Link of the Day

You may have noticed the rather long list of links on the right hand side of the site. Most of these links are to studies and reports on the costs and benefits of public subsidies for professional sports stadiums. It's a long list, though, and you might be wondering where to start.

Today I'd like to highlight one of those articles: Finding the Bottom Line for Sports: Observations from an Academic by Brad Humphreys. Humphreys has a Ph.D. in Economics, and he is currently an Associate Professor in the Department of Recreation, Sport and Tourism at the University of Illinois Urbana-Champaign.

This article is particularly relevant in light of next Tuesday's City Council meeting because Humphreys analyzes the differences between "economic impact studies," which are typically prepared by sports teams, and academic research, which centers on analyzing the costs and benefits of subsidies.

The staff analysis of the San Francisco 49ers' economic impact report will be one of the subjects at the next City Council meeting, and the issues Humphreys highlights should form an important part of that analysis.

While Humphreys acknowledges that the presence of a professional sports can offer some non-economic benefits "like civic pride and world-class city status for their host communities," he concludes that "these benefits don't seem to justify the public spending needed to build a 21st century stadium."

In fact, he states that

My own research, published in peer-reviewed academic journals, and based on past economic performance of all U.S. cities with a professional football, basketball or baseball franchise since 1969, concludes that professional sports teams and facilities increased employment and earnings in only one small sector of the economy -- the recreation and amusement industry. It actually reduced earnings and employment in related industries like hotels, bars and restaurants.

Overall, professional sports reduced real per-capita income in their metropolitan areas by about $40 per year.

If that information is true, you may wonder, then where does the economic impact report get its numbers?

Humphreys addresses this question in the article. He finds sports teams and supporters use economic impact studies, which are forecasts. He writes,

They use relatively simple methods to quantify complex economic events. There is no widely accepted standard methodology for generating these forecasts, so the authors face many choices in how to run these studies, ultimately affecting the size of expected benefits.

Academic research and analysis, on the other hand, . . .

. . . goes through the peer review process, and papers with important flaws in methodology, data or technique are typically not published. But peer-reviewed academic papers are not accessible to non-specialists, so reporters rarely see them. Researchers care about both the conclusions and how those conclusions were reached, so academic papers contain mathematical equations, long detailed methodological discussions, footnotes and citations.

Humphreys also identifies three important differences between economic impact studies and academic analysis.

First is the question of gross spending vs. net spending.

He acknowledges that people spend a lot of money at games and events, but he cautions that "all this spending is not new spending." Most people have a limited budget, and if they spend more on attending events, they will have less to spend for other purposes.

Second is the issue of "Concentrated Benefits, Diffuse Costs."

In a nutshell, economic impact studies focus on the economic activity generated at the stadium, but they ignore the more diffuse decline in activity in other areas of the city. In the case of Santa Clara, such costs are things like fewer patrons at the AMC Mercado on event days.

The third issue is forecast uncertainty.

Economic forecasts, like weather forecasts, are projections. Hopefully, they are good projections based on solid information, but because they are projections, they carry a degree of uncertainity. A good forecast will identify "that degree of uncertainty in an understandable way. Forecasts are not very useful without that estimate of uncertainty, and an omission of that suggests a false degree of accuracy."

The San Francisco 49ers' economic impact report does NOT identify the degree of uncertainty. In fact, it states that . . .

The report has been prepared to assist the 49ers in the assessment of the economic impacts and community benefits associated with the franchise and the proposed new Santa Clara stadium and should not be relied upon for any other purpose, or by any other person or entity.

And that may be the most telling statement in the whole report.

From our email inbox

It's Wednesday, and that means it's time once again to open up the Stadium Facts inbox and see what our readers have to say!

Today's letter comes from Santa Clara resident Daniel L.

He writes . . .

I have enjoyed working with several Niner players and staff, particularly those from the Walsh era that came from Stanford. Many have been a big positive for the community. Yet this stadium will only bring pain to the residents.

I grew up living in Palo Alto just a couple blocks from the Stanford football stadium. On game day our streets were barricaded to keep traffic out... and us in. The major streets were gridlock with police directing traffic at the intersections. So called "special events" (such as the Olympics and World Cup Soccer) were even worse. Police and military helicopters would circle the area for days (and nights) in advance. Areas of interest to terrorists would feature police with automatic weapons along with bomb sniffing dogs.

Meanwhile, drunks and lowly individuals would wander through the neighborhoods looking for crimes of opportunity since the police were busy directing traffic and handling crowd control. The same thing occurs in Oakland, South San Francisco, Berkeley, etc.

Have you ever noticed how football stadiums are seldom ever in [the] nice part of town???

If owning a stadium is such a great financial opportunity then why are not Alviso and East Palo Alto fighting to get a stadium?

Considering that Santa Clara cannot afford to repair the streets in several neighborhoods, staff a library east of highway 101, repair the international swim center, fill 30 or so vacant city positions... and has been reducing services by cutting library and police station hours... we clearly cannot afford to be in the stadium business.

Daniel raises an important issue that we haven't yet discussed in great detail here at Stadium Facts — how the stadium will impact the residential and commercial areas near the stadium. From the information the San Francisco 49ers have presented to the City Council, Santa Clara residents who live near the stadium can expect the same traffic congestion and controls Daniel experienced living near the Stanford stadium.

In their presentation to the City Council on April 24, Larry MacNeil, the 49ers CFO, addressed the issue of traffic controls around the stadium on event days. According to their plans (please see their report for the full details) traffic on all of the streets surrounding this area would be severely limited on game days. In fact, a portion of Tasman Drive would be completely closed, and other surrounding streets would be closed post-game. (Unless you live in those areas, in which case you'll have to get permission from a police officer to pass into your own neighborhood.)

And these traffic restrictions aren't just an issue for residents living near the stadium. Who would brave the stadium traffic to go to a movie at the AMC Mercado on an event day? Unless you live close enough to Rivermark Plaza to walk there, would you even consider trying to shop there on an event day?

And, of course, there's the continuing issue of misplaced priorities. Daniel identifies several more pressing concerns he sees for the city — street repairs, library services, swim center improvements, a hiring freeze — and we all may have ideas on how the city should spend that money. Or NOT spend it, for that matter.

How would you like the city to invest $180 million?

More Real Money

In my post Real Money several weeks ago, I outlined the value of some of the assets that the San Francisco 49ers are asking Santa Clara to contribute to the proposed stadium. The total then? $297 million in cash, land, and other property.

As I noted at the time, this figure does not include the cost for replacing parking space for Great America — parking space that the city is required to provide as part of its agreement with the park and that will be lost if the stadium project moves forward.

The plans for providing that replacement parking will be one of the subjects of the City Council meeting tonight, Tuesday May 29. The meeting starts at 7:00 P.M. in the City Council Chambers, 1500 Warburton Avenue. If you can't attend in person, you can watch from the comfort of you own home on Channel 15!

I hope you will attend (or watch) and learn more about what the real costs of this project would be for the residents of Santa Clara.

"Politicize the debate"

At the May 15 City Council meeting, NotWithMyMoney.org requested that the Council pledge to allow the citizens of Santa Clara to vote on any stadium proposal that would require spending public money. Besides putting off a "yes" or "no" answer, certain Councilmembers also denigrated the citizens who spoke in favor of a vote.

Councilmember Caserta said,

"I just think this is political theater."

Mayor Mahan said

she fears that an election could improperly politicize the debate over a stadium.

Hello? Ms. Pot? There is a Mr. Kettle here to see you. Shall I tell him you'll call him black?

Santa Clara residents received a 4-page color pamphlet from the 49ers a few weeks ago. It was distributed as an ad insert in the Santa Clara Weekly newspaper. This paper is delivered unsolicited. The pamphlet looks remarkably like an election flyer. There is a "candidate football player holding cute baby" picture. There is a "candidate football player helping out in the community" picture. There is just about every election pamphlet device except promises of a chicken in every pot.

Here is a sample of election pamphlets:

Look pretty similar, don't they?

So let's see, carpet bombing the city with slick campaign literature. Doing so in May, many many months before the election. An exercise for the reader would be to find out how much money does it take to accomplish this mission.

"Political theater" indeed.

FS: Councilmembers, like new, $___ each

The 49ers came to Santa Clara last night for a question-and-answer session with concerned residents.

OK, quick show of hands, how many people know what is the maximum contribution you can make to a City Council candidate?

John York and Larry MacNeil (the 49ers owner and CFO, respectively) both contributed to Mayor Mahan's 2006 campaign. Both men gave the maximum amount.

Legal? Yes. Ethical? You decide.

It gets better. Jed York claims to be unaware of the contributions from his father and the 49ers CFO. However, he just happens to know exactly what the maximum allowed amount is. What's more, Mr. York also said:

If a politician can be bought for only $500, I would hate to be represented by them.

FOR SALE: Councilmembers, like new, $500 each.

--

Campaign contributions are public records. You can look at them here. Search for "Mahan" or any other candidate, or browse by election. The contributions referenced above can be found in the filing from "Mahan for Mayor," dated 10/31/2006, which is an FPPC Form 460, covering the period from 10/22/2006 to 10/27/2006. Look at page 5 of 6. Click on the small copy below for a larger version:

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From the mailbag

It's Wednesday, and we have a whole one-week-old tradition of posting a letter from a reader on Wednesdays!

Today's letter is from a Santa Clara resident who asked us to withhold his name if we published his letter. It is a letter he first sent to the Mayor and City Council.

He writes . . .

Mayor Mahan and Council,

“Political Theater”. Those exact words were used by Councilmember Caserta to describe the polite, well researched efforts of our fellow citizens of the City to recommend that before the seven of you vote to spend ~$180 Million of the City’s money on a new 49ers stadium, it be put to a vote by the citizens. Gasp! Shocking suggestion, isn’t it? “Political Theater”- kind of a thought stopper isn’t it? Prevents any further discussion or consideration when such labeling is used. But I forget, that was Councilmember Caserta’s intent all along, right? And of course you are aware that this is now a matter of public record. Let the chips fall where they may.

But I digress. I wanted to mention I enjoyed in a sad sort of way the bit of political theater staged by the City Council regarding the SOFNA street and sidewalk repair issue. I thought it curious that when “Champion Of The People” Coucilmember McLeod proposed the motion to complete the study of street repair within five long years (when all of you will conveniently have moved on to future political horizons), there were no opposing motions, and when it came time for a vote, the motion was speedily passed. Great political theater!

And great selective ineptitude, as well, when compared to the falling-all-over-yourselves-to-comply three month deadline on the stadium project. Let’s see, five years to address a sustandard street issue by the citizens of the City, who helped buy the seats in which you imperiously sit, and two to three quick months to address a stadium proposal by a family that has more money and influence than it knows what to do with…Hmmmm, an interesting comparison to be sure. Musn’t keep the rich and powerful waiting, mustn’t we? After all, if the York family were told by “Champion Of The People” McLeod that it would be five years before a resolution was reached on The Brand New Stadium, I think they’d go elsewhere, don’t you?

Perhaps you read this, silently declaring, “What umbrage, what cynicism! How dare he challenge the ethics of our Council!”. Well you now have my email address. I invite each of you to kindly prove me wrong on any of the points implied and stated in my letter to you.

PS My views do not in any way reflect the views of the SOFNA members. I only live here in Santa Clara, as I have for the last 11 years, and pay taxes…

Regards,

[name withheld by request]

Santa Clara

As with last week's writer, this week's writer raises some good points that we haven't yet discussed here at Stadium Facts.

I agree with him that the May 15th City Council meeting provided a number of interesting juxtapositions.

First the City Manager offered an overview of the budget for the 2007-08 Fiscal Year. During the presentation, she referenced a number of items that have been cut back or frozen in the continuing efforts to keep the city from operating at a deficit. Things like cutbacks to library hours, delays in opening a new library, and a hiring freeze on 30 positions. [According to the numbers she presented, that last item saves the city $3 million a year.]

Overall, the presentation demonstrated that Santa Clara has usually been concerned with fiscal responsibility.

The next major topic of the meeting was the excellent presentation by the SOFNA regarding the terrible condition of their streets and sidewalks. We presented excerpts from their presentation last week in this post: Priorities? Duh! What priorities?

I’ll disagree slightly with the letter writer in that I had the impression from the council’s discussion that all of the Councilmembers and the Mayor would prefer the city to pay the entire bill – an estimated total of just under $15 million – for the repairs. But that was just my impression.

The problem, however, was that none of them had a plan to pay for all of it, so the only motion that was proposed was for the staff to come back in three weeks (at the June 5th meeting) with a projection of both when it could be placed into the budget sometime in the next five years and how much of the cost the city could cover.

To be very clear, I agree that this is the type of project on which the city should be using its resources, and as long as there is a fiscally responsible plan, then I hope the city will pay the full cost of this project and complete it as quickly as possible.

And then came the petition to council requesting a commitment to put any proposal for a stadium to a vote of the people (and if there is no proposal, then there would be no election.)

So here’s another interesting juxtaposition. As the writer notes, the Council needs three weeks to develop just a plan for a $15 million project in a 5 year timeframe, but the San Francisco 49ers ask for $180 million, plus a parking garage, land, bond issue, etc., to be delivered in 2-3 years, and they expect an agreement 12 weeks or so from the date of their proposal.

Among the many things I don’t like about this whole proposal is the speed at which the San Francisco 49ers are looking for an answer. It shouldn’t be Santa Clara’s problem that they came to us at such a late date with this plan.

But as the writer says, the Council to date has shown no willingness to push back on these timeline demands from the San Francisco 49ers. Sort of makes you wonder for whom they’re really working?

The pleasure of your company

I've heard through the grapevine that there will be a special meeting tonight - Wednesday - in Santa Clara with one or more members of the York family.

It is a public meeting, and it will be at 7pm at:

Resurrection Lutheran Church
2495 Cabrillo Ave
Santa Clara
(408) 241-2728

The church is right across the street from the Youth Activity Center near the intersection of San Tomas and Cabrillo.

So I hope you'll attend and bring your questions!

A Costly Pitfall

In yesterday's Mercury News, reporter Mike Swift examined the costs not just of building a stadium but also of operating it for the next 30 years. As he notes in his article Running 49ers stadium a costly pitfall . . .

When an NFL team asks government officials to help build a stadium, public debate frequently focuses on the construction costs. But sometimes, the bills are only beginning when the gates swing open.

Of particular interest to the residents of Santa Clara is the fact that while the 49ers have stated that they will pay for construction cost overruns, they have not agreed to pay operating expense deficits.

As we pointed out last week, their answer was simply that the Stadium Authority could “push back the cost on the tenants," which might seem reasonable until you consider that the stadium’s main (and perhaps only) tenant will be the San Francisco 49ers, who are asking, of course, for a long-term fixed-rate lease. Moreover, under the current plan, the team won’t even be covering its own game day costs.

The San Francisco 49ers also pull a neat slight-of-hand trick in this article. In their presentation to the Santa Clara City Council, they counted all of the construction money raised by the proposed city-operated Stadium Authority alongside the team's contribution in order to make it look like the city was only contributing 18.7% of the construction costs. [It's on page 12 of their presentation.]

But in yesterday's article, the 49ers CFO refers to the Stadium Authority contributions from the sale of naming rights as "the public side" of the funding. Funny how that classification changes depending upon what they need it to be.

Mike also presented some interesting comparisons among different recent football stadium projects. While at first glance it may look like Santa Clara is getting a better deal than is typical, the chart accompanying the article left out one important calculation — the PER RESIDENT cost.

Using the numbers in the chart, which don't include the value of additional property or other contributions, here is the breakdown of these deals in terms of the construction cost cash subsidy PER RESIDENT:

• Phoenix - $310 million - $210 per resident


• Seattle - $300 million - $518 per resident (city) or $92 (metro area)


• Dallas - $325 million - $260 per resident (city) or $54 (metro area)


• Santa Clara - $180 million - $1,651 per resident

I think these numbers provide an important perspective on the size of the subsidy relative to the size of the community. (And I have to say that the Santa Clara number makes me nauseous, but that's just me.)

So if the City Council asked you how they should invest $1,651 on your behalf, what would you tell them?

Truthiness

When "The Colbert Report" premiered on Comedy Central, the host, Stephen Colbert — in his character of "a blustery right-wing pundit" — introduced a now-regular segment: The Wørd of the Day. And what was that first word?

Truthiness

As he explained it to his viewers that night . . .

Now I'm sure some of the 'word police,' the 'wordinistas' over at Webster's are gonna say, 'hey, that's not a word'. Well, anyone who knows me knows I'm no fan of dictionaries or reference books.

I don't trust books. They're all fact, no heart. And that's exactly what's pulling our country apart today. 'Cause face it, folks; we are a divided nation. Not between Democrats and Republicans, or conservatives and liberals, or tops and bottoms. No, we are divided between those who think with their head, and those who know with their heart.

He later said in an out-of-character interview that . . .

It used to be, everyone was entitled to their own opinion, but not their own facts. But that's not the case anymore. Facts matter not at all. Perception is everything. It's certainty. People love the President because he's certain of his choices as a leader, even if the facts that back him up don't seem to exist. It's the fact that he's certain that is very appealing to a certain section of the country. I really feel a dichotomy in the American populace. What is important? What you want to be true, or what is true?...

Truthiness is 'What I say is right, and [nothing] anyone else says could possibly be true.' It's not only that I feel it to be true, but that I feel it to be true. There's not only an emotional quality, but there's a selfish quality.

The word captured an element of current politics that seemed disturbing to many — a concern not with facts and evidence but rather with gut feelings. Not surprisingly, it was named Merriam-Webster’s 2006 Word of the Year.

Right now, you may be thinking “Hey, Stadium Facts, truthiness is all well and good for those inside-the-beltway, Washington-insider types, but surely we don’t have that problem in Santa Clara?”

Alas, fellow citizen, we’re having our very own truthiness-fest right here in our own city.

Some examples . . .

From Councilmember Kevin Moore on April 24, 2007:

“There's a risk with anything, yeah, but we're going to bring the ball all the way down the field and score on this one. This is an absolute winner for the city.”

He’s apparently relying on the information provided by the San Francisco 49ers and their paid consultants, because every independent academic economist who has studied the issue of public subsidies for professional sports stadiums has concluded that they aren’t a good deal for cities.

In fact, retired Stanford economics professor Roger Noll has looked at this specific proposal and concluded that it’s not a good deal for Santa Clara.

But, hey, that’s what truthiness is all about. Thinking with your gut, not with your head.


From Mayor Patricia Mahan on April 24, 2007:

The team wants Santa Clara to contribute $160 million to the project - a figure Mayor Patricia Mahan called "doable" - and an additional $20 million to $30 million to move an electric substation to make way for the stadium.

Hmm — I thought the feasibility study needed to be completed before we would have the facts to determine whether or not this project is possible? But if your gut tells you it's doable, why, then, it must be!


From Councilmember Dominic Caserta on May 15, 2007:

“We are studying this issue. We are rolling up our sleeves.”

Uh, Dominic, take a look at Mahan’s and Moore’s statements above. Some of your fellow councilmembers have rolled those sleeves back down. They ain’t waitin’ for no stinkin’ feasibilty study.

And the winner (at least so far) of the prize for best display of stadium truthiness from the media is

. . . . [drum roll] . . .

Miles Barber, the publisher of the Santa Clara Weekly [which, we should note, must have been paid quite a bit of money from the San Francisco 49ers to include a glossy 4-page election brochure advertisement with last week’s edition.]

As you read the excerpt below, note how he first seems to criticize truthiness — people forming opinions while ignoring facts — but then just as quickly falls into truthiness himself. Pure truthiness genius!

He writes . . .

Opinions are just that….opinions.

They are not necessarily based on fact. They are just opinions and some folks speak their opinions with such authority they sound factual which almost makes them believable. . . .

When forming an opinion, it is important to get the facts. . . .

One tactic often used by these makers of “truth” is the fear factor.

“A stadium in Santa Clara will bankrupt the City!”

“Our utility rates will skyrocket!”

“The owners will pocket millions while the taxpayers foot the bill!”

Folks, these are opinions based on fear not based on fact.

These are statements made by individuals who always ask “why” and never “how”?

While a project of this magnitude raises concerns for all of us and investing this amount of money is not an everyday occurrence, it is absolutely a visionary project.

Of course, he provides absolutely NO facts for any of his assertions and uses the same fear tactics he demeans [“You don’t want do be one of those no-thinking opponents, do you?"] to try and convince you that the stadium opponents have no facts.

See!! Isn’t that absolutely INSPIRED truthiness!

Sadly for Miles, however, stadium opponents DO have the facts. In fact, all of the independent, academic economists agree that public subsidies for pro sports stadiums DO NOT benefit the cities to any significant degree, and may, in fact, be a detriment to the city [see, for example, Oakland, California.] And the owners WILL see the value of their team increase by HUNDREDS OF MILLIONS of dollars if they get a new stadium and a new revenue sharing deal.

But please, I wouldn’t want Miles to worry about a silly thing like facts and evidence getting in the way of such great truthiness!

And if you’ve read this far, you deserve a great reward. Click the link below to see Stephen Colbert explaining truthiness.

The Wørd of the Day: Truthiness

[The video doesn’t seem to be available to embed directly, so the link will take you to the video on the Comedy Central website.]

Enjoy!

The Santa Clara Way

City Council member Dominic Caserta hit the nail on the head when he said,

We in Santa Clara do things very well. We're fiscally prudent and we make decisions based on consensus building and principles, not politics.

The decision on building a stadium in Santa Clara — and the larger issue of how to develop the entertainment district — must shun politics, and be made in adherence to our principles of fiscal prudence, consensus building and democracy.

Let's examine these three important principles in detail.

Fiscal Prudence.

I used the 49ers waterfall financial model (slides 15 - 17 of 49ers Proposal) to see what it would take for Santa Clara to break even after 30 years. The Stadium Authority would have to net over $15M annually in non-49ers events just to break even. By the 49ers' own calculations, this would be almost impossible.

It was really interesting to see how this profits the 49ers. In addition to their football profits, the 49ers would get a cut of non-49ers events amounting to over $45M over the life of the stadium.

Wow. The stadium is looking pretty good for the 49ers... Their rent goes down. They get a high tech ballpark & guaranteed capital improvements — increasing their market value significantly. Plus, they make an additional $45M off the backs of Santa Clara — approximately $450 per person.

Sorry Sally, no new bicycle for you, Jed York needs a new yacht.

Consensus building.

A recent CBS5 poll showed that 55% of Santa Clara residents oppose building a new stadium if it meant using public funds. Rather than forcing through a stadium proposal that has so little public support, the city must build consensus on how to best develop the entertainment district.

Building consensus requires effort to develop a proposal that will be an asset to the community. It must bring in a diversity of venues that will ensure high utilization, attract a broad cross-section of the community and keep a large percentage of revenues in the city.

The 49ers proposal achieves none of these goals. By all estimates, the stadium will be utilized between 10 and 30 days out of the year. The remaining 335 days will leave the district with a dark hole that could gobble up every man, woman and child in Milpitas, and still have room for dessert.

Big empty places are scary. Only the foolhardy, the drunks and shady characters will find this behemoth an attraction.

Democracy vs. Politics.

The 49ers have politicized this discussion with their paid consultants and slick sales pitches to City Council and to the community.

Stop the politics. Insist on putting this critical issue before the people on a general election ballot.

Thou shall be allowed to vote

Last week, City Council was asked to make a promise. They were requested to promise the taxpayers of Santa Clara that IF there is a proposal to build a stadium that would require spending public money, then Santa Clara voters will get to vote on it.

Note the big, blinking, red IF.

This means

1. If the feasibility report from the City's consultants says that we've all been smoking crack, and that we all should just go take a cold shower and forget about the stadium, then there will be no vote.
   
2. If the 49ers decide that they would like to build and operate the stadium with their own money after all, then there will be no vote.
   
3. If the 49ers decide that it would be easier to thumb wrestle a better deal out of Gavin Newsom than to squeeze a $300 million subsidy out of peasants with pitchforks, then there will be no vote.

In fact, Brian from the local Libertarian Party addressed Council before they voted on this request, and explained it using an even simpler analogy:

The 8th Commandment says, "Thou shall not lie." It does not say, "Thou shall not lie, but really, thou don't have to promise that until the temptation to lie comes up." (Paraphrased.)

Seems simple enough...

So, did City Council pledge to tell the truth let the voters have their say?

Nope.

They voted to

[refer] TO THE CITY CLERK TO RETURN TO THE COUNCIL NO LATER THAN JULY 10, 2007 CITY COUNCIL MEETING REGARDING NOVEMBER 2007 AND FEBRUARY 2008 POTENTIAL BALLOT MEASURE CALENDARS AND HISTORY OF LAND USE BALLOT MEASURES. (Meeting minutes)

Or, in layman's terms:

Priorities? Duh! What priorities?

For years, the streets in Santa Clara's South of Forest neighborhood have been a wreck. The city apparently has trouble scraping up the $15 million to fix this. Yet some Councilmembers are now enthusiastic about spending 20 times that amount to subsidize a stadium.

This was illustrated in stark contrast at the City Council meeting Tuesday night. In an impressive display of civic involvement, the South of Forest Neighborhood Association (SOFNA) presented a request to City Council to fix their streets.

Santa Clara or Sarajevo?

The South of Forest neighborhood has some of the most gruesome pavement seen anywhere since the war in the Balkans. Here are some of the pictures shown to City Council.

The hazards are very real. Here is what happens when kids ride their bicycles on these streets.

The residents of South of Forest are understandably very upset about this. They would like the city to fix their streets, and soon.

Compare their request to the proposed stadium.

• The cost of street repairs is $15 million.
• The city's share of the stadium costs has been estimated to be around $297 million.

• The repaired streets will be available for enjoyment 24x7, 365 days a year.
• The stadium would only be in use about 30 days a year. The rest of the time, well, it would be just as attractive to drug dealers as Candlestick or the Oakland Coliseum.

• The SOFNA request got loud proclamations of sympathy from the entire Council. Councilmembers Moore and Caserta both talked of precinct walking in that neighborhood during their campaign. A member of the audience addressed Council afterwards, and pointedly wondered where have Messrs. Moore and Caserta been in the 3 years since the election.
• The stadium, on the other hand, got this unabashed endorsement from Mr. Moore: "We're going to bring the ball all the way down the field and score on this one." (KPIX TV)

Misplaced priorities? You decide.

--

Here is a copy of SOFNA's presentation to City Council (982 KB.)

Letters, We get letters . . .

Well, maybe not lots and lots of letters like David Letterman, but we did get a great letter today from William B. of Santa Clara.

He writes . . .

It's gratifying to find that there are other Santa Clara residents who are seriously questioning the need, the use, and especially the real costs of a football stadium in our City. Thank you for creating your site.

I hope that this doesn't put me in too-small a minority, but I oppose any stadium even if the 49ers/NFL pay 100%, own the stadium and keep it up—the traffic congestion and the police overtime, the fire and paramedic on-call support are down to us as residents no matter who "operates" the stadium.

In essence, we're being "offered" ownership of a billion-dollar boondoggle as residents, but we're not going to be given much CONTROL.

By that I mean: The yet-unreleased details of who, exactly, will be seated on the so-called Santa Clara Stadium Authority. That body, I firmly believe, will be the vehicle by which the 49ers front office generally and the York Family in particular will control any decision-making on any finished stadium. Having learned from their dealings with San Francisco, I firmly believe that the team management is looking for a far more "unequal" partnership than the one they now have at Monster Park.

Anyway, please count me in as a supporter.

Sincerely,

Bill B.
Santa Clara

Bill raises some great points that we haven't even gotten to yet here at Stadium Facts, in particular the whole issue of the Stadium Authority. While the San Francisco 49ers claim that this would be a separate entity, formed by the city, but with firewalls in place to protect the city’s finances from risk, we have no details yet about how this would function in practice.

In fact, when one Councilmember asked the San Francisco 49ers about what would happen if the Stadium Authority did not generate enough revenue to cover expenses, the spokesman’s answer was simply that the Authority could “push back the cost on the tenants.”

Sounds like a good answer?

Well, maybe, until you consider that the stadium’s main (and perhaps only) tenant will be the San Francisco 49ers, who are asking, of course, for a long-term fixed lease of $5 million a year. [And just to be clear, that money would go to the Stadium Authority—not to the City of Santa Clara.] If you have a lease agreement, the landlord can’t just come back and raise the rent. That’s why you sign a contract.

There might be other tenants in the building, but they will probably have leases too, and from a simple economic standpoint, there is a limit to what the Stadium Authority can charge for rent. If the rent for stadium office or retail space jumps too sharply in response to Stadium Authority budget shortfalls, these other tenants will simply move.

Moreover, under the current plan, the team won’t even be covering its own game day costs. [As Bill notes, those policemen on overtime aren’t going to be volunteers.] The 49ers' budget estimates for the Stadium Authority are on page 14 of the San Francisco 49ers' plan, and you can see that the NFL Game Day Expenses alone are higher than the 49ers' expense reimbursements to the Stadium Authority.

As I’ve urged before, please read the San Francisco 49ers plan yourself. And while the Mayor may cut off your microphone if you talk a few seconds past the buzzer (while allowing non-resident pro-stadium speakers to continue well past their alloted time), please come to meetings and ask the City Council serious questions about this proposal.

It’s clear that they’ve had a largely pro-stadium audience at meetings until now, and they need to hear from the other side.

On a lighter note

After a fun-filled, light-hearted 4-hour City Council meeting last night (I’ve heard that this is just spring training for the 7- and 8-hour meetings we’ll get to enjoy this summer), it’s time for a little humor.

The Field of Schemes website—run by one of the authors of the excellent book Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit—has links to a number of websites and blogs, but this one—Save Our Owners!—may be the most funny. It's "The Daily Show" of stadium activist blogs.

I particularly enjoyed the post Economists Stunned by New Theory of Economics.

Here’s an excerpt . . .

Economists working on a research project at UMKC to describe why poverty exists made a shocking discovery this week, finding that poverty in urban areas is caused mostly by not sending enough public money to out-of-state sports franchise owners.

The will of the people

The will of the people is the only legitimate foundation of any government, and to protect its free expression should be our first object.

Thomas Jefferson

Tonight at the Santa Clara City Council Meeting, two founders of the stadium opposition group Not With My Money will present their petition for the City Council to agree to take any stadium plan to the voters of Santa Clara for the voters' approval.

You don't have to agree with their position on the proposal to agree that the Council should seek the approval of the public before committing itself to an enormous public works project.

Depending on the financing options, the Council may be required to seek a public vote, but the standard should not be “what do we HAVE to do.” Instead, for a city that prides itself on its ethics program, the standard should be “what is the RIGHT thing to do?”

And the right thing is to ensure that any proposal of this size has the support of the residents.

Back in 1984 when the City Council was tackling the Great America deal, they made their approval of the deal conditional upon a vote of the people.

The current City Council should follow that precedent and agree to make the approval of any proposal subject to a vote of the people.

So, if you believe that the will of the people should be the foundation of Santa Clara’s government, attend the City Council Meeting at 7pm tonight and let the Council know.

Apparently through the nose

Well it's Sunday, and that means it's time for the funnies:



Unfortunately, the numbers are very real.

From the mind of Homer

No, sadly, not the mind of the ancient Greek poet.



















Rather, the mind of this Homer:


















When I started hearing rumors about Santa Clara's plans to spend in excess of $190 million (plus another $100 million or so in land and other property) on a stadium for the San Francisco 49ers, I couldn't help but think of the Simpson's episode "Marge vs. the Monorail."

For those of you without an extensive knowledge of Simpson's trivia, in this episode the town receives an unexpected windfall of $3 million, and they have a meeting to decide how to spend it. Marge proposes that they fix Main Street, but when a slick salesman suggests that they buy a fancy new monorail, the town agrees. I don’t think it will spoil the plot to say that a giant donut saves the day.

A town with cash? Slick salesmen? An unneeded public works project? Promises of jobs?

I'll let you draw the parallels yourself.

But apparently I’m not the only who has made connections between this deal and “The Simpsons.”

One of the bloggers at Say Hay: A Bay Area Sports Blog saw another Homer-related connection.

Here's an excerpt from their post Niners To Santa Clara: “Can We Have Some Money Now?”

According to the Chronicle, the San Francisco 49ers will ask Santa Clara residents to shell out as much as $200 million dollars for the proposed stadium. The Niners are trying to sell the deal based on the influx of new jobs and tax relief, in addition making the stadium “publicly owned.” We obviously don’t know how the exact conversation went, but given the general ineptitude of owner John York, we like to imagine that the conversation was similar to Homer Simpson’s attempt to start an internet company:

Homer: Welcome to the Internet, my friend. How can I help you?

Comic Book Guy: I’m interested in upgrading my 28.8 kilobaud Internet connection to a 1.5 megabit fiber optic T1 line. Will you be able to provide an IP router that’s compatible with my token ring Ethernet LAN configuration?

Homer (after staring blankly): Can I have some money now?

Maybe what the San Francisco 49ers need is a great song to seal the deal. Something like the "Monorail" song.

Who's got outside money?

Santa Clara mayor Mahan claimed that a vote on the stadium would "allow outside opposition money to influence" the debate.

Fine, let's see who's got outside money.

If you have been to City Council meetings recently, you may have seen some stadium supporters waving a sign with the web address supportourniners.com. The people waving the banner were all very nice regular people, so I assumed this is some kind of grassroots supporter's network.

In fact, at one meeting that I attended, I remember the Mayor telling the supporter to hold the sign so that it can be seen by TV cameras. A not-so-discreet thumb pressing on the scales of Justice, but whatever...

However, if you go look at their website, you will see a tiny little logo at the bottom left of the screen that says, "Site design and operation by JA". It is a live link to jathinking.com. Here's a screenshot of it in case they decide to disavow any knowledge of my, err ... their, existence:

Curiouser and curiouser!

Being the Alice-in-Wonderland inquisitive type, I followed that link and suddenly found myself in the big-moneyed world of ... [surprise!] ... the San Francisco 49ers! You see, JA Thinking is something like an ad agency or may be a public relations firm. They are based in Brentwood, TN. (How outside can you get!) They proudly boast that they do $42 million of business with the likes of Taco Bell, KFC, and the 49ers.

So there you have it. The pseudo-grassroots stadium booster website is run by the 49ers' own ad agency. Presumably said ad agency is paid for by the 49ers because

• why in sand hill would some bidness people in Tennessee give a horsefeather about a stadium all the way out there in California?
• what kind of grassroots organization can afford a national ad agency, and if they got that kind of money, I respectfully submit that they are, by definition, no longer grassroots.

Compare-and-contrast, if you will, their booster club with ours. This website is all volunteer-run. We put it up on blogger.com, partly because it's hip, but mostly because it's free! We all have day jobs. We're doing this on our own dime. Why? Because we want you, dear fellow Santa Clara residents, to get the facts and make your own decisions.

So here's the debate on turning the hen house into a KFC. The supporters are bankrolled by Foxes, Inc. The opposition are, OK fine, a bunch of chicken littles. And da mayor has the gall to throw veiled accusations about "outside" opposition money. Harooomph!

Let 'em vote

The city is being asked to spend big money on a highly controversial investment. The least City Council can do is let the residents vote on the proposal.

If that's not reason enough, consider this: the money being eyeballed will come out of the utility reserve fund. Our own City Charter says that fund is for utility-related uses only. Period. Here are excerpts from the relevant section:

Article XIII. Fiscal Administration
Sec. 1320 Utilities fund.

Expenditures from such fund shall be made for the following purposes only ...
(a) For the payment of operating expenses ...
(b) For repairs and maintenance;
(c) For the payment of interest ...
(d) For the payment ... to the City ... for services rendered;
(e) For extensions and improvements;
(f) For ... the replacement of utilities property ...

No mention of a stadium.

In case this turns into one of those "Which part of NO do you not understand?" situations, a formal request has been made to City Council to place the final stadium proposal on the February 2008 ballot. Here is a copy of the letter:

This request is on the agenda for the City Council meeting scheduled for 7PM May 15, 2007. Concerned citizens are encouraged to attend and address our elected representatives. Speakers are allowed 3 minutes each.

Stadium vs. Rolling blackouts?

Silicon Valley Power, Santa Clara's non-profit power company, is one of the best electric utilities in the nation. Thanks to SVP we had reliable power for a fair price while the rest of California was reeling from rolling blackouts.

Breaking SVP's piggy bank to subsidize a stadium will weaken SVP's financials. This will benefit very few people, many of whom will be out-ot-towners. At the same time, it will expose all Santa Clarans to the wild ups-and-downs of the energy market that PG&E customers had to endure.

The day the music died

Back in 2000, most Californians saw their electricity bills doubled. But even paying through the nose was no guarantee for reliable service. On June 14, 2000, when temperatures in San Francisco reached 103 degrees, the power went out for 97,000 people in the Bay Area. They were victims of the largest planned blackout since World War II. These rolling blackouts continued right on through the following summer. In fact, they spread state-wide.

If you lived in Santa Clara at the time, you'll remember that we were spared the worst of the electricity crisis. Part of the credit goes to voluntary conservation. However, the overwhelming reason why we did OK is because our city has its own electric utility.

According to Metro, SVP is so well managed that big businesses go out of their way to buy electrons from our wee little power company:

"Their service is so good, we paid to extend their network," says Mike Brozda, a spokesman with National Semiconductor, whose plant sits in both Sunnyvale and Santa Clara. Rather than split the building's power between PG&E and Silicon Valley Power, the company extended Santa Clara's power lines into Sunnyvale at its own expense. (Metro, May 20-26, 1999.)

It's called a "reserve" fund for a good reason

A key part of any well-run business is having good contingency planning. Good planning dictates you save money for a rainy day. Having something to fall back on makes it easier to deal with unexpected situations. By having a healthy reserve fund, SVP is able to maintain its power plants properly, absorb the cost spikes, and last but not least, insulate its customers from crooked energy traders.

(Remember the recording of 2 Enron traders joking to each other about stealing from poor grandmothers? It's at 22 seconds in from the beginning of this video.)



Local power is a good thing

Santa Clara is one of only 3 cities in the Bay Area with their own electric utilities. Our electric rates are "on average 35 percent less than" that of our neighbors on PG&E, and our electricity is more reliable to boot. Why should we jeopardize all that to build a ballpark that will sit empty 9 out of 10 days?

THREE Slaughterhouses ?

Once upon a time there was a big field of more or less happy grazing sheep in the south bay until a pair of foxes finally realized what a very big flock it was. Having fattened up on other similar suckers long ago, the two foxes found themselves getting hungry, so they decided to put on the coats of their victims, posing as benevolent and altruistic souls rendering help to the new field of contented sheep.

In the midst of that huge and timid flock they naturally found a few pushy goats who vehemently believed the cunning foxes story, hurriedly agreed and bleated the many advantages of the foxes new scheme. It was to be called a partnership or duping.

Well, within just a few days of one another, one fox named York selected a very juicy sheep, named Santa Clara, for his meal. Jealous and not to outdone of course, the other bigger fox named Wolff was super quick to swallow up another fat sheep called Fremont real quick. Not totally satisfied though, Wolff sunk his teeth again with feverish greed into San Jose's surplus empty airport lands, claiming it a potential soccer field for desert.

Well, in just a flick of a finger those sly foxes had the whole flock of sheep stupefied with dreams of not just one, but three exciting coliseums. All the sheep had to do was hand over the land, help pay for most of the stadiums and then let the foxes control the whole operation without complaining, since they had lots of experience corralling sheep . . . and of course they had to be quiet, nor to complain as they lined up to get fleeced.

So, after many years of feasting on San Francisco and Oakland, leaving nothing but bones, scrap and unpaid renovation promises, these scavenging carnivores finally found another field of docile sheep right here in the south bay bleating with excitement over the joy of losing their skins too. Of course a few of the smarter sheep were alarmed but they were rapidly chased away by the goats who knew all the inside details of everything.

Just imagine how lucky all those excited sheep and goats are going to be now. With not just one, but 3 separate colossal stadiums, all within 3 miles (or there-abouts) of each other! Can't you imagine with so many slaughterhouses close at hand trumpeting all their blue sky promises, it won't take much time to get thoroughly skinned.

"One heck of an anchor"

There are several ways to look at the word "anchor."

When Santa Clara Councilman Kevin Moore described the proposed San Francisco 49ers' stadium as "one heck of an anchor" in building "an incredible entertainment district," he was probably thinking about an anchor as "a source of security or stability."

When I nicknamed my new sofa bed "the anchor" (many, many years ago), I was thinking of it in terms of something that would weigh me down. No longer would I be able to move all of my possessions in a small car at the drop of a hat.

I'd need movers. And a van.

That sofa bed was a clear limit on my ability to move around—not quite a noose, but a definite restriction.

And the more I think about the dark stadium and the overflowing toilet analogy (not to mention that $250 million plus 15 acres of land), the stadium seems to be that second kind of anchor—the one that weighs you down and restricts your movement.

In part, blowing an enormous wad of cash on a stadium means that there will be little if anything left to build the rest of this entertainment district. And while the San Francisco 49ers have painted rosy pictures of the economic impact a stadium might have, very little (if any) actual cash will flow to the city.

The only way the city will receive any direct cash is if the Stadium Authority profits exceed $1,000,000. While the San Francisco 49ers have certainly projected at least some money going back to the city (and please, read their report for yourself if you want to see their projections), the city would be far better off simply investing the $200 million in a money market account.

Of course, cash parked in a money market account isn't very entertaining.

But is a stadium?

If a stadium was built as the anchor to an entertainment district, this district would be nearly inaccessible to non-attendees on game days. According to the San Francisco 49ers traffic plans (again, please see their report for the full details) traffic on all of the streets surrounding this area would be severely limited on game days. In fact, a portion of Tasman Drive would be completely closed, and other surrounding streets would be closed post-game. (Unless you live in those areas, in which case you'll have to get permission from a police officer to pass into your own neighborhood. Or at least that was what the 49ers said at the April 24, 2007, City Council meeting.)

So on a game day—a lovely Sunday afternoon—who would brave the stadium traffic to visit the entertainment district? And as Au pointed out, the more events that are held at the stadium—remember, more events are the only chance the city has to generate any real cash from this project—the more days this entertainment district is virtually inaccessible to anyone not attending the game or event. And if you're at the game, you aren't also seeing a movie or attending a concert or doing anything else in the rest of this district.

If the City Council thinks that 68,000-seat stadium can be a positive addition to an entertainment district (and a majority of Council members have indicated that they do), then wouldn't it be better to limit our cash investment in this project so that we can build the rest of the district? Let the San Francisco 49ers worry about making the stadium profitable while the city works on ways to develop the district outside the stadium.

Putting $200 million of our eggs in this stadium basket will weigh the city down and limit its ability to respond to other entertainment possibilities.

And that restriction makes a publicly-financed stadium a real anchor.

Let the sunshine in . . .

Many cities and states have enacted what are often called "sunshine laws" that help to ensure that the public has full access—with very limited exceptions—to government meetings and information.

In fact, California has open meeting laws that require “governing and other bodies of local government agencies—for example, city councils and school boards—to conduct business in a way that enables the public to scrutinize and, to a slightly lesser extent, participate in, government decisions, actions and policy choices.”
[From the California First Amendment Coalition website.]

But there have already been reports that at least some members of the Santa Clara City Council have come close to crossing—and perhaps have already crossed—the legal line in their meetings with the San Francisco 49ers.

The San Jose Mercury News first reported on this issue back on December 21, 2006—“City treads fine line in Niners meetings”—and more recently on May 4, 2007—“Santa Clara, 49ers sign confidentiality agreement”.

Byron Fleck and Karen Hardy touched on these important issues in one of their recent reports on this proposal. We’re reprinting it here with their permission.

BILLIONAIRE YORKS WANT YOUR MONEY, BUT WON’T LET YOU ASK QUESTIONS!

by J. Byron Fleck and Karen Hardy

Draw your own conclusion. We have.

Since January 2, 2007, the Mayor, Santa Clara City Council and City Manager have repeatedly assured residents that we would have ample opportunity to present our views and ask questions to the Yorks’ 49er representatives and the City Council, regarding billionaire Yorks’ request for YOUR money, to build THEM a football stadium.

One of those public opportunities was supposed to be this Tuesday, April 24. This was to be the critical council meeting where the Yorks would tell residents how much of YOUR money they want. Problem is, we residents are effectively precluded from asking questions about their request.

Why?

Because, contrary to established practice when presenting before the City Council, the Yorks elected not to distribute their financial proposal/subsidy request by the Friday before Tuesday’s Council meeting.

Because the Yorks decided to hide their request until Tuesday’s meeting, neither the Mayor, nor City Council, nor City Staff nor (most importantly) YOU, have a meaningful chance to review their request and formulate questions and comments to the people asking for YOUR money.

Meanwhile, billionaire Yorks will make their pitch in the light most favorable to them, then, presumably, jet back to Ohio or wherever, in a calculated move intended to leave us with no time to ask meaningful questions or present thoughtful views.

A billionaire “Dump and Run” is how I describe it. Perhaps Karen describes it better. “Loot and Scoot.”

Just how outrageous is the Yorks tactic?

Well, consider this. The next time you present a request to City Council for a simple garage conversion or backyard fence, just see how far you get when you refuse to present your application and drawings until the night of your hearing.

We find it inconceivable that the City of Santa Clara would allow such disrespectful tactics, and yet expect (and require) so much more from its own residents for relatively insignificant matters.

On January 29, 2007 City Staff recommended, and Council adopted on February 6, 2007, the following principle concerning the Yorks request:

“1. City Staff and 49ers staff will have the opportunity to participate in public meeting Study Sessions...These Study Sessions...[will] update and inform the Council and community of issues pertaining to the ongoing feasibility analysis.”

On December 21, 2006, The San Jose Mercury News broke a troubling report of private meetings between the Mayor, certain City Council members and 49er representatives concerning a proposed stadium in Santa Clara, thereby raising questions about possible violations of California’s open meeting rules.

Presumably stung by public concern about the private conversations, Santa Clara City Council unanimously voted on January 2, 2007 to adopt the following guideline:

“Any proposed or approved stadium project in the City of Santa Clara will be the result of a visible, public process, open to the community.”

It is clear to us that the Yorks are actively scheming to intentionally avoid public scrutiny of their subsidy request from YOUR money. That scheme is inconsistent with the principles espoused by the Santa Clara City Council, an insult to the residents they expect to fund their subsidy and a breach of good faith with our City.

Even if Approved . . .

In the event that the council or the voters (if decided by the residents) approve the stadium development, then additional serious questions emerge.

An extensive analysis needs to be made to determine the potential use of the stadium by more than just one user (only the 49ers football team has emerged in this case) for just 10 days a year, and since that isn't economically sensible, then who might want to use the stadium? Maybe additional football teams or other types of sporting events like soccer, band or musical contests, or any number of public spectator extravagances? Professional, amateur, or private recreational or building shows? On & on, there are many uses for the stadium that would make it economically feasible, if controlled properly.

But control and use of the of the stadium by the city rather than by any one user (like the Yorks) seems to be imperative or otherwise all gate receipts for whatever program would be taxed unfairly (in favor of the Yorks in this example) for which they aren't entitled. If the number of activities that the stadium books out falls into large numbers, because of its recreational center location, then it would pay for the city to float a bond (rather than scrounge from other assets) and run the whole operation just as they do the convention center.

Obviously, long term contracting for major users would be mandatory, but from all appearances it seems to be the choice spot according to the city council and the 49ers.

Better cross your legs...

Would you spend almost 3000 buckaroonies to remodel a bathroom that you can only use once every 10 days? And if you tried to use it more often, the toilet would back up?

I didn't think so.

Yet that's exactly what the proposed 49ers stadium would be like. It would cost close to $3000 for every man, woman, and child in Santa Clara. By the most optimistic estimates (the 49ers' of course) the stadium would see action about 30 days a year (10 home games, plus 20 "special events.")

"A couple more days if we make the playoffs," says Lisa Lang, the 49ers' VP of communications.

So the only way to make this investment pay off is to increase the number of events. But wait! If you think the neighbors are up in arms about traffic etc now, wait until we try to put on even more events! There goes that overflowing toilet...

So to recap, 30 days out of 365 days a year, that's not even 10% utilization, folks!

Compare this to other investments we can make:

• A school would resound with the pitty-patter of little feet at least 9 months out of the year, or about 53% utilization. (We don't count weekends, 'cause the little tykes ought to have time off for Little League, etc.)
• A typical Silicon Valley office building would be in use 5-6 days a week (7 if it's Yahoo's -- they gotta catch up to Google.) Minus a couple of weeks off for Diwali and Chinese New Year, etc, that's still easily 65% utilization.
• A library like the cool new one on Homestead can be open 7 days a week -- if the city hasn't already blown its wad subsidizing billionaires.

What does that utilization look like?

Stadium: 10%	School: 53%
Office: 65%	Library: 100%

The moral of the story? If we're going to invest in something big, let's invest in something that will get a lot of use.

PS. Also, don't forget, that's $2900 per head, so for the average Santa Clara household with 2.58 :-) persons, that's just about $7500. That ought to pay for marble vanities and a heated toilet seat.

The Dark Stadium

Santa Clara City Council says they want to invest in the "entertainment district" on the north side of town. But in fact, they are looking to burn over $2900 per SC resident to subsidize a stadium that -- best case -- will be completely dark 330 days a year. That's a black hole the size of Milpitas (population: 63,000, vs. Proposed Stadium Occupancy: 68,500), most suited to attracting undesirable elements looking for a shadow in which to do an illicit deal.

If Santa Clara City Council really wants to make an investment in the entertainment district, shouldn't they actively solicit other proposals? And if they want to make this a sound investment, shouldn't they consider a well-diversified portfolio of investments, rather than a single all-or-nothing boat anchor of a deal?

And if City Council wants this investment to help sustain the city as a great place to live, shouldn't they try to augment the current big-box entertainment venues with more human scale developments, encouraging people to get out of their cars and spend all their entertainment dollars in the district -- rather than only within the fortress of the "Naming Rights" Stadium?

Santa Clara City Council need look no further than Mountain View's Castro St., Sunnyvale's Murphy St., Santa Cruz's Pacific Avenue or even Milpitas' Great Mall to see great examples of diversified entertainment districts that enhance the community without putting all the City's eggs in one basket.

Real Money

In all their glossy brochures, the San Francisco 49ers don't mention the amount of money that they're asking from the city, but they did have to give an actual number in their presentation to the City Council.

$160 million in cold, hard cash.

Yes, that's right.

$160 million.

Using the 2000 census figure of 102,361 residents, that works out to $1,563.10 per resident.

But it's only $1,400.58 per resident if you use the California Department of Finance's recently released estimate of 114,238 residents.

A bargain, right?

Well, don't put your checkbook away just yet, because that's not all the San Francisco 49ers want from Santa Clara.

They also want the city to relocate or reconfigure a substation that’s currently located on the property. Their estimate for that item? Just an additional $20-30 million.

So add $290 or so to that check.

But wait, there’s more! The city has plans to build a new parking garage for the Convention Center. The San Francisco 49ers want Santa Clara to build the parking garage on the stadium property instead. In the City Council Meeting, the City Manager stated that she considered this request to be an additional contribution the city would be making to this project.

But what’s a $47 million parking garage among friends?

Just add another $450 to that check you’re writing—that should cover it.

In case you’ve lost track, that’s about $2,140 PER PERSON the City of Santa Clara will be kicking in to this project on your behalf.

Be sure to send a thank you note.

But that’s not all the San Francisco 49ers need.

You can’t build a stadium in the air, so the San Francisco 49ers also want the city to contribute 15 acres of prime real estate to this project.

Currently, this land is used as a parking lot for Great America, and the city has a long-term commitment to Great America to provide parking. So, while the city doesn’t need to buy land for the San Francisco 49ers, they will need to replace the parking for Great America as part of their agreement with the park. Of course, as with so much else about this project, there’s no information yet about how this will happen or what the costs might be.

A conservative estimate of the value of this land, however, is in the range of $60 million. Of course, neither the San Francisco 49ers nor certain members of the Santa Clara City Council want to count the value of this land as a contribution the city will be making toward this project.

And you can understand why—if residents knew that the city was actually considering contributing in excess of $297 MILLION in assets (cash, land, and property) to this project (nearly double the $160 million figure the San Francisco 49ers and certain members of the Santa Clara City Council repeatedly quote), the residents of Santa Clara might revolt and let the team go back to San Francisco with their stadium plans.

For those keeping score at home, we're now up to $2,901.50 PER RESIDENT.

[Edited to add: The $2,901.50 is based on the 2000 census figure. Using the California Department of Finance's recently released estimate of 114,238 residents, the per resident cost is a mere $2,600 PER RESIDENT.]

By the way, it’s worth noting that San Francisco Mayor Gavin Newsom announced a stadium plan on March 27, 2007. Under this proposal, the city of San Francisco would contribute land but would NOT provide any public financing for the stadium construction.

You can read the article here:

City unveils new 49ers stadium proposal

The value of the San Francisco land is a little harder to determine right now—it’s a toxic Superfund site that’s in the process of being cleaned up—but even if the value of the land is a bit higher, San Francisco has approximately 744,041 residents, so the per resident contribution is closer to $80.

You read that right—$80 per resident.

If the Santa Clara City Council was preparing to spend a comparable per resident amount, its tab for this project would be under $1 million, or about a quarter an acre of land.

And at that price, I’d be happy to support this project.


If you’d like to read San Francisco 49ers’ proposal to the city of Santa Clara, you can find it online here:

San Francisco 49ers’ proposal

Economic analysis

While the San Francisco 49ers have the money to hire consultants and produce glossy brochures to support their proposal, regular citizens have spent their own time and money to carefully analyze the evidence.

J. Byron Fleck and Karen Hardy have produced a series of reports that thoughtfully and critically review the proposal. They will be posting full copies of these reports on their own website, but they have given permission to publish their findings here. This report is their own analysis of the evidence, and we encourage you to go to the sources and review the evidence for yourself. In the interest of space, I have not included the footnotes, but I've included several links to the evidence they've used.

SINCE THERE IS NO ECONOMIC BENEFIT TO SANTA CLARA, WHY DOES ITS CITY COUNCIL STILL CONSIDER GIVING A BILLIONAIRE $200 MILLION?

By J. Byron Fleck and Karen Hardy

On Monday, April 9, 2007, we published our first in a series of reports about Santa Clara City Council’s continuing study to provide the 49ers billionaire owner, John York, a subsidy from Santa Clara City residents of $180 million- $200 million. The funds sought from Santa Clara residents would replace a like amount, which, presumably, otherwise could and would come from Mr. York’s own pockets, to build a $850 million football stadium which would host 17 events annually.

We conclude in this report, there is absolutely no reason whatsoever that the Santa Clara City Council waste any further City Staff or consultant ($200,000 budgeted) resources on a project which will produce no (if not negative) economic benefit to residents of Santa Clara. The reasons for our conclusion follow.

First, in our April 9 report, we provided the following facts. None were refuted by Jed York (son of John York, owner of his family’s football operations), John York nor Conventions, Sports & Leisure (“CSL”), the consultant paid by the Yorks to prepare an “independent” study of the benefits of a Stadium , with subsidy, to Santa Clara City and regional residents:


* CSL was previously retained by Al Davis, Managing Partner, Oakland Raiders, to prepare and present a similar “independent” economic assessment of economic benefits to the residents of Oakland and Alameda County in support for the expansion of the Oakland - Alameda Coliseum.

* CSL has never, in any “independent” economic impact analysis commissioned, as here, by an NFL owner, concluded that the detriment to residents exceeded any benefit to the residents, of hosting a new stadium.

* Neither York nor CSL challenged our April 9 report where we cited leading economists who said, “[I]ndependent work on the economic impact of stadiums...has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development.”

* Neither the Yorks nor CSL took issue, with an important conclusion of the authors report. While there is absolutely no economic benefit to Santa Clara residents subsidizing a billionaire NFL owner to fund his dream stadium, on the backs of residents of decidedly more modest means, billionaire Mr. York will pocket an extra $30 million annually as the result of a new stadium.

Second, after publication of Mr. York’s self styled “independent” economic impact report, a real independent source conducted its own survey of experts.

“Four prominent sports-finance experts say a report outlining the benefits of a San Francisco 49ers football stadium in Santa Clara is riddled with inaccurate assumptions and incomplete information - casting doubt on many of its projections.”

Dennis Howard, a professor at the University of Oregon’s Lundquist College of Business summed up CSL’s report, and its underlying methodology, succinctly. “When you start peeling away the layers you realize how fragile this analysis is. It just doesn’t stand up.”

Specifically, we found the following observations particularly troubling:

* Omitted from the CSL report is the fact that a new stadium creates no new construction jobs. Some workers filling those jobs would probably have been working on another construction project elsewhere. Conversely, the CSL report contends that 1,350 construction jobs would be created.

* Of the 900 jobs to be created within Santa Clara City, CSL cannot identify how many of these would be full time, part time or seasonal. Intuitively, these jobs appear to be low skill temporary or seasonal positions. Stadium vendors, parking attendants and souvenir sellers immediately come to mind. Jobs which pay low wages, provide no healthcare benefits and unlikely to be staffed by many Santa Clara residents. More likely, these positions will be more likely than not staffed by the same people providing these services now. The only difference is that their place of business shifts to Santa Clara from San Francisco. Hence, “technically” these are the “new jobs created in Santa Clara.”

Third, on April 10, Jed York and CSL presented their “independent “ economic report to the Santa Clara City Council. Minutes into the presentation, it became apparent that the logic of York’s report was in trouble.

Jed York introduced the report enthusiastically announcing to Council that “billions in new economic activity” would be generated by a new stadium. When CSL’s representative rose to present its findings moments later, the “billions in new economic activity” pronounced by Mr. York, suddenly, and without explanation, shrunk to $246 million.

While CSL’s tone was upbeat and confident, especially in their repeated emphasis that the head spinning benefits to Santa Clara were calculated “conservatively,” fine print not appearing in their power point presentation, gave us pause. Specifically, at page 23 of CSL’s report, we found a series of qualifications and disclaimers which, in themselves, can reasonably give rise to a conclusion that CSL’s report was a sales job as opposed to a serious examination of economic impacts, both positive and negative. For instance:

* “CSL International does not make any representations or warranties as to the accuracy or completeness of the information provided to us. Information provided to us has not been audited or verified and has been assumed to be correct.” [ed. Huh?!?] [ed. Given this disclaimer, we are baffled that CSL’s report can be fairly described by anyone as “conservative” let alone “accurate.]”

* “Some assumptions inevitably will not materialize, and unanticipated events and circumstances may occur therefore, actual results achieved during the analysis period may vary from those described in the report, and the variations may be material.” [ed. Although the introductory clause suggests that CSL knows, in fact, that things won’t turn out as rosy as stated in their report, nowhere in their report does CSL identify which assumptions “inevitably will not materialize.” CSL does tell us, however, that “the variations may be material.” In the authors’ understanding, if a material fact turns out to be error, it must be a fact of such significance that a reasonable person would not go forward with the transaction. If CSL has not confidence in their own report, why should Santa Clara residents?]

* “The report has been prepared to assist the 49ers in the assessment of the economic impacts and community benefits associated with the franchise and proposed new Santa Clara stadium and should not be relied upon for any other purpose, or by any other person or entity.” [ed. So, CSL’s report is not “independent” as they expressly state at Page 1 of their report, after all. No one, like a city resident who experiences any adverse consequences (utility rate hike, perhaps?) or the City itself may rely (e.g., seek redress in court) on CSL’s fantastic enumeration of benefits to Santa Clara residents.]

To the extent one may be tempted to characterize CSL’s qualifications and disclaimers above as mere “boilerplate,” he / she is well advised to remember that the halls of justice are strewn with victims of “boilerplate.” Whether it be a credit card application, insurance policy or promissory note, words matter. In the case of the CSL report, those qualifications and disclaimers must be given great weight, especially since so much is at stake for Santa Clara residents, for no economic benefit.

Finally, we direct your attention to an Op-Ed piece in The San Jose Mercury News Perspective section of April 15, 2007, authored by the leading authority on the subject of the true economic impacts of new stadium development, Professor Roger Noll at Stanford. We think this piece is so important, we have decided not to summarize its many key findings regarding the CSL report. Unlike CSL’s report, Noll’s study is truly independent. We hope that by dangling this tease, you will spend a few minutes reading and digesting Professor Noll’s article for yourself. It is that important.

http://www.mercurynews.com/opinion/ci_5672692?nclick_check=1

Bottom line, Professor Noll concludes that CSL’s report, coupled with billionaire York’s anticipated subsidy request, poses significant financial risk, while generating little if any benefit, to Santa Clara residents.

CONCLUSION

There is no dispute among independent authorities. Providing public subsidies for new stadium construction is uniformly a loser to the effected community and its residents. Given that fact and given that CSL’s economic impact report is discredited, it begs the question why the Santa Clara City Council would continue to waste hundreds of thousands in staff and consultant time, and your money, to investigate the idea of providing a subsidy of your money to a billionaire, where there is no benefit to Santa Clara residents.

Many of the sources they have cited are available online:

San Jose Mercury News, “Economists call 49ers stadium forecast overly optimistic” Sec. 1B, April 10, 2007

CSL’s full report

Op-Ed piece in The San Jose Mercury News Perspective section of April 15, 2007, authored by onr of the leading authorities on the subject of the economic impacts of new stadium development, Professor Roger Noll of Stanford University.

Rappaport, Jordan, and Chad Wilkerson. "What Are the Benefits of Hosting a Major League Sports Franchise?" Economic Review (Federal Reserve Bank of Kansas City), First Quarter 2001.

Noll, Roger G., and Andrew Zimbalist."Sports, Jobs, and Taxes: Are New Stadiums Worth the Cost?" The Brookings Review, Summer 1997

Welcome!

This blog started when a small group of Santa Clara residents concerned about the proposed San Francisco 49ers stadium connected through email. We share a sense of shock that our city of just over 100,000 residents is preparing to commit around $300 million in assets to this project.

Perhaps most shocking of all is that at least four members of the City Council have already expressed clear support for this project before any independent financial impact studies have been completed.

The San Francisco 49ers organization is well-funded and well-organized, and while our group can’t match them in either of those areas, we can provide an impartial, thoughtful, and detailed analysis of the proposal.

Most of us are not absolutely opposed to a stadium under any circumstances, but we share a conviction based on evidence and facts that anything close to the current 49ers proposal is a bad investment for the City of Santa Clara.

In the coming weeks and months, we will be posting reports, questions, links to articles, reminders about upcoming meeting, and other information and analysis to help the voters of Santa Clara get the information they need to make a truly informed choice.

If you have questions, comments, or concerns, please email them to us using the “Contact Us” link.

Working together, we believe that we can truly change the debate on this important issue.