2011 NFL Lockout, CBA roundup: G3 and stadium financing

Not much going on in CBA talks today. Giants owner John Mara was reportedly at today's sessions, which is a good step. He's one of the more moderate owners and has a good reputation with both the owners and the players. I suspect that news will be sketchy until Thursday or Friday.

One aspect of the negotiations that's not talked about much is the issue of stadium funding. Since 1999 the NFL has set aside money in a separate stadium fund. The money goes to owners to build new stadiums, or to renovate their existing stadiums. Traditionally the amount given for new stadiums is $150 million per team, with lesser amounts for renovations. 

This fund could be in jeopardy with a new CBA, which could put new stadiums for the Raiders, 49ers, and Chargers at risk.

The G3 fund was set up in 1999 specifically for stadium work. Money is generated in a couple of different ways. Each team gives a percentage of it's media revenue to the fund, and a percentage of the visiting team's club seat revenue go to the fund. Since the funds from club seats would otherwise go to the pool of money that the players split with the owners, the union has to approve the loans. The union also has to approve the fund itself as part of the CBA. 

Financing for stadiums can be extremely tricky and if a team is even 10% short, the stadium deal can fall through which can be a devastating blow to the financial well-being of the team. 

 

Some examples:

Gillette Stadium opened in 2002: The cost for the stadium at that time was $350 million (amazing how costs have risen in the past decade). The Patriots went from 28th in the league in revenue in 2001 to 4th in revenue by 2003

.In 2002 the Colts ranked 29th in the league in revenue in 2003. Their new stadium was opened in August of 2008 and that year they climbed to 8th in the league in revenues. 

Jerry Jones' new palace was completed in 2008. He was #1 in Forbes revenue rankings that year, with revenue of $269 million. In 2010 his revenue had climbed to a whopping $420 million, this despite an awful showing by the Cowboys. This can be directly attributed to his new stadium.

 

So what does this mean for the 49ers? The 49ers got $114 million in funding from the voters of Santa Clara, but the stadium is going to cost $1billion, and they need more. Goodell has been on the West Coast stumping for the 49ers, but the NFL needs to front up some cash.

Jed York:

"Obviously, a new stadium is vital to the 49ers and to this area," York said in an October interview with the Sacramento Bee. "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."    

 

Al Davis also needs a new stadium:

My biggest thing is, and we work on it day and night, we want a stadium," Davis said during a Jan. 18 news conference. "The best place for a stadium is where the Oakland Coliseum is right now. As to whether it will happen or not, we have to have somewhere in the future here, a new stadium."

 

Roger Goodell

"Since this new CBA was put in place (in 2006), it makes it even more challenging to get a stadium built, and then you add the economy on top of it," NFL commissioner Roger Goodell said last season. "It's a difficult environment to get stadiums built, and that is sort of the core -- the investment that the ownership is making to generate revenue."    

 

I don't know what will happen with a stadium revenue fund, though I have a hard time seeing a new CBA where money isn't allocated for a program since that's a sure way to drive up revenue and both players and the owners benefit from that. I do think that if either Al Davis or Jed York expect to see financing from the league they'll have to figure out a way to do a joint stadium like the Giants and Jets are doing--that stadium got $300 million in funding, which was a full 20% of the cost of that stadium. The other $1.3 billion got split up between the two teams. 

It's easier to come up with half of $1.3 billion than it is to come up with all of $1 billion (and you can guarantee that the cost will end up being more than that).

Forbes 2010 Rankings
Forbes 2009 Rankings
Forbes 2008 Rankings

The American Money Machine (Time article from 2004)
G3 info from allbusiness.com article from 2006

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