Cubic Zirconium

"It's kind of like getting the engagement ring," Mahan said regarding Santa Clara City Council's decision January 15th to move forward with negotiations to subsidize a stadium for the San Francisco 49ers.

"I'm ecstatic," Jed York, son of team owners John and Denise DeBartolo York, said after the 6-1 vote.

San Francisco 49ers officials stated that paperwork would be filed first thing in the morning to start the Environmental Impact Report required for the stadium.

But something seemed to have been lost in the translation from ecstasy into action, as the billionaire's corporation did not submit paperwork first thing the next morning.

In fact, it was 8 long weeks before the SF 49ers made the very first move in getting the paperwork done for a stadium. March 14th, they ponied up a paltry $14,113 to start the review process for building a 68,500-seat stadium in Santa Clara.

It would appear that Santa Clara's suitor is treating us like the dumb cousin of our exotic neighbor to the north.

And Mme. Mayor, you might want to check your finger. That engagement ring just might turn it green.

"An all-out blitz"

... an all-out blitz to win a multimillion-dollar sweetheart deal from [elected officials] ...

Is this Stadium Facts ranting about the recent wave of glossy mailers from the San Francisco 49ers to voters in Santa Clara? Nope.

Despite making an eye-popping $20 billion from TV deals ... [this football operation] desperately wants to make $600 million more by taking eight games a year off of free TV and hiding them on the ... new NFL Network.

Is this some football-hater, carrying on about corporate greed and politicians with questionable ethics? Nope.

This is Duriel Harris, former All-Pro wide receiver for the Miami Dolphins, in his letter to the editor of the San Jose Mercury News. He concluded:

This only hurts the fans who love our game the most... It's not too late for the NFL to resolve to treat fans right in 2008.

You can read the full letter here.

All that and the Brooklyn Bridge, too?!

Editorial cartoonist Steven DeCinzo won 1st Place for Best Cartoon from the Association of Alternative Weeklies in 2000. He has penned a number of incisive panels on the 49er's proposal. The latest appeared in this week's Silicon Valley Metro:

The Brooklyn Bridge has of course been the scourge of gullible people since 1901. A hundred years from now, will cartoonists be drawing NFL stadiums instead?

Here are some earlier commentaries from Mr DeCinzo:

Feasibility Study: $111 million Impact to the General Fund

The numbers are in, and the proposed stadium subsidy adds up to be a big fat loser for the city of Santa Clara. The city's General Fund would lose $111 million in cash, lost revenues and opportunity costs. To see where all that money goes, check out this presentation.

You will see that NFL events will provide no financial benefits to the city. In fact, in this proposal, the City would have to subsidize NFL events with revenue from non-NFL events. Rather than enriching a for-profit enterprise, let's focus on the needs of real Santa Clarans.

We can do better than this. We must do better than this.

What about the schools?

Redevelopment Agencies (RDA) divert the majority of property taxes collected in an RDA district to development, with the net effect of starving cities and schools.

At some point, the state realized how damaging this can be, and passed SB211. Under SB211, any minor change to the RDA forces the RDA to relinquish some of their sheltered money back to specific groups -- notably schools. This is called an SB211 amendment.

The stadium subsidy would require the RDA to borrow $65 million, thus forcing them to do an RDA amendment.

SB211 doesn't require a stadium. In fact, the RDA could pass an SB211 amendment today, triggering those pass-through payments, but has chosen not to do that.

Moreover, if the RDA borrows more money, they will not be able to repay their RDA debt early (which the city is currently on track to do in 2020.) Once the debt is paid off and property taxes revert to normal distribution, schools will actually get significantly more than they get with SB211.

So, if you take the long view, an SB211 amendment would not be good for the schools. But if you feel the schools are really hurting today, and that they need a near term injection of cash, you don't need a stadium. You just need to pass an SB211 amendment.

Subsidy opponents interviewed on KPFA

This morning KPFA, 94.1 FM, interviewed Byron Fleck, a founding member of our sister organization NotWithMyMoney.org. You can listen to a recording of it here -- fast forward to about the 33'42" mark.

Also on the show was Neil deMause, co-author of the seminal book "Field of Schemes: How the Great Stadium Swindle Turns Public Money Into Private Profit," and the wesbite of the same name.

KPFA is listener-sponsored, and has been broadcasting from Berkeley, CA since 1949.

Just barely above junk bonds

The 49ers would like Santa Clara taxpayers to believe that building, owning and operating this stadium will be a fabulous investment of our money. Better than buying Google stock at $100, or Sunpower at $25.

Some members of City Council are all but ready to put on Gold Rush outfits to repeat that chant.

But if it's such a screaming good deal, why haven't the 49ers themselves scooped it up yet? Or the city of San Francisco, which has been looking this over even longer than we have?

Well, one source for impartial opinions turns out to be the bankers, because to build a 68,000 seat stadium, the city will have to borrow a lot of money. The bankers are the ones who will have to take a hard look at the deal and decide how risky it is. The bankers have no personal attachments to this, only their money. And money itself is neutral.

At the November 20 City Council meeting, David Brodsly, the city's own bond consultant struggled to spit out the cold hard facts: the Stadium Authority bonds will be BBB-rated -- just one step above junk bonds!

Besides the bruised egos ("They think our pride and joy is junk!") there is also the practical matter of bond interests. Safe loans have lower interest rates. Risky loans have higher interest rates (think pay-day loan.) Higher interest rates drive up the total cost of borrowing of money. Ultimately this will make it harder for the stadium to break even.

Nobody on City Council batted an eyelash at this. Here we are, mortgaging our future for this white elephant, but nobody even registered a reaction when a disinterested bystander calls it a turkey.

Here's a video clip of the remarks, with a transcript:



Santa Clara resident Don Buchanan: "What kind of a rating do you think this bond will receive?"

David Brodsly, Managing Director, KNN Public Finance (the city's bond consultant): "The two bond issues that are ... umm ... being contemplated by the Stadium Authority ... they would be the [inaudible] ... the ... the admissions bond would probably be in the BBB level which is the bottom of the investment grade range, that's ... it's ... that ... it's the less certain area of the market, but that's ... that's a good guess standing here today."