TheWiz
04-02-2007, 09:14 PM
There are a half a dozen or so notable team events that will occur in the next month...
- Whether or not RB Hicks signs an offer sheet elsewhere will be known as will his participation with the team past April as a result.
- It seems highly certain that we will either see Smiley agree to a much cheaper deal than expected or we will see him posing with another teams' jersey at a press conference. There is a chance he gets traded post draft to a club still needing OG help and an '08 pick, but I think it less likely at the moment.
- Of course, the draft is quickly approaching.
- Individual player workouts for potential draftees. Keep in mind that these are almost never used to actually scout players you intend to draft in day 1. While a team on the edge may invite a 1st or 2nd rounder, usually it's just for more information like another interview, more MRIs, seeing them play on natural grass, etc. The majority of these workouts are used to scout players who could go late in day 2 or go undrafted since teams really only get to see them at pro days, if they attend those events. A pro day is a controlled atmosphere, a team workout is the anti-combine, you choose not to participate at your own peril. For many players, impressing at these workouts is what can mean the difference between a 20k bonus just to come to camp or a bare minimal deal to work your butt off for 3 weeks and get cut with no bonus.
Don't get me wrong, my mind is heavily buried in the upcoming draft but there is only so much one can think on one topic. In fact, a study I read about suggested that the more information and criteria you have the more likely you are to make bad decisions. It was a cross study of many disciplines including stock brokers and sports betting. People who got more in depth and private information tended to make the worst choices as opposed to those who followed classic indicators only. So, obsessing over Wonderlic scores, shuttle times, game footage loops against top 25 teams, and hand size it's only going to kill me by the end of the month.
One that intrigues me the most that is not game related is the impending meetings with the Santa Clara officials regarding our financial plan for the proposed stadium. This is supposed to occur in a 2-stage process. The first meeting in 9 days will revolve around pitching the idea of the stadium to the city. Clearly, before you break the bad news about ripping up streets and asking for money from a city you want to make them salivate over increased tax revenue, increased jobs and tourism, and the like.
The first meeting is an economic impact study presentation. You'd be surprised how the trickle down economics work in these studies. The presence of a stadium can easily drive up property values in residential zones over time, increasing taxes. A stadium also not only brings in games but concerts, various other sporting events, media events, and conventions/goods shows. These lead to increased tourism which leads to more businesses moving into town, more jobs at existing business, and makes current business happy because it increases their attractiveness. More taxes also mean better schools and social programs that encourage families towards the region. It's a big, long loop. All this report will generall sell is two ideas. How much actual increased tax revenvue the city will likely gain and how they would be silly to pass up on the deal.
The second meeting will be the teams formal proposal, 2 weeks later. We have all seen the artists rendering of the region used to convince the city into agreeing to talks in the first place. But a formal proposal is more like selling the novel instead of just the cover. It will include what infrastructure changes (roads,water lines, sewage lines, electricity, data lines, etc) will need to be made just to make the stadium ready to build. This likely will be the bulk of the first 12-18 months of building and impacts the city the most. It will make the area a veritable traffic jam for that time span while everything is converted and digging and foundation work is done on the stadium. The proposal also will include a more detailed map of the stadiums location and design as well as other features in a very real world sense beyond the artistic rendering. Where exactly will the stadium be, it's location relative to the pipeline, and how it really fits in real world scale.
Between the stadium building plans, infrastructure details and economic impact, funding will lastly be discussed. Exactly how the team will pay for the stadium is a the real crux of the argument. If we could build it without a penny from Santa Clara and even buy the land we build it on it would be an open and shut case. But the fact remains that the team will ask the city for money, land, and incentives packages. Especially after making them pine for the tax dollars and increased city tourism and city recognition.
Here is an example of a possible 'finance' package providing all of the factors...
1) The city forgoes on leasing the land to the park and instead turns the rights over directly to the team. The city also will go without property taxes until the stadium itself is completed. This is a very small concession since they will gain a lot more in taxes in '012-'015 than they could selling leasing rights up until then.
2) The team asks for 3 fairly valuable plots of land in the surrounding area at no cost but without any tax credits. The team will build condominiums and rental properties on the land and use the profits to help pay off the stadium costs. The city loses the potentially lucrative costs of selling to a private developer but will receive taxes and residents sooner than if it waited longer to sell the land.
3) The team will ask the city for 150M in funds from a variety of funds bearing cash surpluses but mostly 135M of it from the electric utility fund. This will come in roughly equal payments of 50M over the '08-'011 years. The funds will pay for all of the infrastructure and a large part of the landscaping costs but also the costs needed to build housing on the plots given by the city.
4) The team will aggressively seek a new G-3 Style program through the NFL. While none, to my knowledge, was agreed upon during the recent meetings, this fund would not be required to be accessible before '08. The first goal would be to create the fund or at least make certain it would be available by this fall. A second goal is to get a 200M loan. While the previous limit was 150M, the leagues profits and growth and desire to replace Candlestick as a venue will be big selling points. The team could easily get a 200M, zero-cost loan this way.
5) Stadium naming rights then come into play. Lots of speculation has occured but nearly all of it centers on the team able to gain 10M/year for selling these rights. A 15-year naming rights deal nets the team 150M in cash. Such a deal can be speculated to include up to 10M in payments (2M/year) from now until 2012 while the stadiumj is built and an additional 9M/year over the first 10 years of stadium play ('12-'22). Then a payment of 20M could buy out their deal or the sponsor could pay another 10M/year over another 5 years and the team also holds rights to cancel the deal in '22. In short, this financing helps to pay off all interest from loans and pay off parts of the loans over the course of its existance.
6) The team secures 100M in low cost loans from private lenders. The default rate on a loan to an NFL team must be lower than the chance of getting trcuk by lightning 3 times. It's backed by a multi-billion dollar per year revenue sport and an owner who at least can sell his franchise rights for hundreds of millions of dollars. The revenues from naming rights and property income will offset any interest costs and still pay off part of the principle. At the same time it defers a lot of the cost past the '17 season when the ownership can easily pay down this loan.
7) The rest falls to ownership directly. While the league loan and city funds will throw around 350M straight into the pot to get the stadium built another 150M and unrealized property income pays off parts of loans and all interest. That's 500M. Then the team has a 100M loan it will pay off in the '17-'22 time frame. That comes to 600M which leaves 200M for the team to cover. Considering how the team can make 30-40M per year with a playoff level team and an easy 40M-50M when it moves to a better stadium, paying off 20M per year from '07 to '17 is a piece of cake.
Keep in mind the actual eventual costs do come to 200M (league) + 100M (private) + 200M (personal) = 500M while also almost all profits from the city-donated land end up paying down interest and eventually loan principle. But the team will need the stadium until '22 before ownership can see full, complete profits from its operation and even then maintence costs could start to build up.
A brief idea: The city pays money up front and land rights and the league gives us a big, very cheap loan. This finances the roads, utility lines, and foundation of the stadium and all construction through most of '09. The team will already be receiving income from naming rights and property rentals/sales to continue on as well as having saved cash from the last 2 NFL seasons. Then a 100M group of private loans pays to start building the stadium along with about 50M in owners direct cash. The remainder is built and finished in forms of deferred payments, some immediate cash, and also very low cost inflation-fixed loans. The loans are all paid off in various ways until '22.
The only downside is increased, albeit still cheap, costs for Santa Clara electricity users. All of which can easily be replace and fixed. While the city will lose a utility cushion, it will be receiving an increased tax income from as early as mid '08. After all, the city will be pitched the idea that its surplus won't last long anyhow. They're spending nearly 20M per year just to keep costs cheap and hope that in 5 years, the other 200M going towards transmission and generation improvements will keep the costs low. Out of 2 reports I have seen, both say the city is more or less spending upwards of 300M to secure that the average private citizen doesn't spend as much as an extra $60 per year, inflation adjusted, through 2037. Barring another huge financial windfall from PG&E short comings, the system would be quite insolvent beyond that point. I expect the results to show the city will incur enough extra taxes to offset almost all of that cost to private citizens and the increased revenue for most businesses will in fact offset their extra costs to say the least.
- Whether or not RB Hicks signs an offer sheet elsewhere will be known as will his participation with the team past April as a result.
- It seems highly certain that we will either see Smiley agree to a much cheaper deal than expected or we will see him posing with another teams' jersey at a press conference. There is a chance he gets traded post draft to a club still needing OG help and an '08 pick, but I think it less likely at the moment.
- Of course, the draft is quickly approaching.
- Individual player workouts for potential draftees. Keep in mind that these are almost never used to actually scout players you intend to draft in day 1. While a team on the edge may invite a 1st or 2nd rounder, usually it's just for more information like another interview, more MRIs, seeing them play on natural grass, etc. The majority of these workouts are used to scout players who could go late in day 2 or go undrafted since teams really only get to see them at pro days, if they attend those events. A pro day is a controlled atmosphere, a team workout is the anti-combine, you choose not to participate at your own peril. For many players, impressing at these workouts is what can mean the difference between a 20k bonus just to come to camp or a bare minimal deal to work your butt off for 3 weeks and get cut with no bonus.
Don't get me wrong, my mind is heavily buried in the upcoming draft but there is only so much one can think on one topic. In fact, a study I read about suggested that the more information and criteria you have the more likely you are to make bad decisions. It was a cross study of many disciplines including stock brokers and sports betting. People who got more in depth and private information tended to make the worst choices as opposed to those who followed classic indicators only. So, obsessing over Wonderlic scores, shuttle times, game footage loops against top 25 teams, and hand size it's only going to kill me by the end of the month.
One that intrigues me the most that is not game related is the impending meetings with the Santa Clara officials regarding our financial plan for the proposed stadium. This is supposed to occur in a 2-stage process. The first meeting in 9 days will revolve around pitching the idea of the stadium to the city. Clearly, before you break the bad news about ripping up streets and asking for money from a city you want to make them salivate over increased tax revenue, increased jobs and tourism, and the like.
The first meeting is an economic impact study presentation. You'd be surprised how the trickle down economics work in these studies. The presence of a stadium can easily drive up property values in residential zones over time, increasing taxes. A stadium also not only brings in games but concerts, various other sporting events, media events, and conventions/goods shows. These lead to increased tourism which leads to more businesses moving into town, more jobs at existing business, and makes current business happy because it increases their attractiveness. More taxes also mean better schools and social programs that encourage families towards the region. It's a big, long loop. All this report will generall sell is two ideas. How much actual increased tax revenvue the city will likely gain and how they would be silly to pass up on the deal.
The second meeting will be the teams formal proposal, 2 weeks later. We have all seen the artists rendering of the region used to convince the city into agreeing to talks in the first place. But a formal proposal is more like selling the novel instead of just the cover. It will include what infrastructure changes (roads,water lines, sewage lines, electricity, data lines, etc) will need to be made just to make the stadium ready to build. This likely will be the bulk of the first 12-18 months of building and impacts the city the most. It will make the area a veritable traffic jam for that time span while everything is converted and digging and foundation work is done on the stadium. The proposal also will include a more detailed map of the stadiums location and design as well as other features in a very real world sense beyond the artistic rendering. Where exactly will the stadium be, it's location relative to the pipeline, and how it really fits in real world scale.
Between the stadium building plans, infrastructure details and economic impact, funding will lastly be discussed. Exactly how the team will pay for the stadium is a the real crux of the argument. If we could build it without a penny from Santa Clara and even buy the land we build it on it would be an open and shut case. But the fact remains that the team will ask the city for money, land, and incentives packages. Especially after making them pine for the tax dollars and increased city tourism and city recognition.
Here is an example of a possible 'finance' package providing all of the factors...
1) The city forgoes on leasing the land to the park and instead turns the rights over directly to the team. The city also will go without property taxes until the stadium itself is completed. This is a very small concession since they will gain a lot more in taxes in '012-'015 than they could selling leasing rights up until then.
2) The team asks for 3 fairly valuable plots of land in the surrounding area at no cost but without any tax credits. The team will build condominiums and rental properties on the land and use the profits to help pay off the stadium costs. The city loses the potentially lucrative costs of selling to a private developer but will receive taxes and residents sooner than if it waited longer to sell the land.
3) The team will ask the city for 150M in funds from a variety of funds bearing cash surpluses but mostly 135M of it from the electric utility fund. This will come in roughly equal payments of 50M over the '08-'011 years. The funds will pay for all of the infrastructure and a large part of the landscaping costs but also the costs needed to build housing on the plots given by the city.
4) The team will aggressively seek a new G-3 Style program through the NFL. While none, to my knowledge, was agreed upon during the recent meetings, this fund would not be required to be accessible before '08. The first goal would be to create the fund or at least make certain it would be available by this fall. A second goal is to get a 200M loan. While the previous limit was 150M, the leagues profits and growth and desire to replace Candlestick as a venue will be big selling points. The team could easily get a 200M, zero-cost loan this way.
5) Stadium naming rights then come into play. Lots of speculation has occured but nearly all of it centers on the team able to gain 10M/year for selling these rights. A 15-year naming rights deal nets the team 150M in cash. Such a deal can be speculated to include up to 10M in payments (2M/year) from now until 2012 while the stadiumj is built and an additional 9M/year over the first 10 years of stadium play ('12-'22). Then a payment of 20M could buy out their deal or the sponsor could pay another 10M/year over another 5 years and the team also holds rights to cancel the deal in '22. In short, this financing helps to pay off all interest from loans and pay off parts of the loans over the course of its existance.
6) The team secures 100M in low cost loans from private lenders. The default rate on a loan to an NFL team must be lower than the chance of getting trcuk by lightning 3 times. It's backed by a multi-billion dollar per year revenue sport and an owner who at least can sell his franchise rights for hundreds of millions of dollars. The revenues from naming rights and property income will offset any interest costs and still pay off part of the principle. At the same time it defers a lot of the cost past the '17 season when the ownership can easily pay down this loan.
7) The rest falls to ownership directly. While the league loan and city funds will throw around 350M straight into the pot to get the stadium built another 150M and unrealized property income pays off parts of loans and all interest. That's 500M. Then the team has a 100M loan it will pay off in the '17-'22 time frame. That comes to 600M which leaves 200M for the team to cover. Considering how the team can make 30-40M per year with a playoff level team and an easy 40M-50M when it moves to a better stadium, paying off 20M per year from '07 to '17 is a piece of cake.
Keep in mind the actual eventual costs do come to 200M (league) + 100M (private) + 200M (personal) = 500M while also almost all profits from the city-donated land end up paying down interest and eventually loan principle. But the team will need the stadium until '22 before ownership can see full, complete profits from its operation and even then maintence costs could start to build up.
A brief idea: The city pays money up front and land rights and the league gives us a big, very cheap loan. This finances the roads, utility lines, and foundation of the stadium and all construction through most of '09. The team will already be receiving income from naming rights and property rentals/sales to continue on as well as having saved cash from the last 2 NFL seasons. Then a 100M group of private loans pays to start building the stadium along with about 50M in owners direct cash. The remainder is built and finished in forms of deferred payments, some immediate cash, and also very low cost inflation-fixed loans. The loans are all paid off in various ways until '22.
The only downside is increased, albeit still cheap, costs for Santa Clara electricity users. All of which can easily be replace and fixed. While the city will lose a utility cushion, it will be receiving an increased tax income from as early as mid '08. After all, the city will be pitched the idea that its surplus won't last long anyhow. They're spending nearly 20M per year just to keep costs cheap and hope that in 5 years, the other 200M going towards transmission and generation improvements will keep the costs low. Out of 2 reports I have seen, both say the city is more or less spending upwards of 300M to secure that the average private citizen doesn't spend as much as an extra $60 per year, inflation adjusted, through 2037. Barring another huge financial windfall from PG&E short comings, the system would be quite insolvent beyond that point. I expect the results to show the city will incur enough extra taxes to offset almost all of that cost to private citizens and the increased revenue for most businesses will in fact offset their extra costs to say the least.