49ers File Lawsuit Against Santa Clara

The Oversight Board approved a measure last Friday that would pull back $30 million owed to the 49ers as part of the stadium funding process. In proposing the measure, county tax collector George Putris said, “Let’s be real: That stadium is going to get built whether or not you get this $30 million.” The money was part of $40 million that would come from the Santa Clara City Redevelopment Agency.

Previously, California had numerous redevelopment agencies across the state that could finance a variety of projects. The agencies were scrapped last year as part of the state government’s attempts to balance the state budget. After the agencies were scrapped, the state created oversight boards that are required to follow specific parts of the law that were designed by the state in order to dissolve the Redevelopment Agencies.

As late as last fall, many expected the stadium groundbreaking to occur later this summer, potentially delaying the opening until 2015. In the ensuing months, though, the 49ers finalized necessary financing, putting the stadium on the fast track for an opening day coinciding with the start of the 2013 season.

This year earlier is significant because it allowed the 49ers to plan on submitting a bid later this summer for Super Bowl L. A stadium is required to be in operation for two seasons before it can host a Super Bowl. A 2014 opening would have the stadium open exactly two seasons before the historic Super Bowl L. The 49ers are also planning on bidding for Super Bowl LI, as the NFL is requiring bids for both games at the same time.

The 49ers have been working to get out of Candlestick Park for upwards of 15 years. This new project will place them in Santa Clara in what used to be a parking lot across the street from the team’s offices at 4949 Centennial Boulevard. Late last year, the team and county secured $850 million in loans, which will go towards the estimated $1.2 billion stadium. There were some legal issues with regards to the financing plan, but following the dismissal of the claims, the project continued forward.

The team has announced plans to develop one of the most technologically sophisticated stadiums in the world, with parts of the budget going towards technology not yet invented. Super Bowl L has yet to be announced and this kind of technological prowess would likely be a significant benefit in a bid for such a high profile Super Bowl.

The new stadium is scheduled to cost $1.02 billion, although that figure is subject to potential cost overruns. The stadium was initially budgeted at $987 million but inflation and some new estimations bumped it up $35 million. The 49ers will be responsible for any cost overruns. The breakdown of the stadium financing is as follows:

$450 million: Bank loan to the city’s stadium authority

$400 million: Bank loan to the 49ers, who pass the loan on to the city’s stadium authority

$150 million: 49ers’ payments, mostly from luxury suite sales (much of which has already been sold)

$20 million: City’s stadium authority payments, from existing stadium revenues

The biggest hurdle for any new professional sports stadium is the financing. During the economic boom of the late 90s and early ‘00s, companies, cities, counties, and states had little problem turning over huge sums of money to finance these monstrous cathedrals. However, since the economic downturn, financing stadiums has become a tricky issue. New football stadiums in Dallas and New Jersey have remained without naming rights and for California teams in particular, the state’s economic struggles means there is little to no public money available.

A potential 49ers-Raiders partnership would put both teams in a position to dramatically decrease their own stadium costs. A joint stadium might boost the cost a bit, but having double the season ticket revenue and double the luxury suite money would make a significant impact. Even more important, having double the football dates makes a potential stadium all the more attractive to sponsors, whether it be naming rights or signage in the stadium. All of these benefits make such a stadium that much easier to finance.