Sunday Night at the Movies

There was a spirited crowd at Peterson Middle School on Wednesday night, eager to learn more about the most important City-wide initiative of the century -- Measure J, the Stadium Subsidy.

And, learn they did. Kolstad & Kennedy covered topics as varied as the technical minutia of redevelopment law, school financing, game-day public safety measures and the stadium's potential impact on our perilously overdrawn City budget.

They even discussed campaign finance reform:



While we were not able to capture every moment of the evening's proceedings, we have posted as much as we could on youtube, where you will find discussions on:

• Stadium jobs
• Traffic
• School funding
• Taxes
  
• Economy & economic stimulus
  
• Public safety
• Stadium financing
  

Sit back, grab a bag of popcorn & let the good times roll!

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.

"Net Present Value" vs. "Actual Dollars"

Mayor Mahan & Councilmember Matthews have revolutionized the housing market with their discovery that "net present value figures ... are based on outdated economic assumptions" and that we should focus on "actual dollars" paid over 40 years!

Madam Mayor, I'll buy your home for $1 million -- a good $100,000 over the current market price. I'll pay you in 2050. Do we have a deal? Can you vacate by next Tuesday?

Fair Market Rent for the proposed stadium site is currently over $1.8 million per year. Even with the new Mahan-Matthews Math, that should be worth over $72 million in "actual dollars." Too bad the 49ers LLC only signed up for $40 million.

This is a bad deal -- with or without the lies the Mayor is spreading.

Don't Sign the Petition!

In Santa Clara, it takes something like 6,000 signatures to get a measure on the ballot. The SF 49ers have stated they will pay to get the signatures (generally those nice signature-gatherers in front of the Safeway, etc., are paid per signature.) This is stated in a letter from the SF 49ers for Tuesday's agenda.

The letter also includes a copy of their petition & proposal.

It all looks pretty innocuous. The verbiage of the proposed change to law is likely to be almost (if not completely) identical to what the City Council will put forward.

The pernicious aspect of this move is that with the SF 49ers' backed initiative, they can bypass CEQA.

The California Environmental Quality Act safeguards only apply to projects which are put forward by the City Council. So, the City Council could not put this on the ballot until everyone is satisfied with the Environmental Impact Report, proposed mitigations, as well as the City Council's acceptance of certain things that won't be mitigated (e.g., "Yeah, it will be loud & disruptive -- deal with it.")

This Tuesday's City Council (15 Dec 2009) has one agenda item (6B-1) which is basically a proposal for the City Council to step away from performing the due diligence for our city.

From the agenda report:

The Council can consider various options in how they review the stadium related materials on this evening's agenda:

Option 1: Take under review the staff's report dealing with the EIR's required Mitigation, Monitoring or Reporting Program and related ballot measure funding; or

Option 2: Have the 49ers present the initiative petition filed with the City Clerk and briefly address the substance of the initiative. If Council is satisfied with the community initiated petition process then it would not be necessary for Council to take action on the MMRP and related findings. Additionally, if Council determines that the Ordinance portions of the community initiative petition and the Council initiated ballot measure are sufficiently similar, then Council could continue discussion of their ballot measure language and the EIR's MMRP and related findings to a later date in January/February 2010 to allow the initiative petition process to proceed to qualification for the June 2010 ballot.

In other words, Tuesday night, the Council can vote to abdicate their responsibilities.

What can you do?

• Come out & speak against this end run around our rights!
• Send email to let the Mayor & City Council know you are outraged by their actions!
• Send letters to the editor!
  
• Spread the word!
  

Environmental Impact Process

The long-awaited Environmental Impact process for the proposed SF 49ers stdium has begun. You have until Sept. 15th to voice specific concerns with the proposed stadium's impact to the environment and our quality of life.

The first step in the EIR is for the public and interested agencies to provide input on specific concerns they have with the physical aspects of the stadium. These concerns can include noise, traffic, parking, light pollution, visual concerns, impact to the environment.

There will be two public scoping meetings held on Sept. 2. These meetings are an opportunity for the public to provide verbal input on specific areas the EIR should cover. Written input can also be provided. All input is due by Sept. 15th, 2008.

This input, together with regulatory requirements and input from staff, will form the basis for the EIR. The EIR will assess the risks and impacts of the identified concerns, and propose ways to mitigate those concerns.

The outline for the EIR is posted at:

http://santaclaraca.gov/pdf/collateral/49ers-20080818-Stadium-Project.pdf

Now is your time to act.

Read the outline, write down all your concerns. In addition to the meetings on Sept. 2nd, comments or questions may be directed to the project manager, Jeffrey Schwilk, at 408-615-2450 or jschwilk@santaclaraca.gov or by postal mail at:

City of Santa Clara
Planning Department
c/o Jeffrey Schwilk, AICP
1500 Warburton Avenue
Santa Clara, CA 95050

The cold, cruel truth

These words of wisdom are from Ray Ratto's recent article on the A's stadium — Time to call A's owner for crying wolf on stadium — but the analysis holds just as true for the current San Francisco 49ers' request for a massive public subsidy from the City of Santa Clara . . .

the cold, cruel truth, proven again and again by economists everywhere, is that stadiums have not paid off for anyone except for the team owners.

Starbucks on Mars

The article is almost a year old — A stadium in Santa Clara? You'll be dead before it happens — but every time I read this line . . .

There will be a Starbucks on Mars before there's a 49ers stadium in Santa Clara.

. . I have just a little hope that fiscal sanity will triumph over reckless spending in Santa Clara. [And if it doesn't, maybe the latte run will be just a bit more exciting.]

Thanks Scott Ostler!

A quick thought

If contributing $222,000,000 and 15 acres of land to a project AND assuming the risks of stadium operations were such a great deal, why can't the San Francisco 49ers find private investors willing to invest private money into this project?

The fact that they have turned instead to the City of Santa Clara to ask for a massive public handout for this project is perhaps the best evidence that this enormous gift of public money is a poor investment.

One of Silicon Valley's many claims to fame is its venture capital firms, and if the 49ers can't find private investors in this area (or anywhere else, for that matter) to partner with them, then they should not expect the City to provide the money for them.

The New England Patriots have proven that football stadiums can be built with little to no public assets. The 49ers should take a page from their play book.

Two teams, one stadium

Mercury News sportswriter Ann Killion raised an interesting idea in a recent column — maybe the 49ers and Raiders should build a stadium together, just as the New York Jets and New York Giants are doing.

As Killion writes in her article "A's, 49ers trailing on stadium scoreboard"

Football stadiums are a questionable investment for everyone except a football team. Because of their size, they can be used only for NFL games, the occasional big soccer game, random bowl game or rare mega rock concert. NFL football stadiums are guaranteed for only 10 dates a year. Factor in the handful of other events suitable for such a venue, and you're lucky to push that number to 15 events a year.

And that's worth almost a billion dollars?

If it could be built and operated with private funding, a joint stadium would certainly make much more economic sense. Whether such a stadium — even one funded privately — would fit in Santa Clara, however, is still an open question.

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.)

Infinity not as infinite as it used to be

The feasibility study is not done. No contract has been signed. But already the flip-flopping has begun. The issue is cost overruns, both during construction and operation of the stadium.

At a meeting with the community in May this year, SF 49ers Director of Strategic Planning Jed York tried

to convince skeptical Santa Clarans that they would not be exposed to financial risk, either during construction or once the stadium opens.

"The 49ers' risk is infinite," Jed York, son of 49ers owners John and Denise DeBartolo York, told church members and other city residents Wednesday night at a meeting at the Resurrection Lutheran Church. "In your doomsday scenarios, we are taking that risk."

In September, a flyer distributed by the 49ers at the Art & Wine festival says the offer is still good:

No, there are absolutely no hidden costs. The city and its residents will not be responsible for cost overruns or operational shortfalls.

Here is a picture of the flyer. Click on the image to see a close-up of the highlighted part:

Earlier this month, however, York took a giant step back from that claim. In an interview with Mark Purdy, a sportswriter for the Mercury News, York changed his mind about that willingness to assume all risks:

". . . if you're losing money, the 49ers are going to write a check to the city council at the end of the year to the city general fund to make up for any losses that occur at a football game.''

But since the 49ers only play at home 10 days a year, does that mean the city is on the hook for the other 355 days? What about maintenance costs? Will they be apportioned by the same ratio, i.e. the city is responsible for 97% of all maintenance cost overruns?

infinite, adj.

1. Having no boundaries or limits.
2. Immeasurably great or large; boundless.

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!

Commonwealth Club discussion on "The Future of the 49ers"

Two weeks ago, I was invited to be a guest at a Commonwealth Club panel discussion entitled “After Further Review: The Future of the San Francisco 49ers.” The panelists were: Michael Cohen, Director of Base Reuse and Development, City and County of San Francisco; Ann Killion, Sportswriter, San Jose Mercury News; Patricia Mahan, Mayor, Santa Clara; and Carmen Policy, Former President and CEO, San Francisco 49ers and Cleveland Browns. The moderator was Dan Ashley of ABC7 News.

It was a fascinating discussion.

I was most surprised by two issues. First, the San Francisco stadium plan is quite serious and moving ahead quickly. Michael Cohen, who is in charge of the redevelopment efforts at Hunters Point, made it clear that while they were shocked at the Yorks' sudden withdrawal from negotiations last November, they quickly regrouped and developed an aggressive stadium development schedule. They met with the 49ers organization last December to present their new timetable, and to date they have met every one of the benchmarks on that new schedule.

The second surprise was the very strong sentiment expressed by three of the four panelists that the 49ers should stay in San Francisco. While I expected Michael Cohen to be in favor of the site, it was probably Carmen Policy who painted the most vivid picture of the possibilities of the Hunters Point location. Policy was clear in his belief that the 49ers’ first priority is a new stadium, but he was also clear that even if the San Francisco deal is not quite as good, the team should stay in San Francisco. In fact, Policy indicated that “if the NFL had its druthers, the 49ers would stay in San Francisco,” as Mercury News reporter Mike Swift noted in his article about the discussion – “49ers Decision a Year Away.”

Cohen answered many of the objections that I have heard about the site and outlined the plans for transportation improvements in the area.

Ann Killion also expressed strong support for the team staying in San Francisco, and she knocked down many of the myths promoted by stadium supporters in Santa Clara.

While Patricia Mahan talked about an “entertainment district” in Santa Clara, Killion replied that football stadiums are not like other types of professional sports facilities. She said that with a football stadium, 70,000 people come in 10 times a year to see the game, and then they turn around and leave. They don’t stick around and spend money.

She also noted that public subsidies for stadiums are a very hard sell in this area because we have the examples both of what can happen when public subsidy goes wrong (see Raiders, Oakland) and of how stadiums can be built without public subsidies (see Giants, San Francisco.)

Mayor Mahan started reading a list of cities smaller than Santa Clara that host NFL football teams, but the moderator interrupted to say that it wasn’t about the size of the city, it was about the money. [As we’ve discussed here before – "A tale of two cities."]

I would highly recommend tuning in for the broadcast of the discussion. It will be aired this Thursday, September 20, on 1590AM. Here are the full details:

Thursday, Sept. 20, 2007
KLIV-AM 1590 kHz
7:00 PM and 10:00 PM

If you miss the broadcast, you may be able to listen to it or purchase a recording of it at the Commonwealth Club website. It’s not yet available there, but I will update this post with a link as soon as it’s available.

If you want to learn more about the stadium issue, this discussion provides an excellent analysis of the situation and the state of the current proposals.

Three million Benjamins

Photographer Chris Jordan has a new series of works entitled "Running the Numbers: An American Self-Portrait."

He created this portrait of Benjamin Franklin using images of 125,000 $100 bills — $12,500,000 representing "the amount our government spends every hour on the war in Iraq."

To depict the $222,000,000 subsidy that the San Francisco 49ers have requested from the City of Santa Clara to build a football stadium, we'd need about 18 of these expensive portraits. [And if you include the value of the land the City has been asked to donate — for a grand total of about $287,000,000 in subsidy— we'd need 23.]

Either way, that's a lot of Benjamins.

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.

The Odd Couple, or Here We Go Again

It's more than two months old this time and it's getting stale. But in fact, it's just a reprise of the idea that first floated to the surface back in January: A marriage of convenience between Al Davis' Raiders and the York family's 49ers.

Now, the problem isn't the Raiders themselves, but the team's owner, Al Davis, who has been hauling multiple parties into court and suing them since before the Raiders split from Los Angeles. Millions of dollars in legal fees have been squandered by all sides - and that level of litigiousness certainly makes this Santa Claran wonder why the idea is even being proposed - again.

We thought this was properly dealt with back in January by Raiders Chief Executive Amy Trask, who simply said in essence that the Raiders would be concentrating on the current season in a stadium they're simply thrilled with, and that they are not actively seeking out the 49ers as business partners.

But like a zombie, this 'joint stadium' idea has come to life once again, walking the streets by night and claiming more victims, many of them credulous 49er Faithful. This time, on May 29, a columnist from the Sacramento Bee blew some more zombie powder in the creature's face.

True 49ers-Raiders synergy? Not a chance - and to their credit, neither author above really attempts to make such a limp case. Rather, the 'sticker shock' of what will likely be a one-billion-dollar stadium proposed for our City of Santa Clara has some 49ers business-office people looking for more ways to make others feel their pain.

But what the article fails to underscore is that any such partnership of the Yorks and Al Davis makes Davis a partner of the City of Santa Clara as well. Santa Clarans should be looking at any such agreement with deep suspicion, based on Davis' past dealings with the County of Alameda. Such a cooperative venture involving Mr. Davis may turn out to be anything but "cooperative".

In fact, Al Davis' latest lawsuit against the NFL was finally thrown out by the California Supreme Court only on July 2. If all we have to look forward to in any future dealings with Mr. Davis is more frivolous litigation, this Santa Claran strongly suggests that our guest be handed his hat and escorted to the door.

Note also that the Raiders' lease at McAfee Coliseum is over in 2010; they'll have to do some real tap-dancing to keep themselves there year-to-year until 2012. But Alameda County and the City of Oakland are still on the hook for the $200M worth of debt they used to fix up the Coliseum in 1996 - and that debt, on which Oakland and the County pay roughly $11M per year, will not be retired until the year 2025.

The likelihood of the NFL allowing another franchise into McAfee, with two teams just down the road? Just about nil. If Lew Wolff does finally get the green light to move the A's to Fremont, only the Warriors will be left in the smaller Oracle Arena. We note a similar situation from the 1990s, when both the Rams and the Raiders left Los Angeles.

All of this makes one wonder how long the 49ers will commit to staying in Santa Clara. Now, that will be at least until Santa Clara pays off its obligations in the years 2033 or 2038, right? Hello?

You could also ask Oaklanders about their likely reaction to Al Davis and his Raiders skipping out on yet another dinner check in any move to Santa Clara - but you'll probably want your kids out of earshot first.

Now, there is an idea in the latest article that that should get honorable mention: Having Al Davis and the Raiders be full contributing partners in any stadium - as long as that lets the City of Santa Clara completely off the hook.

That's mere speculation on the part of one sportswriter right now. So kindly permit this reader to take his suggestion one step further: If the two teams prove they're serious about this - that they'll (1) finance the entire stadium cost privately, (2) assume total ownership of the stadium, (3) mitigate its use of all City services such as police overtime and (4) waive any and all tax abatements - this stadium opponent might get on board.

But if Al Davis, whose team is in financially worse shape than most of the other NFL franchises, jets down from Oakland demanding the currently-proposed level of corporate welfare from the City of Santa Clara, we residents should be up in arms: If the millionaire owners of the 49ers are not entitled to a public dole of over two hundred million dollars, the Raiders - after the litany of abuses by their owner in Oakland - certainly are not entitled to benefit from that giveaway either.

Al Davis could end up costing the City of Santa Clara a lot more than he's worth. Just ask the Alameda County Board of Supervisors.

From the inbox

It's been a few weeks since we've had the opportunity to open up our inbox and post an email from one of our readers, but I'm glad we have the chance to do so this week.

Today's letter comes from Santa Clara resident Susan H., who lives in a neighborhood very close to the location of the proposed stadium. She sent us a copy of the letter she sent to the Mayor and City Council, and we are posting it here with her permission:

Dear Mayor Mahan and Council Members,

We have been living in the area near the proposed stadium site for the past 30 years. We’ve seen changes such as new housing developments in place of where the stable used to be, and erection of the power stations, the Niners training camp and soccer field, as well as improvements to this area, especially the addition of Rivermark Plaza. All was fine and added value to a quality of life to the area residents.

However, I cannot see the benefit of having a stadium near our residential area because facts have always shown that property value will decrease in areas near any stadium, not to mention the noise pollution, environmental pollution, and excess wear and tear on our local roads, not to mention the decrease in the quality of life in our neighborhood. We certainly do not welcome the sound of construction going on for the next few years as well.

Since the City is planning to subsidize this project with public money, then it should be put up for a public vote. You need to allow the public to decide, not just amongst the Council. I urge you to place this up for a public vote for the sake of the residents in Santa Clara, as well as your integrity. This is a republic country and we should have a say so in how our tax dollars are spent. If you do not allow us to vote, then it would be no different from a dictatorship. I urge you to give this much reconsideration and thoughts. I am sure that you would want to leave a positive legacy, not a negative one. Thank you.

Sincerely,
Susan H.

It's no surprise that all of us at Stadium Facts share Susan's concerns about the impact a stadium would have on Santa Clara, and Susan summarizes these concerns well. For those residents who live in the immediate vicinity of the proposed stadium, those impacts are even more significant. The years of construction would be just the start. Once the stadium is opened, anyone who lives anywhere near the stadium will have to contend with street closures and restrictions, increased noise and traffic, and increased crime.

NFL football stadiums are not an asset to a neighborhood, and if property values in these neighborhoods fall, the city will collect less in property taxes. In fact, at least one study suggests that simply announcing plans to build a publicly-subsidized stadium can cause property values in the entire city to decrease.

In their study The Impact of Stadium Announcements on Residential Property Values: Evidence from a Natural Experiment in Dallas-Fort Worth, economists Carolyn A. Dehring, Craig A. Depken, II, Michael R. Ward found that

. . . a series of announcements regarding a new publicly-subsidized stadium in nearby Arlington, Texas, had a deleterious effect on residential property values in Arlington. In aggregate, average property values declined approximately 1.5% relative to the surrounding area before stadium construction commenced.

Every property owner in Santa Clara, especially those who live closest to the proposed stadium, should be concerned about this evidence.

We also support Susan's call for a public vote on any proposal that would require any public financing for or operation of a stadium. The City Council should WANT the support of the residents for any project of this size.

Thanks for writing Susan! I hope you'll continue to contribute to the discussion.

Cities and the stadium business

At his blog Field of Schemes, Neil deMause, co-author of the book Field of Schemes, recently summarized an excellent special report from the Baltimore Sun of the pitfalls of stadium ownership for cities. As he writes in his post Aberdeen: How not to build a stadium deal,

It's an outstanding reminder that when it comes to stadium finance, it's increasingly less about who pays the initial bills than about who reaps the revenues down the road.

The experience of Aberdeen is a cautionary tale for any city considering the possibility of operating a professional sports stadium. As Aberdeen's current mayor said in 2005,

Municipalities, especially this one, shouldn't be in this type of business.

The San Francisco 49ers have requested not just $287,000,000 in public assets for the construction of the stadium. They have also requested that the City of Santa Clara create a Sports Authority, which would both assume an additional $330,464,000 in bond debt and operate the stadium.

And taking on debt and operating the stadium are two additional risks, as the experience of Aberdeen demonstrates.

I hope you'll read the full article at the Baltimore Sun website, but here are a few interesting highlights:

Every game has been a sellout since the 6,000-seat stadium opened in 2002. Companies such as Bank of America have paid to be sponsors. . . .

But even on days like this, when the city-owned stadium is packed, Aberdeen loses money.

This is an important cautionary note — a full stadium does not equal profit for the city.

The Harford County community owes $6.7 million in stadium-related debt, and millions in interest, on a payment schedule stretching to 2022. The city's stadium fund has posted operating losses that total more than $1 million since 2001, forcing Aberdeen to dip into its treasury.

And these debts and operating losses are for a small, minor league stadium. The debt and potential for operating losses will be much bigger for an NFL stadium.

In closed-door negotiations, Aberdeen signed over to the Ripken businesses most of the money to be made from the baseball games. City officials had intended to cover the bills in other ways, including fees, taxes and a deal with Nottingham Properties to develop adjacent land. But the city's contract with Nottingham contained no penalty for delay. The land remains mostly acres of dirt.

Under the current proposal from the San Francisco 49ers, the breakdown of revenue streams is the same, with the notable exception of stadium naming rights, personal seat licenses, concessionaire rights, etc. But these revenue streams are NOT profit for the Stadium Authority — the 49ers' proposal calls for the Stadium Authority to borrow against this expected revenue in order to build the stadium. Like the Aberdeen IronBirds, the San Francisco 49ers will make most of the money from the actual football games.

The city, with a general fund budget at the time of just $7.6 million, pledged $4 million.

Most minor-league stadiums are owned by larger jurisdictions that can spread the costs over bigger budgets - the situation in Prince George's County, where the minor-league stadium is overseen by a multi-jurisdictional authority.

What's particularly interesting to me about these numbers is that even in the case of a minor league baseball team, cities look to spread the cost over a larger region. And Aberdeen pledged a little over half of its annual general fund budget to the project. The current San Francisco 49ers' proposal calls for Santa Clara to take on FOUR AND A HALF TIMES its annual general fund budget for a stadium. The scale of the subsidy request is simply shocking.

The city was counting on a ticket tax and the potential for parking fees, advertising on a billboard and non-baseball events. The tax raised about $140,000 the first season, but the city had little success attracting concerts, banquets or similar functions. In 2002, those events brought in only $2,000.

The trickle-down profit scenario outlined in the 49ers' proposal depends on not simply attracting other events, but making a profit from these events. If there is no profit from outside events, no money will be set aside for capital improvements, and I'm sure we can all guess who will be on the hook for those expenses.

"The Ripken family has put Aberdeen on the map," said [Former Mayor Douglas S.] Wilson, after rattling off the names of major leaguers such as Orioles right fielder Nick Markakis who have passed through Aberdeen. "To create that in a small government, to be able to have a minor-league baseball team, I mean, it's pretty phenomenal."

We've seen the same sort of thinking here in Santa Clara. Instead of addressing the very real financial costs and potential risks, stadium supporters draw on such far-fetched comparisons as the Wright brothers and the moon landing.

Instead of such wishful thinking, we need to focus on the very real financial risks involved in the stadium business.

After all, if there was money to be made in operating a stadium, don't you think the 49ers would want to do that themselves?

Stadium proposal discussion on KKUP 91.5 FM

Tomorrow morning — 7:00 am, Wednesday, July 25 — Don Cormier at KKUP 91.5 FM will be interviewing a couple of people regarding the proposed San Francisco 49ers stadium in Santa Clara.

I hope you'll tune in to the show!

Update: if you missed the show, click on the KKUP logo below for a recording (57MB MP3 file)