Friday, May 11, 2012

Home is Where... the Luxury Seats Are (cont'd)

Well, it’s good news for Vikings fans:  the bill to fund a new stadium in Minneapolis survived its final hurdle, passing in the State Senate, ensuring that the Vikings will stay put for years to come.  Under the final bill, the share of construction costs for the Vikings and the NFL will be $447 million; $348 million will come from the state and the City of Minneapolis will pony up $150 million.

The proposed new stadium's interior

Now that Minnesota, and the rest of us, can move on, let’s jump back to where we left off yesterday with our look at stadium financing.  You’ll recall that we covered the first mean to finance construction of new venues—100% public funds through the sale of bonds—and then we looked at how Cowboys Stadium was paid for—with a mix of public and private funds.  Today, we examine a second example of the latter, and move on to our third means of financing…

Santa Clara Stadium:

The San Francisco 49ers have called Candlestick Park home since 1971.  Originally built as the stadium for the MLB San Francisco Giants, it continued to be a multi-use park until the Giants moved to their new home, AT&T Park in 2000.  Situated Candlestick Point on the western side of the San Francisco Bay, fans, players and the media have long complained about the cold and windy conditions that, though not too extreme for football, made attending baseball games almost unbearable, particularly in the early years of the stadium (which first opened in 1960).  Adapting the seating for football has resulted in an unusual arrangement, leaving a large portion of the seats that are in right field territory hidden behind a sideline grandstand during football games.

In sharp contrast to the process that located, financed and built Cowboys Stadium, the journey toward Santa Clara Stadium was longer and had some hairpin turns.  In 2006—nine years after a first failed attempt to get a new stadium plan off the ground—the 49ers put forward a plan to build a new stadium at the same site, Candlestick Point, at an estimated cost of a little over $900 million.  However, as in previous discussions over the previous decade, disputes with the San Francisco officials arose concerning the precise location of the venue, which was to include retail space and housing.  Much of the dispute centered on the team’s concern over traffic to and from the new stadium, especially given the additional traffic for the retail and housing developments; the city simply failed to provide an adequate solution beyond the existing two-lane road that was the only route between the stadium and the freeway. 

It's not that far
Instead of slogging through further negotiations, the team decided to look to the community of Santa Clara, located 40 miles to the south, which is where the 49ers’ offices and training facilities have been for the past 25 years.  Unfortunately, withdrawing the stadium proposal was not a cut-and-dried affair; San Francisco had positioned the proposed stadium as the centerpiece for its bid to host the 2016 Summer Olympics.  When the team abandoned its Candlestick plans for Santa Clara, San Francisco had to withdraw its bid.  This, and the anger over its beloved team leaving the city, inflamed the passions of both San Francisco citizens and public officials, to such an extent that a California State Senator introduced a bill prohibiting the 49ers from building a stadium within 100 miles of the San Francisco if they did not build within city limits.

The club’s dealings with the City of Santa Clara has been much less contentious by comparison, and the terms of the financing for the stadium seem more than fair.  Under a voter-approved proposal, called “Measure J,” the city owns the property on which the stadium will be built, and will lease the land to the team for the stadium.  The city has secured an $850 million loan for construction, and the team will be responsible for any construction costs exceeding that amount.  The city’s stake will also be paid for with a hotel tax and funds (capped) from the city’s Redevelopment Agency.

A rendering of the new stadium

Remember from the last post how Jerry Jones and the Cowboys received a $150 million loan from the NFL through the league’s “G-3” program?  Well, in February, the NFL approved a $200 million loan to the Niners in the next generation of the program, “G-4”.  In case you were wondering, loans taken from these programs are paid back through certain types of receipts from ticket sales.

UPDATE:  A dark, but small, cloud is threatening the sunny outlook on the development of the Santa Clara stadium.  In late June 2012, the Santa Clara County Oversight Board voted to withdraw $30 million, which had been approved by Santa Clara voters, from funding of the new stadium.  The Oversight Board is a newly created body that determines how property taxes from redevelopment zones, the source of the earmarked funds, are spent.  The explanation?  Officials said that they wanted to use the money to pay teachers--a version of the guns vs. books debate.  This move came as a surprise to the officials in the city of Santa Clara as well as the 49ers, who quickly filed a lawsuit to keep the county from taking back the money.  However, if the team loses the battle, they will simply absorb the cost, which amounts to less than 3% of the stadium's total cost.

100% Private Funding   

Now we come to third, and most rare, form of stadium financing (at least in the NFL)—all-private funds.  The latest football mecca to be built purely with private money is the new Met Life Stadium—home to both the New York Jets and the New York Giants.

As is the case with other stadiums, Met Life Stadium is, on paper, owned by the New Jersey Sports and Exposition Authority, and the teams are in a lease with the Authority to use it.  Built in East Rutherford, New Jersey, right next to the former Giants Stadium, the complex is the first project representing a 50/50 partnership between two teams.  The only real hitch in the deal is that, under the terms of the lease, if one team decides to move out, the other team has to stay for the remainder of the lease.  Time will only tell if this creates any New York-caliber drama in the years to come.  You know how roommates can be…

When the Jets proposed a new stadium plan for a location in Manhattan, it fell through because of the amount of public funding that would be required.  Once they decided to partner with the Giants, there was no real drama on determining location—they just opted to build next to Giants Stadium.  I guess things just go more smoothly when you don’t need the government to foot the bill (perhaps a model for how things should work in other aspects of life? Hmmm…).  Good thing for local authorities, too, as the total construction cost came to $1.6 billion, the most expensive NFL venue ever built.  Opening private wallets did not give builders a blank check, however.  One sacrifice that had to be made was leaving off a dome, which meant saying “fuggedaboutit” to indoor events, like the Final Four—one major event developers had been hoping to host at the new place.

Met Life Stadium does, however, boast the largest permanent seating capacity for football games, at 82,566.  It’s most striking feature is its outer layer of aluminum that has interior lighting so that the stadium’s colors can be changed depending on which team is playing at home.

The stadium for a Jets home game...

...and for a Giants game.  Cool, huh?

Unlike other stadiums that had to accommodate additional teams, or even other sports, after construction, Met Life Stadium can be easily converted from the home field for the Jets to the home field for the Giants.  The FieldTurf in each end zone is rolled up by ground crews and replaced with different FieldTurf bearing the other team’s name and logo.  The NFL logo appears a midfield, instead of team logos, so that’s one less thing that needs changing.  And the stadium sports four locker rooms, two at each end—one for the Giants, one for the Jets, and two for visitors.  Since the visiting team is housed at the locker room at the opposite end of the home team, the home team can use the visitor’s locker room at its side on game day.

So, did you ever think that so much went into building big donuts of concrete filled with hard seats?

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