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Mercury News story on stadium plans

To read the full Mercury News story on economic struggles for stadium plans in Fremont, San Jose and Santa Clara, click here.

The Fremont part is fairly similar to my story from this weekend.

The main difference is that Lew Wolff made it seem like it would just take too long to explain the complex method he had devised to finance stadium construction without building the housing units right away. He told the Merc, it would just be a combination of revenues stadium naming rights, parking and concessions, which, of course, wouldn’t start flowing until after the stadium was built.

From the Merc:

Fremont stadium

The same real estate challenges are dogging Wolff’s plans for a 32,000-seat A’s stadium off Interstate 880 in southern Fremont. The expected price tag for that facility is $400 million to $500 million, excluding land, and Wolff had hoped to pay for it by selling hundreds of apartments and townhouses in a Santana Row-like “village” nearby.

Instead, Wolff now says he’ll use money from naming rights — Cisco Systems will put its logo on the state-of-the-art facility for $4 million a year — as well as cash from parking fees and concessions to recoup his construction costs.

If he is forced to dip into those funding sources, which sports owners typically use to pay players and run the team, it could take longer for the A’s to afford to improve their roster. But in time, Wolff thinks, the economy will recover enough for him to develop the residential concept.

Matt Artz

  • Gus Morrison

    Why is it that no one challenges the numbers thrown out? Are they too big to imagine?

    “The expected price tag for that facility is $400 million to $500 million, excluding land,”

    Add to that the cost of the land at (conservatively) $1.5 million an acre times 120 acres equals $180 million, bringing the cost to almost $700,000,000.

    “Instead, Wolff now says he’ll use money from naming rights — Cisco Systems will put its logo on the state-of-the-art facility for $4 million a year — as well as cash from parking fees and concessions to recoup his construction costs.”

    Again, conservatively, assume you could borrow $700,000,000 at 5%. You would need to repay $35 million a year just to cover the interest.

    Subtract from that the $4 million naming rights (remember how steady that income was at Candlestick, 3com stadium, monster park, etc.), Wolff now needs $31 million more just to cover the interest.

    In 2005, from the A’s economic analysis submitted to the city of Fremont, the total income from food and beverage and merchandise was $27 million and the income from parking was $4.775 million. Using every penny of their 2005 income, they just barely cover the interest if the loan is at 5%. Any higher, and there is not enough revenue. And, somewhere repayment of the principal, $23 million +/- a year needs to be brought into consideration.

    At one time, I would ask “what bank would loan money under such circumstances?” but what we have seen of banks in the last several months makes that question moot. Somewhere in this folly, one would expect a modicum of common sense to come to bear. I keep waiting.