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Hook, Line, & Stinker 

Everyone loves the 49ers. But even love has its limits. Are taxpayers willing to subsidize millionaire owner Eddie DeBartolo Jr.'s dreams of a new stadium when economists say it's a bad deal

Wednesday, May 1 1996

Page 7 of 7

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.

About The Author

George Cothran


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