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The reasons for this explosion in new stadiums are simple, says the troika of economists. It starts with players' salaries. As player pay shoots into the ionosphere, the costs of operating a ballclub also rise. Keeping pace with players' demands, owners have to find new ways to generate revenues. Other than the teams' names, most of which are already marketed to the hilt, what most owners have left is the stadium and the streams of money it produces: admissions, food and beverages, and souvenirs. In pondering DeBartolo's demands, don't think of a stadium as a municipal asset, as Policy has been calling it. Think of it as a giant cash machine for DeBartolo and his players.
Baade says stadiums aren't physically obsolete; they're economically obsolete. "It's all about generating more revenue," he says. To make stadiums more profitable, owners are adding more and more exclusive amenities: Stadium clubs that bear a membership fee, skyboxes, personal seat licenses (lifelong or similarly time-bound tickets), luxury suites that cost in the neighborhood of $200,000 a year, and what's called signage, a euphemism for selling the name of your stadium to a corporation for a million or two.
"The lack of business discipline on the part of team owners [in reining in salaries] is translating directly into a taxpayer burden financing their new stadiums," Baade says.
To make matters worse, when a team goes into building a new stadium not only does it have to provide enough revenue-producing elite amenities -- some stadiums have even included hotels -- to keep up with players salaries, it also has to count on the increased revenues to pay off construction costs it has incurred. So the pressure to upscale is severe. But when all is said and done, a stadium can be an incredible money machine. The Cowboys' stadium generates close to $40 million a year after expenses, Baade says.
Along the way, American sports are growing more and more elitist. New stadiums are quickly becoming less a place for working class heroes than playgrounds for CEOs.
Tom O'Donnell, chief executive of McDonald Company Securities in Cleveland, explained to the New York Times recently why his company signed a 10-year lease for boxes in the city's football and basketball arenas. "Ours is a relationship business," he said. "And a (luxury suite) is a great way to entertain our clients. Our company is now just minutes away from the downtown complex. I believe these luxury suites will eventually become the hottest tickets in town."
Personal seat licenses are particularly irksome to the beer-and-peanuts crowds. It's one thing to look up and envy the CEOs in their air-conditioned luxury suites with their personal concierge service, office equipment, meeting rooms, and full-course meals. But PSLs, as they are called, are cutting into the regular Joe zones, locking up seats in regular areas for those who can pay an arm and a leg for them.
Policy says PSLs will definitely be part of the new stadium at Candlestick. But in San Francisco, the PSLs will be for life. "They will be an asset to the fan, a marketable commodity they can sell or pass down to relatives," Policy says.
Likewise, all the other amenities -- luxury suites, stadium clubs, and fancy restaurants -- will be part of the new 49er arena and its financing scheme. And Policy makes no bones about the upscaling of American sports. "The dynamics of stadium economics dictates luxury features," he says.
But he rejects the notion that the pressure for more amenities comes only from the front office. "A lot of it has to do with the changing American public," Policy says. "Look at how people go to the movies now. Instead of a Coke and a dog they now have cappuccino and 12 screens to choose from, all attached to a theme restaurant and retail shops."
Policy is from Youngstown, Ohio, so he can be forgiven for believing that persnickety, rep-house San Francisco is anything like, well, Youngstown, birthplace of the American mall. But his comments beg the question: How prepared is he to sell a new stadium, and a public subsidy, to populist San Francisco? At least the Giants had the good sense to go classical, with a Camden Yards design that recalls the days of pin stripes and puffy pants.
But there's a more fundamental problem with the 49ers relying on CEOs to buy luxury seat leases, club memberships, and PSLs and finance their stadium. By the time the 49ers stadium is planned and gets the go-ahead -- assuming all goes well for DeBartolo over the next few months -- corporations and businesses may be tapped out. The Giants' financing scheme -- as well as that of the Raiders, A's, and Warriors in the East Bay -- is premised on the same scheme.
Ask Art Modell, the owner of the team formerly known as the Cleveland Browns. He will relate what happens when a team owner gets in line for corporate money behind other teams. One of the main reasons he was forced to leave Cleveland is he couldn't raise revenue from luxury suite leases. Downtown Cleveland had already given all it had to the Indians and the Cavaliers.