No shock. San Diego is in massive debt right now, so much so that roads are going unpaved, they're laying off police dogs, police support services and lifeguards, removing fire pits from beaches that families have used for generations... all for a team that plays in a stadium that frankly is more than adequate even by today's standards. Qualcomm Stadium despite its age is still a serviceable NFL venue that due to San Diego's mild weather is still in decent condition. Besides that, at this point the overwhelming opinion is that if the Chargers don't want to build privately in San Diego they won't be moving very far north up to LA. The fans could still drive to games fairly easily and bear none of the cost.

On June 2, 2009 SurveyUSA took a poll of Santa Clara voters and found that across all demographics (age, race, gender, political affiliation) voters
were against a public subsidy for a stadium 62% to 30% with 8% undecided. Our city council has ignored this poll. They should have taken a poll of voters long ago, before spending $2 million in studies and countless hours of staff time.

Tragically, public opinion polls tend not to matter. Promises are made, sometimes palms are crossed (not always with cash, btw), and magically stadium funding opposition just melts away (at least in the minds of the elected officials, who decide these things).

Ask the Glendale taxpayers how many of them were in favour of building the hockey rink? And yet an arena was built in an area where none of the fans lived, paid for entirely by the taxpayer (with the promise of 'shared' revenues paying off the bonds, good luck with that). That white elephant will bleed revenue from the city coffers for decades to come.

Sadly, the taxpayers only get their say at election time - and by then it's usually too late.

John Bladen-can you provides some links to more information about what happened in Glendale?

SCT:

Most of that info is now archived (not current) news. Neil may have stories relating to this on this site? You might try azcentral.com or the Arizona republic news sites and search their archives as well. I don't have the links handy, but those stories are still in archives on the Phoenix paper websites.

In short, in 2001 the Coyotes newish owner (Steve Ellman) had an agreement with Scottsdale to build an arena out there, but had to put money in. Along comes Glendale in 2003 (where Ellman owned land that is now the adjacent shopping district, Westgate or something like that) offering essentially a free arena, with only a cut of each ticket sold and a fixed fee per parking space required to get an arena built (no club money up front). Ellman, having no interest in spending his own money when he could spend someone else's, accepted. So the city floats $185M in bonds to build a hockey rink... Ellman then takes on (some would say simply 'took') a partner, Jerry Moyes of Swift Trucking fame.

As Moyes tells it, he just loaned Ellman money a few times. Eventually, Ellman was into Moyes for as much as either cared, and offered him the franchise as settlement for his mounting debt, which Moyes accepted (some of us are skeptical about this part...).

The end result? Glendale, a city of 250,000, now has an 18,000 seat arena that they are paying $8-12M debt service on annually (depending on whom you believe). This should have been covered by payments from the team. However, they aren't selling tickets, and thus aren't selling parking spaces either. As I understand it, the Coyotes have never paid more than about $4M toward the annual debt service, leaving the city on the hook for the rest.

The club has recently gone through bankruptcy (ahem), and emerged owned by the league it plays in. The City of Glendale still holds a lease (which at inception was termed 'favourable' by the holder, even "free" at some points, but is now commonly called 'scandalous', 'onerus' and the like) that effectively binds the club to the city for the next 25 years. This club has lost $200-300M (again, depending on whom you believe) in the 13 years it's been in Phoenix, and quite frankly, shows no sign of so much as breaking even in future. So, the city has a long term lease that many believe to be ironclad. However, you can't get blood out of a stone. I am actually expecting the franchise to go into chapter 11 again in a year or so, or maybe even chapter 7.

If no-one goes to the games, the club is not obligated to cover any shortfall in the revenue they provide to the city (their payments being based largely on ticket and parking sales, with as near as I can tell, no minimum payment). The city itself (in which I do not live, btw) appears in danger of having it's credit rating lowered (they also built the Cardinals new home for Mr. Bidwill, though that at least is full these days). If that happens, their $5-8M loss on the bond debt figures to climb significantly (2x?). That's a lot of cake for a city of 250,000 inhabitants.

It's hard to see an upside for Glendale here. The city has not taken to hockey (no surprise to some of us), and there appears no bona fide owner in sight (several have looked at the books, but as the NHL commish himself said, it's hard to drum up interest in a franchise that loses $35M-$40M annually. Who knew? The latest group to sign a letter of intent are still trying to raise money, and have not committed to 'cash').

The City did have the foresight to include a $700M lease break clause to discourage relocation, but frankly, that's the definition of an uncollectable debt. Months ago, they were offered a $50M cash buyout on the lease by a prospective owner who wished to relocate the club, but refused it. The NHL also blocked the relocation and then took ownership of the club through bankruptcy to "defend the city's interests". They then announced that they would be demanding lease concessions, which the council has said will not happen (Arizona also has a law that is intended to prevent taxpayer subsidies to business that the city may run afoul of). We'll see, on both counts.

The arena in Glendale is thus the definition of a sinkhole for taxpayer money. The only tenant has no money, and precious few fans. The city has leverage to keep them there, but no leverage to recoup their money. I don't know how anyone involved in city management (or the council) are still employed, but hey, like I said, I don't live there.

Now, this sad story is the NHL, not the NFL, so I would not suggest you be worried about something similar with the 9ers. However, it is important that your council not prove as short sighted and idiotic as Glendale's has been (and is).

John-Thank you. At 114,000 Santa Clara is less than 1/2 the size of Glendale. Here's the debt our city council is getting us into-there are several parts to it.

$114 million in a direct subsidy ($40 mil in redevelopment bonds; $20 mil from our electric utility to move a substation to make 380 parking spaces; $17 mil for a parking garage for 1700 cars; $35 mil in increased hotel taxes).

That does not include $35 mil in interest on the redevelopment bonds, interest at 8.5% on a $12 mil loan from the 49ers to cover the state of CA $12 mil takeaway of our redevelopment money in 2009/2010. Our assistant city manager has said we don't have the money to repay a loan. Plus the redevelopment district has to be extended in time so money that would otherwise flow to our general fund will instead go to pay off stadium bond debt. The city's own estimate is that $67 mil will be bled off of our general fund. AND because the hotel taxes will be collected over many years, but construction needs to be paid for as it occurs, the 49ers will loan Santa Clara another $20 mil at 8.5% interest to cover the gap in time between when construction occurs and when the hotel taxes trickle in.

As if that isn't enough, our city will create an agency to manage the stadium, the Stadium Authority, governed by our city council, city manager, and city attorney (i.e. 100% governance overlap with the city). The Stadium Authority has promised to raise another $330 million through the selling of personal seat licenses, naming rights, and vendors contracts. They will take out bonds with a BBB rating (right above junk bonds-with a high interest rate). The city won't give us any details about the financing, out of privacy concerns for the 49ers! We are to take it on faith that they can raise this amount of money. The amount of debt per year our city could find itself paying easily dwarfs what Glendale is paying.

In addition, the 49ers will pay the city a pittance for rent (they already pay the city only $25,000/year to rent their training facility, less than what many Santa Clarans pay for a mortgage)and $5 mil/year to the Stadium Authority, which won't cover the listed annual expenses for the stadium. And Santa Clara will own and manage the stadium. The Stadium Authority will hire a company to do the management (more $$).

The 49ers have a citizen's front group, Santa Clarans for Economic Progress, that just sent a misleading mailer into our homes (see a previous article Neil wrote about it). A pie chart in that mailer lumped the $330 mil in with the 49ers contribution, making it look like the 49ers are contributing over $800 mil to the costs of a $937 stadium. They aren't. Santa Clara's total promised contribution is $114 mil plus $330 mil = $444 million (47% not including the land). FYI-our mayor is a member of the group that sent the mailer into our homes-her picture was on the mailer.

At the June 2, 2009 meeting in which the city council approved the Term Sheet with the 49ers, we were promised 2 votes: 1) on the funding of the stadium, and 2) a vote on whether or not the 49ers could bypass our city charter requirement for competitive bidding when public funds are used. The 49ers took a telephone survey of Santa Clarans (We were called and asked who paid for the survey)-they asked how citizens felt about allowing the bypass of the charter. We adamantly said no. I'm sure other Santa Clarans did also. The 49ers did an end run around Santa Clarans by going to our state senator Elaine Alquist and getting her to put legislation through Sacramento that overrides our right to vote on a city charter change. So the 49ers worked with our state senator, with the public support (in Sacramento, at senate and assembly committee meetings) of our mayor Mahan and councilmembers Moore and Matthews to get our second vote taken away from us!

Now, the 49ers are working to have our first vote essentially taken away from us too. Our city council just voted to put the stadium issue on the ballot in June, 2010. On the same night last week, they voted to approve the EIR without mitigating measured (traffic will be awful, and most of the parking will be offsite at local businesses-this is a 14 acre stadium on a 17 acre site. It is really too small.) Simultaneously, the 49ers announced through their citizens front group that they are collecting signatures to put a 'citizens initiative' on the ballot. The problem with this initiative? It is just as misleading as the mailer they sent a few weeks ago, it does not mention the $330 million, it only lightly mentions the $114 million (the pieces of it anyway-it doesn't add the numbers up), it does not mention the loans or interest rates or the bond debt we will be taking on. In addition, the 49ers initiative is not open to challenge or to have the language changed by the rest of the citizens of Santa Clara, as a city council measure would be, and the 49ers initiative can proceed independent of the status of the EIR or the fact that the amusement park next door to the stadium site, is suing Santa Clara (Neil has several articles on this site on what's going on in Santa Clara.) The 49ers can afford to pay people to gather signatures to get the initiative on the ballot. Our mayor says she doesn't want 2 initiatives on the ballot. Given that she's a member of the 49ers front group, we expect her to pressure the city council into only putting the 49ers initiative on the ballot.

To see the initiative, go to:
www.santaclaraplaysfair.org

In addition, the 2 members of our city council who are opposed to the stadium are both members of the city's ethics committee. At a November meeting, one of them asked to have all contributions from everyone towards the stadium campaign made public. We've now been told that our mayor is seeking at tomorrow nights (Dec 15) city council meeting to replace those 2 members on the ethics committee with herself and another pro-stadium city council member. Conflict of interest, anyone?

Short sighted? Our city council members who want the stadium are completely blind to the costs and environmental effects. They behave as if they were elected to represent the 49ers, and not us.

This is the 3rd time that a ball club has attempted to come into Santa Clara and take away public funds. The first time was in 1966, the 2nd time it was the Giants in 1980. Both of those times Santa Clarans voted no. I urge Santa Clarans to vote no this time too. We are entitled to a good faith estimate of what this will cost us. Our city council, and the 49ers, won't tell us, because they know the costs are too high for our city to adsorb.

SCT, this thread is about the San Diego stadium situation, not Santa Clara. Please try to keep your discussion relevant to the topic at hand.

I don't blame San Diegans one bit.

The audit for Qualcomm Stadium from May of this year used to be on the Voice of San Diego (VOSD) website, but was taken down recently. Contact them or the City of San Diego to see if you can get a copy.

It'll curl your hair.

The revenues coming into Qualcomm are atrocious compared to what the City of San Diego is paying out. The highlight - lowlight, really - was to find out that only 46% of what it costs to operate Qualcomm comes from actual stadium-generated revenues.

Funnier one yet: Part of a prior agreement between SD and the Chargers required the City to eat their unsold tickets, just so that the NFL blackout rules wouldn't kick in. The city finally managed to get that killed - but it took at least several years to do that. It was a complete ripoff of taxpayers.

Up here in the Bay Area, rumors are rife that the S.F. 49ers routinely pressure all the print/TV/radio outlets to suck up unsold 49ers tickets. The fans screech about how they don't get blacked out the way the Oakland Raiders do - but I would love to know if that's on the up-and-up.

NFL stadiums benefit NFL millionaires, they don't benefit cities. Looks like three-quarters of San Diegans polled sure got the news.

Bill Bailey
Santa Clara Plays Fair

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