NFL, 49ers bring in the big guns for stadium financing

Congratulations are in order to the 49ers and the City of Santa Clara for lining up all of the necessary financing for their now-$1.02 billion Santa Clara stadium. The Merc’s Mike Rosenberg reports that a consortium of lenders including Bank of America, US Bank, and Goldman Sachs will be providing the bulk of the financing, $850 million. The rest will come from the NFL and the City’s redevelopment funds.

It all sounds promising, but forgive me for being skeptical about this:

Essentially, the two sides are betting that the stadium will create so much profit that they will be able to pay off the loans over about 25 years. If that money doesn’t materialize, the 49ers are on the hook to pay the difference in higher rent payments to the city.

I’d have to thoroughly read the terms of the 75-page agreement to know how iron-clad that is. A rough read right now shows that the way it’s set up, the City-run, quasi-governmental Stadium Authority will lease the stadium to “Stadco”, an entity created by the 49ers to manage the stadium. Stadco will then sublease the stadium to the team itself. I suppose the point of this is to provide some amount of insulation for both the City and 49ers. Here’s some relevant language from Section 8.6:

The recourse of any lender of any construction or permanent financing obtained by Stadco shall be limited so that no City, Agency or Stadium Authority funds, assets, or operating revenues or City enterprise funds will be used as collateral. For other sources of Stadco funds described in the Final Financing Plan that are not loans, Stadco shall provide to the Stadium Authority for its review and approval, evidence, reasonably satisfactory to the Stadium Authority, that such funds shall be available as of the Close of Escrow to pay Development Costs.

This seems to be good for the City from the standpoint of protecting it upfront, as Stadco is responsible for rounding up the financing. As long as the 49ers can meet their revenue projections to pay off the $60 million or so in debt service annually, plus other stadium costs. Of course, that’s been my question from the beginning. At this point I don’t think Santa Clara will be stuck in a position like Oakland/Alameda County or Hamilton County in Ohio, simply because the broader Valley economy should remain strong. Nevertheless, Section 19 covers a default situation by either Stadco or the Stadium Authority. If the 49ers can’t come up with the dough, it’ll be a sign that the team is in such financial straits that the team would descend into bankruptcy, and in that case the team would have to be sold and the courts will decide what to do next (see: Frank McCourt).

28 thoughts on “NFL, 49ers bring in the big guns for stadium financing

  1. By the way RM, any possible Raiders angle to all the profit this stadium is supposed to produce? 8-10 home games, plus a handful of other events, wouldn’t seem to cut it (would it?).

  2. Um, so if they have the financing lined up, which from this it appears they do… is that it? Are they ready to go? If so all I can say is, “holy shit that was fast!” I guess congrats are in order.

  3. Frankly this also seems to be bad news for the Raiders to an extent. They’re no longer needed for the SC stadium to be completed which means they’ve just lost any leverage they had with the Niners. Suddenly they seem to be a bigger LA move target than they were yesterday.

  4. has there been any news about a company buying the naming rights?

    some of the more recent stadiums built over the past decade and or the most expensive naming rights are.

    ne-15 years 120 million for gillette field
    phi-21 years 140 million for lincon financial field
    pit-20 years 57 million for heinz field
    sea-15 years 75 million for qwest field, now century link field
    indy-20 years 122 million for lucus oil stadium
    car-20 years for 140 million for bank of america stadium
    nyj/nyg-25 years 400 million for metlife stadium

    the rumored farmers field stadium in downtown la would be 30 years for 700 million.

    unlike the a’s potential cisco partnership, surprised the niners haven’t had a company step up yet and get the naming rights for the new stadium.

  5. Way OT (but on topic for this blogs mission): looks like #$%%@ Stand for San Francisco (masquerading as Stand for SJ) has sued the city of SJ over the proposed discounted land sales and EIR. What a bunch of @#$% morons! You know where that group can rot. Since two EIR’s were completed for Diridon and the options to sell at a “discount” aren’t subject to vote or against the law/Muni code, the lawsuit should quickly make its way to the round file. Simply put: NO CASE!

  6. Tony what do you expect. The Giants want the A’s gone from the Bay Area. They’re going to do everything they can to make sure it happens.

  7. You’re right Dan. Hopefully MLB puts an end to this nonsense asap. Read an SI article about the lawsuit: Wolff appears to be taking it in stride, so I feel better about this already.

  8. Again, further confirmation that the Raiders are Los Angeles bound. Remember, the NFL was only going to help build this stadium if both teams were involved, and now its announced they are proceeding without Raider involvement.

    Seems that with the death of Al Davis, the NFL will be more amenable to them being the NFL team in LA.

  9. raiders are likely moving in with the niners. chargers are not getting any new venue in sd so they’ll likely be a candidate to move up to la. does the nfl really want to potentially have two teams that play in the same division sharing a stadium, that’s a scheduling nightmare.

    with teams like the rams, jags, and even the vikings have issues with their current location, i think there is as good a chance of them moving to la as there is the raiders.

  10. Once Bud talks to the Giants, he’s probably going to tell them to knock it off.

  11. http://sportsillustrated.cnn.com/2011/baseball/mlb/wires/12/02/2010.ap.bba.athletics.territorial.rights.3rd.ld.writethru.0972/index.html#ixzz1fRpbfluV

    Simply i don’t get the part of the land deal, their complaining their was no city vote?, it’s nice to see there really paying attention to what happened. The A’s and city only came to an agreement that the A’s could have an option buy the land and if they do choose so, the deal would then go to a city vote.

    So their complaining that there is no city vote for something that there will be a city vote, yay let’s waste the courts time with that lawsuit??

    Also poor job by whoever wrote the article to not mention there would be a vote then, I would say it should be pointed out to the writer, but I don’t see anyone take credit of writing this article?

  12. Letsgoa’s, Only way the Raider were moving into Santa Clara was if the NFL forced it, which they don’t have to anymore. The Niners and SC don’t want the Raiders and their fans in Santa Clara. Which means the Raiders are SOL. They either need to make a stadium happen in Oakland, which is unlikely, or they move to LA. The Chargers meanwhile are still trying in SD and still think they have a chance near the waterfront. The Raiders are out of options if the Niners don’t want them involved.

    • Letsgoa’s, Only way the Raider were moving into Santa Clara was if the NFL forced it, which they don’t have to anymore. The Niners and SC don’t want the Raiders and their fans in Santa Clara. Which means the Raiders are SOL. They either need to make a stadium happen in Oakland, which is unlikely, or they move to LA. The Chargers meanwhile are still trying in SD and still think they have a chance near the waterfront. The Raiders are out of options if the Niners don’t want them involved.

      Actually Dan, the Raiders and Niners front offices enjoy great relations and are probably inclined to work out a deal on the stadium. It’s the vast majority of both fan bases that despise each other; hence Niner fans don’t want the Raiders in SC. I’m sure the city of SC also want the Raiders as well ($$$).
      Alas, I don’t know what to think anymore. But I’m having a hard time believing a deal in Oakland is realistic for the Raiders (just my opinion). IMHO it’s looking like SC or LA for my team.

  13. Janie McCauley wrote the AP piece on Stand for SF. As per Yahoo sports.

  14. “SC don’t want the Raiders and their fans in Santa Clara” Wow, that reminds me of this, http://www.youtube.com/watch?v=yggQ3HbO0Wg Anyways, ignorant comment. Oakland Raider fans are the same as 49er fans, they come from all walks of life. I’m of the opinion that they stay in the Town, especially if the A’s bolt.

  15. This is great news for a few reasons:

    1. The fact those banks and investment firms in this day and age post great recession are putting the money upfront tells you this is for real.

    2. The fact the 49ers sold 173M in luxury suites without corporations and SBLs tells you the banks are going to “hedge their bets”…..That # is higher by now with corporations in the mix. No banks or investment firms are giving loans for anything without knowing they are going to make $$ of it.

    3. #2 with SBLs going to sale next month with the 49ers having a “budding dynasty” under Jim Harbaugh plus the popularity of the NFL gave these firms the confidence this can be successful.

    3. Granted Santa Clara is taking more a risk but the 49ers have agree to pay a 30M a year lease payment if things fall through. That is about the debt service the Stadium Authority would pay anyways if thing fell thru. But the way things look that is far from a reality considering if 200M roughly in suites sold without corporations, SBLs and season tickets will be an easy sell.

    @ML- Frank McCourt is not a valid comparison. I see that you think if things go wrong it would be a similar situation so I understand that but in reality MLB and the NFL are light years apart in comparison.

    I know you are a “Cowgirls” fan and all (I say that in fun of course….Your Cowboys are a loss on our 9-2 record..ha!) but the 49ers as a organization will be OK compared to the Dodgers because the Yorks will not spend their $$ on personal things like the McCourts did because they have the $$ to back their ownership.

    BTW…The Raiders will join in very soon that is coming to a reality. LA is not even close in financing or anything of the nature. They now will see that the Santa Clara is far closer and “one in the hand is worth two in the bush”.

    As for naming rights….Santa Clara hired a 3rd party company to negotiate terms with several Silicon Valley companies. If that was not close to reality these banks/investment firms would not give loans out for this otherwise.

    I am ashamed of Stand for San Jose for their lawsuit against San Jose but I am proud to be a 49ers fan to see them get the stadium they deserve….Raider fans rejoice too, this guarantees both Bay Area team stay for years to come.

  16. stay in oakland and do what, continue to play at the coliseum? somehow tear down the baseball part of the coliseum structure and build a mirrow image almost of mt davis? certainly they’re not gonna get any new stadium built in oakland.

    imo it’s still gonna be the niners and raiders joining forces in santa clara. maybe it won’t be 50/50 and raiders maybe would pay rent and possibly after a 5 year run at the venue, they’ll start thinking about their long term home. granted if la does get two sports teams eventually with one not being the raiders, the raiders org is basically stuck in the bay area and probably will somehow work out an agreement with the niners in sharing the stadium full time unless they themselves wanna build a new stadium themselves without public money somewhere else in the bay area.

  17. @eb- Why would the Raiders play at the Coliseum with a new stadium coming up 35 miles south?

    The Raiders will sign a 10 year lease with SC and then in the meanwhile have the Coliseum demolished with the A’s gone and build a new stadium in Oakland for the 2025 season.

    The new CBA will be up in 2020 and the Raiders can ask for a credit at that point. In the meanwhile the NFL has stated is so many words that only credit will be granted for a Bay Area stadium in the current 10 year agreement.

    Going to SC guarantees they will not move to LA ever. LA is a big risk that the Raiders nor any NFL team wants to take. SC is now a reality…..stay in the Bay Area for 10 years with the 49ers and work on stadium solution with Oakland in the meanwhile.

    That makes sense because with the Raiders in SC for 10 years it puts the onus on Oakland to get a new stadium built by 2025 to bring them back. With the Raiders staying in the market in SC it gives Oakland a fair shot.

    Lets face it…..SC is now….Oakland is a big “maybe” right now. By going to SC and the A’s leaving to San Jose, Oakland can truly change the face of the Coliseum site for the long run.

  18. How is LA a big risk?
    The Raiders are at the bottom of the NFL’s franchise valuations and have had more games blacked out than sold out since returning to Oakland.
    Remember, Al Davis said multiple times he never wanted to leave in LA in the first place. He only left because the NFL kept changing the terms of the new Hollywood Park stadium deal in 1995.

  19. “Remember, Al Davis said multiple times he never wanted to leave in LA in the first place.” Funny enough, he said the same thing about Oakland.

  20. @Char- LA is a big risk for these reasons….this is why no team has signed on despite Farmers Field and the Industry site being known for almost 2 years now.

    1. In order for a team to secure financing for Farmers Field or the Industry site they would have to move to the Coliseum or the Rose Bowl for 3-4 years so that they can sell luxury suites, SBLs, and sponsorships. What if financing falls thru? The NFL will be stuck in the same situation they were with the Rams and Raiders years ago. That is a pretty “big risk” right there.

    2. Each stadium plan requires a piece of ownership of any team who moves there. These guys want to buy a piece of the team at the price it is at now then after the team moves and increases in value then reap the profits….The NFL has stated they will not let this happen.

    3. In the Raiders case, why alienate their fan base in the East Bay again to what avail? Since the NFL shares revenue across the board the Raiders can play in SC and make about the same amount of $$ they would in LA because of the NFL system.

    4. LA has shown to be a bad NFL football market in the past. The Rams had LA to themselves are were real good in the 70s and 80s and still had blackouts during seasons they were good. The Raiders LA fan base was alienated years ago and now to tap into them again after losing a generation of fans is a “big risk”.

    5. Five teams (Dodgers, Lakers, Kings, Clippers, and USC) all play near or in Downtown LA. There is a saturation factor there that people seem to ignore. Granted the NFL is a different sport and all but the corporations in the area have so many options.

    The Raiders in Oakland are just now making up for the lost generation of fans from 1982-1994. It took 15-16 years and getting control of ticket sales to recover the fan base. Going back to LA would be novel at first but what happens once the team starts losing??? The NFL will be screwed with blackouts once again.

    I just think the risks involved for the Raiders moving back to LA are too much. Now that SC is a reality they will jump in on this for the time being.

    I say tear down the Coliseum in Oakland re-build it once the A’s leave after 2014 and do a 10 year lease with the 49ers with exit options if they get their stadium. It is the smart move for the Raiders.

  21. Sid, just a point of interest… Roski is no longer asking for a discounted portion of a team to move to his stadium. That was his salvo firing back at AEG after they announced their most recent info about Farmers Field.

  22. Sid: The issue isn’t whether the 49ers & Santa Clara obtained financial backer for the stadium. The enormous challenge is going to be how to repay the debt service on an annual basis. If you read the proposed DDA, the alleged $30 million in annual rent payments from the 49ers is not a guarantee. Its only an estimated value based on an unknow quantity. The revenue streams you’ve mentioned have been tried before with other municipally owned stadiums and each one has failed at the objective in providing sufficient cash flows to pay for the stadium’s expenses. In addition, the $850 million stadium debt from all three lenders is now being shifted to the Santa Clara Stadium Authority. The supposed partnership was between this newly created agency and an entity called “San Francisco 49ers Stadium, LLC,” which is based in Delaware. Frankly, this transaction doesn’t bode well for Santa Clara taxpayers. When the stadium begins to lose money (as has been the case with many other newly constructed NFL stadiums) it turns into the public’s responsibility to keep the doors unlocked. This has taxpayer bailout written all over it.

    • Sid: The issue isn’t whether the 49ers & Santa Clara obtained financial backer for the stadium. The enormous challenge is going to be how to repay the debt service on an annual basis. If you read the proposed DDA, the alleged $30 million in annual rent payments from the 49ers is not a guarantee. Its only an estimated value based on an unknow quantity. The revenue streams you’ve mentioned have been tried before with other municipally owned stadiums and each one has failed at the objective in providing sufficient cash flows to pay for the stadium’s expenses. In addition, the $850 million stadium debt from all three lenders is now being shifted to the Santa Clara Stadium Authority. The supposed partnership was between this newly created agency and an entity called “San Francisco 49ers Stadium, LLC,” which is based in Delaware. Frankly, this transaction doesn’t bode well for Santa Clara taxpayers. When the stadium begins to lose money (as has been the case with many other newly constructed NFL stadiums) it turns into the public’s responsibility to keep the doors unlocked. This has taxpayer bailout written all over it.

      So perhaps the Raiders will indeed be playing in SC as well (need $$$…).

  23. @LosweRowen- From the “naked eye” it would seem Santa Clara took on a lot more debt with the loans but I did some math and it actually makes sense.

    By taking on the 850M directly into the stadium authority the 49ers are the insurance policy just in case the debt service gets to high by paying the difference in lease payments.

    Look at the projected revenue streams and you will see this works out

    Note: If 175M in luxury suites sold to individuals and corporations are now in the mix that tells you the 49ers fans indeed have money to spend on SBLs and season tickets. That is a pretty clear cut sign.

    The #s:

    1. Stadium Builder Licenses- If New York sold them for 1k-20k during the recession we should assume a 7k average on the low end and a 12k average on the high end. One can assume as well that 35,000 seats or about half of the total seats will sell with a SBL tagged to it if luxury suites sold because SBLs are far cheaper.
    Low End: 7k x 35,000= 245M
    High End: 12k x 35,000= 420M

    2. Naming rights- No way the bank loan out 850M without this being in the works. New York went for 400-450M and LA is the way high end at 700M. I say assume 300M as being a decent projection.
    Total: 300M

    3. 49ers lease payments- By paying 30M a year and making up the difference in debt service it protects Santa Clara’s General Fund because the 49ers have to make up the difference themselves. Otherwise, under the old agreement Santa Clara would have to make up any shortfalls from their 330M from the General Fund.
    30M x 25 years= 750M…..Plus any short fall from debt service. The 49ers if this fails could be making 50M-60M lease payments, they are the ones who in the long run could bleed through the nose while stadium authority holds the debt they do not pay the debt service difference if the revenues fall short.

    4. Corporate sponsorships- 25M-100M, not sure how they would sell these and what it would cost exactly.

    Therefore if everything sells on the “low end” you have:

    $245M (SBLs)+300M (Naming rights)+750M (49ers lease payments over 25 years)= 1.295 billion dollars.

    This is “low end” math, the 49ers in reality are taking the risk because although the loaned money sits with the stadium authority any shortfall is on the team. That was the “trade off” the 49ers made with the city of Santa Clara.

    From Santa Clara’s point of view, the loans mean nothing if the 49ers are the ones making up the difference on debt service if it comes short.

    In conclusion, it may seem bad on the surface but in reality Santa Clara took on the debt but the 49ers in turn have taken the year to year risk of paying the difference from debt service and revenues themselves. Santa Clara has “fire-walled” their General Fund in what is actually a more effective manner than before….The trade-off was taking the loans directly.

    Interesting way of doing it……

  24. with the latest news, seems like the majority of bay area columnits who’ve commented about the stadium deal in santa clara are praising jed and how he’s gotten this deal done when nobody thought it’d happen especially with his parent’s mishandling of everything associated with the niners both on and off the field. the same can’t be said about wolff wanting to move the team and actually getting very close other than the green light from mlb due to the tr issue to getting a new downtown stadium built in sj.

    but other than purdy, slusser, townsend, and MAYBE steward from “bang”, the thought from the media here what wolff is doing is wrong and the a’s should remain in the city of oakland. really is there a difference between what both the niners and a’s want at this time? they’re currently playing in cities that have really realistic land to build a stadium and forget about working with the politicians on a billion dollar project that a new stadium built anywhere in the bay area would cost. yet when it’s the niners who want to move to the south bay and i’m guessing getting that south bay money to help pay for a new stadium is something they’re looking at, it’s a good thing. woff is trying to do the same thing moving the a’s to sj and he’s projected as the bad guy in all of this.

  25. oh yeah go niners! 2011 nfc western division champs, FINALLY.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s