Monthly Archives: April 2007
Good session tonight. The 49ers seem to be improving on the PR front. Before I get into that, here’s what I got out of the council session.
- The current stadium estimate is $854 million, including $111 million in inflation costs associated with a 2010 construction start date.
- 81% of the project funding would come from the team, the NFL, and various advance stadium revenue sources (more on that later).
- 19% would come from $160 million in City-derived funding.
- That $160 million contribution does not include money for a garage that would have to be built to accommodate parking requirements for Cedar Fair, the company that currently owns and operates Great America.
- The contribution also does not include money for a potential relocation of the on-site power substation. The Merc pegs this cost at $20-30 million.
- The league’s G-3 loan program has been exhausted and it is not known if the 49ers will be able to utilize the “club seat waiver” facility used for other stadiums. The league and the team are still working on the source.
- The team would cover cost overruns.
- A stadium authority would be created to collect project revenues, own and operate the stadium.
- Some revenue would be captured for use in a stadium improvement fund, which would be utilized every 5-7 years.
What isn’t known is what the stadium authority actually is. Sure, it’s a quasi-public governing body, just as the Coliseum Authority or a mass transit joint-powers authority is. Beyond that, we’re getting into a gray area. When one resident asked if the stadium authority was really just an extension of the city (and as such the city would be liable for financing), 49ers CFO Larry MacNeil simply said that the project would not touch the city’s general fund.
Okay, but that doesn’t answer the question. Stadium authorities are sometimes created to pool resources from various jurisdictions, but that doesn’t appear to be the case here as the team would be dealing almost entirely with the city. If the authority is asked to issue bonds and the city owns the authority and the stadium, then it stands to reason that the city is ultimately responsible for a lot of the debt service. Honestly, it makes sense for the 49ers to ask the city to move in this direction since it would allow for access to lower interest and/or tax-free bonds. MacNeil was very careful not to specify which method of city funding would be required. One more interesting tidbit: the Authority would hire 69 full-time employees once the stadium is up and running.
Notice the fine print in the “Stadium Authority Project Funding” line item. There’s a ticket tax, naming and pouring rights, the usual suspects. But there’s also one other item that doesn’t look that familiar: Stadium builders licenses. Care to guess what those are?
The team predicts that almost 50,000 game attendees would travel by car and park in the nearby area, which has 32,500 parking spaces within 1.5 miles. The other 18,000 would travel via some mode of public transit.
While I can’t argue with the charter bus estimate, the light rail number is overly optimistic. If anything, I can see it used by people who want to park at a VTA Park-n-Ride station (Great Mall, Tamien, Evelyn) and want to avoid parking fees and hassles. Those people would be missing out on tailgating. Tailgating is much more integral to a football experience than any other sport, so I’m skeptical that many would willingly take this option. It doesn’t help that only a limited number of 49ers fans even have access to VTA light rail. It’s also not known if the VTA estimate contains Caltrain users who might transfer in Mountain View to get to the stadium. Caltrain doesn’t have a station within a 3 mile drive of the stadium. A transfer would be required via light rail, bus, or even Capitol Corridor.
The block of Tasman Drive immediately north of the stadium site would be closed on gameday to allow for safe pedestrian circulation between the convention center, light rail station, and the stadium. Several major intersections would have limited or no cross-traffic to funnel stadiumgoers to and from the venue more quickly. Additionally, nearby residential neighborhoods in both Santa Clara and Sunnyvale would have restricted access to prevent fans from parking there. This policy is already in place on one day per year: Independence Day. During the fireworks show, 101 turns into a parking lot.
As for available parking, the 49ers have already talked with several nearby office park landowners and businesses about using some of their spaces. The landowners would get the majority of the parking revenue, while the rest would go to the Authority via parking fees and the remaining revenue cut. Yahoo! bought a large swath of land located kitty corner from the nearby Hilton, and while I don’t think they’ll design their parking facility strictly with football parking revenue generation in mind, they may want to figure out ways to bring fans in to check out Yahoo! technologies in the nearby tech showcase center. On a related note, West Valley-Mission Chancellor Stan Arteberry endorsed the project, no doubt seeing dollar signs in potential parking revenue (Mission College is slightly under 1 mile southwest of the stadium site).
I’ll end tonight with one more table that shows the various costs and revenue sources. Keep in mind that the revenue projections shown are net of debt service. I’ll have more thoughts on these numbers tomorrow.
Update 11:30 AM – There were a few more observations I wanted to put into the original post but it was getting late and my brain was fried.
- Vice Mayor Kevin Moore suggested the possibility of building flexible space into the stadium that could be used for offices, retail, or even an annex for the Convention Center across the street.
- 49 officers would be required on game days for all manner of functions. Some would come from surrounding jurisdictions such as Sunnyvale and San Jose, possibly the Sheriff.
- When the parking and traffic diagram was shown, I couldn’t help but think of FedEx Field, which has a similar sprawling parking structure. What Santa Clara has over Landover, MD is a vastly superior freeway infrastructure.
- A better parallel may be Qualcomm Stadium in San Diego. The venerable “Murph” is in the middle of several freeways and a few major arterial roads. Tasman Drive has its equivalent down south in Friars Road, an east-west arterial that repeatedly gets clogged before and after home games.
- The team intends to have the CEQA process start in August or September, making the window for the council to make a decision on the project only 3-4 months.
- Santa Clara residents may have a shuttle available to them from an offsite parking lot only they can use.
- Debt service on the facility would run 25 years. The lease would be 30 years.
I plan to attend tonight’s Santa Clara City Council session, at which the 49ers will present the important details of their stadium plan. I didn’t originally plan to go but I’m curious about how well the 49ers make the sales pitch.
Coincidentally, the last time I attended a City Council session was when A’s President Mike Crowley traveled down here to talk up the A’s stadium proposal several years ago.
On Wednesday, the A’s rather quietly filed ” ‘an application to negotiate a development agreement,’ Fremont Economic Development Director Daren Fields said.” What Fremont mayor Bob Wasserman terms “a double, not a home run” is more like sacrifice bunt made to move a runner into scoring position. So far this season, the A’s have had only one player who has shown the ability to lay that bunt down. But I digress.
The A’s also dropped off $500K with the application. It falls short of what I’ve been looking for (the application, not the money), but it’s a start. The abrupt nature and timing of the application makes me wonder if there is something to my thought that the San Jose and Fremont development plans are somehow tied. There are plenty of factors in the Fremont deal alone that need to be addressed. An externality like San Jose would severely complicate matters. I’d like to think that the Fremont deal is completely standalone, but maybe it isn’t and Wolff is scrambling in light of the recent news in San Jose.
Speaking of San Jose, the shared stadium concept for the Spartans and Quakes has died as neither side could come to an agreement on revenue splits. After looking over the details of the deal, I’ve come to the conclusion that both sides were right not to budge.
From SJSU’s standpoint, Don Kassing had little desire to cede control over a large piece of property to a private party. While it’s true that SJSU would not have had to pay for any of the construction, the land itself has significant value despite its mostly deteriorating condition. On the other hand, Earthquakes Soccer, LLC was paying for construction of everything, all they wanted was a cheap land lease to keep overhead low.
The Quakes were willing to pay $1 million guaranteed per year, plus a split of revenue based on the events held. SJSU would get revenue from Spartan events. The Quakes would get revenue from Quakes games. The two parties would split revenue from other events such as concerts.
That $1 million offered per year is essentially a lease payment. If you’re the Quakes you think this is a good deal considering the circumstances, and especially in light of other stadium deals in which the team not only doesn’t pay for the stadium, but also doesn’t pay for anything else like a land lease. If the Quakes have to pay $6 million, that payment severely cuts into the split you were planning with SVS+E, the likely stadium operator. If you’re Kassing, you’re thinking that $1 million for the Quakes to lease several dozen acres of public/university land is not getting bang for the buck. That may sound like more of a philosophical stand than a hard numbers stand, but Kassing has every right to do it.
In the end the deal has to pencil out for both parties. It obviously didn’t in this case, so they both walked away. The Quakes are tied to San Jose if they want to finance the venue since the Edenvale property is the apparent key. There are other site possibilities, but land costs now have to be a concern.
It’s the second week of the season, which means it’s time for Forbes to release its list of MLB team valuations. The usual suspects (Yanks, Mets, BoSox, Dodgers, Cubs) lead the pack. Towards the bottom of the list, the A’s estimated value jumped 24% to $292 million. That compares to the league averages of 15% rise in value and $431 million.
In the meantime, the A’s payroll has gone up much more gradually, only 1.3% from 2005 to 2006 and 6.7% from 2006 to 2007. Before you start on that angry e-mail to Lew Wolff and Billy Beane about how they could’ve afforded Frank Thomas or, um, someone other desirable free agent, take a look at the following table:
The payroll cost as a function of revenue is the key indicator. That was driven down from well over 60% to just under 55%. The owners must’ve gotten the memo from Bud Selig to go with the program and keep that player cost at that comfortable 55% threshold. Should franchise value go up again next season, I would expect payroll to jump a proportional amount. If growth is flat, payroll should stay flat.
However, that player cost as a function of value is intriguing. It’s akin to home equity, and it will come handy when the time comes to borrow for Cisco Field. It’s likely that the media buzz around Cisco Field helped drive the rise in valuation.
The A’s ranked 24th on the list and were surrounded by familiar faces: Florida, Pittsburgh, Tampa Bay, Kansas City, Milwaukee, Minnesota, and Cincinnati. Of those teams, the Royals pulled in an astounding $32 million in revenue sharing last year. The Marlins made $43 million (EBITDA) in 2007. It just so happens that the state/local governments and the Marlins are $30 million apart ($60 million over 30 years) in their efforts to fund a new Miami-area ballpark. How about applying some of that profit to bridge the gap and gain some seriously positive PR in the process? Perhaps that’s too much for Jeff Loria and David Samson to be magnanimous.
That’s right, folks. There were over 20K present at Tuesday’s game, yours truly included. Most came prepared for the cold despite the blanket giveaway, and most stayed until the end. There has always been talk about Croix de Candlestick pin nights and high winds. Tuesday night gave that legend a run for its money.
Temperature at first pitch was 52 degrees, with a noticeable breeze and the sun setting through partly cloudy skies. By the third inning, that breeze turned into a steady 20 mph wind. I didn’t bring my portable weather station to verify it, but I figure the wind chill dipped the temperature another 3-5 degrees.
Funny thing is I remember nights like this in mid May. And late August. With the Warriors wiping the floor with the B-team Mavs next door, a lack of parking could have dissuaded some from attending the game. On the BART train home I heard one rider talk about how he had to park at Wal-Mart for a weekend game. Nevertheless I was pleasantly surprised by the turnout (which had a little something to do with the blankets). The BART bridge was packed as some Warriors fans left the blowout early.
I’ve touched on this briefly, but I have to ask again: How much does weather affect attendance? I can recall numerous occasions when friends who are casual A’s fans chose not to go simply because of the cold. I could be way off base, but I sense that it has a greater impact than some think.
One note about attendance: The main difference between this season’s figures and last season’s is the fact that the Yankees didn’t play here Opening Day as they did last season. The combination of a Yankees game and Opening Day effectively removed one date from pulling a sellout crowd. That normally represents a loss of 10,000 fans or more.
The Merc’s ruffling feathers at Glass R2D2 in their attempts to get the pols to release information about negotiations between San Jose and Lew Wolff. Barry Witt’s already gotten the crux of the story, what remains are – what else? – details. Mayor Chuck Reed would prefer to draft and release a report summarizing the discussions, while others want the MOU (memorandum of understanding) between the two parties and supporting documentation. In requesting the report, Reed cites the need for sensitivity while the parties are still in negotiation. The hot topic isn’t so much the stadium at this point as the rezoning-entitlements deal that Wolff is pursuing in the Edenvale neighborhood (South San Jose).
Certainly some of the Merc’s muckraking comes from the notion that they’re trying to hold Reed up to the standard he created for himself when, during last year’s mayoral campaign, he claimed to be the true plain-talking, “open government” candidate. The platform earned Reed a landslide victory, so Reed has to be careful to manage this situation carefully. The ramifications of a bad negotiation don’t stop with the Quakes/SJSU stadium, they extend to Reed’s plans for redevelopment in his old North San Jose stomping grounds as well.
Not to be ignored is SJSU, the entity that owns the land on which the new stadium will be built. Negotiations continue between them and the A’s on revenue sharing, enough that University President Don Kassing came off sounding less than optimistic:
“I don’t know if it’s going to come together,” Kassing said. “I say that not to be pessimistic, but I don’t know. It would consume 40 acres approximately, so we would provide a parcel of land – they put a commercial activity on that land and then make money.
“So we provide an opportunity for them to make money by having a parcel of land. We don’t donate it, it’s our land, belongs to the State of Calif. – San Jose State, and we want a return on that land, and so far we haven’t found it.”
I sense this is just some poker table bluster. Kassing has every right to make sure SJSU gets a fair deal especially when dealing with a private wheeler-dealer like Wolff. But there has to be a recognition of two things:
- The stadium may be the best chance for SJSU to get a modern facility, which should help its suddenly resurgent football program.
- MLK Library II became hugely successful as a result of a necessary partnership between SJSU and San Jose, so there is a precedent for getting a modern facility built that doesn’t jeopardize the integrity of the school. In fact, there’s already an example of what the Quakes are pursuing in Carson, where the AEG-operated Home Depot Center sits on the Cal State-Dominguez Hills campus.
Practically speaking, people are getting excited a little too early in the process. Even if the city didn’t disclose any details of their negotiations prior to Wolff’s presentation, the public’s still going to have every opportunity to scrutinize the project in its entirety, including the rezoning scheme and public benefits such as new soccer fields. I understand where all of the interested parties (including the Merc) are coming from. Still, everyone needs to chill.
There is one other quote from Kassing from the Spartan Daily article linked above:
“I can’t tell you everything because I don’t want to compromise the confidentiality of the conversations,” Kassing said in a press conference on April 3. “But the Earthquakes, through a really creative idea of Lew Wolff’s, would seek from the city the rezoning of a parcel of property … and change the zoning from commercial/industrial to residential. Apparently when you do that, the value goes way up… . That difference would be used to build the stadium.”
The difference would be used to build the stadium? That sounds familiar…