49ers stadium pushback, Sharks add Citrix
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.
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).