As has been rumored ever since it was noticed that they’d registered a whole bunch of stadium-related domain names, Levi’s is buying the naming rights to the San Francisco 49ers‘ new stadium in Santa Clara. Price: $220 million over 20 years. That’s more per year than any NFL stadium other than the New York Giants‘ and Jets’ MetLife Stadium, which is about right, given that while the Bay Area is pretty big and lucrative, it’s still not New York (and there will only be one team playing in Santa Clara, at least unless the Oakland Raiders move in).
So what does this mean for paying off Levi’s Stadium’s $1.2 billion price tag? The naming-rights money is supposed to help pay off $450 million in short-term bonds that Santa Clara’s stadium authority sold toward funding construction, with 70% of the fee going to the authority. Santa Clara is already expecting to get more than $300 million at least $400 million from seat licenses, so add in the present value of $7.7 million a year in naming-rights money — somewhat backloaded, as it’ll start at $5.7 million in 2014 and rise 3% a year to $10 million in 2033 — and … taxpayers should have their butts mostly covered, anyway, though it’ll likely require selling some 20-year bonds that can raise money now and be paid off over time with the Levi’s boodle.
So Santa Clara’s big gamble looks to be working out relatively well: If taxpayers do end up on the hook for something toward the stadium costs, it should only be a tiny fraction of the $1.2 billion total construction cost. Which doesn’t necessarily make such a risky maneuver a good idea for other cities — not every team can sell its naming rights for $11 million a year, and Santa Clara got very lucky that the 49ers got good just in time for those PSLs to go on sale — but at least those who were worried this would be a Cincinnati-style taxpayer albatross can breathe a little easier.