49ers stadium pushback, Sharks add Citrix
- 10.20.10, 12:26
- 59 Comments
Hot from the Merc’s Howard Mintz is word that the 49ers stadium in Santa Clara may be pushed back a year or more, according team president Jed York. The #1 issue being cited is the uncertainty regarding the NFL’s labor situation (the CBA ends after this season).
York remains confident that the team will be able to secure financing for the project, which calls for a new 68,500-seat stadium to be built on a parking lot adjacent to Great America theme park. Santa Clara voters in June approved the stadium deal, which includes a package of $114 million in public contributions and hundreds of millions of dollars that would be secured through stadium revenues, from luxury boxes to naming rights.
But a large chunk of the nearly $1 billion cost has always been linked to obtaining financing, which some sports economists have said could be difficult in today’s economic climate. The 49ers have retained the investment firm Goldman Sachs to secure lenders willing to finance the project.
We’ve been sounding the horn on this since the beginning, so this is no surprise. In the end, it doesn’t really come down to the 49ers. It comes down to the Raiders. Are the Raiders willing to be tenants of the Niners? And if so, for how long? Those are the questions that need to be answered before anyone on the outside digs into their pockets.
Update 3:00 PM: A Q&A with SacBee’s Matt Barrows and York sheds a little more light on the situation.
(Matt Barrows): When you say, “lynchpin” are you talking about knowing that the 2011 season will occur uninterrupted or securing a loan from the NFL?
JY: Well, I think there’s a combination. Obviously, you have the G3 program of $150 million coming from the league. That fund has obviously been tapped, and there’s nothing there to replace it other than a club seat waiver, which is not as efficient as a G3 financing. Absent a new labor deal that addresses the economic realties of the NFL today, I think it’s going to be very difficult to get that piece.
MB: Do you have any better assurance today that a G3 program or similar program will be part of a new labor deal?
JY: That’s a goal for the NFL. That’s a goal for everyone involved – that we continue to invest in our stadiums, whether that’s building new stadiums or renovating stadiums that already exist. And that’s certainly something the NFL is working on, trying to make sure that’s part of the new labor deal. Obviously, a new stadium is vital to the 49ers and to this area. But without a CBA that adequately recognizes the costs of a new stadium, the capital expenses, it’s going to be very difficult for us to move forward and obtain that financing in the second and third quarter of 2011 absent a big piece of the puzzle.
This is a major issue for the NFL, as the league and the players’ association are far apart on this. The current CBA essentially provides 60% of revenue to players. However, that 60% does not include club seat revenue. The players want a piece of this, but the league is refusing because the G3 program and any future stadium lending initiative is expected to use club seat revenue as one stream to secure the loans. It’s unclear how the two sides can come to a reasonable compromise, since plenty of premium seat revenue for recently built stadiums will have to be grandfathered into the agreement. Yet it’s also hard to see the NFL going beyond the 60% high water mark for regular revenue distributions to players, and that may be the best concession the league can make. This has gotten even more complicated because in the past the union has pledged part of its 60% share to help fund G3. There’s also the matter of the rich franchises (Dallas, Washington, New England, both New York teams) wanting to keep more of their locally generated money. The two sides have historically been better partners (league owners as well) than their counterparts in the other three leagues, but there are limits to how accommodating either side will be.
On the other side of SJC, HP Pavilion have entered sponsorship deal with Citrix which will get the company’s name and logo on the outside of all of the arena’s luxury suites, concierge desks, and some arena walls. The deal is worth $150,000 a year, plus Citrix is ponying up for its own suite. The article (premium subscription required) by SJ/SV Business Journal’s Eli Segall, notes that
The deal, a first for the arena, is part of a growing trend of targeted sports marketing and an indication that athletic sponsorships may be on the rise this year, as analysts have predicted.
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But Citrix is not aiming its logo at the masses. Instead, the company is targeting pockets of the arena where corporate entertainment is taking place, and where executives who might buy Citrix products might see its brand.
It makes sense for Citrix to do this, considering the number of different products it has and the local companies it often has to compete with (Cisco, VMWare to name two).
@tony d
blue moon? take that coors crap out of here…..
so many better beers that are along the same lines and made by people other than coors.
So…LA 49ers, here we come?
I mean, the Santa Clara deal is pretty much doomed to failure. The Yorks and San Francisco will NOT work together. Ever. Any deal with Al Davis is similarly doomed to failure. They can’t stay in Candlestick forever, and there are THREE people who want to bring NFL teams to LA (Ed Roski, Casey Wasserman (who is good friends with the Yorks), and Magic Johnson). The first two have all got private funding.
Am I the only one who sees the writing on the wall?
i don’t see how the niners or raiders would leave the bay area to move to la. if by somehow one of these teams leave, you think it’s gonna be easier for the left over to get a new stadium? imo the nfl wants both teams here and for both teams to help build and share a new stadium built somewhere be it santa clara or oakland.
if there are teams looking to move to la, they would be the chargers which are already in socal and need a new stadium themselves or the jaguars who are having a tough time drawing any fans in jacksonville. the vikings are another team that needs a new stadium but i doubt they’ll move away from min. everybody else’s stadium situation is just like it is in mlb, they’re playing in new stadiums. there are whispers that the dolphins and panthers whos stadiums were built in the near the beginning of the stadium craze of newly build ones the past two decades want a new venue as they’re “new” stadiums were clearly not up to snub with the newer ones built just in the past decade and especially in the past half decade with dal, indy, arz, nyj/nyg building these sparkling new palaces. sort of how the chisox in mlb had to completely refurbish us cell a few years back just like in the case of the nfl teams i mentioned above they built their stadiums during the early mlb park craze and when these newer parks built in the late 90s and into the 2000s popped up, us cell was clearly behind the times compared to these newer venues. dolphins have upgraded their stadium a bit and probably will do so more when the marlins move to their new baseball only park in 2012. car? probably will do the same and upgrade the venue rather than just a brand new stadium.
@ML- I did read your “model” very thoroughly and your #s I think are underestimated much too far.
The Raiders had their PSLs sold for 10 years and their fans base isn’t even as close to as affluent as the 49ers fan base. The 49ers are going to offer “lifetime rights” for their SBLs. Big differences when you compare the two.
If the $330 M was “risky” as you say then why would the Santa Clara City Council take this piece upon themselves to get this done?
You don’t think the city of Santa Clara ran several scenarios like you did to see what the possibilities were? Also you don’t think they gauged the interests of local corporations and their possible support on this? Several of which are in the city of Santa Clara themselves.
The City of Santa Clara could of easily avoid a City run Stadium Authority and drop this on the 49ers laps but they know the city will make $$ on this for their broke general fund. Hence why they are assuming the risk if there is a shortfall.
Dallas and New York are bad examples for naming rights for one reason…Their old stadiums never had names on them either. Cowboys Stadium and Giants Stadium ring a bell?
Neither city has the corporate base in the general area. NY does have a lot financial companies in their area but they have been hit hard from the recession and only the Mets have a name on a stadium/arena in the area. While Dallas is a popular spot for branches and not corporate HQs like Silicon Valley is. Dallas only has American Airlines Arena while the Rangers/Cowboys do not have names.
In fact there is further evidence of the support of Bay Area corporations as even the 49ers and Raiders stadiums had names (Monster, 3Com, Network Associates, McAfee) once upon a time and those places are dumps compared to NY and Dallas’ old stadiums.
There are so many businesses and affluent fans the financing outside of the NFL’s $150 million is not really the problem.
The NFL is the real problem to get this done and unless they get their act together on a new CBA all stadium ideas will have to wait. In the 49ers case the more time it takes the better since the economy should show some improvement as time goes on.
Speaking of those Raidas, how bout that game yesterday? 59-14!! WTF??? I was running around Sunday and finally got to settle down and watch the game early 2nd quarter, and it was already 31-0 Raiders. Had to do a double take on the score. We always find ways to blow it at Mile High, but felt pretty good that this one was in the bag.Boy, did they miss Mc Fadden. 16 carries for 165, and 3 TD’s WOW!!!! The 49ers being 1-5 makes up for the Giant’s winning the pennant..
Um, the 49ers are 1-6. Go Rangers!!
@Sid – If you think I underestimated figures, please show me where. I provided two scenarios, one in which the 49ers sell out SBL’s, and another where they come up short. I did it to illustrate the value of a shortfall, and the inherent risk that lay within. The projections for non-SBL revenue streams come straight out of the 49ers’ presentation. I didn’t make them up.
The problem with SBL’s and PSL’s is always a matter of demand. The Raiders and Oak/AC gambled that demand for the team coming back would be high enough to fund $200 million in renovations via PSL sales. Both lost big time. The 49ers, who used to have a long waiting list for season tickets, are also gambling on high demand to sell SBL’s. However, that waiting list is practically gone, and the SBL’s in conjunction with higher ticket prices will push many fans to balk, especially if they’re priced similar to what the Giants/Jets/Cowboys are paying. The continued on-field malaise only makes things worse. While there will be plenty of corporate types to invest in suites and club seats, SBL’s will also hit non-corporate interests. City/Team both need lots of SBL sales to pay off the principal upfront. If that doesn’t materialize as it should, that’s more debt service for the Stadium Authority, and thus the city. So to dismiss the risk based solely on general “affluence” is not only ridiculous, it’s changing the subject.
The City of Santa Clara was sold on a particular outcome. It would be one thing if they limited their exposure to $100 million in RDA funds and didn’t create a city-owned Stadium Authority. That would’ve capped the risk. Now it’s a case of a city of barely 100k population carrying up to $440 million in loans and bonds. Could the City make money? Yes, if everything fell into place and the Raiders came to town. But the real money is the long tail of redevelopment, as City wants to create a full entertainment district in the area.
The stadia in Arlington and The Meadowlands have no naming rights for one simple reason: money. Both operators want long deals, 30-40 years, for massive coin, and they haven’t gotten it yet. If they settle for a shorter term or a lower annual payment, there’s no going back. Whoever gets the first deal for those respective venues pops the cherry. Everything else after that is tainted. So it makes sense to hold out for the best deal possible. Unfortunately, that means someone else (the public or the team) carries the risk. In Santa Clara’s case, it’s Santa Clara. None of that has to do with previous stadia having or not having naming rights deals in place. Dallas doesn’t have corporate interest? DFW has 24 Fortune 500 companies, including Exxon Mobil (#2) and AT&T, who just moved from San Antonio to Dallas a couple years ago.
All the naming rights deals you cited were short term and cheap. Easy to do. Committing to 30-40 years for $300 million is several orders of magnitude more difficult, especially for companies who haven’t even been around that long.
While the CBA is a factor, it also makes for a convenient excuse. It’s not like a lockout will last longer than one season. By the time it ends, the 49ers will still be at least 2.5 years from opening the stadium in 2014.
Somebody should poll 49er season ticketholders about how much they are budgeting for upcoming PSLs. Between mortgages, rent, car payments, etc etc etc, I’ll bet PSLs don’t even show up on their expense lists. And many will just start watching on TV rather than plunk down big cash for the obviously unnecessary expense of PSLs.
Is Santa Clara really on the hook for the entire $430 mill? Voters were led to believe it’s just $100 mill. Glad I don’t own a home in Santa Clara.
FWIW, the Meadowlands people were negotiating a naming rights deal with an insurance company, but it turned out the company had ties to Nazi Germany. Oops.