Santa Clara Has Money Needed To Build Proposed $1B Stadium For 49ers
The 49ers' "turbulent drive for a new home in Silicon Valley is reaching the end zone," according to a front-page piece by Mike Rosenberg of the SAN JOSE MERCURY NEWS. The team and the city of Santa Clara "announced Friday that they have captured all the money needed to build a proposed $1 billion football stadium next to the Great America theme park -- the largest and final obstacle needed before construction can start." The funding deal was "spelled out in a development contract that caps two-and-a-half years of closed-door negotiations between city and team leaders." Goldman Sachs, U.S. Bank and Bank of America have "agreed to loan the city and team a combined $850 million to pay for the lion's share of the construction, which could start as soon as next year." But critics are "alarmed by a major shift in the funding plan that emerged Friday: The city will take on more than twice as much debt as was promised to voters, even though the 49ers vow they won't leave the city holding the bag." Revenues from the stadium, "such as ticket sales, stadium naming rights and the team's rent, are supposed to pay back most of the loans." The rest will "come from the NFL, which is expected to chip in $150 million; the city's redevelopment agency, which will contribute $40 million; and a local hotel tax expected to generate $35 million."
RISING PRICE TAG: The price of the 68,500-seat stadium "has jumped from $987 million to $1.02 billion, largely because of tweaks to stadium design, more refined construction estimates and inflation." 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 facility. 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." According to the deal, the city's "general budget can't be touched." In addition to loans, the 49ers will "contribute $150 million to building the stadium, largely through luxury suites they have already sold." The final $20M is "expected to come from various revenues expected before construction starts, such as season ticket sales." The two sides are "now so confident in their funding prospects that they are 'motivated' to start building the stadium as soon as mid-2012, with a chance it could be completed in 2014." The deal "calls for the 49ers to pay the city about $30 million per year to lease the city-owned land, a large increase from the previous estimate of $5 million." The financing deal is a "far cry from the one voters approved, when they were told the team and NFL would pay about half the cost and the city's stadium arm would pay about one-third" (SAN JOSE MERCURY NEWS, 12/3). Santa Clara Mayor Jamie Matthews said, "Not a dime of general fund money" will go toward the stadium. In S.F., Nanette Asimov in a front-page piece noted final approval "of a finance plan, development budget, stadium lease, ground lease and public safety agreement isn't expected until spring" (S.F. CHRONICLE, 12/3).
SOURCES FOR FINANCING ON 49ERS' NEW SANTA CLARA STADIUM
|Bank loan to the city's stadium authority|
|Bank loan to the 49ers, who in turn pass on to the city's stadium authority|
|49ers' payments, mostly from luxury suite sales|
|City's stadium authority payments, made from existing stadium revenues|