The San Francisco 49ers and the city of Santa Clara have taken a huge step forward in their attempts to get a new football stadium built for the 49ers down near Great America. Word got out last night that the 49ers and Santa Clara have reached an agreement with Goldman Sachs, U.S. Bank and Bank of America in which the three banks will loan the 49ers and the city $850 million to pay for much of the construction costs of the stadium.
The stadium will cost approximately $1.02 billion and will go up across the street from the 49ers current facilities on 4949 Centennial Boulevard in Santa Clara. The cost originally was approximately $987
billion million, but naturally that estimate has increased. Add in potential cost overruns and I suspect this $1.02 billion figure will not be the final number, either.
The city is taking on more of the debt load than previously anticipated, but the 49ers are paying a greater amount of rent to cover that debt load. If the 49ers go under the city is screwed, but given the financial state of the NFL, this seems like a safe bet for the city. As long as they have strong legal documents, they should not have any problems.
Most of the loans will be paid off using ticket sales, naming rights and the 49ers rent to the city of Santa Clara. That ticket sales will include the seat builder licenses (a.k.a. personal seat licenses). The rent is set to be $30 million per year. Additionally, the 49ers will be looking for upwards of $150 million from the NFL now that the new CBA is settled. There will also be $40 million from the Santa Clara redevelopment agency and $35 million from a local hotel tax.
Both sides are optimistic the stadium will become a large enough revenue source that they will be able to pay the loans off early:
But city and team leaders are betting the stadium will create so much profit that they will be able to pay off the loans in about 25 years using only money generated by the stadium. If their estimates don't pan out, the 49ers would be on the hook to pay the difference through higher rent payments to the city. The team would also fork over any extra construction costs that may come up. The city's general budget can't be touched, according to the deal.
On top of the $850 million in loans, the 49ers are expected to contribute $150 million primarily through suite sales already accomplished.
The two sides are hoping to get construction started in the middle of next year so that the stadium can open in time for the 2014 season. A more conservative approach would have construction start in early 2013 and have the stadium ready to open for the 2015 season.
If you live in or near Santa Clara and are curious about what will happen with all this, there will be three public meetings at the Santa Clara City Hall. The first is this Tuesday and will feature Goldman Sachs making a presentation to city officials. The second meeting is this coming Thursday, at which city officials will review stadium progress. The third meeting is the following Tuesday, at which the Santa Clara Stadium Authority will vote on legal relationships, a framework for stadium operations and a preliminary finance plan.
The 49ers have plenty of season tickets and PSLs to sell in order to pay this deal off, but it is a significant step in the right direction. I know some folks are a little pissy about the team living the city limits, but given how many teams play outside their respective named city, I don't think it's the end of the world.
It will be interesting however to see how the pricing structure is at the new stadium. Will the middle class and lower class fan (from a financial standpoint) be priced out? I'd like to hope not, but we'll have to wait and see.