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Volume 20 No. 42
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Niners estimate seat licenses will bring in $500M

The San Francisco 49ers project that they could raise half a billion dollars in seat licenses at their new stadium in Santa Clara, an amount that would be the second-most of any U.S. team, behind only the Dallas Cowboys, said sources familiar with the team’s meeting with bankers earlier this month.

In fact, the team had already raised $79 million by the time of the meeting; it needs to raise $200 million to meet basic requirements for the $850 million of debt that will cover much of the stadium’s total cost, the sources said. Sales began last month.

The team displayed a slide to the bankers at the Feb. 13 meeting in which the Cowboys were shown with $600 million of PSL sales at Cowboys Stadium, the 49ers at $500 million, and the New York Jets and Giants each around $400 million at MetLife Stadium, the sources said.

Premium seating at the Santa Clara stadium is basically sold out two years before it opens.
Asked about the projections, Jed York, the team’s acting owner and chief executive officer, said, “We don’t have an estimate on that.”

Three sources said the 49ers provided the $500 million figure on a slide shown to bankers by Goldman Sachs, one of the three financial institutions leading the financing for the new stadium. The Cowboys, Jets and Giants have already sold most of their PSLs for their existing stadiums.

The 49ers have labeled their seat licenses as Stadium Builders Licenses, with the one-time fees priced at $20,000 to $80,000 a seat. Those fees compare with PSLs of $1,000 to $30,000 a seat at MetLife Stadium and $16,000 to $150,000 a seat at Cowboys Stadium.

For the 49ers, the large seat license figure underscores why the team can undertake such a significant financing solo, with the wealth in Northern California appearing to have made the first new football stadium in the state since the 1960s possible. The team hopes to break ground in the coming months and open the stadium in 2014.

At the meeting, the team and its bankers sounded receptive to a second team playing at the new stadium, the sources said, though having a second team is not necessary for the 49ers to meet the debt obligations. Speculation has centered on the Oakland Raiders, who play across the San Francisco Bay from the 49ers in 45-year-old Coliseum.

The lease allows for a second team, York said, but the negotiations for a second tenant at the stadium would have to occur through the stadium authority that was created to build the stadium.

The Jets and Giants are the only NFL teams to share a stadium.

Some of the $850 million will be borrowed through the stadium authority for tax purposes, but the 49ers are responsible for the debt, as well as cost overruns. The latter element is what is causing some concern among banks that are being asked to buy into the loan syndication because the stadium’s guaranteed maximum price — a figure banks usually get at this stage of the process — will not be available until May, two months after the loan is expected to close.

The stadium is expected to cost more than $1 billion. The team is responsible for the $850 million of debt and is receiving $200 million in loans and grants from the NFL. Santa Clara is paying for some infrastructure improvements.

Goldman Sachs, U.S. Bank and Bank of America have agreed to lend the money even if they are not fully successful with the syndication, so the bank meeting and its outcome is not critical in any way to the outcome of the stadium. The three lenders, however, clearly want to offset their risk by getting other banks to buy pieces of the loan. It is possible they could charge the 49ers a higher rate if they are unable to fully syndicate the loan.

That said, one of the sources said the financials shared by the team look promising, noting for example that the club is expecting about $20 million annually from naming rights. The loan is for three years, so the team would have to refinance in 2014, and the banks expect the debt by then to be down to $600 million or $650 million. That is why the team needs to sell a minimum of $200 million of seat licenses, said one source. But with the club almost halfway to that goal already, this source said, the banks should be comfortable to proceed.

Legends Sales and Marketing, the company that sold premium seating for Cowboys Stadium, is doing the same for the 49ers’ project. Dave Checketts, chairman and CEO of parent company Legends Hospitality Management, said that much like what happened for the Cowboys, the Santa Clara stadium is basically sold out of premium inventory a full two years before the facility is scheduled to open.

Staff writer Don Muret contributed to this report.