While the threat of franchise relocation may be cooling, some cities looking to keep their teams haven’t shown an aversion to throwing tons of public money a team’s way.
Take the Yanks and Mets deals. Both will rely on the issuance of public, tax-free bonds to finance both ballparks. No taxes are being raised to pay for either project, but both teams will pay off the debt using PILOTs, or “Payments-In-Lieu-Of-Taxes.” In this case, the taxes would be property taxes that would be levied on the land improvements. The use of government-issued bonds may be illegal, so the IRS is going to take a look at it.
The Twins are using the typical playbook in bypassing a referendum for their sales tax hike. Yesterday the Minnesota House passed the Twins’ stadium bill. The state Senate is expected to be more baseball-friendly than the House. All signs point to the Twins staying put.
Closer to home, Sacramento pols are trying to put together a public financing plan for a new Kings arena. To accomplish this, they’re attempting to circumvent the 2/3 voter approval required for a specific-use sales tax hike. If this sounds familiar, Santa Clara County is doing the same thing with their Measure A “BART tax.” If you’re wondering, there’s no mention of the A’s anywhere in that article, which should be a clear indicator of where Sac’s focus is – not on the A’s.
Tonight is the last San Jose ballpark EIR outreach meeting (City Hall, 14th floor, Room 1446, 6 p.m.). Thank you, SJRA, for scheduling it earlier – preventing a conflict with Sharks-Preds Game 4. I attended Tuesday night’s game, and the Tank really did hit 113 dB after the first Marleau goal. Marc Morris’s traffic-related comments document is available if you’re interested. I didn’t come away from the previous meetings overly convinced that the expanded traffic study (area and time) would take place. Hopefully the continually applied pressure will make it happen.
The June election is less than 6 weeks away, and some major things will be decided that could have an impact (direct or indirect) on the A’s future in the Bay Area. Among the issues:
- Oakland’s mayoral race could extinguish or revive any hope of retaining the A’s within city limits. Frontrunner Ron Dellums appears to be convinced that the A’s already have one foot out the door, while Ignacio De La Fuente has said he’s willing to fight to keep the team.
- San Jose’s mayoral race is wide open, and that means it’s getting ugly. Yesterday, a Merc report linked Vice Mayor/mayoral candidate Cindy Chavez to the 11th hour, backroom deal for the Grand Prix race. Opponents Chuck Reed, Dave Cortese, and Michael Mulcahy seized upon the story, with Mulcahy calling for the Santa Clara County DA to investigate the matter further.
- Santa Clara County Measure A proposes a 1/2-cent sales tax hike that would fund hospitals, emergency services, and transportation – chiefly BART. At 8.75%, the County would tie Alameda County for the highest sales tax in the Bay Area. This tax is expected to be the deciding factor in the push for BART to San Jose, as its revenue stream is designed to make up for a federal funding component that hasn’t materialized. Should BART not come to San Jose, the Warm Springs extension could be delayed indefinitely, even though they are technically “de-coupled.”
I haven’t been able to attend any Oakland forums/debates so far, but I’m going to try to make May 15th’s forum sponsored by Oakland Community Organizations (location TBD). For Oakland residents I have a request: If you have the opportunity to pose A’s or ballpark-related questions at any of the house parties or other events, please send me any feedback you get. I’ll be happy to devote a new post (and attribute you) on the subject matter. As a San Jose resident, I’ll be attending Saturday’s Public Policy Forum (at City Hall Council Chambers, no mayoral candidates expected), the Monday and May 13 debates (also at City Hall Council Chambers). Living in downtown SJ makes it quite easy to attend such SJ-related events, Oakland’s another story.
Over at The Hardball Times, Maury Brown provided an assessment of the three teams that are most often targeted for a possible move (Twins, A’s, Marlins), along with potential target cities (San Antonio, Charlotte, Portland, Las Vegas, Norfolk). In his judgment, we shouldn’t expect the A’s to find greener pastures outside the Bay Area. I’ve felt the same way for some time, and I’ll continue to concur until details about a knock-Lew’s-socks-off deal from outside California are revealed.
For those that think a big, free stadium is just around the corner anywhere in North America – think again. Those days are over. You can point to the DC deal and how the public has been swindled, but that took an extreme amount of coordinated (some would say collusive) effort by MLB and the owners, and the payoff had to be huge (which it will be). That payoff is not happening anywhere else.
drummer510 has started up a blog called “Keep the A’s in Oakland.” It’s an outreach-type blog that encourages like-minded folks to call and write Oakland pols and educate the public on what’s possible in Oakland. I’ve given the author a few pieces of info to get him going, including my mock-up of the Broadway Auto Row site.
The Twins appear to be in the home stretch of their political process to get a new open air ballpark approved. About three-fourths of the funding would come from a 0.15% sales tax hike in Hennepin County (Minneapolis, not St. Paul).
A new article in the East Bay Business Times covers Fremont’s vision for transformation, including the ballpark village concept and a new “downtown” area.
Forbes finally released their annual team valuation list today. The usual suspects are at the top of the food chain, with the Yankees being the first team to surpass the $1 billion mark. The Washington Nationals had the biggest gain, jumping all the way to #6 with its $440 million value. That figure is in line with the expected sales price of still-ownerless franchise. Other low-revenue teams got a big boost as well, including the A’s, who jumped from $180 million to $234 million in the calendar year the Wolff/Fisher group has owned the team. This rapid appreciation is due to the continuance of lucrative national TV deals and revenue sharing.
It gets more interesting when looking at how these numbers break down. Forbes usually gets the figures pretty close since franchise sale prices tend to come very close to Forbes’ appraisals, so it should be pretty easy to accept these values even with the limited information MLB and the teams make available. Take a look at how the A’s and Giants compare:
- Franchise value: A’s – $234 million (+26% change), Giants – $410 million (+8% change)
- Debt-to-value ratio (less than 40% preferred): A’s – 38%, Giants – 37%
- Wins-to-player cost ratio (% relative to per average wins-per-dollar of salary): A’s – 116, Giants – 76
- Market value: A’s – $73 million, Giants – $155 million
- Brand management: A’s – $21 million, Giants – $50 million
- Season ticket rolls: A’s - 8,000, Giants – 28,000
What do these numbers mean to you, the baseball consuming public? Not much if you’re looking for huge future payroll increases. These are not liquid or cash figures. And don’t be fooled by the Giants’ debt-to-value ratio. Other teams with higher debt have ancillary assets they can sell off to reduce the load, the Giants don’t unless Magowan and Co. are willing to dig deep into their own portfolios.
On the other hand, the market value and brand management numbers are telling. In both cases, the Giants more than double the A’s. The Giants have 350% more season ticket holders, though that could change drastically for the worse next season. This raises more than a few questions, such as:
- How much are the A’s and Giants tapping into their relative markets, and the Bay Area as a whole?
- Are the A’s low values due more to the stadium, ineffective marketing, or other factors?
- How much of a difference will a new ballpark for the A’s really make in the grand scheme of things?
Should the A’s get a ballpark built soon and ink better media deals, they could see a surge similar to what the *ahem* Anaheim Angels experienced.
This installment comes from San Jose City Hall’s Council Chambers, where the third ballpark EIR outreach meeting is being held. There are less than twenty people in the gallery this time, due in part to Soccer Silicon Valley calling off the dogs for now. As new items come up during the session, I’ll post them here.
Update (22:15): The Q&A was focused on perceived inadequacies in the Draft EIR. They ranged from expanding the traffic study to cover a larger area and the 6-7 p.m. timeframe, to questions about mitigation costs (not currently covered).
That brings up a source of consternation. While there have been recent updates to the Diridon/Arena and Midtown plans to cover new projects, there’s a lack of clarity on how the ballpark will affect more than just the study area. The EIR aims to cover some of this, but there’s a general feeling that there’s no overall vision. Impacts from individual projects are narrowly studied and focused, so there’s no sense of how they are woven into the fabric of the whole community. Whatever happens with the EIR, there will be some heated debate when the Planning Commission holds its hearing on July 12. The first mayoral election will have taken place and the results should at the very least thin the herd for a November runoff.
On the blog San Jose Inside, contributor “Single Gal” started a serious discussion over the ballpark, mayoral candidates, and the city’s vision. She brought up candidate Michael Mulcahy and the notion that he may get votes simply because he’s so close to the situation. Not to be lost in all of this is candidate David Pandori’s swipe at Mulcahy over the weekend.
Yesterday, word came that Adobe is going forward with plans to acquire the 5.5-acre SJWC east parcel. There goes one major piece of a ballpark village, at least a viable piece for commercial use. As for the residentially zoned west parcel, nothing’s been announced yet.
One bit of non-San Jose news that can apply universally: Phoenix is losing $3 million per year on a 2,800-space garage built north of Chase Field (formerly Bank One Ballpark). Promises of 90% capacity as a multi-use parking facility never came to fruition. The garage only gets significant use during the Snakes’ home games.
The start of the baseball season is usually accompanied by two neat statistical news releases. Forbes Magazine’s 2006 team valuation figures are not available, but Team Marketing Report‘s newest MLB Fan Cost Index is. It shouldn’t come as a surprise that the elimination of the Coliseum’s third deck led to a 25% increase in the average price of a seat. What is surprising is the fact that many teams with new stadiums are towards the bottom of the list. Granted, most of those teams (Detroit, Pittsburgh, Milwaukee) have been perennial cellar-dwellers in medium-to-small markets, but there appears to be a clear correlation between on-field success and ticket price. Baltimore and Seattle charged a hefty premium when their teams were more successful and their stadia were newer. As both went into the tank in the last few years, price hikes have been fewer.
To put things into perspective, here are a few more bullet points that you might find interesting:
- In 1999, the A’s average ticket price was $10.10. That means that in seven years, ticket prices have gone up 118%.
- 1999 payroll was only $26 million. The current payroll is $62 million, a 138% increase. Pay-to-play is the name of the game.
- There’s no better indicator of MLB clubs’ revenue disparity than ticket prices. Ten years ago, Boston had the highest ticket price – $15.43. Cincinnati had the lowest – $7.95. Boston still holds the mantle of as ticket price champ, with its average price at $46.46. Kansas City now has the lowest – $13.71. There’s also a multiplier effect because teams like the Red Sox, Yankees, and Cubs routinely sell their seasons out, as opposed to the oft-lackluster attendance records of the lower-revenue teams.
The Fan Cost Index is frequently cited by analysts and economists, but it tends to paint the fan experience with too broad a brush. Before his untimely passing, Doug Pappas wrote an article for Baseball Prospectus that deconstructed the FCI and sought to obtain more granular, circumstance-based data.
Now that the A’s have raised ticket prices 25% over last season, what’s in store for the remaining years on the Coliseum lease? And what can we expect when a new ballpark is opened? Will it have a China Basin-like pricing structure, or will it look like PNC Park’s tiering system?
A new piece in Slate by SF Weekly contributor Tommy Craggs provides a nice forward for today’s upcoming post on ticket prices. Craggs bemoans the loss of the Coliseum’s upper deck, especially section 310, where he and his friends frequently sat during games. Perhaps a little too romantically he writes, “Underpoliced and sparsely populated, the coliseum’s scruffy upper deck was perfect—the ballpark equivalent of Wyoming.” There’s value in being able to stretch out, place one’s jacket on an adjacent chair, or use the next row of seats as a footrest. It’s also nice to be able to render a printed row and seat assignment useless. Plus it doesn’t hurt that vertical circulation in the Coliseum has always been excellent, making “trading up” quite easy.
Of course, Craggs doesn’t mention that sitting in 310 often made one feel like he was watching the game while actually sitting in Wyoming. Believe me, I’m a cheap guy who loves my bleacher seats and used the “View level” as a reliable fallback when the bleachers were sold out, but the seating bowl’s curvature was not conducive to actually watching a ballgame. I’ve had a chance to sit in every section in the Coliseum, even the odd Loge boxes in the corners that act as not-quite skyboxes. I absolutely sympathize with AN’s Brian in 317 and FreeSeatUpgrade, who have championed the upper deck ever since the announcement to close it was made. Unfortunately, they’re a small subset of A’s fandom, and their counterparts in other cities have been slowly becoming extinct over the past two decades – or at the very least homeless.
The funny thing is that the upper deck vibe hasn’t completely evaporated. It appears to have moved to the Plaza Outfield area (formerly Plaza Bleachers). While these sections are more likely to be sold out for high-demand games, the typical weekday series against Texas or Kansas City will render the Plaza Outfield a veritable pasture. There are far fewer desirable seats (front row for the most part) in Plaza Outfield because so much of the outfield is obstructed by the sheer height of the deck. It’s still an interesting vantage point, especially if one get there early enough to sit in dead center.
My cynical side points to a strictly business ethos in the closing of the upper deck, in that sections 315-319 were too good. Similar seats in other stadia cost upwards of $20. Yet A’s fans were only paying $9, or $1 on Wednesdays. For many, the price of a View level ticket acted as a cover charge, and upon entering the stadium they made a beeline for the Field level. If not trading up, finding a slightly better perch in the upper deck was likely as long as there were plenty of empty seats in the area.
Last September, Craggs also wrote about the ballpark design Wolff unveiled in his August press conference. He alluded to the scarcity issue in that piece as well, though in the throes of a pennant race I doubt anyone was even considering the idea that Wolff would experiment with the stadium in such a drastic way. The days of an A’s being an inexpensive social scene are coming to an end.
Or are they? Certainly there are potentially innovative ways to bring these fans in without completely destroying their wallets, right? The A’s transitioned several season ticket holders from the 300’s during the offseason, but what about the young, spur-of-the-moment types? For them, I think there is a good solution: student sections. It works in college basketball and football, why not at an A’s game? The student sections could be specially designated areas of either the bleachers or upper deck, with discounted tickets and special green T-shirts. Student sections at college hoops and football games tend to be loud, so they’d naturally work for cheering and heckling in baseball. Non-students would be welcome too, but a certain percentage of those seats would be set aside for students – say 500-1,000. At the new ballpark non-premium bar could be built into the stadium for the kids to visit after games – with a ticket stub acting as free admission. The best part is that it would be easy to market ticket packages to schools and students.
Some may argue that this environment is already in place at the Coliseum, but not the way I’ve defined it. The LF bleachers are always raucous due to the culture that’s been there for decades. When the A’s move to new digs, tickets will become even more scarce, which could further push fans away. Why not take a proactive approach and give it a new marketing twist? The more of those young fans can be kept in fold, the more likely they’ll sign up for better seats as they get older, earn more money, have families, etc. Wolff said he likes the “neighborhood” concept being deployed at many new ballparks. Well, Lew, here’s a group of fans just waiting for a neighborhood. What can you do for them?
Furthering the effort to dispel any notion of a hidden agenda, Lew Wolff spoke with Merc scribe Mark Emmons and gave a little more insight into the business operations side of the A’s. Apparently Wolff owns 12% of the team, a partnership (which I assume includes members of the DiNapoli family) owns 13%, and John Fisher controls the rest.
After the warm-fuzzy stuff in the article, they get down to the ballpark issue, which doesn’t reveal anything new on the dealmaking front. However, there appears to be clarification on a number of subjects.
On looking outside the Bay Area:
He will look elsewhere “only if we bomb out here.”
Wolff said he has not closed the door to Oakland, although there has been no sign of meaningful talks in months. He has been in discussions with Fremont and calls the site adjacent to Interstate 880, currently leased by Cisco Systems, “an excellent location.”
Then onto San Jose (emphasis mine):
Then there’s the question of San Jose, which has twin hurdles: A ballpark presumably would need voter approval, and baseball gave the Giants territorial control of the market. Wolff, who also has been talking with Major League Soccer about bringing a new franchise to the city to replace the Earthquakes, insists he won’t “tilt at windmills” and fight the Giants’ claim.
Added Selig: “San Jose is a dead issue. The thing that holds the sport together is its own internal rules. If you start to break them, you’re going to have anarchy.”
But look at this from earlier in the article::
Yet ask Wolff, a prominent figure in San Jose redevelopment for almost four decades, what would be a good next step in the revitalization of the city’s core, and he says: “If they could get the A’s, that would help.”
After reading the article I had to re-read it again twice. Frankly, I don’t know what to think. Some of the OAFC-ers seem to believe that Wolff and Selig are playing good cop/bad cop on this, though Selig hasn’t been nearly as visible as Wolff and Selig’s given more soundbites to the Marlins’ cause than the A’s (which is likely a vote of confidence in Wolff, not in Loria/Samson). I find it interesting that those who have dealt directly with Wolff have given a near-universal appraisal of the man as a “straight shooter” or any number of words that are synonyms for “honest.” Those who haven’t dealt with Wolff tend to have a more cynical or negative view. I’ve never met Wolff myself, so I can only temper things I’ve heard as a San Jose local (also positive) with the various bits of circumstantial evidence that exist.
Shrugging my shoulders as always…
One more thing – I’ve added “Attendance Watch” to the sidebar. In my previous attendance analyses there has usually been a mention of standard deviation. I haven’t done that yet with the figures because as the statheads usually say: Two weeks into the season is too small a sample size.
Nate Silver of Baseball Prospectus wrote a piece analyzing attendance revenue for the four two-team markets. He wondered what effects one team’s success had on the other. After running attendance revenue figures through a regression analysis, Silver surmises that for the most part, one team’s success would have a symbiotic effect on its rival. The notable exception is Chicago, where loyalties seem to run the strongest.
As for the Bay Area, Silver wrote that either team had a slight but positive effect on the other:
Not much to look at here. Multiple choice–this is because (a) there’s a cleaner geographical distinction between the West and East Bays; (b) whatever Mapquest says, you couldn’t get from the Coliseum to SBC Park in 20 minutes if you were flying a Concorde; (c) Bay Area fans are characteristically non-committal and indifferent.
The last point is painfully true. Bay Area people are accustomed to having to drive an hour to get to work and at least 30 minutes to get to entertainment. I know plenty of Peninsula/SF people who never visit the other side of the Bay and East Bay folks who have little idea what the South Bay looks like. That begs the question, “How distinct are the four ‘sides’ of the Bay?” I’ve always thought it was a rather fluid dynamic because of the way I live, but maybe it isn’t. Where does Fremont fit into all of this?
Elsewhere, Chris Isidore of CNN/Money looks at how scarcity is affecting ticket prices and demand. He noted that the average ticket price of an A’s game went up 25% from 2005 to 2006. That number coincides with the newest Fan Cost Index numbers released by Team Marketing Report.
I’d go further into the FCI, but I’ll save that for next week.