Monthly Archives: March 2005
There’s also a Chronicle article about Lewis Wolff’s background and real estate experience.
The vote yesterday was unanimous, in favor of the Wolff/Fisher group.
Good article in the Chronicle about John Fisher, the new majority owner. An excerpt:
The deal went through, and the Fishers became part of a large group of businessmen who owned the Giants.
Harmon Burns, a mutual fund executive, later bought out most of the Fisher family’s stake.
John Fisher kept a small stake in the team so he could continue to monitor its financials, his dad recalls. Fisher, 43, recently sold the stake so he could buy the A’s.
This time, it seems to be just John Fisher investing in the team.
Fisher may have stuck around long enough to gather knowledge about how Peter Magowan and Co. structured the private financing deal that paved the way for SBC Park. If so, that knowledge would be immeasurable. Whether those lessons could be similarly applied in Oakland is anyone’s guess at this point.
The seemingly endless negotiations between MLB and O’s owner Peter Angelos have finally been completed. From the looks of things, here’s the deal:
- The two teams will form a “joint venture” or rather a regional cable sports network that will broadcast both teams’ games.
- This network will be owned and operated by the O’s, with backing from MLB.
- The O’s will pay the Nats “fair market value” for yearly broadcast rights, which may be worth $25 million per year.
- Angelos and his group will be guaranteed a minimum price of $365 million should they decide to sell the O’s.
A Baltimore Sun article also had this note regarding the Expos move to DC:
Angelos bitterly opposed that move, but said he might be persuaded to go along if his franchise was compensated for expected losses in revenue — about $30 million.
I’m not clear on what this $30 million figure is. Is it a lump sum or an annual loss? This may have something to do with the speculated annual guaranteed revenue the O’s were supposed to get as part of the settlement, somewhere in the neighborhood of $130 million a year. If it’s in there, it’s the most controversial piece of the whole deal because it strikes at the heart of the revenue sharing agreement. There are already major loopholes that have been opened in the agreement over the last several years, namely the ability to write off stadium construction costs as “operating expenses.” This only shrinks the revenue sharing pie further.
There are serious ramifications for MLB. Notice how the Red Sox announced all of the changes that are planned for Fenway Park? It’s not just John Henry feeling wistful about the old ballyard, it’s that they can write off those improvements agaisnt future revenue sharing contributions. The Yanks are offering to fund half of a new Bronx stadium that will cost around $800 million. Once it’s built, they’ll spend the next 40 years writing off the costs. The new Busch Stadium is also going to be half-funded by the Cardinals. The new bleachers at Wrigley Field? A write-off for the Cubs. The ongoing improvements to Dodger Stadium? Same story.
Since all of those teams named above pay into the system, the ability to withhold a portion of that yearly payment while also receiving huge benefits along the way (tax write-offs, good local PR, increased franchise value) is huge.
On the other side of the ledger, have-not teams like the Twins, A’s, Devil Rays, and Marlins would split an ever smaller revenue sharing funds pool. The idea behind this is that it should motivate the have-nots to more aggressively pursue new ballparks, since they’ll get the same write-off benefits the haves get. Eventually I think MLB will move further in this direction, choosing to share a limited amount every year until every team either has a new ballpark or becomes a contraction candidate.
Lewis Wolff will be formally introduced as the new managing partner of the A’s on Friday. Ballpark plan unveiling then? Maybe, maybe not.
I won’t be there due to my day job, but I hope the media brings up some good questions, not just the same-old, same-old stuff (moving, territorial rights, Billy Beane’s extension). Some examples of good questions:
- Steve Schott made a $100 million pledge towards a new Oakland ballpark while you were in the VP of venue development position. Now that you are the majority partner, has that stance from ownership changed at all? If so, how much?
- Do you have a generally agreeable figure for the amount of public investment required for a new ballpark? If so, can you shed some light on what that figure is?
- You have mentioned that the Coliseum is probably the easiest site to develop, but other Oakland sites are being explored. Is the Estuary/Oak-to-9th site one of these? If there are others, what are they?
- Gensler and HOK have been mentioned as firms that may be involved in the project. Can you clarify which architect(s) you are working with?
- What will the design process be like? How much will the public be involved? (HOK tends to be very focus group-based)
- Are you leaning towards a specific theme or type of construction when designing the ballpark?
- Is the ownership group pursuing alternatives to the current media situation, such as operating a radio station, switching cable channels from FSN to Comcast, etc.?
If you have other examples, please post them in comments.
In what could be a harbinger of things to come for Oakland, new Milwaukee Brewers owner Mark Attanasio is exploring opportunities to develop land around Miller Park. He even has thought about the issue of preserving the large parking lot there for tailgaters:
Attanasio said he already has been taught about the tradition of tailgating in Milwaukee and the importance of convenient parking at Miller Park.
“I am confident we could come up with a mix that would work,” he said. “I look at this as an opportunity to make this an even better place to visit.”
Like the Coliseum, Miller Park has over 10,000 parking spaces and is conveniently near an interstate freeway. The new structure replaced the aging but venerable Milwaukee County Stadium, which for decades was a multipurpose facility that had little character.
That’s where the parallels end. Miller Park, unlike the Coliseum complex, is a single-attraction venue with little development, especially residential, immediately around it. The Coliseum complex has both the stadium and arena, which offer entertainment all year-round. Miller Park only has the baseball season. The Coliseum also has BART and AC Transit serving it. Milwaukee not only does not have any kind of rail transit system like BART or light rail, but the buses that serve Miller Park only run during baseball games.
Although the city of Milwaukee is open to development ideas, it would appear that luring retail to the area is not a slam-dunk. Even with the differences in comparison to the Oakland situation, Miller Park could become a good case study for any future Coliseum-area development, especially if Milwaukee and the Brewers pursue the construction of a hotel on-site.
They’ll need at least 3/4 of the owners to vote yes. All indications are that there will be little-to-no resistance.
There’s another angle I hadn’t considered until now for John Fisher. Fisher does not have any official ties to the Gap, but he did have a share of the Giants while SBC Park was being built, and he still manages money for the Fisher family, much of which is still on the Gap’s board. Could there be some sort of quid pro quo involving his being the majority partner? For instance, Fisher may have been brought in to prop up the bid, and in return, the Gap or one of its subsidiaries would get a good deal on exclusive advertising rights in the ballpark. The Gap used to have prominence in the ‘Stick, where the outfield fence had Gap signs in the power alleys (yes, the pun was intended). With SBC, the right field facade is one large Old Navy advertisement. Would all Oakland stadium personnel wear Gap khakis or Banana Republic chinos? Would fans see Old Navy commercials on the big scoreboard display in between innings?
Fisher is pretty much guaranteed to make good money on his investment once a ballpark is completed and the franchise’s value rises as a result, at which point he could sell some or all of his share (with MLB approval). Or perhaps Fisher is aggressive in nature, looking to push for a better position within local media (TV, radio, cable) for the team.
It looks like there will be a press conference with the new ownership group tomorrow. The MLB owners’ conference call will probably happen early tomorrow morning. The vote itself is little more than a formality at this point. Jim Young returned to Oakland early to set it up.
“The stadium issue is going to be the major focus of this ownership group,” Young said. “But that’s no surprise there.”
It would be interesting if the A’s actually presented a ballpark proposal tomorrow. There’s probably no better forum or time to do it than right before the season starts.
David Pollak’s article compares and contrasts the San Jose and DC situations. It does not explore the legal option, which based on the rhetoric I’ve heard from Magowan and San Jose supporters, may very well be the most likely scenario – but it would have to be undertaken by San Jose/Santa Clara County, not the A’s.
There’s a good column about the A’s and their claims of being a small-market team by virtue of their stadium situation. I agree the assessment that the A’s have been holding the pursestrings too tightly, and that the small market claims are as much a sell job as they are fact. However, the writer didn’t point out one big issue for the A’s – the revenue sharing agreement. The A’s are perennial recipients of a revenue sharing surplus, which should be fed back into the organization for player salaries. The problem with that is that the surplus is received well after the season ends. Other teams with large revenue streams get much of their money upfront in the form of suite leases, large season ticket rolls and locked-in ad agreements. The A’s are stuck in a place where they’ll get this surplus ($19 million this year), but they can’t expect to receive that amount every year, and so they can’t immediately invest it in new players. Because the amount of the surplus fluctuates from year to year, it’s difficult for them to commit to free agents for long-term deals. What the A’s have done (with the exception of 2004) was get players midseason, and many of those moves have enhanced Billy Beane’s reputation, while giving the team that second half boost. Still, they should shell out some of the extra cash to keep a few of their franchise cornerstones instead of pocketing the cash.
There’s also a little dishonesty about the Forbes figures. Since MLB is private, it’s hard to tell how much revenue is being hidden by organizations who happen to also own the stadiums, concessionaires, radio/TV outlets, etc. The A’s don’t have that type of vested interest relationship, so their revenue figures are probably more accurate than the Giants or Yankees. Unless a team gets into major financial straits and gets audited as the Brewers did in 2004, we may never know how much any team truly makes.