By Erin Sherbert
By Rachel Swan
By Erin Sherbert
By Erin Sherbert
By Erin Sherbert
By Albert Samaha
By Erin Sherbert
By Erin Sherbert
Eddie DeBartolo Jr. -- multimillionaire owner of the San Francisco 49ers; shopping mall king; and racetrack, hotel, and casino proprietor from Youngstown, Ohio -- wants your money. Actually, he wants millions of it, even though he doesn't need it. But need rarely correlates with want when it comes to the superrich. Their logic of necessity is, well, bizarre at best.
This observation will become increasingly evident in the coming months as Mayor Willie Brown's inner circle confabs with the 49ers and decides how far to let DeBartolo reach his fingers into the city treasury in order to finance a new, state-of-the-art football stadium at Candlestick Point.
DeBartolo, who with his sister, Denise DeBartolo York, holds a half-billion-dollar stake in the country's largest real estate development company, wants San Francisco taxpayers and their cash-strapped municipal government to pony up somewhere between $25 million to $50 million to build the new stadium (cost estimate: $250 million) for his superrich players to play in. Factoring in the bait-and-switch hokum that usually attends municipal finance, the true amount of the city's proposed investment will probably be millions more. It's hard to calculate a figure now; talks between the city and the 49ers haven't even begun yet. But be confidant, the city's contribution will most likely be far more than $50 million. To be safe, double that number, and perhaps add a little more.
Accepting that premise, accept this: At a time when the Muni fleet is past retirement and driving maintenance costs ever skyward, when the port is lying fallow, when the library system is $6 million in the hole, when business taxes are prohibitively high, when the economy in all sectors is still struggling back from a decade of recession, San Francisco is considering carrying half the freight for a stadium that will create a negligible amount of lease revenue for city coffers -- less than what it makes now from Candlestick, the 49ers say -- but will help DeBartolo increase his profits, keep pace with players' skyrocketing salaries, and continue to build his commercial sports empire.
Also, know this: Few will raise a dissenting voice, especially the daily newspapers. They, more than anyone, have a stake in ballclubs locating and staying here. As Examiner sports writer Harry Jupiter said a few years ago: "It's no coincidence that papers put ball scores above the masthead. That sells papers."
But the 49ers' bid for city largess will test more than the integrity of local journalists. When DeBartolo's miner-forty-niner pick lands on the public treasury, it will also strike the city's rich vein of class-conscious populism. His demand for public subsidy will serve as the first true test of the city's neighborhood-bound progressives under a Brown mayoralty.
More than once over the last decade the city's fabled grass roots have struck out the Giants as the team grabbed at city money. Most notably, neighborhoods rose up against Art Agnos' proposed 1990 China Basin ballpark because it was financed with city money. (At least Art asked for a continuing percentage return on city money.) Three years later, when the Giants extracted a massive rent reduction on Candlestick from then-Mayor Frank Jordan and a supine Board of Supervisors, activists put the issue on the ballot. Realizing the power of an angry, populist-minded electorate, the owners sagely withdrew their request for lease breaks.
But this is Willie's town now. Forget DeBartolo and his money for a moment. Never before has the city's network of activists had to contend with a power broker like Willie Lewis Brown Jr., and he has as much to lose from the 49ers leaving town as the newspapers do.
Traditionally acquiescent to millionaires, the Board of Supervisors has now been totally co-opted -- or appointed -- by the mayor. So it's up to activists to scream bloody murder if DeBartolo makes a serious run at tax dollars. Banking on that, however, is as safe as betting on a long-shot nag at one of DeBartolo's racetracks.
Look at what happened with the Giants' stadium deal. Granted, they were smart to ask the city for painless tax increment financing and the infrastructure costs that attend development. After losing twice at the polls and once at the board, they had learned the lesson of millionaire hubris. But what this taught them was more sinister: Co-opt all the politicians and all the activists-cum-consultants. They will help you co-opt all the corrupt neighborhood clubs. It's an easy enough gig in a town like San Francisco where most activists stand like shiny merchandise on a Wal-Mart shelf, all with a price tag proudly displayed. With this greasy hegemony, you can get anything past uneducated voters.
But the Giants' success was driven by one more crucial element: Willie Brown. These days, no one dares stand up to Willie on stadiums or anything else. Some of the city's most prominent political players -- like affordable-housing advocate Calvin Welch and land-use attorney Sue Hestor -- are in Brown's kitchen cabinet. Will they and the hundreds of other people who are the counterweight to elected and corporate power in San Francisco stand up to a raid on the city's treasury?
We shall see.
As Mayor Brown enters negotiations with the 49ers, he will have to ask himself a central question: How does one measure the value of a sports team to a city? It's unclear now what financing instrument the city will employ, whether it will be bonds, revenues from naming the park, or General Fund monies. But ultimately, the mayor will be investing tax dollars. So he'll have to calculate the economic benefit -- the return on investment, if you will -- of pumping millions in public monies into a football franchise.
To his credit, Brown has made the first tenuous steps toward assaying this number, calculating this ephemeral value. Last month, his office sent out a request for proposal (RFP) for consultants who will help city officials craft a plan for a new stadium. Part of the consultants' job, as outlined in the RFP, will be to gauge revenue-generating and job creation potential of the new stadium.
That's a start. But what Brown should have asked for was an economist with expertise in professional sports franchises, their economies, and the dollars-and-cents impact they have on a city.
Then again, maybe Brown was smart not to ask for such a person. If a truly independent economist were to join the team, the mayor would learn some unsettling facts. Chief among them: Sports teams are a bad investment. In the words of Fortune magazine, "they don't do diddly" for a city's aggregate economy, and they tend to have a negative fiscal impact on other segments of a city's entertainment industry.
Upon learning the economists' findings, Brown would be left without an economic explanation for subsidizing a multimillionaire. He would have to start telling the public the truth: "I am giving this incredibly rich guy over here lots of your money because if the team leaves on my watch I am toast." Or you can look at it this way: The $25 million to $100 million in public money the mayor and his team are thinking of forking over is in reality a giant contribution to Brown's 1999 re-election campaign. In a way, you've got to applaud the man; he's just found the most lucrative method yet for skirting the $750-per-contribution limit prescribed by local law. And he's thinking of doing it with tax dollars.
Is it really so clear-cut that the only ones benefiting from a 49ers-San Francisco, public-private partnership are a politician and a corporation? Certainly, San Francisco earns about $6 million in lease revenue from Candlestick each year. But factor in costs -- maintenance, police overtime, fire official pay, and new construction upgrades -- and that $6 million evaporates. Also, since DeBartolo bought the team in 1977, he has been slowly but persistently renegotiating -- in nine amendments to the lease -- a better deal for himself, taking an ever increasing share of revenue. (Who would expect anything less from putting the son of a shopping mall king who negotiates leases for a living at a table with bureaucratic lifers?)
So that leaves the indirect economic benefit, the so-called ripple effect sports teams have on a city. But according to four academics -- three economists and one sociologist -- who've studied the issue extensively over the last decade, no such spinoffs occur. These academics are Roger Noll, a Stanford economics professor who is currently on sabbatical at the Washington, D.C.-based Brookings Institute; Robert Baade, an economics professor at Lake Forrest College in suburban Chicago; Andrew Zimbalist, an economics professor at Smith College in Northampton, Mass.; and John Zipp, a sociologist at University of Wisconsin-Milwaukee.
Since the late '80s, these scholars have issued studies, theses, dissertations, and well-received books refuting the owners' claims. Yet cities keep falling for the millionaire franchise owner's con, year after year. Talking to the academics, it's easy to hear the edge their voice-in-the-wilderness status has lodged in their throats.
Sports teams and their cheerleaders -- chambers of commerce, politicians seeking PR points, and newspapers that bank on their sports pages -- argue that people who come into a city to see a game also spend their money in local restaurants, bars, and hotels. They also say that sports franchises act as advertising vehicles for cities, wherein fans who see San Francisco's team on television in other locales will want to visit here -- bringing their wallets, of course. This is the fulcrum of their economic argument.
"I'm talking actual money," says Jack Immendorf, the local private eye and political fund-raiser who serves as president of the city's Recreation and Park Commission, the body that will have to approve any 49er stadium deal. "When you talk about the effect on businesses, you're talking billions-plus dollars since they've been here." Immey, as he's called, stresses that he doesn't have exact numbers to back his assertion.
This rosy presumption also holds sway in the innermost circles of the Mayor's Office. Rudy Nothenberg, the city's former chief administrative officer who returned to sit as Brown's major domo on, among other things, the 49er deal, is a true believer in the national advertising power of sports teams. "There's no question they bring in visitors," he says.
It's disturbing enough that two of the officials in charge of getting the best deal for the city are entering negotiations assuming that it's in their best interest to cut the deal. Such bias calls into question their resolve at the negotiating table.
Worse still, their presumptions are utter hogwash, economists say.
"There is simply no evidence that building a new stadium or refurbishing an old one has any economic payoff for a city whatsoever," Andrew Zimbalist says. "If I were mayor and DeBartolo came to me and asked for money for a new stadium, I'd tell him to go back to Kezar," the Golden Gate Park stadium the 49ers played in until they struck a Candlestick lease with the city in 1969.
The academics say teams rarely if ever bring in new spending to a city or metropolitan area. "They are realigning spending," says Robert Baade, who has published several studies on the economic myth of professional sports franchises. "They are taking from movies and restaurants."
What irks Baade is the "multipliers" arguments, in which hired consultants claim that new stadiums will have a yeasty effect on a city's economy. "They assume that all ballpark spending is new and therefore can have a multiplier effect," he says.
To create genuine new spending, Baade and his fellow economists say, a team would have to attract fans from distances of greater than 30 miles away. Only these far-flung fans, who may consider eating out or spending the night in the host city, would constitute new spending, and thus a net economic plus.
Roger Noll rushes to support Baade. He says his studies show that teams simply don't draw outside their immediate area anymore. Used to be, he says, when most teams were located in the Northeast, that people would travel long distances to see them. But that was in the '60s. With the advent of more teams in more cities, and the ever growing reach of televised sports -- ESPN Nation -- sports travel has all but ended.
Even if the 49ers could draw new visitors from outlying areas, how many of those fans would visit the city and drop more cash after watching a game, downing dogs, and guzzling beers? Remember, Candlestick is in the boonies.
Economically speaking, sports franchises compete for a finite number of disposable entertainment dollars that residents spend. In other words: What goes into DeBartolo's pockets doesn't go into the pockets of the proprietor of the Red Vic Theater, the Purple Onion nightclub, the Red Room bar, the Abandoned Planet bookstore, or Sam Jordan's BBQ.
"What goes on typically," Zimbalist says, "is that when someone goes to the ballpark, they spend money they would be spending elsewhere."
But theory only counts for so much. San Francisco has a real-life indicator of a ballclub's economic impact on its surrounding area. Just look at Bayview-Hunters Point, the nabe nearest Candlestick. Any 49er-generated spending hit Third Street lately?
Cities go into a frenzy attempting to lure a sports team. Look at San Jose. Without a team in mind, they erected a $135.6 million arena -- all with city money. But cities go absolutely bonkers when a team threatens to leave. The specter of losing economic benefits -- no matter how mythical or distorted -- has more emotional and political punch than missing out on something you've never had. Of course, San Francisco finds itself in the position of losing a team, and a Super Bowl dynasty team at that, all of which diminishes the city's bargaining power.
But again, the critics from academe come to the rescue with empirical data to stiffen the city's resolve. Namely John Zipp, who saw a rare research opportunity when the crybaby millionaires of summer went on strike in 1994.
The seven-week Major League Baseball strike of 1994 afforded Zipp the perfect statistical laboratory to test his theory that the loss of a ballclub would have no economic impact on a city. The strike banished all of the teams from all of the cities all at once. "What were the effects?" Zipp thought.
He set about measuring retail sales, expenditures of disposable entertainment income, and hotel stays in the months prior to, during, and after the strike. He also set up two control cities, non-baseball towns where economic activity would serve as the benchmark.
His study, to be published in Urban Affairs Review in November, found that while hotel stays dropped ever so slightly in 10 of the 24 cities with major league teams, they dropped in non-baseball cities at the same rate at the same time. Also, more home games were canceled in September than August, but the drop in hotel stays was greater in August, also indicating that the decline in room stays was disconnected from the strike. Finally, five baseball cities experienced an increase in hotel stays during the strike.
But Zipp's most compelling findings were in the area of disposable spending, the outlays on food, drink, and other nondurable goods that pro-sports team advocates always measure to support publicly subsidized stadiums.
Zipp found that sales of nondurable goods were higher than average for 13 of 17 baseball cities during the strike. "These results indicate little impact from the strike [on the local economy]," Zipp writes in his study. "[The] baseball strike had no substantial impact on non-durable goods in cities hosting major league teams."
Since some cities did not provide specific data on nondurable goods, Zipp further tested his thesis by measuring overall retail sales in struck cities.
At the same time that non-baseball control cities experienced retail sales declines during the strike, six of the seven baseball cities posted greater than average gains in retail sales during the strike. Only one baseball city, St. Louis, showed an extremely small downturn in September, 6.8 percent to 6.6 percent.
Moreover, Zipp showed that "all ten of the cities thought to be most vulnerable to the strike (those with more games missed and more fans per capita lost) did better than expected in both strike months, while four of the cit-ies least susceptible showed some relative losses," further supporting his argument that ball teams are not a determining factor in an area's fiscal health.
Zipp's study is surely limited in its scope. Seven weeks is hardly enough time to properly assess a metropolitan economy and make conclusive statements about it.
Baade, on the other hand, has made similar studies of cities with professional sports teams from the mid-'60s until the late '80s and come to the same conclusion.
Zipp cites a 1990 study co-authored by Baade that "looked at nine cities between 1965-83 and found no significant relationship between adding a sports team or a new stadium and the city's economic growth," Zipp writes in his study. "In fact they found that in seven of the nine cities, the city's share of regional income declined after the addition of a sports team or the construction of a new stadium."
Baade updated and expanded this study in 1994, including 48 metropolitan areas that hosted professional sports teams over the 30 years between 1958 and 1987. Again, Zipp writes, Baade "found that in no cases did a new stadium have a statistically significant, positive economic impact on the city's growth and in three cases it had a negative impact."
If the point isn't money, what is it? That's where club owners and their attendant sycophants start talking about "the intangibles." This amorphous realm deals with the psychological health of a city. It's a pride thing, a civic thing, a sense of being a world-class, major league town. But it's also about sticking your chest out and doing the strutting bloated-neck-sack, my city do or die, your city sucks thang. So, you see, it has a lot to do with the sports mentality.
Baade adds another point. "It's an edifice complex," he says. "The Egyptians built pyramids. We build stadiums, shopping malls, and casinos." And DeBartolo builds all three. He's the perfect exemplar of this syndrome.
Affordable-housing activist Calvin Welch has another metaphor, and a slightly different explanation, for the problem. For years, he's called it the "cargo cult mentality" of city officials. Whether it's a convention center or a sports stadium, it has to do with laying down offerings to the long dead, long gone economic gods -- false gods in the case of sports stadiums. Build it and they will come back, that's the thinking. Just like the South Pacific Melanesians who built wooden replicas of cargo planes hoping they would beckon back the real World War II aircraft with their C rations and Coke.
Or as Baade says: "It's like Pascal, who said, 'I believe in God because I can't afford not to.' It's the same way with city officials and stadiums. They have to believe stadiums have an economic impact, because they can't afford not to."
Zipp agrees, attributing the rush to build stadiums to a desperate reaching -- fervent, even -- at creating some sensation of progress. "The fiscal crises of the last two decades have made city officials more concerned with issues of economic development while seemingly less able than ever to impact their economic fates," he writes in the preamble to his study. "In this climate, city leaders increasingly have sought major development projects, ones that can create jobs and that they can use to portray a sense of urban revival. In virtually every major U.S. city, part of these developments have focused on trying to keep or acquire a professional sports team."
In the world of intangibles, this is the greatest one: How does a mayor, a city, catch a self-esteem buzz? The drug analogy isn't gratuitous. Like drugs, the buzz is a lie, a fleeting perception, but a powerful one. And like drug pushers, sports team owners like DeBartolo rely on it to make their money.
Check out Carmen Policy, president and chief smooth-talker for the 49ers, discussing the intangibles. He hits all the right notes, the perfect pitchman pushing all the right buttons to make a sale.
"We are part of the soul of the city," he says of the team, when asked to defend a public subsidy, even though economists say it isn't money-wise.
"Why is it a good investment for the city to have a world-class opera? Why is it important to have a great symphony? Why is it important to have a great main library? We have become part of the fabric of the community."
As he spins out of control, Policy equates the 49ers with nonprofit public institutions bent on public service. One wonders if he's willing to take the whole plunge and wed his team to municipal government. His confusion is forgivable, however. Once you take the public teat in your mouth, independence and identity can tend to get skewed.
Phony though it is, Policy's parable will probably work on San Francisco's political elite. In fact, they've already begun to repeat it. "The team is very important to the mental health of the city," says Immendorf. "It's not a question of whether the city will contribute, it's a question of how and when."
From Immendorf, this message will spin outward to the other appendages of the establishment. Soon it will become a mantra in newspaper columns and daily conversation.
And that isn't necessarily a bad thing, Baade says. After watching city after city bullshit their residents with chatter of economic windfalls, he'd be relieved to see a city that argues in favor of public subsidies solely using the civic pride argument.
"Since [a public subsidy for teams] isn't worth discussing on an economic level, you have to analyze it on cultural grounds," Baade says. "Honesty dictates no less when you are using taxpayer dollars. Don't sell it as a cash cow, because it's only a cash cow for players and team owners."
Unfortunately, knowing our civic lights, they will spew an amalgam of civic self-esteem and voodoo economics. But don't be too hard on our zombie pols. They really have very little choice in the matter. Self-interest and cynicism are really only two reasons why mayors and commissioners -- and the activists who barnacle themselves to their hulls -- can be expected to spin the 49er line and support subsidizing the stadium. There's an additional, and more insidious, reason: It has to do with blackmail, greed, economic collusion, and the economy of the National Football League.
Currently there are 28 teams in the NFL. Compare that to the several hundred cities who are ready and able to pay big bucks to lure an existing team with promises of stadium heaven, and the result is a classic supply-and-demand imbalance -- which turns the elemental lucre of NFL owners like DeBartolo.
Into this economic dynamic step club owners with their desires for new stadiums -- and a damn effective shakedown routine. Owners go to mayors and say something like this: "Give me a ton of money for a new stadium or I'll pack up and leave. There are several other cities who want me and are willing to pay to get me." Usually, it works.
Baade and his fellow skeptics are blunt as spoons about the whys and wherefores of this power imbalance. "It's a cartel economy," Baade says of the NFL. "Leagues are cartels who further their own economic interests by limiting supply, and they only expand when the political pressure mounts from the public."
Adds Stanford's Noll: "This is the whole reason cities get in these bidding wars. Leagues create this situation by making sure there are far more cities than teams."
Policy insists that the 49ers aren't threatening to leave. "I heard on the radio the other day someone saying we were threatening to leave," he says. "That's not true. I haven't done a very good job of getting our message out."
But Policy says the team can't stay in Candlestick. "We don't think Candlestick in 2007 [one year after the 49er lease expires] is possible," Policy says. "I think the mayor agrees with that." But from there, he refuses to predict the future.
What the city has on its hands then is a subtle, PR-smart threat. Former Giants owner Bob Lurie, who threatened to move his team if he didn't get a new stadium, taught DeBartolo that blatant blackmail doesn't work. But for all his bombast and arrogance, at least Lurie was on the level. What team owners do now, whether it's the Giants' new owners or DeBartolo, is deliver a coded message to city officials -- we can't play in Candlestick -- allow them to draw the obvious conclusion, and then filter the message to the public in small, savvy doses. Whether the 49ers are bluffing or not, the threat of them leaving is definitely hanging in the air.
Pressed on the economists' critiques, Policy interrupts to lay it on the line. "We could take forever and deal with what this or that economist says or with what this or that study says," he begins. "But it won't do anyone any good to get too philosophical. The real question is what are communities without football teams willing to do to get them."
Then Policy deftly shifts the argument away from actual economic benefits to the city and back to the supply-and-demand equation that serves teams so well.
"There is no better way for coming up with what something is worth than to look at the market value out there on the free market. Teams who have not come within sniffing distance of a Super Bowl are being offered a couple of million dollars in concessions to locate somewhere."
Notice how he's turned the discussion from what is best for the city to what is best for him, his boss, and the corporation he works for. Part of city's soul, eh?
San Francisco isn't alone in bartering over stadiums. As any ESPN viewer knows, America is spiking with stadium fever. Everyone is cutting deals for new sports cathedrals. Two years ago, San Jose built its stadium to lure the San Jose Sharks. What's more, the city failed to make even the most modest attempts at recapturing revenue from the stadium. New York is agog: Both the Mets and the Yankees are angling for new stadiums. And in Houston the city is juggling three separate stadium demands -- from the Astros, the National Basketball Association Rockets, and a third for some football team to be named later. The situation in Houston has gotten so comic and severe that SF Weekly's sister paper, the Houston Press, has launched a column called "Stadia Watch" just to track all the developments. At the same time, teams are bolting from cities and heading for better deals elsewhere. The Oilers fled Houston after the mayor failed to pony up for a new downtown stadium -- this after the city had poured $200 million in renovations into the football team's arena. Cleveland gave the Indians and the NBA's Cavaliers the $425 million Gateway sports complex two years ago but still failed to keep the Browns in town, losing them to Baltimore. And here at home, not only are the Giants building a new Camden Yards-like stadium at China Basin, but both the Raiders, who fled L.A. back to Oakland, and the Warriors are getting total makeovers at both the Coliseum and the indoor arena next door. By no means is this an exhaustive list; it's not even close. Everywhere fans turn, they're either getting new stadiums or getting screwed and losing teams.
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.
"Once your line in the cue is determined, it means everything," Baade says.
But such pressing questions -- just like the compelling research of economists -- will probably fall by the wayside. The 49ers don't really need cultural credibility. Nor do they need a realistic financing plan. Their ace in the hole is the Super Bowl.
To be sure, the team will hype the economic windfall of San Francisco hosting the Big Game as they argue for public money. And, they'll point out that the Super Bowl won't come unless the city builds a new stadium that meets NFL standards.
While economic benefit arguments mean squat during the regular season, Super Bowls do flood municipalities with hundreds of millions when the game visits. (The fact that they do so by drawing in people outside the area actually proves the skeptics' case for nil benefit in normal years.) At one time, Mayor Jordan had the NFL promising to hold the big game here in 1999 -- if the city upgraded Candlestick with $20 million to $30 million. When that became untenable under Mayor Brown, the NFL withdrew its vow and the new mayor was left with the goal of drawing the game in 2004. But there is no guarantee.
Which raises the question: Wouldn't it be worth it to spend $50 million to get more than $100 million in Super Bowl goodies? Sure sounds like a good deal. But consider this: San Francisco can only get the Super Bowl once every 28 years. Even assuming that we will get the bowl in 2004, which is quite an assumption, is it really worth it to spend $50 million for a one-time bang? And spread that $100 million to $200 million over 28 years, which is the real way to measure the economic impact of a Super Bowl. Whaddaya have? About $7 million to $8 million a year, and that's not figuring in the time value of money.
But again, what the Super Bowl truly represents has more to do with Eddie DeBartolo than it does with the city. The big game is a lure, an itchy tease DeBartolo is using to get his new cash cow stadium. And the stadium, above profit potential, above all else, is indeed a pyramid, as Baade says, a monument to one man's mission to define himself as a capitalist.
A new stadium and another Super Bowl would once and for all allow DeBartolo to step out of the shadow of his late father's mall empire. The struggle to build a new stadium is at one level a story of a young scion trying to free himself from the hold of a dead and obsolete dynasty and build a new dominion -- one more modern, one more him.
DeBartolo's dad, Edward J. DeBartolo Sr., carved his path with shopping malls. Starting in the late 1940s, DeBartolo Sr. built one of the largest real estate empires in the country. According to the DeBartolo Realty Co.'s annual report ending December 1995, the company owns an interest in 51 superregional and regional malls, 11 community centers, and land containing 455 acres of development potential. The value of the company on the open market is pegged by the Wall Street Journal at $1.3 billion, with $332.7 million in annual revenues. But the annual statement also concedes to $1.9 billion in debt.
Newspapers have carried conflicting reports over the years about the son's involvement in and passion for the mall business. Some wryly commented that DeBartolo Sr. bought his son the Pittsburgh Penguins hockey team and later the 49ers to give Junior something to do.
But the clearest indication of DeBartolo Jr.'s passions came last month -- a little more than a year after DeBartolo Sr. died -- when DeBartolo Realty allowed itself to be bought up by its larger competitor, Simon Property Group. The $7.5 billion deal erased the remaining debt the DeBartolos were laboring under. The DeBartolos had been carrying the debt since a series of bad decisions and a plummeting real estate market left the company holding billions in arrears. In 1992, the company sought refuge in five banks that helped it restructure its debt. Ever since, the company had been shedding assets like a bad wool sweater. Last year, the company sold its stake in the Ralphs supermarket chain and its interest in two Louisiana riverboat gambling operations for a grand total of $425 million, according to the Wall Street Journal.
DeBartolo and his sister will keep a 14 percent, $500 million stake in the new Simon DeBartolo Co., but the move represents a "scaling back of his involvement in the retail industry," the Journal reported last month. "He will retain a board seat in the combined company, but is not expected to play a role in management." Both he and his sister made roughly $12 million in personal stock profit from the deal.
All the converging events -- the death of his father, the seismic shift in his business holdings, and the potential for a Super Bowl in San Francisco -- have focused Edward DeBartolo Jr.'s attentions squarely on his sports franchise and the city of San Francisco.
Last year, he launched a new company, DeBartolo Entertainment Co., a San Mateo development firm dedicated to building a 49er theme restaurant in San Francisco. Other possible projects include a card room on the Peninsula and a new wrinkle in his father's business riff, a series of entertainment centers mixing retail, movie theaters, and casinos.
For years, DeBartolo has hidden behind Policy, allowing him to be the sweet-talker. (DeBartolo declined to be interviewed.) But as his money becomes more important in town, DeBartolo will have to step to the fore and show us what he's got. And as he moves to make his mark in San Francisco and the Bay Area, DeBartolo will obviously have some adjusting to do, especially if he's asking the city to join him in a business deal.
Policy says DeBartolo is dedicated to the city. "He wants to be a part of San Francisco," he says. "He wants to remain here and own the team for the rest of his life." To back his point, he says that while the 49ers have been one of the highest grossing teams in the NFL, "(DeBartolo) has plowed all that money back into the team, hiring the best players."
All fine and well. Frankly, most San Franciscans appreciate his interest in the team and probably want him to stay, too. But if you want our money you have to ask nicely, and that's something the team isn't willing to do -- so far.
Asked to prove that the team can't afford to carry the freight of the stadium all on its own, Policy refuses to share any financial information -- even in the most general revenue/expenditure sense.
But what happens when Joe taxpayer comes to you -- which he eventually will -- and asks you to prove you need his money?
"I'll tell you what I'll say," Policy responds. "It ain't any of your damn business."
In the words of Fortune magazine, sports teams "don't do diddly" for a city's aggregate economy, and they tend to have a negative fiscal impact on other segments of a city's entertainment industry.
San Francisco has a real-life indicator of a ballclub's economic impact on its surrounding area. Just look at Bayview-Hunters Point, the nabe nearest Candlestick. Any 49er-generated spending hit Third Street lately?
According to Robert Baade, "It's an edifice complex. The Egyptians built pyramids. We build stadiums, shopping malls, and casinos." And DeBartolo builds all three.
"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.
The struggle to build a new stadium is at one level a story of a young scion trying to free himself from the hold of a dead and obsolete dynasty and build a new dominion -- one more modern, one more him.
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