Here is what happened this week in San Francisco, where a new stadium plan has been announced for the 49ers move away from Candlestick Park (or whatever they’re calling it these days):
The funding deal was spelled out in a development contract that caps two-and-a-half years of closed-door negotiations between city and team leaders and essentially completes a planning process that began when the team announced interest in abandoning San Francisco five years ago.
Threaten to leave. Threaten to leave some more. Keep threatening until the public gives you what you want. Standard NFL operating procedures that are good for NFL team owners in their attempt to fleece the public. Sound familiar?
But, here is an interesting twist:
Goldman Sachs, U.S. Bank and Bank of America have agreed to loan the city and team a combined $850 million to pay for the lion’s share of the construction, which could start as soon as next year.
I don’t know about you, but when I think of Goldman Sachs, U.S. Bank and Bank of America, I don’t think “altruistic companies that are looking out for the public’s best interest”. If those three companies have agreed to loan San Francisco money to help them build a new NFL stadium, there is one reason why: they liked the terms of the deal.
And what’s not to like: they will get paid.
Even if NFL football fades in popularity, they will get paid.
Even if the 49ers can’t make rent, Goldman Sachs, U.S. Bank and Bank of America will get paid.
If the city has to raid their general fund, increase taxes, or open a stupid racino, Goldman Sachs, U.S. Bank and Bank of America will get paid.
Back in the days before the financial meltdown, Goldman Sachs was playing an interesting financial game. They were both selling investments based on pools of home mortgages while simultaneously betting that the investments they were buying were going to blow up in the faces of the suckers they sold the bad loans to. While it’s technically illegal to sell a flaming pile of dog crap, that didn’t stop Goldman Sachs. And, why should it? Many of their ex-employees are now in charge of regulating them, so as you might expect, no one has gone to jail over that scam.
Goldman Sachs’ Role in the NFL
It turns out that Goldman Sachs is also involved in profiting from the NFL’s corporate welfare deals. One example is the deal in San Francisco where a city will be making debt payments to private companies (Goldman Sachs, U.S. Bank and Bank of America) on behalf of private companies (San Francisco 49ers and the NFL).
In 2008, Goldman Sachs analyst, Anthony Noto left the company to become the CFO of the NFL.
In 2010, Noto returned to Goldman Sachs.
A former Goldman Sachs executive, George Atallah, was the lead negotiator on behalf of the NFL players association during the recent labor dispute. Who was he negotiating against in the deal? Goldman Sachs:
George Atallah, a former Goldman man now working with the Player’s Association, has called into question his former employer’s handling of the negotiation.
Atallah was recently quoted by The NY Post: “It’s hard to find that Goldman Sachs would ask any of its clients to do a deal without full transparency. I’ve worked for Goldman and know what it believes. So it’s doubly disappointing to me that they are so respected but apparently won’t advise their clients to observe the most basic tenet of business.”
Minnesotans may remember the name Eric Grubman. He’s the executive vice president of the NFL, and – you guessed it – a former Goldman Sachs investment banker. Grubman stopped by Minnesota in October, and took a limo to the capital so he could threaten to move the Vikings if Minnesota doesn’t meat the Vikings and the NFL’s public financing demands.
Here’s how Matt Tiabbi described Goldman Sachs in a piece last year at Rolling Stone:
The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who’s Who of Goldman Sachs graduates.
It looks like Taibbi’s description applies to the NFL as well, with the money source being eternal public debt payments to our NFL/Goldman Sachs masters.
What does this lead to?
With all that in mind, what does this lead to? Here’s my guess:
Since Goldman Sachs profits from public financing of stadiums, Goldman Sachs’ employees running the National Football League will push for the most expensive, most publicly financed stadium they can, since this leads to more interest payments to . . . Goldman Sachs.
The NFL will never allow the public to own an NFL team since public owners may decide to make financially rational decisions like refurbishing existing stadiums, building stadiums on transit, and other cost-saving measures that lead to less need for public borrowing.
Goldman Sachs The NFL will never allow public ownership of a team (other than the Packers who are grandfathered in) because it takes away Eric Grubman’s ability to threaten to move teams if the public doesn’t agree to make regular interest payments to Goldman Sachs.
A Better Way
Minnesota needs to make some serious decisions on how to deal with these corporate welfare queens. Here is what I propose:
1. We build stadiums that suit our needs at prices we can afford.
2. We build them in locations that leverage other public investments, such as highways, trains, buses, and parking facilities rather than build stadiums in the middle of nowhere with 21,000 car parking lots at $10,000 per space for 10 uses per year.
3. We ask fans to chip in a serious share of the cost through Personal Seat Licenses. This money should go toward lowering the public’s debt obligations rather than lowering the private business owner’s contribution.
4. We finance the stadium ourselves. Rather than making debt payments to a financial firm based in New York City, let’s finance the bonds locally through locally owned banks or direct investments by taxpayers and local businesses. Sending interest payments to Goldman Sachs is clearly not in Minnesota’s best interest. I imagine someone like Cory Merrifield from @SaveTheVikesOrg would be willing to lend $10,000 to a stadium fund if he would see a 5% return on his money while helping finance a new stadium. Come up with terms where it makes sense for the public to lend money to itself, see a return, then spend that return locally.
5. We demand that our teams use stadiums for longer than 30 years. We need to stop living in constant debt. It’s nonsense to run up the credit card with hundreds of millions of dollars in additional debt as soon as the credit card is paid off. For at least some period, our local professional sports franchises’ taxes should be able to go toward schools, transportation, and health care rather than being earmarked for stadium debt payments.
If any of this seems unreasonable to the Vikings and the NFL, there is a simple explanation why: Goldman Sachs.