CAN GIANTS DRAW ENOUGH FOR NEW STADIUM?

Byline: Lance Williams and Edward Iwata  San Francisco Examiner

If you build it, they will come. But will enough of them come to pay off the debt?

That's the big question among sports financiers who were amazed at the news that the San Francisco Giants had nailed down $140 million in bank loans for the first privately financed major-league baseball stadium in decades.

Bankers and economists wondered whether the Giants and a gleaming new ballpark by the San Francisco Bay could sell enough tickets and corporate ads to cover the hefty debt on the loan.

Traditionally, sports franchises have not paid their own way, relying heavily on tax-free municipal bonds, hotel and motel taxes, and other public money to build arenas and stadiums.

The Giants deserve a lot of credit, said John Gillespie, a managing director at Bear Stearns, the New York investment bank that financed baseball stadiums in Baltimore and Arlington, Texas. ``Everyone thought the stadium here would be pretty difficult to do, but they definitely pulled a few rabbits out of the hat.''

The Giants' $140 million loan will come from a syndicate of financial institutions led by Chase Securities Inc., a subsidiary of Chase Manhattan Corp., the giant New York bank. It beat out 12 top banks to win the deal.

The loan ``is the last important piece of financing for the stadium,'' Giants executive Larry Baer said. ``Despite the skeptics, we've always felt this project is extremely salable to the financial markets.''

The Giants would not disclose terms of the agreement, but sports economists said the short-term deal would be a seven- to 15-year loan at a variable interest rate, with interest and principal payments of $10 million to $15 million a year.

The $255 million stadium also will be bankrolled by $100 million in corporate sponsorships, concession rights and charter seat sales. The last $10 million to $15 million will be tax-increment financing from the San Francisco Redevelopment Agency.

The 42,000-seat stadium, set to open in the year 2000, will be dubbed Pacific Bell Park after the San Francisco telecommunications company, which paid $50 million up front to have its name on the ballpark for 24 years.

Beyond the hoopla, however, is cold economic reality. Sports experts wonder whether the so-called ``halo effect'' of a new stadium will lure enough fans to cover the Giants' debt.

Typically, a new baseball stadium brings in a million new fans a year and $10 million to $20 million in new revenue from ticket sales, corporate suites and advertising. But eventually, a winning team is needed to fill the coffers.

``It's going to be a real challenge, but it can be done if you've got a good team and a good facility in a good market,'' said Mary Collins, a partner at Orrick, Herrington & Sutcliffe who worked on a recent deal to renovate the Oakland Coliseum Arena for $140 million for the Golden State Warriors.

Baer said the Giants estimated they must fill at least 60 percent of their seats to pay off the loan. That translates into a season attendance of just over 2 million. This season, with the third-worst record in the major leagues, the Giants are on pace to draw about 1.4 million.

For offseason revenue, the Giants also might explore booking concerts and other entertainment. ``These venues become entertainment facilities and attractions unto themselves,'' said Rob Tillis, vice president of global finance for Chase Securities.

Mayor Willie Brown and the Port of San Francisco, which owns the land at the 12-acre project site, want the deal to happen. One insider said the city could lease the land to the Giants for 20 to 25 years at $1.

So far, taxpayers appear to be off the hook, in contrast to other failed sports megadeals that left municipalities covering huge debt. One such fiasco might be taking place across the Bay, where Raiders ticket sales have fallen short of what it will take to pay for the Oakland Coliseum renovation, leaving the city and Alameda County to foot the bill.