Stop the Bleeding -- Vote No on J!

With this year's $13.5 Million deficit (expected to grow further next year) the City of Santa Clara is sinking from the ranks of fiscally sound, well-managed cities. It's saddening that we may lose yet another guaranteed $5 Million per year in rent from our fabled theme park, Great America.

Saddening, but not surprising. We already provide an annual give-away of $2.5 Million to the San Francisco 49ers' in the form of below-market rent on their training center.

Measure J extends that deal and expands the loss. The San Francisco 49ers would rent a brand new, state-of-the-art stadium for 25% of fair market value of the land it sits on!

Worse, they'd pay only 14% of the land's fair market value during the first 10 years of operation. Over the next two years, as our deficits sky-rocket, they'd pay nothing.

A cynical observer

A few weeks ago, Mercury News sportswriter Tim Kawakami had some interesting observations on the San Francisco 49ers' Santa Clara stadium proposal.

As he wrote in his post "The 49ers’ Ashley Lelie: A weird symbol of a confusing franchise",

The 49ers are asking for about $200M in public money (which I believe will probably be jacked up to $250M at some point), and yet they can just go ahead and say, well, why don’t we just purchase and operate a theme park while we’re at it?

This makes sense? To whom? Perhaps in the near future the Yorks can just ask Santa Clara for $2 billion and then decide to buy SeaWorld, too. Lots of syngery there, I’m sure.

I hope you'll follow the link above and read the post for yourself (the stadium issue is about halfway through the post.)

"Pay no attention to that man behind the curtain."

Former Mayor Gillmor, the power behind the throne in Santa Clara politics, publicly excoriated Cedar Fair this week. The owner of Great America apparently committed a whipping offense when it raised objections to the proposed stadium. Cedar Fair was "acting in [its] narrow self-interest," according to Mr Gillmor.

Let's draw an analogy.

Imagine you are renting a nice little bungalow. One day the landlord just shows up, unannounced, with a casino operator. They proceed to discuss building a card club, right where your garage is.

Would you be upset? Of course you would. You might even oppose the deal. Is that "acting in [your] narrow self-interest?" Most people would say, no probably not. Certainly nobody could blame you for your objections.

So here's Cedar Fair. The owner-operator of the Great America theme park has been renting land from the City for years. They have a long term lease. They pay a fair rent^*, which is more than their neighbor, the SF 49ers, can say.

Now this neighbor wants to build a stadium where Cedar Fair's parking lot is. Apparently nobody got their agreement in advance. Cedar Fair understandably doesn't think this is such a great idea. Nobody can blame them for that.

Or can they?

Mayor Gillmor thinks he can. But since when does a private business have to act in anybody's interest but their stockholders'? It sounds brutal, but that's capitalism, which Mr Gillmor surely knows a thing or two about.

If this episode says anything, it is that the 49ers stadium deal is on life support. Why else would the éminence grise himself have to come out from behind the scenes to stump for it? The simple fact is that the 49ers are demanding an exorbitant subsidy from Santa Clara taxpayers. Furthermore, they are so fixated on the feeding trough that they forget to say "Pardon me" to their neighbors.

In the words of City Manager Jennifer Sparacino, we Santa Clarans should strive to treat all parties "fairly and equally, without special favors."

--

^* Cedar Fair pays the city "at least $5.3 million annually in rent" for the Great America property. For their training camp next door, the 49ers pay "about $24,000 a year - less than what it costs to rent some two-bedroom apartments nearby."

One wild ride

Yesterday I wrote that the City Council should not spend any more money on studying the San Francisco 49ers' stadium subsidy request until the City had a signed agreement from Cedar Fair.

I didn't really expect the City Council to postpone this request for additional money, but today's press release from Cedar Fair — "Cedar Fair opposes proposed 49ers stadium" — is precisely the reason why the City of Santa Clara should have obtained a signed agreement with Cedar Fair before spending a dime of taxpayer money on studying the proposal.

Cedar Fair's opposition isn't a complete roadblock to the stadium proposal — in its press release, Cedar Fair states its willingness to "consider selling the remainder of its lease and all of its interest and assets to the City or 49ers for fair market value" — but its opposition completely changes the circumstances of the proposal. If the City Council still wants to move forward with this proposal, it needs to study the feasibility in light of these new conditions.

The San Francisco 49ers, however, were quick to provide an alternative plan — they'll just buy the theme park.

A couple of problems with this new proposal.

First, as Santa Clara's Deputy City Manager Carol McCarthy told the San Jose Mercury News "Any sale requires the city's approval and is contingent on having a class A theme-park operator . . . with proven financial ability to operate it."

So, to use a baseball metaphor, strike one.

Second, the San Francisco 49ers have asked the city for $222,000,000 in public assets plus 15 acres of land to build the stadium. If they don't have the money to build their own stadium, how can they afford a theme park? And if we the taxpayers are subsidizing their place of business, is our subsidy helping them to acquire more business assets? Should public money be used to help a wealthy team owner buy even more private assets?

Strike two.

Finally, in many of their presentations to city residents, the 49ers have tried to claim that they want the City to operate the stadium because they "are in the football business, not the stadium business." (My previous responses to that claim have been "our city isn't in the stadium business either" and "that's a little like Intel saying its not in the office building business." Intel certainly isn't in the office building business, but it didn't use that argument to try and convince the city to build an office for them.)

But if the 49ers don't want to be in the stadium business, why on earth are they considering a leap into the theme park business? Shouldn't they stick a little closer to their core competencies?

I'll call that strike three.

Is this latest theme park idea just a last-minute desperation strategy? Are the 49ers merely clinging to any shred of hope that this proposal is viable? Do the San Francisco 49ers need to keep up the image that the Santa Clara plan is viable in order to put pressure on San Francisco to complete its proposal? Once the San Francisco proposal is in place, will the 49ers still be talking about venturing into the theme park business?

Time will certainly tell, but until then, be sure your seat belt is fastened and keep your arms and legs inside the car at all times.

It looks like it's going to be a wild ride.


UPDATE:

According to Julie Patel's article in the Mercury News today — Niners eye new spot for possible stadium — there may be another option. The proposed stadium site would be moved to an overflow parking on the other side of San Tomas Creek. But if they used this site, the 49ers would need to resubmit all of their site plans and traffic analysis, and the City would have to develop a plan to replace the parking Cedar Fair would be losing.

So this is yet another reason the City Council should have received Great America's approval in writing before spending any money even studying this proposal. As Ms. Patel writes in her article: "Whatever happens, the shifting debate is bound to cost the city of Santa Clara more time and money, on top of the $500,000 approved to research a stadium."

Back to school

It's been almost three months since the City Council last had any public agenda item related to the San Francisco 49ers' request for the City of Santa Clara to contribute $222,000,000 in public funds for a football stadium (although it seems that they have been having plenty of closed-door meetings.)

Tonight, however, the proposal will be back in public session.

At this evening's meeting, the City Council will consider the request to spend an additional $185,000 in public money to continue to study this proposal.

In case you've lost track of the total to date, this new request will bring the total to an even $500,000. And of course that figure doesn't include all of the staff time that has also been spent on this proposal.

I'm certainly in favor of study and research in general, but before continuing to spend any more money studying this proposal, the City Council needs to get back to the Guiding Principles it established for itself back in January.

One of those principles was a requirement that Cedar Fair agree that they will not assert business interference or negative effects from the feasibility studies and that this agreement needed to be in place "prior to pursuing discussions with the 49ers."

The City does not yet have that agreement.

So, the problem with spending money NOW on a feasibility study is that conditions may change by the time Cedar Fair is willing to agree to moving forward with a stadium without any reduction in their payments to the City or any City agency.

Therefore, we shouldn't be spending money on a study now. We should wait until Cedar Fair has agreed in writing to not assert their own business interests. When Cedar Fair does sign such an agreement -- then we can take up the question of whether additional public funds should be spent studying it.

And there's one more issue.

The cost estimates in the San Francisco 49ers' proposal were based on the City Council approving the project in July 2007.

So once we have Cedar Fair's approval, the City Council needs to ask the San Francisco 49ers to submit a revised construction budget.

Once those two pieces are in place, then and only then should we even consider spending more money studying this proposal. Financial conditions can change, and there's no point determining whether or not the July 2007 estimate is feasible, since we are already well past that approval date.

What can you do?:

1. Attend the City Council meeting on TONIGHT at 7pm and speak out! Speakers will probably be limited to 2 minutes each.

2. Call the Santa Clara City Council at

(408) 615-2250

3. Write a Letter to:

Patricia M. Mahan, Mayor
City Hall
1500 Warburton Avenue
Santa Clara, CA 95050

4. Send an email to:

mailto:MayorandCouncil@ci.santa-clara.ca.us?subject=Concerns%20about%20stadium%20proposal

5. Spread the word! Tell your neighbors and friends and encourage them to get involved!

The 700 Pound Gorilla

Funny you should mention Great America, and their parent company Cedar Fair.

Back in January, the Santa Clara Mayor and City Council formally adopted a set of principles for evaluating the 49ers stadium proposal. These included a requirement that Cedar Fair agree in writing to not interfere with the stadium feasibility study, and that this agreement was required prior to pursuing discussions with the 49ers.

Here it is September, with no agreement in sight. The Mayor is saying that Cedar Fair's opposition is "the most substantive" problem delaying the feasibility study. However, "We haven't come up against one obstacle, or one factor, that violates our principles for going forward," Mahan said. (SJMN, Sept 4 2007)

Hmm... I think we have a touch of selective amnesia going on here.

What does Cedar Fair want?

Mark Purdy, one of our more thoughtful South Bay sports commentators, wrote a neat essay in the San Jose Mercury early Friday morning on the current rumble between Cedar Fair and the San Francisco 49ers. However, only in his last couple of paragraphs does he touch on the concerns that we Santa Clarans have about subsidizing a billion-dollar stadium with $222 million of public money. We certainly have no such "money" lying around. It will be nearly all public debt which we'll be paying off for many years - all to subsidize a millionaire football team owner.

Getting back to the article itself, Mr. Purdy notes: "Well, what about the opportunity for a theme park corporation to partner with the NFL and one of its most high-visibility franchises?"

I seriously question what kind of partnership that would be, as you'll have a different breed of customers for each venue. The expense of a stadium is so great, it is difficult to imagine that season and individual ticket sales alone will close the gap. Some form of "Personal Seat License" could well be imposed - and Great America visitors won't see the inside of any new stadium unless they shell out for a seat license like everyone else.

Before PSLs for the Oakland Raiders were finally eliminated in late 2005, they ran from $250 to $4000. When 10-game season tickets first took the place of PSLs in Oakland, they ranged from $470 to $910. A current seat map of McAfee Coliseum shows those same ten-game tickets now running from $260 to $1510. How any new "Stadium Builder's Licenses" will be priced for a new stadium in Santa Clara - not to mention the season ticket prices - is the stuff of pure speculation. Simply start with Oakland's example and work your way up from there. In the end, boosters of any stadium in Santa Clara may be in for a rude shock when season ticket - and possibly SBL - prices are finally posted.

Now, Mr. Purdy is right to question Cedar Fair's flip-floppy statements on the stadium proposal. But he appears to be saying that the current agreement on parking spaces for Great America gives Cedar Fair unfair veto power over the stadium. It does not. If Cedar Fair has plans for the future of Great America that would bump up its attendance figures - and fill up a parking area they're contractually entitled to - then they're well within their rights to insist that their needs be honored. Changing that agreement could force the City to accept less in revenue from (or agree to some cash compensation to) Cedar Fair. Either has an immediate negative impact to the City's General Fund - at the same time that compensating revenues from any football stadium are far from guaranteed. In short: A deal's a deal, guys.

Maybe Cedar Fair is as shrewd as Mr. Purdy seems to suspect. With that, here's pure speculation from this writer: Could Cedar Fair also be holding out for televised promotion of Cedar Fair theme parks around the country during 49ers games? It's amusing to contemplate our "roller coaster company" trying to make sense of the NFL's television blackout rules - rules designed to compel local ticket sellouts. In short, sell out your stadium 72 hours in advance of a game - or no game goes on the air for 75 miles. I'm oversimplifying this, I know. But it would sure be a kick if Cedar Fair were to find itself unable to promote Great America on TV in its own city due to poor ticket sales at the football stadium next door.

We could speculate on these corporate intrigues all day.

As a Santa Claran, however, I still oppose the stadium in general - and any corporate welfare for the millionaire Yorks in particular.

Our city - we taxpayers - will incur a debt of approximately $222,000,000.00 in order to hand that tribute over to the 49ers. Our debt service per year on any such amount will certainly wipe out the paltry $5M in rent the 49ers are offering to the Santa Clara Stadium Authority. That, plus those parking tax revenues dangled before our eyes, all accrue to the Stadium Authority - and not to the City's General Fund.

It gets worse: Depleted G-3 Fund or not, the Yorks are squeezing us for money so that they can then squeeze the NFL for more money. They want to use Santa Clara's money to improve their own cash flow and also to make their own private asset - the team - more valuble on the open market. Other NFL owners likely see such a rising tide lifting all boats, and you can be sure that they are delighted at such a prospect. That's still no reason to build a one-billon-dollar stadium in our city, and it's certainly no reason to hand millions in public monies over to a millionaire team owner who should be funding any stadium on his own or with the NFL.

But the worst problem with giving corporate welfare to the San Francisco 49ers is that it sets a dangerous precedent: Once we issue debt - or steal from the City's Utility Reserve - and hand those proceeds over to a private, for-profit sports franchise, we'll never be able to stop future "needy" millionaire welfare clients from doing the same thing. Their rationalization will be that, since we subsidized the York family from the public purse in 2008, we will have to do it again. And again.

We should be as concerned about that precedent as we are about Cedar Fair's parking spaces.

I do urge fellow Santa Clarans to beware - this is not the deal we think it is.