SJ Economic Impact Report

I’ll get into the nitty gritty later tonight. For now I’ll make a few observations on the new Economic Impact Report:

1. The firm used for this version, Conventions Sports & Leisure, is the same one used by the City of Santa Clara for their 49ers stadium study. I will be looking carefully for unrealistic projections.

2. Cost of the 32,000-seat ballpark is projected to be $461 million in 2009 dollars, $489 million in 2011 dollars. Ballpark would open in 2014.

3. The City’s projected impact is ~$1.5 million in additional general fund revenue, net of increased city service costs ($45k). The A’s would pay for all gameday police, emergency and traffic expenses.

4. Projected 2.1 million in attendance plus 3 non-baseball events.

5. 50% of attendees would not be from
San Jose and would be coming in solely for an A’s game.

6. Jobs – 350 during construction period, 980 net new jobs including 138 ballpark-specific jobs. I’ll get into why I’m skeptical about this later.

7. There are hints about what kind of deal could be struck within the numbers. Think property taxes.

8. An alternative development scenario projects just over 1 million new s.f. In office space. It could produce nearly 3x the number of post-construction jobs but yield $300k less tax revenue annually. The difference here is that completion of the construction would occur some 20 years after a ballpark due to commercial market conditions.

9. Yes, there is a section devoted to indirect impacts, which I will largely ignore.

10. This is the first official analysis from the City which refers to the A’s by name (88 instances).

31 Responses to SJ Economic Impact Report

  1. Anonymous says:

    I still have a feeling San Jose won't work. It seems like the Giants care too much about their little territorial rights.

  2. Anonymous says:

    If MLB were to open the entire region to both teams, which I think is a great idea, it would actually boost the idea of keeping the A's in Oakland and working on a downtown site.

    SF is much, much more accessible to Oakland than San Jose.

  3. Anonymous says:

    $461 million for Wolff and Co. to pay out of pocket? How do they possibly recoup this expense? Or is it just the price of ownership?

  4. Anonymous says:

    The one number that really sticks out is the $49 spent per person per game. That is supposed to include parking, ticket, food, merchandise, etc. Does anyone really think that is all it will cost a person to go to a game? We aren't going to be going back to the late 90's anytime soon.

  5. Anonymous says:

    3:49 — if moving to SJ means more money for the other MLB owners (which it will, question is how much) then Neukom's whining will not stop it.

  6. Anonymous says:

    Forbes has an interesting article on the SJ Economic Impact Report–including a quote….yes a quote from LW about territorial rights…I" just think it's a little unfair," says Wolfe, who believes that the bum economy could well lower the $461 million estimated price tag thanks to the lower bids going out all over the construction industry. He had previosuly noted that Chicago, LA and NY all share rights–

    A second interesting quote from LW…yes quote…is as follows–…He just needs the commissioner's office to play along. Otherwise, he says, "We're out of options in Northern California."

    For the Oakland folks I am sure that this is all part of the plan–LW using SJ to get a better deal out of Oakland…oh well—-quotes are quotes..

  7. Dan says:

    Seem like a fairly conservative Economic Impact report IMO. They estimate everything based on a very conservative 24,000 fans a game. Which if you look at other new stadiums, even that are at the lower end of attendance for new parks like PETCO Park in San Diego, 24,000 is right on the money.

  8. Paul says:

    Now baseball can ask itself if it wants to continue subsidizing the A's to the tune of $32 mill a year just so the Giants can have two major cities in their territory compared to zero for the A's, or if wants to let the A's go to San Jose and even things out.

    Neukom's whining about territorial "rights" set more than 15 years ago makes as much sense as new regulations on horse and buggy transit. It's time for MLB to recognize the New World.

  9. Tony D. says:

    Finally, NEWS!

    anon 4:25,
    I don't think the A's/Lew Wolff or City of San Jose care one bit about being accessible to SF.

    Bow-Tie Neukom and his Giants can keep the Territorial Rights to San Jose on the following conditions:

    1) They privately finance a MLB ballpark at Diridon South and relocate the MLB Giants out of San Francisco to downtown San Jose; change name to MLB "San Jose Giants."

    or

    2) They agree to pay the City of San Jose $130 million per year indefinetely (or until they relinquish said rights); for lost economic opportunities of no MLB in SJ.

    Since neither scenario is going to happen…STEP ASIDE BOW-TIE!

    Lastly, is it just me, or are the A's/Lew Wolff and SJ making a strong, subtle case to MLB through the media?

  10. Tony D. says:

    By the way,
    Downtown SJ rocks when the Sharks are in town with 17,500 at HP Pavilion.

    24,000 average for an A's home game would be even sweeter; 32K+ for sure against the like of Yankees, Red Sox, Giants.

    My ideas for interleague games against Giants: El Camino Series? Bayshore Series? Battle of the "Sans"? Joseph takes on Francis? OK R.M., I'll stop.

  11. Anonymous says:

    ML,

    So what do you think? Is this the "official" opening salvo from SJ and Wolfe? Very little chance Lew is being misquoted, and he sure seems to be leaning towards SJ. In fact, I'd say he's lobbed the ball squarely into Bud's court.

    Jeff

  12. Transic says:

    At least this story is better than debating the nuances of some individual's website about a supposed city.

    Anyway, another thing MLB has to consider is that they're just about out of options in terms of relocating any franchise in these current conditions. I think that Bud is trying very hard to find a convincing argument for the A's to stay in Oakland. That's why the silence from the league and the slowness of the deliberations on the part of the task force. In other words, I have not come aboard the opinion that this is just window dressing for an eventual relocation. The Expos relocation has not gone as well as hoped. Incidentally, one of the biggest criticisms of that move made when it was still being debated was that it would result in the two teams in the area (Balt/Wash) struggling both in wins and attendance. There is a reason why there has been only one relocation in the last 30 years. The league is loathe to be considered responsible for a major business decision, like a franchise relocation, being handled haphazardly.

    This is going to put the league in a real tough spot. This is much different from the Montreal situation, where one can sort of argue that there was a legitimate suitor other than Washington, D.C.. Today, even that is not available. Other cities are either: too small to make a considerable impact (Las Vegas); beset with economic/political obstacles (i.e., Sacto and Portland) that may make it a "Lose" proposition for the owner; would be in territory already claimed by established teams (e.g. New Jersey) or out of the country (they're not taking that route for the time being).

    I'm not really a San Jose booster, as I don't live in the state of California and could not care less where the A's go unless towards the East Coast. However, sitting where I am, this is going to become (if not already) a huge headache as the top league brass is going to be faced with the unenviable choice of siding with one ownership group vs another ownership group. As seen with the appeasement of Peter Angelos, this is not going to end up pretty.

    The outcome is not guaranteed, folks! And it may not be what is anticipated.

  13. Anonymous says:

    From the Bloomberg article:

    We’ve explored the Bay Area for a long time now and I think our only real option is downtown San Jose,” Wolff, chairman of Los Angeles-based developer Wolff Urban Development LLC, said in a telephone interview.

    Wolff, 73, said he’s waiting to hear whether a move to San Jose would be allowed by Major League Baseball since the San Francisco Giants hold territorial rights to San Jose. Baseball spokesman Pat Courtney didn’t immediately return telephone and e-mail messages.

    “We probably should be sharing the entire Bay Area, just like the other two-team markets in New York, Chicago, Los Angeles/Anaheim,” Wolff said. “They’re looking into it. A lot of things have changed. It’s really up to Major League Baseball to give us a direction.”

    So much for those OaklandOnly folks saying that Lew was "never quoted" by the writers in St. Louis during the Allstar game about wanting to go to San Jose.

    Where is our OaklandOnlyAnon with his impeccable source now?

    I know that in some of these OaklandOnly's this somehow translates into Lew working behind the scenes in concert with our intrepid Oakland City Pols, but, really, I'd like to hear their theories…and what "theSOURCE" has to say about all of this.

  14. Tony D. says:

    Transic,
    Respectfully disagree with your post. "I think that Bud is trying very hard to find a convincing argument for the A's to stay in Oakland"…why? San Jose is the closest thing to a win, win for everyone: A's, all of MLB (no more revenue sharing), and even Giants (compen$ation for TRights). Also, the A's and Giants have co-existed for 40 years now in the Bay; you can't compare the Expos/Nationals/DC situation to this!

    My take on why we haven't heard from the MLB committee yet is as follows: San Jose is just barely coming out with the ballpark details, and the MLB season is still goin on. While the A's are pretty much done, the Giants are fighting for their playoff lives. Respect the teams and season by simply waiting for the off-season (Winter Meetings?) for Earth-shattering news.

    Patience is a virtue.

  15. Anonymous says:

    I agree with your take, Tony. I think the silence from MLB is because the season is heading for the home stretch. I certainly wouldn't assume it's a good sign for Oakland. If anything I'd assume the opposite, but really it's most likely about timing.

    Also, Transic's comparison with Wash/Balt is nonsensical. That was a team moving from another market (another country!) into the Orioles territory. The A's would be moving farther away from SF. What has happened with the Senators is irrelevant.

  16. Dan says:

    Plus while the situation hasn't improved to a huge degree for the Expos/Nationals, it's definitely gotten better for the team. They were averaging 9,300 prior to their move and are now averaging 23,000.

  17. Transic says:

    "Also, the A's and Giants have co-existed for 40 years now in the Bay; you can't compare the Expos/Nationals/DC situation to this!"

    If it was an issue of the difference in distance between one Bay Area city to another versus from Montreal to DC then it would've been resolved years ago, as it should be harder to move a business hundreds of miles from its origin, in a less constricted market. But MLB is an exception to the rule. Hence, the long process. Yes, I'm aware of the A's previous relocations, during a time when the league wanted to expand its footprint westward. Today, that's not the case. Normally, if you're a business and needed to relocate to compete the order of preference would be something like this: 1) Location near the old one and keep your best customers plus better rent, attract new customers; 2) New location, higher rent but more and wealthier customers; 3) New location, new customers

    Wolff is staring at 2) as his option. 1) was the Uptown site in Oakland (during the previous ownership but the point stands here). That may now not pan out. But the instinct is to seek bigger revenues without much of an outlay in fixed costs. Fremont was somewhere between 1) and 2) but it may potentially have been worse to Wolff because of obstacles to the ease of traffic to the business and back. San Jose may be the best option of what's available now but it comes at a price. Let's agree to rule 3) out because there's nothing out there that's a serious player today. So when he says that there are no more good options in Northern California, I think he means it and not a ploy to get some sort of leverage.

    The real issue is does MLB see it that way. I have my doubts that Selig would say "Yes" unless he can be convinced that a non-Bay Area location is a worse option. Now, I just saw a video of him saying that the relocation of the A's from Kansas City to Oakland was "a horrible mistake." View the video here

    Interpret that how you wish but maybe he meant that it would've been better for the league if the A's stayed in Kansas City. If that was the case then he may have had a point: in the first few decades, both the A's and Giants struggled at the gate, depending on who was playing worse. San Jose was still too small, although growing steadily in that time. It's only in the last decade that people began talking of the Bay Area as a good baseball market, let alone a market comparable to Chicago.

    Selig still has that experience of observing what happened with the A's in Oakland and the effect (or not) on the Giants. Things may have changed but he still has that memory. And that leads me to doubt the chances for San Jose. Now you add the experience of the Expos in DC and the effect on their attendance and the O's this year (of course, the play of the team has a lot to do with that) & you have a recipe for trouble.

    What San Jose has to do is not only to convince him that they're the better option than Oakland but all the other cities as well. Do not be shocked if they stay at the Coliseum if there are no out-of-state cities to take them, despite what Wolff says.

  18. Anonymous says:

    Transic–problem in your logic is that they can't stay at the Coli–they are one of two teams that are in ballparks that need to be replaced–Selig himself states that they need out of the Coli—no one is disputing this-failure to get the A's and Ray's new stadiums will be an on-going headache for MLB.

    Many different ways to interpret Bud's statement about it being a mistake moving to Oakland…but his letter back in December when Fremont was falling apart was pretty clear—he told LW to go pursue other locations–

    So Bud can either have a team move further away from their territorial masters—and allow the Bay Area to operate like all other 2 team markets which will result in the elimination of the $30M annual subsidy to the A's–or he leaves them in Oakland which will always be a small market city…just like Pittsburg…and he has to find new owners willing to stay with those conditions…not likely.

    Relocating the A's to another city outside of NorCal would create serious headaches for the commish…you have an owner willing to invest his own money, a city willing to be the host, and yet he would opt for the team to move out of the area—not likely–

    Best available option is let them move to San Jose—territorial rights that were granted to the Gints to support their move to San Jose should have been rescinded when they chose to build in SF and not SJ–

    Its really not that difficult–don't know why Bud struggles but reality is he does…hard for him to make decisions..even harder to make good ones–

  19. Anonymous says:

    I don't think Bud is struggling to make a decision. He is trying to build a case so there is consensus and when the vote comes it will be a fait accompli. That's how he operates.

    "If it was an issue of the difference in distance between one Bay Area city to another versus from Montreal to DC then it would've been resolved years ago"

    What? There is absolutely no logic to this statement. There are lots of issues to address beside the distance between the stadia. People pointing out to you that this one aspect (of many) makes this very dissimilar to Wash/Balt doesn't mean people are saying this is the end-all be-all reason the A's should move to SJ.

  20. Tony D. says:

    anon 1158 nailed it!

    Transic, what occurred 40 years ago has no bearing on today's situation. Perhaps it was a mistake to have two MLB teams in the Bay Area back in 1968.

    But now is now. In fact, by 2035 the Bay Area will have over 10 million residents, and SJ alone will have 1.4 million of them. For the economic health of the ENTIRE LEAGUE (not just the Giants), MLB is definetely looking at the future, not the past.

    San Jose is the future!

  21. Paul says:

    If we were dealing with anybody but the rocket scientists who run Major League Baseball, I'd say it's a slam dunk that the A's can go to San Jose. But of course, one of these genius team owners reportedly was convinced recently that San Jose was "right next door" to San Francisco and not 48 miles away. Guess he's never heard of maps, Google, globes, or things like that.

    So it could still be a long shot for the A's.

    What if MLB tells the A's: Oakland or nothing and Wolff then puts the team up for sale and no one wants it? What happens then? (Other markets, like Vegas, Portland, etc all have problems of their own)

    For Sale: MLB team
    Requirement: New owner must build privately financed stadium for $500 million in economically depressed area with little corporate backing, and where the team has failed to draw well for 40 years. (We all know Oakland has no $$ for an A's stadium.)

    Any takers?

  22. Tony D. says:

    Why on Earth would MLB tell Lew Wolff/A's "Oakland or nothing?"

    Such a statement would suggest that MLB favors the Giants organization over the A's. It doesn't! This is about the financial health/well being of the ENTIRE LEAGUE, not just the Giants.

    And to reiterate:
    1) 87% of Silicon Valley Company's DON'T DO any business with the Giants.

    2) Of the 13% who do, 75% would continue doing business with the Giants AS WELL AS the A's in SJ.

    3) Giants TRights to SCCo./SJ only exist BECAUSE THEY WERE SUPPOSED TO MOVE TO SJ. They didn't.

    4) Revenue sharing?

    Need I say more?

  23. Paul says:

    Tony D: Selig recently said "territorial rights are always sacred." This is the same guy that moved the Brewers to within 70 miles of two other teams, of course.

    Remember, this MLB, not Albert Einstein and Co., that we're talking about here.

    Anyway, I'm not sure the territorial "rights" were predicated on the Giants moving to San Jose. They may have been secured as part of the deal for the Magowan group to buy the team. Regardless, they can be overturned with a 3/4 of the owners' vote (or something in that range) and MLB rules prevent the Giants from suing over any of this.

  24. Tony D. says:

    Paul,
    Well, Lew Wolff is now openly talking about moving the A's to San Jose, so I guess those Rights aren't that "sacred" after all (money talks!). And MLB TRights have changed in the past you know. Heck, if they were that "sacred," the now-SF Giants would still be in New York and we'd be living in Red Sox territory. Imagine that!

  25. Steve McKeever says:

    Cost of the 32,000-seat ballpark is projected to be $461 million in 2009 dollars, $489 million in 2011 dollars. Ballpark would open in 2014.

    I wonder whether anywhere in this report prepared by world class experts the following information is clearly stated:
    The last time any permanent major league ballpark of fewer than 38,000 seats was built from scratch was in 1913. There are good reasons for this.

    Size this ballpark realistically (say, at least as large as the smallish AT&T Park, which is limited by a confined site), and you're looking at a price tag of about $650 million.

  26. Anonymous says:

    What's your point Steve–LW/A's want a 32,000 seat ballpark…currently priced at $461M–with potential for a much lower fee in the down economy (reference Bart construction in WS at 55% of projected costs)–32,000 creates an intimate setting for baseball, supply and demand issue for fans driving up season tix sales, and an overall avg attendance consistent with much bigger ballparks-

    changing size of a ballpark is no easy task—revised EIR, significant increases in cost of construction–not worth the headache

  27. Anonymous says:

    32,000 sounds about right. Whether it's in Oakland or SJ or Fremont, it's not like there are hordes of rabid A's fans chomping at the bit to go to the ballpark. People here act like our fanbase is as large as the Yankees or Red Sox.

  28. Jeffrey says:

    If you read the report, it highlights the recently built stadiums and the attendance trends over the first 5 years. Average attendance is boosted of course. But by the fifth year it stabilizes and many of the new parks would be perfectly adequate at around 34k or so.

    I hope they build it with ideas for how to bump it up to 37k or in 20 years, but for now… 32k is fine.

  29. Anonymous says:

    If TR's are indeed sacred, it begs the question. Exactly which version of the "Rights" were/are sacred? Once upon a time there existed TR's with SJ belonging firmly in the A's column. Is this the version that is sacred? Perhaps Bud is on a jihad to restore those vestal rights to their pristine origins.

  30. Tony D. says:

    anon 1000,

    It usually takes a little cash to end the "sacred" institution of marriage (see divorce).

    It should also take a little cash to end the "sacred" territorial hold of the Giants over SCCo./SJ.

    Nice post by the way.

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