Great America's worth could be key to 49ers' stadium hopes

[GAcoaster]

From the San Jose Mercury News:

 

Great America's worth could be key to 49ers' stadium hopes

GREAT AMERICA'S VALUE MAY BE KEY TO 49ERS' STADIUM

By Mike Swift

Article Launched: 07/20/2008 01:37:25 AM PDT

 

Whether the 49ers ever play a single down in Santa Clara may hinge on a single question:

 

What's Great America worth?

 

Theme park owner Cedar Fair Entertainment says an NFL stadium next door would be bad for business, so it might sell the park. The 49ers might be willing to buy it.

 

Cedar Fair's asking price is over $110 million, according to two sources knowledgeable about the talks. That price is far more than $44 million - the value that the company is claiming the park is worth in its fight with the county assessor.

 

Neither 49ers officials nor Cedar Fair executives would confirm the $110 million price or provide much commentary about where the talks stand. But with Santa Clara's original July 22 deadline for a stadium deal about to pass, the impasse between the NFL team and the theme park operator is a big reason why the city council was recently forced to delay a ballot vote on the stadium until 2009.

 

"We continue to have discussions with the 49ers, and we continue to have discussions with the city" of Santa Clara, said Stacy Frole, a Cedar Fair spokeswoman. "We don't discuss the value of our individual parks."

 

Jed York, son of 49ers owners John and Denise York, said he couldn't comment because of a confidentiality agreement that binds the team and Cedar Fair.

 

The apparently large spread between what Cedar Fair is asking the 49ers to pay for Great America, and what the company is telling the tax man the

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park is worth, has attracted criticism from stadium boosters like Santa Clara Councilman Kevin Moore.

 

"Do they think they have an oil refinery out there?" Moore said. "They don't own the land under the park; the city of Santa Clara does."

 

Number crunching

 

Real estate experts say the potential market price for a piece of property is not equivalent to its value for tax purposes - particularly if a piece of real estate has a unique value to the party buying it.

 

Nevertheless, tax assessments are supposed to be based on recent sale prices. Cedar Fair bought Great America from Paramount Parks in 2006 as part of a package of five parks, in a $1.24 billion transaction.

 

That year, Cedar Fair appealed its 2006 tax assessment, claiming the park was worth $44 million. That appeal was settled in May by the county's assessment appeals board, which reduced Great America's assessed value to $103.7 million, from $106 million.

 

As part of a second tax appeal filed with Santa Clara County in September, Cedar Fair said Great America had suffered a decline in value and asked for a reduction in the park's property taxes. Cedar Fair said the park's 181 acres of land were worth $20 million, while the rides and buildings were worth an additional $24 million, according to documents filed with the county. That appeal is pending.

 

Decreasing revenue

 

While Cedar Fair does not disclose financial data for individual parks, its rent payments to the city, which are tied to Great America's gross revenue, indicate the park's revenue has dropped over the past two years.

 

In addition to its base rent of $5.3 million annually, Great America pays 5 percent of its annual gross revenue over $56 million. That amounted to $265,623 in 2005, $162,452 in 2006 and nothing in 2007, city officials said.

 

Real estate experts said the problems with California's real estate market can't fully explain the spread between Cedar Fair's claim that the park should be assessed at $44 million and its asking price of more than $110 million.

 

"Real estate prices have gone down since 2006, but, in general, not by 60 percent," said Cynthia Kroll, an economist at the Fisher Center for Real Estate and Urban Economics at University of California-Berkeley.

 

Key to success

 

For the 49ers, the Great America parking lot on Tasman Drive where a 68,500-seat stadium might be built is more than a piece of land - it is the key to greatly increasing the value of the franchise.

 

Experts who study sports franchise valuations say a new state-of-the-art stadium stocked with expensive luxury suites and premium seating could add $200 million to the value of the 49ers franchise.

 

The 49ers rank near the bottom of the NFL in terms of franchise value, according to rankings published by Forbes magazine, mainly because the 49ers play in one of the league's oldest stadiums in San Francisco.

 

Complicating the picture is the fact that Santa Clara County Assessor Larry Stone is a passionate - and politically connected - advocate for a South Bay stadium. Cedar Fair last year accused Stone of having a political agenda when he criticized the big gap between the park's market price and Cedar Fair's tax appeal.

 

Stone said he believes Cedar Fair is the biggest obstacle to a South Bay stadium.

 

"Politically, the delay concerns me," said Stone, who said a ballot vote on the stadium as part of the general election in November would have had a better chance of approval than a 2009 special election. "Issues like this have a tendency to get stale."

 

This does not bode well for Great America. I have a feeling they will end up driving Cedar Fair out of the park one way or another, and it will spell the end of Great America. This is one of those "football always wins out" stories.

 

I think Cedar Fair is right in demanding to be paid for the park's worth since the new stadium will have a HUGE impact on their business. If they want to ruin the park's business, they should have to take it on. I just don't see another operator taking the reigns or the 49er's (or any other owner) continuing to run the park. As it was, the City of Santa Clara bought the park from Marriott to keep it from closing and leased the land to Top Value, then Paramount, now Cedar Fair. It would be a real shame to see the park gone, but from what I've seen and heard the park has been stripped of so much of it's original charm and character it's already a lost cause.