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May 18, 2010
Noll: 49ers stadium public cost could triple
The always thoughtful sports economist Roger Noll had an op-ed in Sunday's San Francisco Chronicle analyzing the upcoming Santa Clara vote on a 49ers stadium. His conclusion: The promised taxpayer subsidy level is low by NFL standards, but risks rising by as much as 200% if some of the financing turns sour.
This is a point I've harped on before, but Noll goes into more detail. In particular:
Seat licenses played a major role in the plan to renovate the Oakland Coliseum to lure the Raiders back from Los Angeles. Sales of Raiders licenses were less than expected, which increased the public cost of the renovation. A scary feature of the Santa Clara proposal is that it repeats a flaw in the Coliseum plan: the stadium authority, not the team, will sell the seat licenses.
The stake in license sales is huge. If 30,000 are sold at an average price of $4,000, the stadium authority will collect $120 million, but this estimate could be off by 50 percent or more. Without a marketing study, the revenue from license sales cannot be reliably estimated.
Noll adds that the city of Santa Clara has promised in its stadium FAQ that the 49ers will pay any shortfalls or else the project will be killed. However, he adds, "the problem with this answer is that the Stadium Authority must borrow and pay its commitment to finance the stadium before tickets, naming rights, seat licenses and pouring rights are sold."
Noll concludes by cautioning voters: "Santa Clara residents should realize that the stadium is public consumption with an uncertain price tag, not a lucrative investment." That sums it up pretty well — if you vote for a 49ers stadium, be sure that you want it at $409 million, not just at $79 million.
Dr. Noll also said that the per capita cost is high because Santa Clara is small (about 115,000 people). We are not a wealthy community. About 40% of our school kids get free or reduced priced lunch, as one measure of the level of income here.
The 49ers have manipulated our election process to not disclose the costs of the stadium on the ballot measure (J). Voters at the municipal level (at least in California) are unprotected - there is no law in place like there is at the state level that requires financial disclosure on ballot measures, so the 49ers took control of the process, wrote an initiative with language that advocates for the stadium, and then with the help of our city council majority also wrote a ballot question that reads like an advertisement and does not disclose the costs. The city attorney-shame on her- just summarized the binding part of the ballot measure - the 49ers written initiative, so the attorney's summary also reads like an advertisement. She did not disclose costs or the essential elements of the Term Sheet, because it is isn't binding, so we aren't actually getting to vote on the costs or the Term Sheet.
Santa Clarans on average aren't rich, but city government coffers were well stocked because of revenues from leading tech companies like Intel and Applied Materials headquartered in town and dependable residential property taxes (on a per square foot basis, home property prices certainly aren't inexpensive. Homes tend to be very small to modestly sized but still cost on average $500K to $750K. Quite a lot if you're not willing to accept using the below par public schools.)
In fact, one year Santa Clara per capita sales tax revenue equaled that of Palo Alto and was among the highest in the state.
However, as SC Taxpayer pointed out, our schools are not well regarded (lunch aid statistics correlate closely with school district parents educational levels) and because of this the city is shunned by many people looking to raise families.
The problem is that the fact the city had some money, an acquiescent city council (out for themselves) and populace not as educated as Cupertino, Palo Alto, or even Sunnyvale, meant that outsiders have viewed the city ripe for picking and has led to a propaganda campaign that would be laughed out of existence in Palo Alto but unfortunately must be taken seriously here.
Well, it appears the 49ers will head to Los Angeles after this vote ends.
Here's the link to a SF Chron article by Matier and Ross that states that the 49ers are spending $300 per voter in Santa Clara. One commentator wrote that this must be a truly terrible deal for the taxpayers for the 49ers to spend that much money.