The NFL within three weeks could approve the financing for the San Francisco 49ers’ planned stadium in Santa Clara, Calif. — including providing up to $200 million in funding grants from the league — marking the strongest sign yet that California’s first new football stadium in almost half a century is as near to reality as it has ever been.
The banks leading the lending for the 49ers project sent preliminary information last week to other financial institutions describing the targeted $850 million loan as a bridge to a more complete financing that would occur during construction, which is expected to start this year. The guarantees promised by the team in the event of a default provide for the league to step in to sell the team and stadium, financial sources said.
The league has tentatively called a brief owners meeting for Feb. 2 in Indianapolis, three days before the Super Bowl, largely to address the 49ers stadium issue. The team’s bankers — Goldman Sachs, US Bank and Bank of America — are expected to attend.
The meeting is not set in stone and may not occur if the 49ers are not ready with their plan, which must be approved by owners and would be eligible to receive up to $200 million in stadium funding grants and loans from the league’s new venue-financing program. Any financing that is football-related must be approved by the league, as would any new lease.
The NFL and team declined to comment.
Under current plans, the stadium could open as soon as 2014. The banks plan to syndicate the $850 million loan the team needs to fund the stadium. Syndication involves cutting up a loan and selling its pieces to other financial institutions, thereby reducing the risk to the principal banks.
Financial sources said that while such syndication is in the works, whether it will be completed in time to meet the Feb. 2 deadline is unclear. One financial source said the three lead bankers have underwritten the deal, though, meaning that they would fund the entire loan between the three banks if syndication failed. “This financing is in place,” the source said. “No issues.”
A football source, however, said there were still hurdles needing to be cleared before Feb. 2, though the source declined to detail what those hurdles were.
The financing expires on Sept. 15, 2015, though the team expects to refinance it far earlier with the proceeds from suites, seat license and ticket sales. The team announced earlier this month it had commenced those sales, with the highest price for a seat license set at $80,000.
The current financing calls for an interest rate of 325 points over the London Interbank Offered Rate (LIBOR), a floating-rate index that stood at 0.58 percent last week. That means the interest rate, as of last week, was 3.83 percent, which translates to $32.6 million of annual interest payments. That amount does not reflect principal payments. The team’s deal with the city of Santa Clara also calls on a lease payment of about $30 million annually.
With almost no access to public financing, getting a new stadium built in California, whether in the Bay Area, Los Angeles or San Diego, has proved to be a massive problem for the NFL. After fruitless talks with San Francisco, where the 49ers play at Candlestick Park, the team has been engaged with the city of Santa Clara for the last 2 1/2 years to build next to a Great America theme park there. The city will put in a small slice of the overall $1 billion-and-growing price tag. Santa Clara’s redevelopment agency will contribute $40 million, and a hotel tax is projected to raise $35 million.
There also has been talk about the Oakland Raiders sharing the stadium, though the team’s owner, Mark Davis, recently talked about relocating back to Los Angeles.
Candlestick Park opened in 1960, while the Raiders’ O.co Coliseum debuted in 1966. San Diego’s Qualcomm Stadium is the most recent NFL stadium in California to have been built, opening in 1967.