Earlier this week HUNGRY HUNTER posted a Fanshot to a San Jose Mercury News article that reported the 49ers have apparently sold $138 million worth of luxury boxes for the new Santa Clara stadium. First off, if you're wondering how a team can sell luxury suits not yet built in a stadium for which there has been no shovels in the ground, it's pretty simply. Teams organize sales teams years in advance of a new stadium opening that focus primarily on the new stadium. I'm guessing most people know this, but I just wanted to be clear.
I'm curious to see who has actually bought the rights to these luxury boxes. The article says the majority of suite holders are individuals, but some companies are involved. What I'm wondering is how many of those individuals are part of companies and plan on using the suites for company-related business. The reason I wonder this is because of the nature of Silicon Valley. If these individuals are not buying on behalf of tech companies, that would indicate there is still a good chunk of money to be found in the Valley. Not that there wouldn't be money if Larry Ellison, the Google guys and others are the ones buying the suites.
The $138 million in sales brings the money likely to be included up to $251 million, which would be just over a quarter of the expected cost. That $251 million is broken up as follows:
Luxury Suite sales: $138 million
Santa Clara city commitments: $78 million
Local hotel commitments (through room rate increases): $35 million
It comes to a quarter of the cost due to the stadium price tag rising to somewhere between $950 million and $1 billion. The cost went up approximately $50 million due to some adjusted projections and design alterations. It shouldn't surprise anybody to see the stadium cost change again in the future with potential overruns down the road.
This is a solid step forward as it does show commitments and some level of confidence. At the same time I'd be curious to see what the suite contracts say in regards to when payment is due and how refunds would be accommodated in the event the stadium deal falls through.
While these are important first steps, it's safe to say the most significant steps forward will be naming rights, sale of personal seat licenses, and of course shovels actually hitting the dirt. I'll even take the ceremonial first shovel that Jed York or somebody else affiliated with the project will stick in the ground. I think a deal will get done, particularly once this labor dispute gets resolved. In the meantime I won't get my hopes up too high on that 2015 estimated first kickoff.