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01 April 2009

49ers, Santa Clara close to terms

Not to be left behind, the Yorks and Santa Clara are back pumping up the 49ers stadium plan. While the basic structure of the arrangement is the same, the numbers have changed a bit. The vote was to be either binding or advisory based on the availability of a completed EIR. By pushing the referendum back to June 2010, all EIR/CEQA should be completed by then. The projected subsidy, which has been estimated at anywhere from $109 million to $180 million depending on certain options, has now been trimmed to less than $90 million. The total price tag is projected to be $900 million.

Why wouldn't the 49ers simply foot the bill for the remaining $90 million, since it's only 10% of the budget? True to form, Jed York says that's the NFL's requirement. Ever since the stadium building boom, the NFL has required some level of public investment if the league tapped into its G-3 fund. The league's rationale is that it's the way for a municipality to get skin in the game. Even though G-3 is gone, it will be replaced by something else and apparently, similar rules will be applied.

It's been over 20 years since the last publicly financed, voter approved sports venue in the Bay Area. That venue was San Jose Arena. Since then, all publicly financed stadium initiatives have largely failed. Let's recap:
  • 1989: San Francisco's Prop P (China Basin GIants ballpark) lost by 2,000 votes
  • 1990: Santa Clara County Giants ballpark measure (1% utility tax) failed
  • 1992: San Jose Giants ballpark measure (2% utility tax) loses in a landslide
  • 1995: Oakland Coliseum renovation to bring back Raiders - done without a vote, notoriously unsuccessful
  • 1996: Coliseum Arena renovation for Warriors - probably the most successful to date, high costs to operate venue make it less attractive for non-NBA events compared to HP Pavilion
  • 1997: Proposition D passes in SF, providing $100 million towards a new Hunters Point stadium for the 49ers. Development was scaled back, project became stillborn
  • 2001: A's efforts to work out a publicly-financed ballpark deal in Santa Clara die due to mistrust of team among City Council members
It's hard to fight that kind of track record, isn't it? Regardless, the Niners will forge ahead anyway. I'd like to think that the A's have learned from this, but I wouldn't put it past them to put out a publicly financed ballpark deal in San Jose. If that happens, I'll be first in line at the ballot box to vote it down. Given the state of the economy, I'd do the same if I were a Santa Clara resident come June 2010.

Note: I omitted Pac Bell Park because the public money involved went towards infrastructure, not the stadium proper.

33 comments:

Anonymous said...

Come on ML

At the Chamber of Commerce luncheon you were at Lew said he is looking for NO public money for his baseball stadium (at that time he hadn't let the cat out of the bag) in San Jose.

Niners = Losers; No public appetite for this. This will be drop kicked right back to our next Governor of the Great State of Californication - Gavin Newsome.

Anonymous said...

ML---interesting---so you would have voted against building the San Jose Arena---personally I look at it from my own personal business perspective--its a small price to pay for convenience and value of not paying with time or money to drive to SF for the '9ers or Oakland for the A's---not to mention how stadiums typically generate positive development around them---resulting in increased tax revenues for cities--

Interesting how you support PacBell--a nice chunk of change was provided via a cheap land lease--I would guess that amounts to more than $100M---guess public subsidies are in the eyes of the beholder--

Anonymous said...

The Yorks (and BaerBrain and Neukom for that matter) are nervous that the A's will beat them to the punch bowl and get all the good corporate goodies, ie Cisco, Adobe, Apple...etc., etc., etc.,

Haste makes waste.

Marine Layer said...

In 1988 I was 12. If I were of voting age I would've voted for it because I'd have been a naive kid who loved sports and didn't care about the numbers. I've seen and read and learned too much about how fiscally unsuccessful publicly financed stadia have been that, despite San Jose's success, if it were presented today I'd vote against it.

I don't have a problem with the public putting in for infrastructure improvements if they are multi-use in nature. Muni, Autumn Parkway - Yes. The Giants get a sweetheart lease. They also footed the bill for millions of dollars of toxics remediation. There was no significant opportunity cost for the land there. The Giants also pay property taxes on the stadium, which few teams do.

This is not a black-and-white issue. Any stadium initiative demands a full appreciation of costs and benefits, including placing a value on having a pro sports franchise in town. Some environments and eras are more hospitable than others. Every voter should take all of these factors into account and not be blinded by either fandom or anti-tax prejudice. As Californians, we lead the nation in so many ways. We should set an example for others to follow whenever possible.

Anonymous said...

You missed Measure N in Santa Clara that passed in 1990.

John

Paul said...

San Jose, a much, much larger city, spent $135 million on a multipurpose arena in use hundreds of days a year. It's supposed to be a good deal for much smaller Santa Clara to pony up $90 mill for a football stadium used 10 days a year? During the worst economy since the Great Depression?

(The stadium would be right in the flight path of San Jose Airport, BTW. "Ready! Set! WOOOOOOOOOOOOOOOSHHHHHHHHHH" (Officials timeout called again)

Georob said...

You know, I'm really getting tired of hearing about all the supposed "corporate money" in the South Bay and how it's just gathering dust waiting to be spent on a team that locates there.

First of all, I have to think that a lot of that money is already being spent on existing Bay Area teams. Secondly, if there IS that much money and power within the tech community, then it should be be used to buy out the Giants territorial rights.

MLB owners aren't stupid. If there's that much untapped revenue in Santa Clara County, then a baseball team would have been allowed to move there long ago.

Anonymous said...

Georob-

Lets put it this way---San Jose/Silicon Valley is in the middle between 2 businesses who both say that this is the place to be---Giants by not wanting anyone else to have access to it and the A's by wanting to have access to it--you may not agree with its lure but you gotta admit that there is something there for not only the Giants and A's to be fighting over it but also to have the '9ers and possibly even the Raiders want to locate there.

At the end of the day you can argue against the bloggers but you can't argue against the reality of teams saying this is where they want to be.

Paul- not sure what you mean by the flight path--on a typical day when you leave SJC you fly out over Santa Clara and from my perspective planes are well south of this area---

Anonymous said...

"MLB owners aren't stupid. If there's that much untapped revenue in Santa Clara County, then a baseball team would have been allowed to move there long ago."

Georob, they could not simply move any team to SV right away. There were only two options: those in the Bay Area already. A third franchise would be too much.

One tried and failed to get a free deal. Then they cemented their place in SF. Meanwhile, the other team wanted to move, too, but had shut itself out by surrendering rights. In case you've not been paying attention, picking up and moving to SV is not simple.

Paul said...

Paul- not sure what you mean by the flight path--on a typical day when you leave SJC you fly out over Santa Clara and from my perspective planes are well south of this area---


...Just last week, I had a business meeting outside at the hotel attached to the Santa Clara Convention Center, about 150 yards from where the stadium would be. I can assure you the meeting was interrupted by very loud jet planes above.

Anonymous said...

The flight path is actually to the east of the proposed 49ers site, but you can still hear the planes in that area. However, I don't think it will be a problem in a loud NFL stadium. I really doubt you'll even notice them.

Paul said...

Let's see - besides interrupting football games, the plane noise would be a problem at the other type of event to be held at the stadium - concerts. Does anyone know if loud plane noise above might be a problem when music is playing and people are paying $100+ to get in?

Anonymous said...

Paul- not sure concerts are part of the mix---Days on the Green went away in the "70's---with Shoreline, SJ Arena, and potentially a smaller concert hall being built downtown SJ I doubt that the financial model shows a large number of concerts---location wise where you could see this space being utilized is as an extension of the SC Convention Center---

Anonymous said...

The Yorks are morons. This will never happen.

Anonymous said...

With the miniscule number of NFL home games played in a season it really makes sense to build a new football stadium for 2 teams.

Jeffrey said...

I am not in favor of large sums of public money going towards sports stadiums.

That said, 10% is sort of a guideline I would use to evaluate the A's potential stadium deal if I were a voting resident of Oakland or San Jose. It is not what I woudl use for Santa Clara.

The large difference, as I see it, is the nature of the schedules. The A's, in the right locale, will bring about 20,000 people to an Urban area 81 times where they will buy food, drinks, etc. The 49ers would bring 60,000 people to the middle of a bunch of office parks 8 times a year.

I don't see the large public benefit to the 49ers scenario.

Paul said...

With the NFL having a multibillion-dollar TV deal, its top draft picks getting $30 mill signing bonuses and players salaries exceeding an average of $1 mill, the 49ers will need to lower their request for public funds by say, another $90 mill, if they want the voters of Santa Clara to pass this.

The signing bonuses of three #1 overall picks of the draft would more than cover the request for public funds.

Anonymous said...

And introducing your hometown 49ers and Raiders.....City of Santa Clara, meet City of Industry. If the people of Santa Clara go along with this insane scheme, shame on them if they allow the 49ers to keep "San Francisco" in the name. Santa Clara 49ers, baby. Right there with the Industry Raiders.

Be careful what you wish for.

Anonymous said...

Paul,

The 49ers are saying the $90 million is an NFL requirement: basically, they have to get 10% of the cost in public funding to qualify for NFL financing. Without NFL financing, the deal doesn't happen.

I agree that NFL stadia provide less public benefit and justify less public investment than MLB ballparks. However, spending $90 million to get a $1 billion construction project, with the rest coming in private funds, might be worth it (especially in this economy).

As I understand, the 49ers will now also pay rent as part of the deal.

Paul said...

$90 million in public funds to own a stadium that is absolutely not a core municipal service? For San Francisco's football team?

What's the benefit for Santa Clara? Games 10 days a year while the Goodyear blimp still flies 40 miles away so it can get a good aerial view of the Golden Gate Bridge? Football fans drive in before the game and drive right home afterward. They won't spend a dime in Santa Clara.

And what's happening with the amusement park that is up for sale? If the 49ers buy it, they prove they don't need any public funding. As far as the NFL's rules to qualify for league financing, that's certainly not Santa Clara's problem. The league's lame financing rules are the league's and are of no concern to Santa Clara taxpayers.


Santa Clara voters will punt this through the end zone.

Anonymous said...

Paul-

Disagree that the SC voters will punt on this---most voters look at the direct impact to their pocket book and make decisions based upon that impact---Ever wonder why so many bond measures easily pass---even when the state is broke---the $90M will come from hotel tax revenue and redevelopment funds--this has zero direct impact to the SC taxpayer.

The other aspect that the city of SC has going for it is that it is very well run by city administrators who have earned the respect and trust of most of their constituents. I would bet this will carry over into this election and this measure will pass by a reasonable margin---it may be an emotional decision but having a NFL franchise located in your city does create some civic pride--even if the name is different--

jeepers said...

Don't forget the catastrophic failure of the Kings' new arena proposal in 2006. It's not the Bay area, but it's instructive. The Kings have historically gotten very strong support from their fan base, but the vote failed by a gigantic margin. It was in part because of flaws with the plan, but it still would have failed had it been a sound plan.

Paul said...

...Big difference between passing bond measures to add to schools or fix roads than to build an absolutely unnecessary facility to further enrich a multibillion-dollar corporation, its multibillionaire owners and its millionaire players. There's at least two Web sites so far rallying against the 49ers subsidy and members of "Santa Clara Plays Fair" have made regular presentations to the Santa Clara City Council to point out the measure.

If you check out those anti-subsidy sites you will see that funds for critical civic projects, such as construction of a new library, have been held up while the city fiddle faddles with the 49ers.

If the team is still called San Francisco, Santa Clara won't see much if any name recognition. East Rutherford, NJ hosts more NFL teams than any other city but I'll bet most people on this board and who root for the NFL don't have any idea what I'm talking about

Paul said...

...Santa Clara Plays fair opposes the measure, if thats not obvious.

Anonymous said...

Oh well---guess we just disagree---look forward to what the voters of the city of SC decide---and btw---why do we need libraries anymore when we have the internet? This I would consider to be a waste of tax payer dollars--

Paul said...

...poor kids in Santa Clara, who do not have PCs or Internet access in their homes, can still go to the library and read books for free. Libraries are more important than football stadiums.

I'm out of luck if there is a 300-page book that I want to read on CalTrain and I need Internet access to do so.

Anonymous said...

and what's the return on my tax payer investment to make sure you have reading material on the train? Sure it would be much cheaper to provide a free internet computer to those in need than to spend millions on a library for a small portion of the population that will actually use it...

sorry--I fail to see the logic of spending millions on a library used by very few--for the kids that need access to books keep the school libraries open later---

Anonymous said...

A library is used by "very few?" I can tell you that it is used by more locally than is a football stadium. Nobody drives from Sacramento to check out a book.

Anonymous said...

Paul,

I agree with you about the name thing. I view the visibility that brings as the #1 benefit of hosting an NFL team. If I lived in Santa Clara, I would have wanted the City to make that a non-negotiable condition of public funding. Or try to work out a deal where the team was called "San Jose 49ers" and San Jose contributed the public finds, since they would benefit more from it than a small city like Santa Clara.

But the deal has gotten significantly better for Santa Clara since first proposed. It's a much smaller contribution for the city, and they now get a permanent revenue stream in the form of rent.

But mostly, it's about the construction jobs and other benefits of a big influx of cash into the local economy. The calculus is: Is it worth investing $90 million of public funds to leverage an additional $800 million in private funds?

Look at it this way: The federal government spent $800 billion on the stimulus package. Only about half of that was actual spending, or $400 billion. That was for the entire U.S. It's not clear how much those funds will enable leverage of private funds.

The City of Santa Clara is in a position to leverage almost a billion dollars in stimulus off a $90 million investment, just for itself (well, and the surrounding area). Granted, it's a one-off, and if times were good might be less attractive. But times are not good. The construction will go on for several years.

I'm not predicting which way the vote will go, but I can see a case for it.

Let's not forget, it's still possible the Raiders sign on as well, which would double the number of event dates.

Paul said...

Apparently, Santa Clara turned down a company that was seeking something like a few-million-dollar subsidy to locate some sort of solar energy facility in town. It would have created a bunch of high-paying jobs, unlike the few minimum-wage, part-time hot dog vending jobs the stadium would create. Since a solar energy company doesn't have the shock-and-awe factor of an NFL football team showing up with hat in hand, the solar company was shown the door while the 49ers are getting the worship treatment for their massive, massive request for public funds.

If an NFL football stadium is such slam-dunk fabulous investment, the 49ers and NFL should be fighting amongst themselves for the right to pay for the whole thing.

(Incidentally, the NFL has wanted to reopen its CBA with the players. One reason for this is that the league now has to pay more for stadium construction costs. Taxpayers are not so willing anymore to flush billions down the drain for these fabulous palaces that benefit a very few.)

Even corporate sponsors are not lining up anymore. The Dallas Cowboys apparently will be opening their new stadium this fall with no corporate sponsor, since none has come forward to write the massive check requested.

Paul said...

re: and what's the return on my tax payer investment to make sure you have reading material on the train?

...As someone with small children who love to visit the different San Jose library branches to read and play with the stuff they have around them, I find your argument that a football stadium is more valuable than a library to be pretty funny. Libraries are open 6 days a week and all are welcome, unlike NFL football stadiums open 10 days a year for 70,000 people with nothing better to do with $80.

Paul said...

...Also, anybody else see the Examiner report today? While the 49ers are trying to squeeze $90 mill out of Santa Clara, they still want $61 mill in improvements at Candlestick. Gavin Newsom said the request would leave the parks and recreation department broke. All this from a team that plays in a league with a multibillion-dollar TV deal and gives first-round draft picks (22-year-olds)$30 million bonuses..

Anonymous said...

I don't use them and I have small children also---who are more than capable of using their school libraries and the internet for all of their needs. Why should I have to pay for you and your families "entertainment" of going to libraries and playing---so lets put it on the ballot---and if the majority votes for it as a prudent investment during these economic challenging times than so be it--otherwise I don't wish to pay for your entertainment anymore than you wish to pay for mine--