The San Francisco 49ers are adding about $100 million worth of goodies to their new Santa Clara stadium, mostly for unspecified tech upgrades to “enhance the fan experience.” They can afford this, in part, because their annual rent payments are expected to go down from $30 million a year to $24.5 million a year, thanks to better-than-expected naming-rights and PSL sales and a refinancing deal that will cut the public stadium authority’s loan rate from 7% to 5%.
Clearly, the 49ers stadium is turning out to be a best-case scenario, where the public costs are going to be repaid by team revenues, and the stadium can pay for itself despite a whopping $1.3 billion price tag. (You could argue that the city could have held out for an even better deal where in exchange for fronting the cash it would get to profit from all the naming-rights and PSL boodle, instead of just breaking even, but that’s a best-case scenario for a more utopian America.) It just goes to show that some stadiums can be built with private money and turn a profit — so long as they’re in major metropolitan areas flush with tech income and host teams that go to the Super Bowl. Whether this would work in, say, San Diego, is another story, though one that the Chargers might want to be asking themselves given how their stadium subsidy demands are coming along.
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.
Been wondering what ever happened with that $30 million in property tax money that the San Francisco 49ers were going to get for their new Santa Clara stadium, only then the state development agency that was going to give it to them got dissolved and the body that inherited the money said they’d rather spend it on schoolteachers, and then there was a lawsuit and a settlement and then the California state finance department said the settlement was illegal? No? Well, tough, you’re going to hear it anyway:
After a yearlong royal rumble between the San Francisco 49ers, local schools, the Brown administration and others, a judge on Wednesday ruled that South Bay school officials were wrong last year to yank $30 million in disputed tax funds from the team’s new stadium.
Sacramento Superior Court Judge Allen Sumner said in a nine-page tentative ruling that he could not immediately award the funds to the 49ers, but he appeared to leave little recourse but to make sure the Niners eventually receive the money one way or another. The team may have to wait until as late as 2016 to receive the cash, however, the judge said.
The Santa Clara board that tried to take back the $30 million is now expected to appeal, with a hearing scheduled for Friday. The San Jose Mercury News claims that this will “conclude a contentious court case that began when the 49ers sued to reclaim the money last June,” but the notion of anything ever concluding in this case seems but a distant dream.
Getting to host a Super Bowl isn’t all about whether you’ve built a new enough stadium or are in a place where it’s sunny in February. No, the key to a successful Super Bowl bid is also about bribes, or as they’re called in NFL lingo, “financial demands.” The Santa Clara city council voted unanimously last night to accede to the NFL’s requirements by rebating a whole slew of fees and taxes, which were nicely summarized by newballpark.org:
- 10% NFL Ticket Surcharge – At a conservative set price of $500 per SB L ticket, the $50 surcharge would yield $3.75 million with an expanded capacity of 75,000.
- $0.35 Ticket fee – Meant to fund some senior and youth programs. A cap of $250,000 per year is imposed on this revenue source. If the 49ers play at least one home game, it’s likely that the 49ers would hit the cap, rendering additional collection of this fee moot.
- Hotel tax – A Mello Roos district was created to provide some stadium funding, backed by a hike in the transit occupancy tax from 9.5% to 11.5% in the stadium’s immediate area. The NFL asked for its share (350 rooms for an unspecified number of days) to be waived. Assuming that the NFL needs 350 rooms for the full two weeks, the City would forego some $70,000+ in hotel taxes. The City notes that it expects to make up this loss via taxes collected on additional room bookings.
- Off Site Parking fee – The City has imposed a $4.54 fee per space for event parking. That too will be waived. This appears to be for all Super Bowl activities, not just the game itself. The City notes that the fee is meant to offset the cost of traffic management.
Total cost of all this to Santa Clara taxpayers: Nobody bothered to ask! As newballpark.org continues, “Strangely, no estimates of this impact were disclosed, even as the City touts $300 million in additional economic activity for the region.” (Much of which would be taking place in the San Francisco part of the region, since S.F. would be the official “host city” for Super Bowl week events, even as Santa Clara would be the actual city hosting the game.)
We’ve been through before with Indianapolis, of course, so none of it should be any surprise. But it’s a reminder of how cities can host a major event like the Super Bowl and still come out of it with an operating loss. Good thing the Super Bowl brings in all sorts of ancillary economic benefits — oh wait.
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.
With the San Francisco 49ers getting a new stadium in Santa Clara, their old home of Candlestick Park will be imploded as soon as the 2013 NFL season is concluded, the San Francisco Chronicle reported earlier this week. The site is currently set to become a multiuse mall-plus-housing complex, though developer Lennar Corp. hasn’t actually set a date for when it’ll build that.
Interestingly, the Chronicle adds, “There are also plans for a 3,000- to 4,000-seat arena that could accommodate small concerts, house the San Francisco Bulls ice hockey team and maybe even host pro women’s basketball.” That seems more speculative than anything — the Candlestick site is even harder to get to than the Bulls’ current home at the Cow Palace, and the WNBA hasn’t expanded in eons. Worth keeping an eye on, though.
In the meantime, the imminent demise of the Stick doesn’t seem to be causing too much grief among Bay Area fans — the best the Chronicle could come up with to say about the stadium is that “it hosted two World Series, The Catch and the Beatles‘ last concert,” which had me confused until I realized they meant this The Catch and not this one. Candlestick was by all accounts a decent (if hard-to-reach and windy) baseball stadium until it got closed in by additions for the 49ers in 1971, after which it was a not-that-satisfying hybrid of a baseball and football stadium. I’ll mostly remember it for the completely excellent buttons that the Giants gave out in the mid-’80s to fans who stayed till the end of an extra-inning game:
I tried for one in 1983 or so, but sadly the game didn’t go extra innings. Though given the usual translation of “vixi,” maybe it’s just as well.
When the NFL was trying to get Santa Clara to approve a new stadium for the San Francisco 49ers, one of the things it did was promise to hold a Super Bowl there (or at least promise to think about it). Which, it turns out, may have been less a promise than a threat:
Santa Clara officials this week began weighing whether the city can still make money from a Super Bowl and related events after stomaching a new list of financial demands from the NFL — including giving up huge chunks of tax revenue…
Essentially, the NFL wants to lease the $1.2 billion Santa Clara stadium and the surrounding area — possibly including the Santa Clara Convention Center, a nearby soccer park and parking lots — for Super Bowl week at a much cheaper rate than normal, [City Attorney Ren] Nosky said. The league also wants other concessions, including possible tax breaks or a portion of the tax revenues received from hotels or other venues during the events…
NFL spokesman Greg Aiello said Thursday that the league also requires host cities to forego sales tax charges on Super Bowl game tickets, which are typically very pricey. Other host cities have exempted the NFL and its employees from taxes on visits and sales during the Super Bowl.
Oh yeah, and let’s not forget that San Francisco would be the actual host city, meaning that much of the Super Bowl week activities would take place there, and not in Santa Clara. But Santa Clarans would at least rest easy knowing that game tickets were being redeemed within their city limits, even if they couldn’t collect tax money on them.
The agreement on how to spend future property tax money on the San Francisco 49ers’ new Santa Clara stadium fell apart again yesterday, as the state finance department ruled that it was illegal. Now the whole thing goes back to court, though it’s not entirely clear what settlement is possible, if the state is insisting that any agreement made now — even with the support of the new board in control of property-tax funds — isn’t kosher.
At stake is about $30 million in public funds the 49ers are requesting, but either way the stadium will go ahead. Look you can see it here!
It looks like Santa Clara residents can breathe at least a preliminary sigh of relief about fears that revenues at the new San Francisco 49ers stadium won’t be enough to pay off the city’s stadium debt as promised: 49ers personal seat licenses, which are dedicated to paying off the public debt, are selling like hotcakes, with $310 million in sales already. (Plus $360 million in luxury suite sales, which the 49ers pocket.) And if I’m doing the math right on the crappy chart provided by the San Jose Mercury News, that’s just up-front sale prices, not annual fees, so there will be plenty of regular ticket revenue left over for the Niners down the road.
That may not be great news for the suckers who are buying high on seat licenses, but it’s very good news for Santa Clara, which, once it gets the money from sale of naming rights on the building, should now have a decent shot at paying off its $450 million in short-term stadium debt that comes due in 2015. (Naming-rights money typically trickles in over a longer period, so they’ll still likely have to refinance a chunk of the bonds.) And with seemingly a good bit of extra revenue rattling around, the 49ers seem in decent shape to be able to keep up with rent payments that will pay off the rest of the public debt (which is really private borrowing by the team that was then re-loaned to the public and is getting paid off by private team payments — you really don’t to know, trust me).
It’s all still preliminary, but signs are that the 49ers stadium will be another data point, to go along with the New York Jets and Giants stadium, that a billion-dollar NFL stadium can pay itself off if you have an enormous metropolitan area with a whole lot of wealthy people in it willing to fork over $2,000 and up just for the right to buy nosebleed tickets. It was still a big risk for Santa Clara to agree to this deal, but it looks like at least the city’s gamble isn’t going to come up snake eyes.
And so much for all that: The San Francisco 49ers and the Santa Clara oversight board that had been denying the team $30 million it was expecting for its new stadium have apparently agreed to split the difference, according to the San Jose Mercury News. The team and county schools will now each get $2.5 million a year from the pool of property-tax money, and other local agencies will get a few million more.
The 49ers, meanwhile, will still get their $30 million, but it’ll take a bit longer. How much longer? Reports the Merc News: “It will take about a half-decade to get the $30 million [the team] was promised, instead of only a few years like it had planned.” Um… right. Hopefully some of that money will be used to hire math teachers for California’s future journalists.