It’s all starting to get a little unseemly at this point.
The Merc’s Mike Rosenberg and Lisa Fernandez report that the City Santa Clara, in its haste to lock in the 49ers stadium deal, gave the team $4 million for the project. That’s a huge turnaround from what was intended a few weeks ago: the team would advance the City money to kick off the work. Back in February I wrote this as part of the Redevapocalypse post:
$40 million doesn’t seem like a big deal as it’s less then 5% of the project cost. It’s still a lot of money to raise and a big enough gap to throw a wrench into the works. There’s a chance that both parties could figure out a way to bridge the gap but it’s not going to happen immediately, and unless it’s the team pledging to cover it completely, any contractual details will require renewed scrutiny.
That renewed scrutiny amounted to two hours to review the new contract (PDF). There are some interesting nuggets in the document:
- The organization the 49ers have set up to take care of their side of the agreement is Forty Niners Stadium, LLC, shortened to Stadco throughout.
- The money is getting shifted around due to a bunch of predevelopment work being done by Stadco for the stadium project.
- An additional $1.6 million was transferred from the City to the Agency (a.k.a Stadium Authority per the agreement) to take care of development fees.
- Up to $40 million can be spent by Stadco with the promise that it will be covered by the Agency. Essentially this is a loan or advance per the terms. Interest is 8.5%.
- The work described is your garden variety utilities relocation and street reconfiguration stuff, as described in the final stadium project description.
Is it as bad as the Irwindale giveaway? No, because the 49ers – I mean Stadco – are actually doing work. Al Davis didn’t promise to do anything for Irwindale. Still, it looks really, really bad and really, really rushed to go about things this way. If the stadium never proceeds past this initial stage, the City will have spent a lot of money on infrastructure changes that will not be helpful for any replacement project.
newballpark.org 
dumbfounding….
Can anyone give the gist of why a football stadium project is much more expensive than a baseball stadium project? Is it the size?
@Briggs – A NFL stadium is twice as big, twice as tall, with twice the seats and twice the square footage. Naturally, it should be twice as expensive.
R.M.,
Any updates on Redevelopment? Is there now a chance that RDA’s will survive as is? Haven’t heard much out of Sacramento. All of this shuffling of funds/assets, you’d think the end was still near, and yet…
@Tony D. – It may not be decided this week! The two parties are in their corners right now as they prepare for Round 2 of the budget battle.
RM,
Thanks for the update. OT: looks like the Quakes landed 7Up and Farmers as sponsors. Should bode well for future/further A’s sponsorships in SJ (in my opinion).
Tony, where did you see the Quakes landed 7Up and Farmers?
Wow, talk about corporate welfare. I’m so glad I live in Sunnyvale instead of Santa Clara.
@Dan–not to answer for Tony but it was in SVBJ—relative to the ‘9ers–I will be the only one here who says–big deal—-this isn’t Al Davis and the Raiders—anybody who thinks that the ‘9ers wouldn’t repay the city if the deal went south needs to show me evidence of where the ‘9ers have been untrustworthy in everything they have done with SC—the valley used to make deals right and left based on handshakes…personally miss the good old days–
Here’s where you can find the Quakes sponsorship story:
http://www.bizjournals.com/sanjose/news/2011/03/22/earthquakes-sign-up-new-sponsors.html
In other team moving news the Anaheim city council has moved up their vote on issuing bonds to upgrade Honda Center to NBA standards. And by their mayors reaction, which was positively giddy, it’s already a done deal. Just one more nail in the coffin that is the Kings time in Sacramento.
http://www.ocregister.com/news/council-293235-kings-anaheim.html
@Dan–that’s sad on the Kings leaving Sac. I hate when teams leave a city, especially one that gave them good support like Sac did and the Raiders did before the move to LA. And you can say the same about the A’s.Sure they’ve had crappy drawing years, but also some solid drawing years in this tough 2 team market. For what the fans have been through with the ruined stadium and carpetbagging ownerships for 15 years, it’s amazing they’ve averaged 17k the last few years. Try 4-6k fans a game in the late 70’s.
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It is a great sign to see the City move forward on what the voters signed off for. All Santa Clara is doing is having the 49ers proceed and writing them an “IOU” because of the redevelopment mess with Jerry Brown.
The infrastructure improvements need to happen now as that is all Santa Clara is reality is paying for.
Santa Clara is on the hook for $333M as part of their new founded Stadium Authority. Not including infrastructure improvements they have agreed to that will total 114M in RDA funds that are being moved around.
ML and I disagree on this but I believe that 333M number is way low for 1 reason now.
Farmer’s Insurance recently signed a 30 year 700M naming rights deal in Los Angeles with potential to rise to 30 years 1B if two teams play in the stadium.
If Santa Clara can sell naming rights for “half” of what Los Angeles got that would be 350M dollars. Now Santa Clara has the entire $333M covered before they sell a single seat license, luxury suite, or any kind of advertising.
It has been “scrutinized” that any shortfall from the Stadium Authority would come from the City’s General Fund. But no one has pointed out that any “excess” from the Stadium Authority goes into the General Fund.
Therefore Santa Clara, after landing a naming rights deal half of what LA got in lucrative Silicon Valley and selling off all the seat licenses, luxury suites, and advertising to what is an extremely wealthy fan base will have an excess of about 75M or so.
That 75M or so will go straight to schools, libraries, police, fire-fighters and city services. This is why Santa Clara took the risk of running the Stadium Authority themselves. They saw a great opportunity to replenish their cash strapped General Fund without having to spend any of it.
All SC is spending is RDA funds that are about to vanish anyway, so why not try to get something back for City Services?
A City profiting off a new stadium deal? Has that happened ever before?
@ML- This 100% defeats your old post on the #s projections and that Santa Clara would fall short. I was in disagreement because I feel Silicon Valley has several companies who can do what Farmer’s did for LA but obviously not to the same level….I will say 700M is ridiculous and not the norm.
But 350M for naming rights to a new 49ers stadium in Silicon Valley will be the easy part…..Of course we need the NFL lockout to end or because of it you could end up being correct and this place may never get built.
@Sid – Are you kidding me? You might as well be quoting a press release. The Farmers deal’s present value is around $300-350 million, not $700 million. That may well take care of a substantial amount of applicable construction cost but it is not an indicator that Santa Clara will be able to get anything close to that. The 49ers (+ Raiders) will be competing with the two NY teams and Cowboys Stadium for the next megadeal, and the fact that the Santa Clara stadium won’t have a dome on it limits the marketing and event staging potential. If it’s both the 49ers and Raiders in SC, they shouldn’t have much trouble taking care of the debt service and giving money back to City in the form of increased revenues. But if it’s just the Niners, Santa Clara is putting itself in great risk.
Quick note: A $300 million naming rights deal is worth $150 million in present day value. Cisco’s $120 million deal is worth $60 million present day. If you’re a company looking to make a naming rights deal in the Bay Area, aren’t you going to look to Cisco as your benchmark? Even if Cisco’s deal changes to $200 million, why would another company pay a 50-75% premium over that? That’s just nuts.
@jk “Sure they’ve had crappy drawing years, but also some solid drawing years in this tough 2 team market.”
This statement is SO far off the mark and misleading it’s hard to believe it’s not intentional. To be clear, the A’s have had maybe 5 years where attendance was arguably decent. Not spectacular relative to the All-Star teams they were fielding and the WS appearances they were making, but decent. However, they lost massive sums of money in those years and they were not sustainable.
On the other hand, the A’s have had over 35 years where attendance was embarrassing, especially considering their overall success. How is it in any way justified to make a “they’ve had some good years, they’ve had some bad years” kind of statement which implies that the number of these years was equal?
“For what the fans have been through with the ruined stadium and carpetbagging ownerships for 15 years,”
PLEASE. I’ve yet to see any evidence whatsoever that “owner love” influenced attendance. There’s strong evidence it has not been a significant factor – just look at Walter Haas’ attendance in the years he wasn’t deficit spending and winning titles. And the A’s attendance was sub-par relative to performance in the years the Coli was considered state-of-the-art, or close to it.
“it’s amazing they’ve averaged 17k the last few years. Try 4-6k fans a game in the late 70′s.”
It’s not amazing, it’s embarrassing. Your counter-argument is that it used to be hideously embarrassing? And these two arguments together somehow add up to a good baseball market?
I’ll give Raider fans credit for what they’ve had to endure over the years. A’s fans, on the other hand, don’t appreciate how good they’ve had it.