When Santa Clara voters approved $114 million toward a new 49ers stadium four months ago, it was viewed as a big step forward. But that public commitment is only a piece of the stadium-financing puzzle. The next big chunk - a $150 million or so loan from the NFL - is in a state of limbo. That's why the 49ers are now saying that 2015, not 2014, is a more realistic date for completing their 68,500-seat stadium.
As President and CEO Jed York explained it to me, financing the stadium depends on a loan from the league and that the loan is contingent on a new collective bargaining agreement. (The old loan program, called G3, contributed as much as $150 million toward new venues, but it expired). The owners and players' union are currently negotiating a new CBA, but a completion date is fuzzy. "My gut feel is that this is going to take a while," York said. Here's the complete transcript:
JY: Looking at the financing markets, talking to our investment bank, the big thing that's coming out right now - the economic arrangement between the NFL and the player's union are going to directly impact the ability for teams to finance and the league to finance new stadiums. And I think there's a chance that this stadium is delayed from '14 to a '15 opening because of that.
Is that still up in the air, or does it seem like '15 the more realistic date?
JY: I think '15 is a more realistic date just looking at the way the union negotiations are going. I don't think with where we are today - we need to make decisions fairly quickly. Obviously, if we get something done soon, we could hopefully pull the trigger and get going on a design development that could get us to where we need to be for a '14 opening. But it's really a direct impact for financing and the NFL making an investment in the stadium at this point. Absent a labor deal, I just think that's going to be very, very difficult.
Are you finding lenders reluctant to lend before they know what's happening with the labor deal?
JY: Lenders - and I don't want to speak for our lenders - but the biggest thing is the investment from the league, the ability to move forward at this time - it's not that you can't finance a stadium, it's that the labor deal is really a lynchpin in order to secure that financing.
When you say, "lynchpin" are you talking about knowing that the 2011 season will occur uninterrupted or securing a loan from the NFL?
JY: Well, I think there's a combination. Obviously, you have the G3 program of $150 million coming from the league. That fund has obviously been tapped, and there's nothing there to replace it other than a club seat waiver, which is not as efficient as a G3 financing. Absent a new labor deal that addresses the economic realties of the NFL today, I think it's going to be very difficult to get that piece.
Do you have any better assurance today that a G3 program or similar program will be part of a new labor deal?
JY: That's a goal for the NFL. That's a goal for everyone involved - that we continue to invest in our stadiums, whether that's building new stadiums or renovating stadiums that already exist. And that's certainly something the NFL is working on, trying to make sure that's part of the new labor deal. Obviously, a new stadium is vital to the 49ers and to this area. But without a CBA that adequately recognizes the costs of a new stadium, the capital expenses, it's going to be very difficult for us to move forward and obtain that financing in the second and third quarter of 2011 absent a big piece of the puzzle.
Is that the feedback you've been getting from lenders - that they want to see loan before they make a move?
JY: I think it's a combination of lenders and obviously getting back from the owners meetings last week, I think that's what you're hearing from well-respected owners in the league and high-ranking officials - that it's going to be very difficult to move forward absent a new labor deal, which puts us obviously in a unique position. We want to continue the design process. We want to continue everything we're doing. And we're going to continue to spend money to make sure that this stadium is moving forward. I just think that there's - the money we're spending now is much more at risk with a real chance that we're going to have to delay it from '14 to '15.
After the meeting in Chicago, did you get a sense that the CBA negotiations are going to take longer than you did previously?
JY: I know that they're sitting down and they're continuing to work. But it doesn't seem like we have something that we're ready to vote on. There's still a lot of negotiations and discussions that need to go on between Roger (Goodell) and De(Maurice) Smith.
Any timeline for the negotiations?
JY: They continue to have discussions. I mean, I'm not the appropriate person to answer that timeline question. But my gut feel is that this is going to take a while.
Why wasn't this delay brought up as a possibility prior to the June vote in Santa Clara?
JY: It (2014) was a goal, and it's still the goal. But I just think we need to be realistic with where we are right now. With everything where it sits today, I think it's going to be difficult to obtain financing for 2014 absent a labor deal.
And a delay wouldn't put any of the public money at risk?
JY: Right. And we were very clear in that in everything that we said and everything that we did going through the stadium approval process. If the league doesn't vote on this, if there's no appetite for financing in the financial markets, the city's not on the hook for anything until we move forward and get final approval.
Will you be able to do anything stadium-wise in the interim before a new CBA is approved?
JY: That's the goal. Hopefully, we'll have something where we can continue to push this ball down the field from a design standpoint and from a financing standpoint. And hopefully we're in a position where we can still hit a '14 opening. But I think that timeline is closing.
Background: On June 8, Santa Clara voters approved a measure that gave a go ahead for the 49ers to build a 68,500-seat stadium adjacent to their team headquarters. At the time, ground breaking was set to begin in January 2012 and the project was scheduled to be finished by the start of the 2014 season. The total cost of the stadium is $937 million. The City of Santa Clara will provide $114 million mostly through redevelopment funds and a hotel tax hike. A city-run stadium authority is expected to raise $330 million while the 49ers, with a likely assist from the NFL, are responsible for $493 million.
-- Matt Barrows