Connect with CP&DR

facebook twitter

Follow us on Facebook and Twitter

Subscribe to our Free Weekly Enewsletter

Is Santa Clara Ready for Some Football?

The San Francisco 49ers of the National Football League are trying to punt themselves out of creaky Candlestick Park and into a shiny new home in Santa Clara. Whether political winds will carry them roughly 35 miles to the south to the City of Santa Clara or whether they'll be blown back to the line of scrimmage now depends on the voters of Santa Clara. 

Measure J, otherwise known as the Santa Clara Stadium Taxpayer Protection and Economic Progress Act, was placed on the ballot by a 3-2 city council vote, but it is based on the language of a citizens' initiative brought forth by Santa Clarans for Economic Progress, which is backed by the 49ers. Measure J asks voters to approve a complex deal that would bring a 68,500-seat, $937 million stadium to a commercial area near Great America theme park, between the 101 and 237 freeways. The stadium would be publicly owned by a joint powers authority consisting of the city and the stadium authority and leased to the team and other tenants. 

Several lawsuits are pending, including one filed by the owners of Great America, which contends that the stadium will interfere with business there. 

The deal involves $114 million in contributions from the city's Redevelopment Agency; its utility, Silicon Valley Power; and a hotel tax on eight hotels surrounding the would-be stadium. The tax is part of the ballot measure and is estimated to generate $35 million over the 40-year lifetime of the deal. While Measure J stipulates that no general fund monies will be dedicated to the stadium, a public stadium authority will be created to operate the stadium and help finance its construction through the sale of $330 million in bonds. Those bonds are intended to be financed through naming rights, seat licenses (season tickets), and ticket surcharges. Measure J includes a clause indicating that the 49ers would cover any cost overruns.  

Supporters say that the city's costs will total only $79 million while generating $249 million in local economic activity, $26 million in local school funding, and $1 million annually in guaranteed ground rent. Measure J stipulates that none of the city's contributions will come from its general fund or enterprise funds. 

"For me, the direct benefits are what convinced me to be supportive of the project as it's been negotiated thus far," said Santa Clara Mayor Patricia M. Mahan. Mahan noted that at a time when the state is raiding local coffers, stadium revenues are "a revenue stream that the state can't lay their hands on." 

An April poll by the San Jose State University found 52 percent of respondents in favor of a stadium and only 36 percent opposed. 

Opponents contend that revenues are based on overly optimistic projections and that the contribution of redevelopment funds and stadium authority bonds still exposes the city to too much risk, even if no general fund monies are used. 

"If you read the ballot measure, you will not find any mention of the $114 million upfront subsidy or the $330 million Stadium Authority contribution that has to be raised," said Bill Bailey, treasurer of Santa Clara Plays Fair. "The 49ers are leaving us a miserable $8 million in fixed ground rent over 40 years...it does nowhere near to compensate for our $67 million in costs."

Moreover, though Mahan said that she believed the stadium would benefit the city regardless of indirect economic activity, Bailey said that estimates of local spending on game days were exaggerated. 

"The EIR proves that of the 20,000 vehicle trips, all 20,000 will be made out of the city within two hours," said Bailey. "If the people in those 20,000 vehicles are stuck in a traffic jam on Great America Parkway, they're not thinking in terms of patronizing Santa Clara businesses." Bailey added that the stadium "barely passes muster under California Redeployment Act" and that the traffic it creates will "contribute to blight" rather than alleviate it. 

Supporters contend, however, that few parcels could be better suited for a redevelopment project such as a football stadium and that, in fact, such a project has been envisioned for decades. The stadium site is located in the Bayshore North Redevelopment Area. 

"I see it as the culmination of all the land use planning that's gone into that area over the last 30 years," said Mahan. "We attracted major businesses, and those in turn attracted other businesses. It has always been planned that we should have a sports venue. That was part of the redevelopment area plan to begin with." 

Mahan noted that the stadium is located in the city's industrial area, which sees tens of thousands of car trips daily to its major Silicon Valley employers.

Though Mahan insists that the city's estimates are based on "very conservative" analyses, if Measure J passes and the stadium does prove to provide a net benefit to the city, it would contradict a long-standing trend in public-private stadium partnerships. Despite the glamour that comes with stadiums, many of those partnerships have proven disastrous for cities. 

"No reasonable person reading the economics research on stadiums could possibly believe that a football stadium is an economic boom to a city," said Roger G. Noll, professor emeritus of economics at Stanford and editor of Sports, Jobs, and Taxes: The Economic Impacts of Sports Teams and Stadiums.  "The general history has been that the estimated benefits...tend to be substantially overstated and the costs substantially understated." 

Noll said that benefits are often based on optimistic scenarios such as consistent sell-outs, and he said that lately stadiums have had trouble selling seat licenses and naming rights for their full anticipated amounts. He also said that he is concerned about the stadium authority's $330 million bond obligations because they essentially obligate the city to promote the team in order to pay off the bond debt.  

Mahan, however, said that attracting fans will be the responsibility of the 49ers. "We're not in it to promote the 49ers per se," she said. 

 

Contacts & Resources: 

Bill Bailey, Treasurer, Santa Clara Plays Fair, (877) 703-4300

Patricia M. Mahan, Mayor, City of Santa Clara, (408) 615-2200

Prof. Roger Noll, Stanford Institute for Economic Policy Research, (650) 723-2297

Official 49ers New Stadium Website

Santa Clarans For Progress Website

Official Measure J Ballot Text (PDF)

City of Santa Clara Stadium Page