49ers deliver stadium financial proposal
The San Francisco 49ers today delivered a preliminary financial proposal to the Santa Clara City Council for the construction of a new, state-of-the-art NFL stadium. The financing framework calls for more than 80 percent of the cost of building the $850 million stadium to be financed by investments from the team, the NFL and from revenues generated by the stadium itself, such as naming rights and stadium sponsorships.
The proposal calls for the city of Santa Clara to make an investment capped at $160 million for stadium construction (18.7 percent). Ongoing operations and maintenance would be entirely paid by revenues generated by the stadium, including significant rental and maintenance payments by the team, and thus would require no additional investment by the city.
The proposal is one part of a feasibility study that began in February and is being conducted by the team and the city.
A separate public entity, the Santa Clara Stadium Authority, would be created to own and operate the stadium, protecting the city’s general fund. The team would enter a long-term lease as the facility’s anchor tenant, contributing $5 million per-year in base rent along with millions more toward operating expenses.
Revenue from the stadium would pay for upkeep and ongoing updates to the facility every five to seven years, with a portion of the revenues going to the city’s general fund. The stadium is projected to generate gross cash flow to the Stadium Authority of at least $1 million per-year just from 49ers games. Hosting an additional 10 to 20 special events annually at the facility, as expected, would generate additional cash flow to the Stadium Authority and the city’s general fund.
A recent economic impact report conducted by Conventions, Sports & Leisure, International shows the facility also would fuel the creation of 2,230 jobs and $249 million in economic activity in the region, while generating a total of $12.3 million in combined annual tax revenues for the city, county and state.
“Our proposal is completely consistent with the promises we made to Santa Clara from the beginning: no net negative impact to the city’s general fund, and no new taxes for the citizens of Santa Clara,” said John York, 49ers owner. “We believe the team’s significant investment in this new public facility will benefit Santa Clara’s entertainment district and provide long-term economic impact for the region.”
The largest funding source, more than $360 million, would be upfront cash for construction from the team and the NFL. The team would also assume all potential cost overruns, including inflation, as long as the project remains on track to be completed in time for the 2012 football season.
The second major funding source for the stadium, more than $330 million, would come from the Stadium Authority’s sale of such assets as naming rights, founding corporate sponsorships and concession rights. Part of this funding would come from bonds issued by the Stadium Authority that would be repaid by a ticket tax included in the price of tickets to stadium events. Backed by stadium revenue and issued by the Stadium Authority, the bonds would have no impact on Santa Clara’s general fund.
Another component of this funding source would be the sale of Stadium Builders Licenses by the Stadium Authority. These transferable licenses would give fans the right to buy 49ers season tickets every year over the entire life of the new stadium, along with rights to tickets for other stadium special events. Revenue from the licenses would be used exclusively to fund and maintain the stadium with no proceeds going to the 49ers.
The remaining $160 million of the stadium’s costs would come from an investment in the facility by the city of Santa Clara, and would be capped. This investment, totaling 18.7 percent, would be significantly lower than the average percentage of public investment in the NFL’s 15 most recently built stadiums. Under the team’s plan, the city would also relocate a power substation currently located at the proposed stadium site.
The team developed a preliminary concept for game day transportation at the stadium working with transportation engineering firm DMJM Harris and the Santa Clara Police and Traffic Departments. Due to the area’s multiple public transit options including VTA Light Rail, ACE Commuter Rail, bus service and Amtrak, roughly one-fourth of game day fans could arrive via public transportation, reducing traffic congestion and parking needs.
The access plan would protect local residents by enforcing resident-only access to neighborhood streets near the stadium on game days. Traffic would be directed along the city’s main thoroughfares, designed to accommodate high volumes of week day traffic generated by businesses already located in the area. DMJM Harris estimates that fans would be able to exit the stadium area 36 percent faster than the team’s current stadium in San Francisco.
Today’s proposal joins the economic impact report released two weeks ago and earlier details of the stadium’s design and site plan as major components of the feasibility study. The team will discuss its proposal in greater detail with the city in the coming months, while continuing to meet with area residents and local businesses to discuss the impact and benefits of the stadium. If the team and the city decide to move forward, the California mandated CEQA process would begin in the fall, resulting in the production of an environmental impact report that would be subject to a thorough review by the public.