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.
Details in the contract show that the $220 million doesn’t all flow to Santa Clara.
sireweb.santaclaraca.gov/sirepub/mtgviewer.aspx?meetid=1338&doctype=AGENDA
The $220 million will be split 70/30 with the 49ers receiving 30 % and the Stadium Authority receiving 70%. So Santa Clara’s agency will only receive $154 million over 20 years. The $11 million is the combined amount of what the 49ers receive and SC receives. Santa Clarans had been promised that the Stadium Authority would get ALL of the naming rights income. So that promise has not been kept.
From the agreement, which will be voted on tonight:
“StadCo entered into a Letter of Intent with Levi Strauss to negotiate the terms of a Naming Rights Agreement as well as a separate Sponsorship Agreement with StadCo on March 7, 2013.
“Terms of the Naming Rights Agreement have been reached with Levi Strauss providing for the name of the new Stadium to be “Levi’s Stadium” in return for Levi Strauss making annual payments to the Stadium Authority starting at $5.7 million a year and increasing by 3% each year for the term of the Naming Rights Agreement.
“With an initial term of 20 years, the total value of the Naming Rights Agreement is projected to be $154 million (an average of $7.7 million per year).
“In addition, Levi Strauss is also entering into a separate sponsorship agreement with StadCo valued at $66 million for a combined naming rights, sponsorship deal with an overall value of $220 million (an average of $11 million per year).”
As I wrote in the item above: “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.”
I don’t think they read your posts, they just have to comment on how everything that is put out by the authoriry or 49ers is scam.
From the term sheet breakdown exibit 14 of what sources of money will pay off the construction loan, over at newballpark.org, the authority expected $7million a year from naming rights.
I’d like to hear from whoever it was (one of the Santa Clara whatever people) who swore with absolute certainty that the naming rights would never bring in more than $5 million. That is $5 million total, not per year.
Anyone know what is up with the Raiders and their quest for a stadium, haven’t heard anything in a while, except for Coliseum City or whatever they call it?
From what i been reading the Raiders have been meeting with Oakland about a stadium. But no real details coming from Oakland, all they have had like Paul said is a press conferences about coliseum city ( baseball park, football field, basketball arena, entertainment district, commercial and residential buildings.) No details about any idea of how this will be payed for or which teams are on board.
Looks like a scaled down version of coliseum city with only a football stadium is what may happen but will require Oakland and Alameda county to put in public money. Raiders don’t have the fan base to tap in to PSL money like the 49ers do… but importantly they are not wining to even try.
Any new stadium at the coliseum complex will need to take on the $100 million debt that still owed for the renovation that was made to get the Raiders back from LA.
What I found surprising but it make sense is that the CEO of Levi’s said that a wining team and run to the superbowl made them really want to make a deal.
How lucky have the 49ers been!
Any chance the raiders go back to LA? I know they have a polarizing fanbase. But does CA really need four NFL team? Putting the Raiders in LA would financilay help the Niners and would give LA a team without loosing another market or expansion.
Paul, i really think there is a good chance the raiders will move back to LA. I mean out of all the teams threatening to move to LA the Raiders ( I guess the Rams to a lessor extent) have a fan base there. A while back when there was a lot of noise about teams going to Farmers Field, the raiders owner had meetings with them. In order for the Raiders to move and play in the “Free” stadium in LA they would have to give up significant ownership of the team, they were not willing to do that. All this according to local news reports.
Right now the raiders don’t have the finances to privately ( or semi privately) fund their own stadium, so they just waiting around to see which city Oakland or LA will give them a deal where its 70% non raider money (public or private) and 30% raider money. The numbers are just speculation but some deal like that is what its going to take.
Interestingly I have family in the LA area who are huge raider fans but they don’t want them back, because of how bad it got in the stands when they were in LA.
Of course, even if the figures break even, that’s not counting the endless hours spent by government officials, the opportunity costs, the issues not addressed, etc., and also not taking into account the risk, all to aid a private business in a money making venture.
But, in the grand scheme of things, not bad.
I’m also from LA and a die-hard Raider fan but I rather have the Rams back. LA Raider fans are just too nasty. I was a senior high school when they left but I remember people getting peed on, fights, just plain old nastiness, cars getting vanadalized after a loss. Not a good environment. but at the same time, gangsta rap is dead and LA has changed. the only team I would hate to see is the Chargers. First they belong in SD secondly, they would alienate all the old LA raider fans.
More dishonesty from Neil.
You know they’ve already sold over $400 million in PSL’s and are well on their way to their $500 million target. Why can’t you have an honest discussion?
Wasn’t trying to be dishonest, just forgot about the more recent report that they’d passed $400 million. Will update/correct now…
Good catch David B, I was hating on SCtaxpayer for not reading the post and I glossed over the $300 mil lol…Hahaha
Paul, well hopefully if they move you get better crowds. Wow getting peed on wow!!! Hahahah damn!
I’d say that coming in under the city’s estimate of $330 million for naming rights this agreement is coming in under expectations. Also, I’m sure the city is disappointed that there was apparently no bidding war between hi-tech behemoths for the rights. I never believed that Apple saw an upside in linking with a product that many associate with brain damage. Turns out I was right about that (also it wasn’t me who said total naming right wouldn’t garner more than five million).
But at least rights were sold. Now how to make up for the shortfall?
BTW Ty, I agree with you that the best case scenario still is that the city doesn’t lose too much money if one disregards the “off the books” stuff. Still I’m hardly as sanguine as Neil about this really (sort of) working out long term. This modest sized city still has a lot of uncertainty to go through.
It’s good that they got this big a deal, at least Santa Clara has a punchers chance now.
In terms of the Raiders, I still think they are waiting for the Warriors and A’s to bolt, so they can get a killer deal from Oakland because they bet the city will be desperate to keep a team, even if it’s the worst one.
Neil, how much of the money in PSL’s is guaranteed?
If the Niners revert to their old football ways and become a mediocre team once again, will the team and the city start to lose real money as fans lose interest and stop buying season and game tickets?
Also, Levi’s as a company is not doing well. Though there’s no short-term likelihood of it, they could definitely go the way of the dodo.
I remember 3Com bought the naming rights to Candlestick Park, and then promptly became a shadow of its former self and nearly collapsed as a business (after spending itself into the poorhouse paying nearly a billion dollars for the naming rights.)
PSLs are all sold on an up-front basis. If the 49ers suck, it’ll be the PSL holders stuck with seat licenses they can’t resell for what they paid for them.
The Levis CEO seems to believe the stadium will become a viable music venue. I’d say this sort of thinking doesn’t bode well for the future of the company.
So long as Paul McCartney and Mick Jagger live to 100, that should work just fine.