the SBLs and suites are going well. At the current pace the projections for what money they are suppose to get from the sales to pay off the $450 million loan due in 2015 is on track.

  38. @SantaClaraTaxpayer

    You are wrong. They are not “adding together the SBL revenue from regular seating with revenue for club/suites”. Suites are separate from club seating and do not have PSLs, club seats are obviously not premium seating.

    Can you guys have an honest discussion or are you going to run with this ridiculous spin?

  39. If anyone doesn’t believe in the numbers reported just go to the sales site and see what’s still available. I’m sure some from the tin foil hat fringe will claim the SA is hiding seats.

    The SA will sell well over the $450 million worth of PSLs. At this point you need to deal with reality.

  40. @David you are right just look at the stadium sales site.

    For what is worth I have 2 seats on 10 yard line in the upper section. I bought in mid 2012, in jan 2013 2 of my friends wanted to buy next to me or near me.

    They could only buy in the corners, end zone and lower level seats (expensive SBL). So they bought in the corners.

    From what I saw in jan, the newspaper chart and the website are consistent.

  41. Thanks to all who argue on our behalf in this blog. We NFL owners can’t do it without the little people of America serving us at every turn. Keep the comments flowing and the public stadium cash spigot turned on, forever and ever amen!

  42. The bay area has money, sorry paul people like to live in the state of insanity like me :).

    Glad I’m not there anymore, enjoy the shakes and increased taxex.

  43. My feeling is that BSL sales are probably going well. It’s possible, given the valley’s turnaround and the team’s success of recent years, that they will in fact sell out as projected.

    There’s still a year and half before the stadium opens and a naming rights sponsor paying the projected $330 million PV is probably not impossible to conceive happening (although less certain perhaps than the BSL sales).

    Also it seems apparent as Neil states that Santa Clara is destined not to become the next Cincinnati stadium wise.

    So if this plays out as a sort of break even deal for the city (if one doesn’t take into account unquantifiable costs like essentially free rent on 11 acres training center land, frozen rent (as appeasement) on the GA lease, a possible decline in home values in 95054, thousands of hours of city staff time, etc.) will it be all worth it?

    Well it’s hard for me to think that having a pro-football team and stadium so dominate a mid-sized city’s politics is a healthy situation to be in. I don’t know how many of the commentators here actually own homes in Santa Clara, but you really have to in order to get the feeling of what’s it like to have outsiders come in and tell you what’s good for your city.

    Furthermore, if one doesn’t have a love of pro-football, or an ax to grind in this matter, if still hard to see the upside for the average resident. Much of my skepticism about the deal centers on the so called “alternative” uses of the stadium which offer the only realistic possibility of city making some money from the stadium. The problem is that any realistic thinking about this leads to the conclusion that NFL stadiums are good for NFL games and not much else.

  44. @Piggy

    Who is arguing for the owners? All I see is people arguing against SCTaxpayer’s and SCJay’s absolutely incorrect BS.

    Accuracy is irrelevant to you as long as the narrative fits your views. That’s pathetic.

  45. You know something David B? In all the years I’ve visited this blog, I’ve never resorted to personally insulting anyone in this forum, even when I strongly disagree with them.

  46. David B, you may be new to this site, but: You can say whatever you want about people’s arguments, but personal attacks are *not* allowed. Violators will be placed in the penalty box. (And that goes for anyone who thinks of responding in kind, too.)

  47. @ SCJay

    You repeatedly posted false information, I pointed out that it was false. There’s no personal attack.

  48. You have to live here and have lived through the 49ers Measure J stadium campaign in the spring of 2010, and everything leading up to it, to know how many lies were told to the people of Santa Clara and how much financial information was purposefully hidden from the public (such as the ballot measure had no disclosure that our Stadium Authority would have any loans at all) to have developed a healthy and justified mistrust of what the public is told about the stadium.

    The best thing for SC financially would be for the BSL and naming rights income to cover the construction loans or come close to it. I remain skeptical – the SJ Merc article doesn’t match the document on the city’s website from last night’s council meeting.

    As Jay said, BSL income doesn’t in any way cover the other costs to the city – city staff time (huge amounts) which is a direct cost to our general fund when we were promised in Measure J ‘No Cost to Santa Clara’s General Fund! No Cost to Santa Clara Residents! Period!’ by our mayor, public safety costs, environmental costs to residents on our north side who will be essentially trapped in their homes with their neighborhoods cordoned off on game days – having to show I.D. to get to their homes if they leave to run an errand etc. We’re now all of a sudden spending $350,000 on traffic controls around the stadium – there are many hidden costs which were not disclosed to the public, and hidden costs from a loss of use of other city property – like the bike trail near the stadium, and our convention center reports that events aren’t booking for 2014 due to uncertainty in parking because of the stadium.

    Given the amount of lying to the public that went on during the stadium campaign, I will believe the number $$ for BSL sales which will offset Stadium Authority construction loans when I see the numbers from an independent financial source – not the SJ Mercury News (which enjoys shilling for the 49ers) or a 49ers press release.

    People are waiting on the city manager to answer some clarifying questions on the city’s document which was posted earlier, because the DDA states clearly that seat licenses for club seats do not go to the Stadium Authority, they stay with the 49ers, and if that is currently true then the amounts trumpeted as going to the Stadium Authority are not true.

    I fail to see why pro-stadium people are still so vicious toward people with differing opinions. That’s been a problem in SC all along – anyone who questions what the pro-stadium folks want is called names by the pro-stadium folks. Juvenile.

  49. David B: Calling SCTaxpayer and SCJay’s arguments inaccurate is fine. Accusing them personally of intentionally lying to fit their views is not. There has to be a line, and that’s where I draw it.

  50. @Neil

    Both question the Mercury News’ honesty and then repeatedly posted false information. That’s enough to question their honesty.

    Do you care about facts or just the slant?

  51. Dave,

    I absolutely don’t find the Mercury a credible source of information on the stadium. They have been 100% go-go on it in all their editorials, columnist opinions, and reportage for the past six years. I have read everything they’ve printed and not once have they expressed any doubts about his project. Why not? I think that their lack of objectivity on the issue is beyond dispute.

    That’s part of the reason I visit this site for information and opinions.

    Did you even read my first post of today? I conceded that BSL sales are probably going well but that that doesn’t mean everything is going to necessarily be smooth sailing financially for the stadium or that in the end it will prove to be “worth-it” to the city (while it certainly will be for the Yorks).

  52. Jay I agree with the sentiment of today’s post but you repeatedly posted incorrect information. You and taxpayer had numerous posts on the Sept. article, so I do question why you are repeatedly posting false info.

  53. The original post that crossed the line was “Accuracy is irrelevant to you as long as the narrative fits your views. That’s pathetic.” And calling that poster “juvenile” in response is out of bounds as well.

    I absolutely care about the facts, and want everyone here to continue to challenge those they find inaccurate. But I have enough experience with online forums to know that when commenters are allowed to attack each other and not just each other’s arguments, it turns way too quickly into mud-flinging. I have faith that people here know how to debate the fact without casting aspersions on each other’s character or intent; if not, there are plenty of other places on the Interweb where you’re welcome to smack each other with pugil sticks.

  54. Getting back on topic, I still don’t understand SCTaxpayer’s argument that PSLs on club seats don’t go to pay off the city’s debt, since that’s not what I understood from anything previous. Can someone post a link to the DDA/Joinder documents so we can all try to follow along at home?

  55. Sctaxpayer said no SBL money for suites and premium seating will be used for city debt. Not sure if that is the exact wording in the doc he linked to.

    But premium seating is not club seating. I believe that the 1600 $80k SBL seats are what is considered premium seating.

    The merc and sctaxpayer both say about $100 million will be transferred to the city.

  56. Question is now does the $400 milion figure for SBL seats include the 1600 $80k seats or does the $403 million figure for the suites include the 1600 $80k seats.

    My ticket rep when buying my seats, referred to those 1600 seats as premium seating, but don’t know if that means the same thing as what sctaxpayer said.

  57. Here is the SBL contract if anyone is interested:

    http://newsantaclarastadium.com/reservations/SBL-Agreement-Form.pdf

  58. Okay, here are the links. Do your own research to see who gets the club seating BSL revenue.
    The Dec. 2011 SC City Council meeting has the DDA. See DDA Exhibit B – which describes who gets what in terms of the BSL income.
    santaclaraca.gov/ftp/CSC/PDF/49ers-agreement/exhibit-b.pdf

    See page 46 Article 13.4 on ‘tenant revenue’ -the stadium ‘tenant’ is the 49ers – and they get ALL of the ‘tenant revenue.’
    The tenant revenue includes the rights to income from seat licenses (rights to occupy seats means seat licenses) for all premium seats. Premium seating includes club seating (see below.)
    “13.4 Premium Seating Revenue. All gross income and revenue from the sale of the
    rights to occupy Suites or other Premium Seating for NFL Events, plus the premium received, if any, by Tenant from the sale of the rights to occupy Suites or other Premium Seating for NonNFL Events (“Premium Seating Revenue”).”

    Now look at page 71 of Exhibit B for the definition of ‘premium seating’ which includes club seating:
    “Premium Seating” means the Suites, Club Seats and any other type of preferred location seating available at the Stadium, including Playing Field passes.”

    Now look at the city’s document from last Tuesday March 12, 2013 and look at the table on page 3. Here’s the document with the BSL info:
    sireweb.santaclaraca.gov/sirepub/cache/2/rdathndxelwde0lrj5mpbkk0/63120203142013102242243.PDF

    The table on page 3 shows sales of $171 million in regular seating BSLs, and $220 million in club seating BSLs – added together that’s almost $400 million, but please explain how that is $400 million towards the SCSA if article 13.4 of the DDA and the definition of premium seating makes it clear that the SCSA doesn’t get club seating BSL money. The March 12th document on the city’s website linked to above shows that $98 million which is being handed over from Legends to the SCSA right now.

    It would be great news if the SCSA was actually getting $400 million in BSL income. But please prove that this is true, given what’s in the DDA about club seating BSL licenses being considered ‘tenant revenue’ and not SCSA revenue.

  59. SCTaxpayer, the link you provided is for the “Lease Agreement” which is different from the SBL and paying off the contraction loan.

    From the sections that you pointed out, from the document you posted it says “rights to occupy” seats, suites, premiums seating.. .that means actual tickets. SBL is not a right to occupy, its the right to pay for the right to occupy or buy tickets.

    Its my understanding that the 49ers will lease the stadium from the SA for $30 million a year, but they will keep all revenue from all NFL events (ticket sales, concessions, parking, etc..), from the document you linked to that is consistent.

    The second link does not work, could you check it…

  60. From the document posted by SCTaxpayer it seems then that all the SBL money from all seats is going to the SA, $400 million worth…

    jjslug, the 1600 seats you are referring to would be included in the $400 total. Since the premium seating revenue mention by SCTaxpayer is for actual tickets not SBLs.

    Just cause you bought an SBL does not mean you have the right to occupy the seat unless you buy the ticket.

  61. Here is a link to a draft version of the DDA:

    http://49ers.savesantaclara.org/pdf/49ers_Santa_Clara_stadium_DDA.pdf

  62. Sctaxpayer, where in the document you linked to (“describes who gets what in terms of SBL income “) does it talk about SBLs income splitting?

    The title of the document is “summary of stadium lease agreement”

    SBL section 12.4 it says “As provided by the DDA…””SA is entitled to all net revenues from sales of all SBLs even after construction.” If selling of SBLs happen after construction has been paid off, SA will get that money.

  63. Yeah, I see the problem here. SCTaxpayer is focused on Section 13.4, which states that “all gross income and revenue from the sale of the rights to occupy Suites or other Premium Seating” goes to the 49ers. And Premium Seating is defined to include club seats.

    “The rights to occupy” suites or club seats, though, isn’t the SBLs. That’s the right to actually sit in the seats — i.e., tickets. SBLs just get you the right to buy tickets — or the right to purchase the right to occupy, if you want to be pedantic about it. So the above doesn’t have anything to do with SBLs/PSLs.

    In case you’re still wondering, article 9.2 of the DDA states that “proceeds from the sale of SBLs shall be collected solely for the account and benefit of the Stadium Authority.” That’s pretty definitive, and isn’t contradicted anywhere else.

    So while I agree that the wording of the contracts is confusing, and the SJ Merc explanation was lousy, the upshot is still the same: Santa Clara gets all the money from the SBLs, whether regular seats or club seats.

  64. Thank you for the clarification jj-slug, Guey, & Neil. It’s a good thing for the SCSA that this is true because they weren’t going to have any chance of be solvent if it wasn’t. The question I have now is how much can potentially more can be harvested from BSL sales, is it $100 million, $150 million, even more?

    The BSL sales are impressive, I wonder how much of that is due to the team’s success the past two seasons–what would they’d have been if the team had strung together two 6-10 years?

    Now how realistic are the naming rights assumptions of $330 PV? I’d guess the potential list of companies able to do this is short. I heard that Citi paid $400 million naming rights. Do baseball stadiums tend to garner larger naming rights than football stadiums?

  65. If you look at the chart in the Merc News, there are about 14,000 unsold SBLs, averaging about $5k each. So that’s about another $70 million yet to be raised, assuming they all sell out, which is certainly possible if not a sure thing. As you say, the Super Bowl appearance helps.

    Citi didn’t pay anything close to $400 million in PV — it was $20 million a year for 20 years, and some of that was for other advertising elements.

    Football stadiums actually tend to do a bit better than baseball in naming rights, probably because they’re on national TV more:

    http://www.sportsbusinessdaily.com/Journal/Issues/2011/09/19/In-Depth/Naming-rights-deals.aspx

    If you figure that Met Life and Farmers Field are the best comparables for the 49ers, then they should be able to get $20m a year, which is pretty close to $330m PV. With only one team in a slightly smaller markets than LA or NY, that might be a reach, but they only have to find one sucker willing to do it. My guess is that they’ll throw in a few other goodies — free ads on stadium signage, make them the Official Whatever of the 49ers, etc. — and at least come close to the mark.

  66. No question winning has helped a ton, helping them sell SBL so fast . I think if they were not winning they would have been announcing these current number near the time of the opening of the stadium.

    From 2003 until two years ago the team was terrible lossing a lot more than winning, but their games where still sold out, always on tv (never blacked out like oakland). Fans still bought season tickets they just didn’t go to games.

    I think that the financing modle used will only work for the popular team in places like the Bay Area and NY. Places with high income levels and a lot of corporate money to tap into.

  67. The total PSL estimate Goldman Sachs and/or the 49ers were floating was $500 million.

    Anyone know what the total interest expense is on the $450 mil short term bonds?

  68. For the record I thought the estimates from Nov/Dec 2011 were crazy. Couldn’t believe people would pay luxury suite money for a pair of 80K seats. It is what it is.

  69. Just in case anyone needs to fill out a Lease Agreement Form, I found a blank template from this link http://goo.gl/fFXTVA. This site PDFfiller also has some tutorials on how to fill it out and a few related Real Estate forms that you might find useful.

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