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December 05, 2011
Santa Clara stadium deal for 49ers piles risk on top of risk
After a perusal of the "Disposition and Development Agreement" for Santa Clara's proposed San Francisco 49ers stadium, the deal looks even riskier for the city than what was reported on Saturday. In brief:
- As reported previously, the stadium will now cost $1.02 billion. Of that, $170 million will come from a mix of NFL funds, cash from the public redevelopment authority, and "other revenues ... from sources described herein," none of which are actually described therein, from what I can tell. It's implied elsewhere in the document that the 49ers will spend $150 million (which is expected to come directly from the NFL as a "loan" to be repaid by luxury suite revenue that the 49ers would normally have to share with the league) and that $10 million will come from the RDA; the other $10 million appears to be a mystery.
- Another $450 million will come via a short-term loan to the city-run Stadium Authority, to be secured by the sale of naming rights, personal seat licenses (here called Stadium Builder Licenses), and that ever-popular "other revenue." This loan needs to be paid off by 2015; for any amount that isn't, the Stadium Authority will need to sell new long-term bonds, backed by ... the document doesn't actually say, so presumably that'd be the authority's problem.
- The remaining $400 million will come via a "subordinated" loan, where the 49ers will borrow money from the banks and then re-lend it to the Stadium Authority. As if that's not confusing enough, the loan from the 49ers will be paid off via rent from the 49ers — which is "expected" to be "in the range of" $30 million a year, and "anticipated" to be enough to pay off all of the authority's outstanding debt.
- The Stadium Authority will now be responsible for operating costs of the stadium during the non-NFL season, with the 49ers covering operating costs during the season. This, frankly, sounds like a nightmare: If 49ers fans break something during the season and it needs to be repaired during the offseason, who pays the bill? Once again, the DDA doesn't say.
- The Stadium Authority can rent out the stadium during the offseason, as well as during the season "subject to approval" of the 49ers and "the payment of certain costs." The authority and the city will then split any proceeds.
The upshot remains what I said on Saturday: If naming rights and PSL sales go well, the city could end up being able to pay off the stadium without dipping into public funds, but that's a pretty big "if." The DDA specifies that "no city general funds" will be committed to the stadium debt — as required by the public referendum that approved the deal — but as we've seen elsewhere, when stadium authorities fail, it's up to their host cities to bail them out.
On top of that, it's clear that the DDA leaves a ton of details to be worked out in the actual stadium lease, which it says will be worked out by the Stadium Authority board (aka the Santa Clara city council) "in coming months." What the specifics actually look like — in particular, how those 49ers rent payments are set — could determine whether Santa Clara ends up covering its costs or becomes another Indianapolis.
Neil - what about Hamilton County?
How many host cities are currently having financial problems with stadium deals? Can you give us a list, please?
Hamilton County doesn't have a stadium authority - it floated the bonds itself.
"Having financial problems with stadium deals" is too amorphous a concept to come up with a list. Do you mean not making money on them, or tax revenues are insufficient to keep the stadium fund filled up, or what?
The 49ers' Stadium Boosters have been preening and prancing about with silly claims about "profits" for Santa Clara and its Agencies for over four years now - and look where we are:
The much-ballyhooed increase in **Stadium Authority** Ground Lease MIGHT cover the interest the Stadium Authority will owe on the "laundered" $400,000,000 loan. $30,000,000 a year for debt service, essentially, on $400,000,000 - with nothing else to cover the other obligations the Stadium Authority will have.
Let's take apart that $170 mil. Note that the same RDA, Hotels, Substation Move and Parking Garage attribution are committed at the same $114 mil level they were last June. If so, that leaves a miserable $56 mil that the 49ers **might** be covering, until they figure out a way to push THAT onto the Stadium Authority, probably in the form of another "Shove It" Loan.
Were it possible for the Council/Stadium Authority to stick Santa Clarans with an even WORSE deal than we were told when the 49ers were demanding our votes on "Measure Jed" last June 8 - this City Council has just done precisely that.
The Santa Clara Stadium Authority is clearly not a going concern, and this Council just admitted it when they agreed to a "triple net" lease, giving the the Authority's year-round control of the stadium to the 49ers themselves for six months out of every year - *** with multiple and periodic options to hand it over to the team for the entire year! ***
Santa Clarans, please come to the Study Sessions at City Hall Tuesday 12/6 and Thursday 12/8, 7pm, City Hall.
Our city is entitled to MUCH more out of the San Francisco 49ers.
But don't count on this Council-Stadium Authority to get it for us.
Bill Bailey, Treasurer,
The saddest part of this is that the new estimate of $1.02B is probably still too low. I'm willing to lay odds that the phrase "cost overruns" will be used at some point in conjunction with this project.
This is so far beyond the scope of what the voters passed that I just cannot see how a lawsuit to stop the project would fail. Bill (and others), you just gotta align yourselves with the right people.
It makes me wonder if the people fighting in Santa Clara can't somehow get together with the people in Sacramento and somehow combine forces. Pooling resources might make each campaign twice as strong.
(I'm not part of this group, by the way.)
Neil- I mean all stadiums in which taxpayers are having to bail out the stadium, whether it's directly or through a stadium or sports authority.
Especially when, like high speed rail in California, the voters are told the cost will be X and so they vote yes, only to find out that their elected officials allowed the cost to taxpayers to go up to XXXX, but don't want to allow a second vote on the true costs. If the true costs had been presented on the ballot the first time around, there's no way the ballot measure would have passed.
Places like Indianapolis and Cincinnati aren't bailing out the stadiums - they're bailing out their own bank accounts set up to pay for the stadiums. And in both cases, it's not because costs went up, it's because revenues went down.
To put it another way: The Bengals stadium deal isn't bad because the economy collapsed any more than it would be good if sales tax revenue were still chugging along. The crashing economy just made people notice that they were on the hook for the spending, because suddenly the stadium tax they'd approved wasn't sufficient anymore. But the amount of money taxpayers have to put in each year hasn't changed - it's just that they're not spending enough to do it via sales tax, so they need to find the money some other way instead. In Cincinnati's case, by selling hospitals.
From the �naked eye� it would seem Santa Clara took on a lot more debt with the loans but I did some math and it actually makes sense.
By taking on the 850M directly into the stadium authority the 49ers are the insurance policy just in case the debt service gets to high by paying the difference in lease payments.
Look at the projected revenue streams and you will see this works out
Note: If 175M in luxury suites sold to individuals and corporations are now in the mix that tells you the 49ers fans indeed have money to spend on SBLs and season tickets. That is a pretty clear cut sign, much like the New York fans did during the recession.
The 49ers have the wealthiest fan base in the league. That cannot be disputed with the luxury suite sales going to so well. If New York could sell in a recession, the 49ers will be able to post recession.
1. Stadium Builder Licenses- If New York sold them for 1k-20k during the recession we should assume a 7k average on the low end and a 12k average on the high end. One can assume as well that 35,000 seats or about half of the total seats will sell with a SBL tagged to it if luxury suites sold because SBLs are far cheaper....That is actually a low # since New York sold 60,000 PSLs each team.
Low End: 7k x 35,000= 245M
High End: 12k x 35,000= 420M
2. Naming rights- No way the banks loan out 850M without this being in the works. New York went for 400-450M and LA is the way high end at 700M. I say assume 300M as being a decent projection.
3. 49ers lease payments- By paying 30M a year and making up the difference in debt service it protects Santa Clara�s General Fund because the 49ers have to make up the difference themselves. Otherwise, under the old agreement Santa Clara would have to make up any shortfalls from their 330M from the General Fund.
30M x 25 years= 750M Plus any short fall from debt service year to year.
The 49ers if this fails could be making 50M-60M lease payments a year, they are the ones who in the long run could bleed through the nose while stadium authority holds the debt they do not pay the debt service difference if the revenues fall short.
Therefore if everything sells on the �low end� you have:
$245M (SBLs)+300M (Naming rights)+750M (49ers lease payments over 25 years)= 1.295 billion dollars....this does not include corporate signage, sponsorships, or season ticket sales, and no 2nd NFL team involved.
This is �low end� math, the 49ers in reality are taking the risk because although the loaned money sits with the stadium authority any shortfall is on the team. That was the �trade off� the 49ers made with the city of Santa Clara.
From Santa Clara�s point of view, the loans mean nothing if the 49ers are the ones making up the difference on debt service if it comes short.
In conclusion, it may seem bad on the surface but in reality Santa Clara took on the debt but the 49ers in turn have taken the year to year risk of paying the difference from debt service and revenues themselves. Santa Clara has �fire-walled� their General Fund in what is actually a more effective manner than before. The trade-off was taking the loans directly.
Interesting way of doing it. Take more debt on but protect yourself from by having the team pay the difference if things fail year to year via lease payments.
I must say it is a very creative way of doing it. No bonds needed here, just straight loans. Wow..
One more thing:
You cannot compare San Francisco Bay Area with Indianapolis, Cincinnati, Pittsburgh etc...Those are markets that are small that do not have fans or corporations who can spend big on SBLs or luxury suites.
The correct comparison is New York. They like the 49ers have similar fan bases and the metro areas are wealthy.
"By paying 30M a year and making up the difference in debt service it protects Santa Clara�s General Fund because the 49ers have to make up the difference themselves."
If this is true, yes. But the DDA doesn't actually say that the 49ers will pay enough rent to cover all the debt service - in fact, it specifically has a clause about how the Stadium Authority will have to sell bonds if it can't cover debt service.
Here is a simple but stupid question. Does the stadium authority itself have any taxing authority? If it does not why are the banks willing to lend it money?
Is the answer that it is not actually a separate entity except for appearance sake and ultimately the city itself would need to make good on its obligations if it fails to have the funds to do so?
This is such a tragedy.
I really hope someone can stop this boondoggle. I keep saying it again and again: there's a stadium project in LA that needs a team and the 49ers need a stadium. It's a win-win for both! On top of that, if the 49ers fans in the Bay Area feel upset about the team leaving, they can just support the Raiders!
Generally I'm all in favor of stadium deals like this one, but I'd bet dollars to donuts (if that analogy worked anymore) that the $30 million in rent is based on the Raiders playing there as well.
Neil would know this better than I, but I don't think there's a team in America that is paying $30 million in rent on a publicly funded stadium.
They need to get the Raiders into this stadium as well so they can kill two birds with one stone.
Ben - this wasn't supposed to be a 'publicly funded stadium'. Voters were sold a bill of goods. There's no way a ballot measure with the DDA's numbers could have passed.
Great, but that's of minimal importance to me. I'm just saying that deals like this (high rent for the team, replacement of a legitimately problematic stadium, plenty of parking for tailgating) are ones that I would favor. How they got there is for the activists to worry about.
The Cowboys and Jets/Giants are paying more than $30m a year in construction debt, certainly. And the Yankees and Mets are paying more than that in "PILOT" "rent" (wink, wink).
I'd agree, though, that this looks way more viable if the Raiders are involved. Though if the Raiders are involved, not sure why they have to go through this convoluted thing with lending money to the stadium authority and then paying rent so that the authority can pay it back. You'd think two teams' worth of revenues would be enough to make the banks happy.
Something doesn't quite add up here.
Raiders don't pay a whole lot of rent in Oakland. Why would they want to move somewhere where the expectation is that they'd pay much more?
Furthermore, they will fill their stadium in Oakland if they're fielding a competitive or at least an interesting team (as they are this year). I just don't see why they'd want to move away from their fanbase to play sub-tenant to the 49ers.
Also, how well would Raider PSLs sell in Santa Clara when they were such a debacle in Oakland? Would 49er fans standby and watch Raiders fans be exempt from buying them?
Ben - there isn't plenty of parking for tailgating. There's the Great America lot, maybe 6000 cars. Then there's the parking garage for another maybe 2000 cars - no tailgating there and no tailgating in the convention center lot.
The city manager was asked how many owners of private lots had signed up to be part of the parking district - the answer was none, and that's 1 1/2 years after the election.
Candlestick and the Coliseum have plenty of parking for tailgating. Santa Clara? No. And there are liability issues for private property owners allowing grills, drinking etc. in their parking lots. Their insurance companies will have something to say about that.
I think the Niners want to have the Bay Area market to themselves. If anything, the Raiders going back to Los Angeles is the most viable option if Mark Davis decides to sell his team. I also have a weird feeling that once the Santa Clara Stadium breaks ground the City of San Diego will cave and get the Chargers their stadium. The Raiders make the most sense right now since they're the #1 team supported by the locals in LA.
Hello, Joshua Northey:
The Stadium Authority can't raise taxes - all they can do is sell more paper.
The last estimate our group saw was that the Stadium Authority Bonds will be rated BBB - investment grade, but barely. They will NOT be tax-exempt, and they WILL have to be insured. Both of those considerations drive up the Stadium Authority's costs of servicing that debt.
Bill Bailey, Treasurer,
"From the �naked eye� it would seem Santa Clara took on a lot more debt with the loans but I did some math and it actually makes sense."
Hm. The New Math. Sorry, Sid, but your assumptions won't hold water:
Not one penny of luxury box income goes to a single Santa Clara Agency.
The Ground Lease to the city is a stinking 180 THOUSAND dollars in the first year, and that's all - at the same time that the 49ers take out over $130,000,000 in broadcast royalties and luxury box rents.
The $30,000,000 to the Stadium Authority will barely cover the debt service on just the $400,000,000 "laundered" loan. That money is not profit, and it's not even revenue - it's simply debt service.
If we demand more in Stadium Authority Lease payments, the 49ers reserve the right to walk away. Reminds me of Indy.
The Personal Seat Licenses, or PSLs, won't sell simply because the luxury boxes did. CEOs rent luxury boxes. Fans will struggle to pay for PSLs - or they will refuse to buy them.
Also, you're way off claiming that only half of those seats will be subject to PSLs - you're taking money away from my Stadium Authority, Sid.
The reason why we need nearly all seats on PSLs if because your flawed assumption that all of the PSLs will fetch $35K each. On the third mezzanine and behind a girder? Guess again. Try $2,000 or even less - and you have a lot less PSL money that the Stadium Authority will have to pay off its huge debt burden.
As for comparisons with Indy and Cincy, they're entirely valid. Indy's 7 times our size and Hamilton County, OH, is 10 times our size.
And *their* NFL stadiums are eating them alive.
(Sid, if we can't compare the ripoff in Santa Clara with the devastation in Indy and Cincy - why are YOU throwing Jets/Giants PSLs in our faces?)
Also, you claim "no bonds."
Of course there are bonds - the Stadium Authority can't pay off the $850 million without issuing them. And the 49ers themselves are the creditors for $400 million of that total. Note that they'll probably be rated BBB (City's own Agenda report BEFORE the mortgage/CDO meltdown), WILL NOT be tax-exempt and MUST be insured. Huge costs of debt service will be down to the Stadium Authority.
"The 49ers if this fails could be making 50M-60M lease payments a year, they are the ones who in the long run could bleed through the nose while stadium authority holds the debt they do not pay the debt service difference if the revenues fall short."
The claim that the 49ers are making up the losses is simply incorrect. Those losses simply get added on to the Stadium Authority's debt - for which the 49ers will loan them even more at the rate you're now seeing on the $400,000,000 "LaunderLoan."
In other words, my city is getting clobbered with "payday loans."
Sorry, Sid - your argument leaks like a seive.
Try reading our City Council's own Agenda Reports before telling a Santa Claran like me that we should blow more than twice as much in public subsidies on the 49ers' stadium as the team told us it would cost last June.
Bill Bailey, Treasurer,
not all experts agree with gadfly Bill Bailey- from tonights SJ Mercury...." But the deal, announced Friday, includes a fail-safe that experts say might be the first of its kind among NFL stadiums. Although the city's stadium authority is ultimately responsible for paying off the loans, the 49ers have vowed to make sure the debt is paid in case the stadium struggles. "That's a big deal. I think Santa Clara comes out smelling like a rose here," said Smith College professor Andrew Zimbalist, one of the leading sports economists in the country. "If in fact the team is going to backstop the whole debt service, then it sounds like a pretty good deal to me."
Who do I believe---an expert like Professor Zimbalist or gadfly BB...
What you're neglecting to mention is that there's nothing in writing showing what the 49er obligations will be and professor Zimbalist clearly didn't claim to have clearly studied the issue. It was a breezy comment made by an expert under the guise of "If true, this may be interesting".
There is no final agreements for the public to view. The 49ers will and council will say anything at this point. They have little credibility.
SanJoseA's is cherry picking from the new SJ Merc article posted tonight:
"The plan to pay for the 49ers' new $1 billion home in Santa Clara will rely on the biggest loan to a public agency for any stadium in NFL history.
The revelation added a dose of reality Monday to the euphoria that the team and city had finally found the money to move the beloved football franchise to the South Bay.
Critics and some analysts fear the stadium next to Great America won't whip up enough profit to pay off $850 million that the city's stadium authority will borrow to propel the plan into reality. If the economic assumptions fall short, the 49ers' new home could wind up bleeding red ink for decades, with interest payments pushing the project's total debt well beyond $1 billion. That's about triple the debt that voters were told the city's stadium authority would take on when they approved the project 18 months ago.
The debt "is way beyond what we normally see. If I was Santa Clara I'd be very, very skeptical," said Robert Baade, a leading sports economist at Lake Forest College. "There are lots and lots of unanswered questions." "
I'd call his comments anything but "breezy"...later in the article he adds "It isn't clear yet what the annual debt on the stadium would be. But Zimbalist predicts the Santa Clara stadium will generate some $120 million in annual income before taxes, more than enough to pay back the loans and still turn a healthy profit. The team and city also hope to rely on funds from the NFL, a local hotel tax and the city's redevelopment agency to account for $225 million toward the debt."
Sounds like a damn good deal---I know you anti-stadium folk hate to hear that--and so does Neil of course--kinda defeats the whole point of his blog---Go '9ers!!
SJ A's, Bill Bailey has claimed the 49ers will generate a lot of money in profits, but that they don't want to "share" it with the city. The whole premise of their dealings with the city is for us to subsidize them to a degree--with attendant uncertainties being placed on our, not their, backs.
So if everything goes well, the city gets to "own" a stadium, big deal.
@Santa Clara Jay--now your grasping for straws--so now your saying that the stadium will generate lots of money but the '9ers won't share it---really? Go back to Professor Zimbalist comments---great to have a quality organization like the '9ers be part of the South Bay community!!
Take a look at the office/support staff of a professional team (usually in a game program). They really don't have very large payrolls. Yes, some very visible and highly paid employees but strip them away and there's really few jobs the teams provide that the average person can aspire to. No way I see a good value in subsidizing this sort of endeavor. That's why the hucksters have to stress intangible benefits to such a large degree.
The city of Santa Clara is already very, very generous to the 49ers w/o providing them a stadium. $26K a year for 11 acres of land. Why do we have to do it all? If this is so great for the region, the city should pass the hat to other cities and see what their interest is. They should draw conclusions if there is little interest in participation.
and the deal was voted on by the city of SC residents...and approved by nearly 60% of the residents--in politics that is a landslide...and in democracy majority rules--you can rant and rave about your personal preference but it doesn't change the outcome. I respect and appreciate the 60% of SC voters who have vision of what the '9ers bring to the region...and regardless of what you, BB or SCT say...the sky ain't falling...Go '9ers!!
Easy to prove, SanJoseA's:
Jed York will scoop out over $130,000,000 in the first year.
Santa Clara's General Fund gets a stinking $180,000 from the team that same first year.
And that's all.
That so-called $30M lease "payment" to the Santa Clara Stadium Authority? It will barely pay the interest on the $400,000,000 "LaunderLoan" - the Stadium Authority will be paying that $30 mil just to break even.
What a way to live. Just breaking even.
Yes, the 49ers *are* keeping it all - and they're keeping our Agencies in a state of perpetual indebtedness while they're doing that.
As for the election: Jed York bought it with 4.87 million dollars of San Francisco 49ers' money.
My group spent $21,000.
And even though we were outspent by 225-to-1, Jed York still couldn't get one-and-a-half votes for every vote we got.
I'm sorry we didn't win - but I'm glad we walked the precincts, reached out and told the truth about the 49ers' ripoff of our City.
Besides, if you can't even figure out the A's ballpark issue in your own city, do you really think you're qualified to speak about the 49ers' Stadium Subsidy in mine? You've just rationalized a debt load on my City's Agencies that has been ***more than doubled by the 49ers*** in a period of eighteen months.
The 49ers is an even worse deal than it was last summer. It will be going forward, too.
Always a pleasure,
Bill Bailey, Treasurer,
Thanks BB for supporting my need for sports--glad you are picking up the tab....or that's right--it doesn't impact the general fund...doesn't take a dime out of your wallet....and for god's sake...its not only your city...but its the city of 60% who voted yes---get a clue---and when I and 68000 other fans attend a game in Santa Clara and stay at one of "your" hotels and eat at one of "you" restuarants and drop my entertainment dollars in "your" city and add to Santa Clara General Fund--please take the time to send me a personal thank you note---deep breaths BB--sky is not falling
Yeah SJ A's, supporting your want for pro-sports, that's it! At least you can stop by my house sometime after a game and buy me a dinner to show your appreciation.
Santa Clara is incapable of keeping its library open like other local cities do but we can get involved with NFL stadium building. Truly mind-blowing.
@SCJay--my dollars and those of the other 68000 fans who spend money in your city because of this stadium will support your libraries, police/firefighters etc--this stadium "generates" money for your general fund...a hell of alot more than an overflow parking lot that was serving an run down amusement park a few months out of the year---which is why 60% of your neighbors voted yes--show me the alternative plan you have to generate these revenues....oh that's right--there isn't one--so what were you saying about libraries closing?
False, A's -
The subsidy DOES rip off our General Fund:
As for taking money out of my wallet, public debt IS public money. My city - my money. When Councilmembers squander public property and therefore public money, they're taking real value away from real Santa Clarans. In this case, they are taking one Santa Clara agency into ***more than twice the debt*** they were last June - debt which must be repaid and which will NEVER be covered by anything but 49ers' advances which must be paid back at an interest higher than the rate on the bonds which my city can no longer afford to issue.
And if the Stadium Authority does default - we've got no place to turn except to the same General Fund that's already losing because of your stadium.
Your 49ers stadium is a non-contributor - piddly economic activity, and jobs paying less than $7,000 a year. In fact: The stadium will contribute LESS than the Training Center does today. Lock up that so-called "economic activity" inside a stadium, and on one else benefits.
Game days? Fans won't be buying dinner in Santa Clara --- they'll be jam-packing our roads on their way back to Daly City.
I'll believe the rest of your rant when you publicly identify yourself as actually buying single PSL on the fifty for the $20,000 that is likely to cost.
Usually, when I hear rants like yours: The writers end up admitting they're going to sit at home and watch the game on their widescreens.
Why? Because they don't want to spend the money.
You'll want to watch out for that, A's - move Jed York's goofbowl south - and the NFL's 75-mile TV blackout radius moved south right along with it.
Bill Bailey, Treasurer,
@BB--your posts get more outlandish every time---now your saying that no one will actually go to the games and just a few posts ago you were claiming that Jed York was going to make an ungodly sum of money and screw SC over because presumably--everybody would be going to the games--and when your with the 60%--there is no need to rant--because I have what I want---on the other hand...you didn't get many people to believe you last time...and that isn't going to change-read the story of the little boy who cries wolf all the time and let me know what happens to him...good night BB--
I didn't claim that nobody would go. You should read more carefully before getting into such a snit.
What I said is: Jed York keeps nearly all of the proceeds. And he remits only crumbs to my city of Santa Clara and to its Agencies.
Also, you claimed that the stadium was not causing General Fund losses to the city of Santa Clara.
I just proved you wrong on that. The Stadium Subsidy DOES rip off my city, and that will always be true no matter how you try to twist or spin it, A's.
You really should read our City Council Agenda Reports before trying to tell me how this stadium subsidy works. You're badly misinformed.
Anyway: When will I hear that you're paying for a PSL in a stadium in Santa Clara?
Remember that our Stadium Authority is going to need every penny it can get - so step up.
Always digging it,
Bill Bailey, Treasurer,
@BB--why you worried about me buying a PSL---since according to you Jed will be making money hand over fist... seems as if demand will exceed supply...and yes---I will be looking at investing in season tix--just like we do for the SJ Sharks, SJ Earthquakes and like we will do for the SJ A's--
SJ Sharks don't sell PSLs (or builder's licenses#. The question is how much you'll be willing to pony up for the mere right to buy tickets.
Let's say a decent seat on the 20 yard line, $5K, $10K, $15? Then will you double or triple that for a wife/son or daughter? Just curious.
My feeling is a lot of people will opt to replace the family car before they put out serious money for a PSL. #Esp since this will be something new for the 49er fans.)
Sid: If your theory were correct, the Oakland Coliseum wouldn't be having financial problems. As it stands, even with three professional sports tenants, the complex is still having difficulties paying its debts. Ditto for Qualcomm Stadium in San Diego and Reliant Stadium in Houston. There's a reason they're deviating from the financial plan which was in the original term sheet. The reality is the Stadium Authority debt will be very difficult to pay on an annual basis an all parties involved know it.
The only costs on the 49ers Stadium ballot measure were $42 million in redevelopment funds. Period.
These are the only costs the voters approved.
There were no costs mentioned for the Stadium Authority on the ballot measure. Had the $850 million in loans for the Stadium Authority been on the ballot, no way would it have passed.
Given how many host cities have had to pick up the tab for stadium debt, whether directly or through a Stadium Authority (Houston, Cincinnati, San Diego, Oakland, Indianapolis for example), the people of Santa Clara should have the right to vote on whether or not we want our public agency taking on that much debt.
Interestingly I'm seeing reports that there may be a ballot measure to have a statewide vote on continuing with high speed rail because the costs have increased so much since the original voter approval three years ago.
A re-vote won't even be close apparently. We need a re-vote in Santa Clara.
The 49ers just need to leave the Bay Area. They've done enough damage to our community.
"Although the city's stadium authority is ultimately responsible for paying off the loans, the 49ers have vowed to make sure the debt is paid in case the stadium struggles. "That's a big deal. I think Santa Clara comes out smelling like a rose here," said Smith College professor Andrew Zimbalist,
Is that like a marriage VOW?
JamieRowen: Let's not forget that many marriages end in divorce and can be very expensive. Unfortunately, if that were to occur in this case, the City of Santa Clara not only gets custody of the child (the stadium#, it ends up having to pay all the child support #debt).
"Sounds like a damn good deal---I know you anti-stadium folk hate to hear that--and so does Neil of course--kinda defeats the whole point of his blog---Go '9ers!!"
I really doubt that Neil (or most of us who are regular readers of his blog) would hate living in a world full of "damn good" stadium deals. But I'm still waiting for the first one.
And please don't equate being against publicly funded stadia with being "anti-stadium folk". The overriding point-of-view presented here has nothing to do with NIMBYism.
"The overriding point-of-view presented here has nothing to do with NIMBYism."
If it was, I don't see anything wrong with NIMBYism in regards to a stadium. It is something completely unnecessary, unlike some kind of power plant or sewage treatment facility that you could suggest the poor of an area should put up with to help everyone out. And it brings such a huge crowd of people to the area that local life is negatively impacted during stadium events.
With the obvious negative of the massive crowds, and no obvious benefit to the citizens of the city, these stadium are huge expensive tributes to the power of deceitful political advertising.
GoAs: No seats without a seat license.
Bill Bailey, Treasurer,
Neil, ever since I read the updated Field of Schemes last year, I thank the gods that you're out here fighting the good fight against publicly-financed stadium boondoggles.
How you keep yourself sustained while putting up with nattering nabobs like SanJoseA's and others is remarkable to me. Fight the good fight.
And Bill Bailey, good on you for bringing this fight back to the city council. I hope against hope that you can succeed in getting Santa Clara taxpayers to take another look at this festering pile of nonsense. Even though I'm not a resident of your fine city, I'm going to find a way to contribute.
And I've already spoken to two friends who are residents of the city and hope to get them to tomorrow's City Council meeting to speak up.
Thank you very much for this.
We heard a very polished presentation last evening on why we should let the 49ers pay only 15% of the stadium's cost (Why they should only have to to pay for the locker rooms and the team store.).
...On how we could pay off everything by "borrowing the interest." (Assuming that PSLs and naming rights will cover everything.)
...On why we're supposed to go $850,000,000 into debt and allow the 49ers to use our Agencies as their ATMs - only to get jobs that pay less than $7K a year.
(Keyser, Marston sez: $17M annual payroll; sez the 49ers: 2,600 jobs. You'll never even be able to feed yourself on a stadium job. The "jobs" claims for the Santa Clara Stadium are total hogwash.)
Contrary to the false information flying around our city: The San Francisco 49ers put NOT ONE PENNY into Santa Clara Unified Schools - the 49ers Stadium Boosters are deliberately promoting confusion between the 49ers' "J" and the $315,000,000 bond measure from 2004 that we're paying for ourselves. The 49ers exploited a funding crisis in our schools in order to get what they wanted last June, but that's all. They are not contributing a thing to our schools.
Please visit our homepage or blogs if you need more info, analysis or ideas.
Take care and best regards,
Bill Bailey, Treasurer,
Thanks for the props, Alison, but please: No personal name-calling of the other commenters here, even if it's via a Spiro Agnew reference. As Posting Rule #1 says:
"All opinions are welcome here, but personal attacks are not allowed under any circumstances. Please criticize the argument, not the person making it."
name calling is always so impressive---and typical of those who are on the outside looking in---oh well...so be it that I am a "nattering nabob"...guess 60% of the voters in SC are also so they think like me and used their vote to re-enforce it--Go '9er's---looks like we might get that new stadium a year earlier than planned!!
I was one of the Santa Clarans who voted for Measure J. However, I expected the financing plan to align itself with the guidelines of the term sheet. Now, this proposed DDA completely realigns itself away from what was moderate risk to extreme risk. That's not what I voted for.
SC will be broke,
There are obviously some hard-core football fans who really don't care what a stadium can/will do to the city's finances.
But overall, I'm pretty convinced that a re-vote--this time one with a fairly written ballot measure--whould result in a stadium plan rejection.
People see problems in the city and that we're undertaking something like this and they should be able to figure out something is completely wrong with the picture.
And to whose who say the 49ers are guaranting SA shortfalls, should know that we're dealing with StadCo a 49er shell that can evaporate at the first sign of distress.
SJA's - You're deluding yourself if you believe that 60% of the city's voters approved the stadium deal. They approved a deal that looks *nothing* like it does now, a mere 1.5 years later. I voted against it solely because I expected this kind of bait-and-switch.
SJA's - You're deluding yourself if you believe that 60% of the city's voters approved this stadium deal. They approved a proposal that looks *nothing* like it does now, a mere 1.5 years later. I voted against it solely because I was afraid of a bait-and-switch like this.
SC will be broke,
Please see the following links, which explain how the Stadium Authority debt was purposefully hidden during the Measure J stadium campaign. And of course, now we know why - so that our city council stadium boosters majority of 5 could work with city staff and the 49ers to load up the Stadium Authority with massive debt.
At our city council DDA study session last night, there was more bad news. The $850 million SA loans will have $75 million in interest - and they plan to borrow that interest at the start of construction (of course our SA is doing the borrowing)- so the total SA loans will really be $925 million at the start of construction.
And please see the following link. The graphic the 49ers put out last night shows that the NFL will loan Stadco $150 million which will go directly to 'tenant improvements'. The SA will borrow $850 million plus the $75 million in interest. And the 49ers? Look at the graphic from the 49ers - the 49ers construction share is down to Zero. This isn't what people voted for, and there's no way Santa Clarans would have voted yes on a deal like this (interesting that this graphic was given to the press, but not yet commented on in the press):
Now look at this link to see how the yes on the stadium campaign, with the help of 5 of our city council members, hid the Stadium Authority's costs during Measure J:
"Thanks BB for supporting my need for sports--glad you are picking up the tab..." , etc.
At least we stuck with the issues.
Bill Bailey, Treasurer,
@BB- your selective use of only a portion of my comment shows how desperate you are to try and twist facts- bottom line...deal is done-I will spend some of my entertainment dollars in the fine city of SC and happy to know that I will be contributing to your police, fire and libraries while Aldo getting to enjoy watching the '9ers in my backyard! Go '9ers!
Now that you're back can you answer my question of how much you're going to be willing to pay for your PSL? (I mean builder's license) and if you'll be doubling or tripling the amount to pay for other family members.
I think it's fair to call the events in Santa Clara a "conspiracy."
@scj- to answer your question- yes I will be buying season tix- 4 to be exact- so now my turn- in one breath your claiming that the stadium will be a boondoggle and no one will buy tix ($200M of luxury suites sold to date) and the next your stating that Jed York will make money hand over fist but not share it with SC- which way are the winds blowing tonight?
The 49ers are going to come out fine on this. The City of Santa Clara is the one entering into a high risk/low reward proposition. We aren't in this "together" with the 49ers as we have no equity stake or realistic way of sharing profits.
You are obviously fairly well to do as you are suggesting to me that you will be making a commitment of $40-50K for the long term right to buy tickets.
A lot of people will not be able or willing to do the same. Luxury boxes I never doubted would sell, but they're not helping on the $850 million debt.
So I think what I've always thought--the 49er SA will have operational deficits that our general fund will be eventually be backstopping.
@sic- your statement defies logic and an abscense of fact- emotional arguments always bore me- goodnight
"@scj- to answer your question- yes I will be buying season tix- 4 to be exact-"
Gotcha again, SJ As.
No season tix without a 49ers PSL.
We're betting about $20,000 !PER SEAT! on the fifty - or $2K up on the mezzanine.
Bill Bailey, Treasurer,
I really hope someone, or a group of people, can come through and push the 49ers out of the Bay Area for good by rejecting this stadium boondoggle. It'll ultimately be for the betterment of our fine city.
@BB- fully aware of expected costs- and yes I will still be buying 4 season tix- thanks for your concern though
No season tix without a 49ers PSL, San JoseAs.
I have to wonder why you're evading the simple question:
When will you come out publicly, and prove that you're buying a PSL for every member of your family?
Looks your own line is still appropriate:
"Thanks BB for supporting my need for sports--glad you are picking up the tab..."
Bill Bailey, Treasurer,
So now that we all know the funds are there, when does the shovel hit the ground & when will the stadium be completed?
@BB-I would offer to buy you a beer opening day but doubt you will be there- PSL's are required so that the bulk of the stadium is financed privately- I am willing to pay my share- as are my partners who will be going in with me- your quite interesting BB demanding that people show to you they will buy tix- you want the names of those who bought the $200M of suites so far? You lost BB- accept it and move on- Go '9ers
@bottomline- site prep work is beginning next month-'9ers want to start earlier now- if possible they want it done for the 2014 season- a year ahead of schedule- Go '9ers!
Well, the DDA hasn't been signed, nor any lease finalized. San Jose A's is likely not a Santa Clara homeowner. He doesn't have to worry about the consequences if the stadium is a financial failure.
Somehow I don't feel very reassured to hear the Goldman Sacs guy say that there isn't a danger to SC in this deal.
Perhaps Goldman doesn't have Santa Clara's best interest at heart, is that a possibility?
San Jose A's: A CEO renting a luxury box has nothing to do with some poor Joe who can't afford a PSL.
You still didn't answer the question: When are you putting down your $5,000 - $10,000 for that PSL?
$20,000 for a single on the fifty is what we're estimating.
"PSL's are required so that the bulk of the stadium is financed privately-'"
Huh? One's got not a thing to do with the other. You may want to clarify your logic on that one.
Looks like you've just admitted you plan on watching on your widescreen.
Remember: No season tickets until you buy a PSL first.
Bill Bailey, Treasurer,
"So now that we all know the funds are there, when does the shovel hit the ground & when will the stadium be completed?"
When you buy your PSL.
That and the naming rights are what the Santa Clara Stadium Authority are counting on to pay back the interest on $850,000,000 worth of loans.
Bill Bailey, Treasurer,
Aren't they going to start building and worry about funding sources later, without having any real idea whether they are even close to be adequate?
@BB- you are like a child running around on a playground trying to pick a fight-- we will be buying 4 season tix and be paying the pal prices required to support the construction of this privately financed stadium- and mow yournworried about the poor Joe who can't afford to pay the psl- so I guess you prefer to have public funds used- our a different type of bird BB- someday you have to figure out what you are really against---btw- PSL's are an investment- hard for you to understand I know but guess what- it worked at ATT rather well- and oh what a horrible addition that has been to SF- just horrible
At last! SJ Ace finally commits to pay for four PSLs!
Not much of a promise, and we had to corner you to get it - anyway, get ready to pay up.
Sounds like at least $10,000 - and very possibly up to $20,000 - depending on which mezzanine you end up on.
Also, the Santa Clara Stadium is most assuredly NOT privately financed - the Santa Clara Stadium Authority and not the 49ers are responsible for paying off that $850,000,000 in debt.
In fact, the 49ers are using our Agencies as their ATMs. In the case of the $400 "passthrough" loan, they even skim interest off of the amount they pay Goldman, Sachs.
Public debt IS public money.
And your own four PSLs are proof of that.
Bill Bailey, Treasurer,
I have no idea why SJ A's keeps referring to the stadium as "privately financed". At the very beginning of these comments Neil points out that the loans are in the City of Santa Clara's name (I'm not even going to bother with the SA firewall fiction) and this is because the lenders were not going to issue a loan to Stadco, the 49ers front which can dissolve into thin air if convenient.
I expect my utility bills to go up because of the sub-station move (which wasn't on the 10 year capital improvements schedule of Silicon Valley Power). This is an example of "public funding"--I get to pay for the 49ers.
When the naming rights deal is announced in Spring and the sales of Luxury Suites (already over $200M) and PSL's are moving along nicely than I look forward to Neil writing an article detailing how this is one of the best, if not the best, stadium deals in the country--of course I doubt he will do that--but for credibility sake it would go a long way--in the mean time you guys can continue to wring your hands over the fact that your city will get more than $800M in private financing to support a 1B investment in your community---
"Investment" is something that I can sell and possibly make a profit. A NFL stadium is sunk money that by definition is impossible to sell or use for another purpose (ok, I forgot, U-2 or World Cup in 2034, or fourth rate bowl game).
It would be a better "investment" for me to by a Ferrari--at least I could sell that (maybe I should tell that to my wife).
Unlike an office building, the owner can't even evict the tenant, we're stuck in other words.
SanJoseAce: "get more than $800M in private financing to support a 1B investment in your community---"
It's no "investment." It's a subsidy.
If it were an investment, our city's General Fund would be getting way more than $180 THOUSAND dollars in the first year.
Bill Bailey, Treasurer,
Whatever BB- 60% of the people disagree with you but your world man- pretty dark depressing world if you ask me- but it's yours- Go '9er's!,
I think we need a refresher course in terminology:
*Financing* is who borrows the money from whom. In a house purchase, for example, the financing is the mortgage agreement with the bank.
*Funding* is who ultimately pays off the costs. If I'm paying off my loan via monthly mortgage payments, that's the funding. If my grandfather dies and leaves me an annuity, that's the funding. If the mayor agrees to make my mortgage payments because I'm such an awesome job creator and he'd miss my pretty face if I left, that's the funding.
The financing of the Santa Clara stadium is very clear: Santa Clara is borrowing a buttload of money from the banks (and some of it via the 49ers). The funding is what's still murky: If naming rights + PSL sales plus the 49ers' rent covers the bond payments, then yes, it will be one of the better deals for a city. If not, not so much. Hence the headline about "risk."
Says it all, Neil.
The $850,000,000 is NOT a private investment.
That's why SanJoseA's argument FAILS.
Bill Bailey, Treasurer,
The city isn't providing any spreadsheets or other estimates of funding. Clearly they don't know. But since the debt is going to be in Santa Clara's name, it will be the city's problem if funding is inadequate.
The behavior of the council and city staff has been in my view reckless.
I conclude that the city staff has found this endeavor fun and probably didn't have much other to do else wise.
See the sleight-of-hand here...
...and ask yourself how much the 49ers are skimming off the $400,000,000 they're loaning to the Santa Clara Stadium Authority.
As I look at that chart, I see not only a lopsided public debt schedule - but also an NFL team that's improving its own cash flow at the expense of one Santa Clara Agency.
See why San Jose A's thinks that we should be paying for his stadium?
Bill Bailey, Treasurer,
I think San Jose A's needs to wake up and realize that every second of time and every bit of energy he spends following sports is a waste. People like him need to grow up and stop caring so much about sports and a little more about art, science, theater, etc.
Thank you, John.
The pursuits you just mentioned, in fact, will always cost the City of Santa Clara a whale of a lot less than $850,000,000.
I was given one of Neil deMause's FoS coffee mugs, and on it is this classic quote:
"The pride and presence of a professional football team is far more important than 30 libraries." --- Art Modell, NFL Owner
You can't get better comic relief than that, the consequences are more tragedy than comedy here in Santa Clara: Our own Central Library has reduced its open hours from 64 hours per week to 55.
But - by golly - we could end with the bragging rights to an NFL stadium.
Just like Cincy and Indy.
Bill Bailey, Treasurer,
Ha! That's the first time I've ever read that quote.
I would argue that sports - and not just professional sports, but college, high school, and even "pee-wee" sports - are responsible for the decline of America. The "us vs. them" mentality, the tribalism, the glorification of violence and thug behavior - all of them are the reason America now ranks so low compared to other industrialized nations.
Make no mistake about it: sports and their enablers - i.e. fans and players - are killing this country.
"Ha! That's the first time I've ever read that quote."
Somebody hasn't read my book, I see...
I apologize. I'll make sure to check it out from my local libra-oh, wait.
But seriously, I'm PASSIONATE about working to erode the influence of sports in this country. It just enrages me every time I see someone even wearing a piece of clothing with a sports team's logo on it, be it a professional team, a college team, or even a high school team.
Physical activity in order to stay fit is great. Sports, however, are a cancer.
I bought my copy of Neil's "Revised and Expanded" FoS under similar circumstances!
Glad I did - I was getting behind the times by continuing to borrow the 1st edition over and over again.
Bill Bailey, Treasurer,
actually love the arts and theatre--San Jose Rep is great...the Performing Arts Center needs replaced---want a bigger venue...San Jose Museum of Art is very nice...needs to be expanded---Tech Museum is fun...my kids are bigger now so havent been in the Childrens Discovery museum in awhile---Would like to see a world class symphony hall built--at one time the thought was across from the new city hall on Santa Clara--renovation of the California theatre for Opera San Jose has been great--although sorry...cant handle opera...ironically all of the venues that I just mentioned were built with public dollars...which I support...but reality is that very few people take advantage of and it would be hard to claim anywhere near the economic benefits that you can from a major league sports venue--having said that a dynamic city that has a diverse array of entertainment options is important to employers because that is oone of the things that their employees want. So BB and Neil....since you support John's notion to eliminate all sports and focus on the arts---how do you propose to pay for these---talk about public subidies!! A new book opportunity for you Neil...
Where did you get the idea I want to eliminate sports? Or do you just assume that anyone who's a Mets fan would want to put an end to their misery?
The difference between the arts and sports is that the arts are objectively more enlightening than sports. Studies show that participation in the arts in high school leads to higher grades, better social skills, higher self-esteem, and more success in college and in jobs than sports do. Arts are cultured. Arts require skill. REAL skill. Thus, they are more deserving of public money.
Another difference is that organizations like SF Symphony and Ballet are not for profit organizations.
In other words no private owners reaping millions (or hundreds of millions) in capital appreciation and no team members making eight figure salaries.
For the record, I'm as opposed to giving subsidies to Nickelback as I am to the 49ers. Maybe more so.
"talk about public subidies!!"
San Jose A's, you need to read your city's budget before making pronouncements like that.
Any one of those cultural outlets - the very institutions that reflect the best of what we can dream and create - will take only a tiny fraction of the public wealth that your own city is squandering on Lew Wolff's ballpark.
And when you try that whine in comparison to what our own inane subsidy of the 49ers will cost us - well, there's no comparison at all.
And SCJ made the point best of all: The A's and the 49ers take pure profit out of their stadiums and put it their own pockets. Art museums and symphony orchestras can't do that.
You haven't made much of a case, there, San Jose A's.
Bill Bailey, Treasurer,
@Neil- assumed by your comment you agreed with John which is to eliminate all sports in favor of Arts- first of all- I support all the arts and as well as sports- once again a healthy city will have a diverse set of options for it's residents- and John- there are plenty of benefits that children learn from playing youth sports and following professional teams as fans- to dictate that we should all be the same in our likes/dislikes is just a tad bit un-American. And scj and BB- many of the not-for-profit arts receive monies from the city general fund to manage their business as typically revenue from tix sales and other sources doesn't meet their annual obligations- furthermore most have been built using redevelopment funds- just like what will be used for the '9ers- finally- sounds more and more like the Raiders may join the '9ers in SC- so your concerns that there will jot be sufficient revenue sources to pay off the debt is taking another hit- but I do appreciate John's honest comments- and your support of them- bottom line you don't like sports and therefore dammit neither should the 60% that voted for the stadium- God forbid any of this differently than you- after all this is just America!
What San Jose A's refuses to see is that the 49ers are keeping the NFL Revenues in their own pockets - as profits.
Museums and civic theater groups aren't allowed to profit.
And they will always take far less out of the public purse than the 49ers - or "The San Jose A's" will.
Nice try, though.
Bill Bailey, Treasurer,
bb--what facts do you have to support your statement "...And they will always take far less out of the public purse than the 49ers - or "The San Jose A's" will."? None of course--as I recall the SJ Rep, which I whole-heartly support and approve of my tax dollars going to, cost nearly $30M to build---pretty much all redevelopment dollars---the Tech Museum, Childrens Discovery Museum and San Jose Museum of Art were also built or remodeled with Redevelopment dollars---collectively exceeding what the city of Santa Clara is putting into the '9ers stadium---you have no proof that the '9ers stadium revenues won't be sufficient to pay off the $850M of loans....I am highly confident they will---and if I am correct than once again the arts will be taking more out of the general fund than the '9ers stadium which has zero coming from Santa Clara's general fund--I know that facts aren't appealing to you...but they really are important!
Look at any City Council Agenda, your city or mine - they NEVER demand that a city agency take on $850,000,000 in debt.
Your argument ain't gonna cut it, A's. Your teams cost WAY more than an Art Museum.
Bill Bailey, Treasurer,
I'm aware of the controversy involving using redevelopment funds to build the SJ Rep. I'm not going to go to the mat saying it was a great idea; maybe it wasn't. (Myself, I greatly prefer the programing at the Berkeley Rep (although, alas, I rarely get to go there)).
Anyway, of course we can't "prove" the stadium is going to lose Santa Clara money before it's even built; (although it certainly has cost us a fair amount to this date), BUT myself (and others) can look at empirical evidence of other cities from the past 20 years and draw conclusions.
Why can't you? Please give me examples, as I've asked you for in the past, of where a NFL stadium has led to prosperity for the host city.
at bb--once again you dodge the issue--sufficient revenues to support the $850M of borrowed money and nothing comes out of city of SC--and per agreement the NFL and '9ers serve as the backstop in the event that it doesn't--but not even going to go there--it will be more than sufficient--add on top the Raiders and the city of SC recoups some of its redevelopment funds and the deal gets even better-
at scj--first of all, building the rep wasn't controversial---not sure why you would say that and it wasn't my point--the fact that it operates at a loss and the city has had to bail it out is controversial--not for me--because I am willing to support it--but for otheres--once again an example of the "Arts" taking more from the GF than a stadium--second--show me another area in the country that has the demographics of Silicon Valley---more fortune 1000 companies than SF and Oakland combined---SJ 2nd in annual income of its residents in the US--those are the demographics that allow for a stadium to be built without significant use of public funds---so first show me one stadiume that has even close to this deal that the '9ers are giving to SC--once again assuming the revenue streams materialize as I expect they will---tell me that the stadium in Dallas, which btw has much more public funding, hasnt supported the local economy there--tours of the facility alone are around 10,000/week--100,000 show up for super bowl and college bowl games, 85,000 watched the nba all-star game--lots and lots of hotel rooms, meals at restaurants...on and on and on--
The NFL hasn't exactly served as a 'backstop' for stadium debt for other NFL host cities. If it had, then why are the taxpayers of Indianapolis, Oakland, Houston, Cincinnati, San Diego etc. stuck with paying for stadium debt/operations and maintenance costs?
And the contract isn't directly with the 49ers - it's with a Limited Liability Company, StadCo. LLCs are shell companies. StadCo isn't the 49ers or the team owners.
At sct- assume you have compared indy's deal to sf to claim they are the same?
There is absolutely no proof that Stadium Authority Revenues will cover the outstanding debt which will be owed by the Santa Clara Stadium Authority.
But at least we got you guys to admit that the *** $850,000,000 *** is Stadium Authority debt and not contributions from the 49ers.
Bill Bailey, Treasurer,
If you think, as I do, that arts and museums and sports teams can all make positive contributions to the quality of life in a city, the difference is that the major sports leagues (MLB, NFL, NBA, NHL) can all easily afford to build their own facilities. They might have to adjust their salary structure once building becomes a cost of doing business, as it is in most other industries. Only players would complain about having their average salary drop from $4M to $3.5M. But they're not going out of business if they're not subsidized. Not necessarily true of arts-related facilities.
Well put Keith,
My thinking entirely.