Monthly Archives: May 2011
Before True North’s press conference devolved into a lengthy sales pitch for season tickets, there was an air of justice and patriotism in the crowd. I really sensed that a wrong was being righted, similar to the way a wrongly convicted man was getting his release. Of course, it’s borderline ludicrous to compare the two, but that’s the passion in Winnipeg right now. They’re getting NHL hockey back in town. Whether it remains there depends on how they sell out. And by selling out, I mean season tickets. 13,000 to be exact in a 15,000-seat arena. If True North can feed on this passion, MTS Centre will be the toughest ticket in Canada for years to come.
True North kicked off the sales campaign by launching a website, Driveto13.com. It describes the pricing plans, sales dates, and terms. There’s even a toteboard for fans and media to keep track of progress, and True North will be sending out a press release every afternoon with an update.
Winnipeg is a tiny market, with only 700,000 within its metro. It’s actually smaller than San Mateo County. Despite the passion for hockey in Winnipeg and throughout Manitoba, the NHL is most concerned with whether that passion can properly counterbalance that size problem. To assuage Gary Bettman’s concerns, True North is putting a few terms on ticket purchasers which should, if successful, address the franchise’s long-term viability in Winnipeg.
Prices are reasonable, we swear
A three-day presale will be afforded to season ticket holders for the Manitoba Moose AHL team, who were brought in when the Jets left for Phoenix. These ticket holders should be prepared for some sticker shock, as the highest priced seat package for the NHL team will be 3.5x the price of the same seats for the Moose. After the presale period ends the general sale begins, and that’s when it’ll get interesting. The NHL Board of Governors has to approve the move. Rest assured that they and Bettman will be looking at the toteboard with a critical eye.
Locking the fans in
An interesting tack being taken by True North is a mandate of multiyear commitments for season tickets. This is where the rubber meets the road, as it will demonstrate how far Winnipeggers’ passion will stretch. A median-priced seat in the lower bowl end or corner will require an outlay of over $14,000 over four years. The best seats will cost twice as much over five years. Only the worst season ticket pricing levels will have the option for half-season plans. To make the price easier to swallow, True North is also advertising monthly payment plans, which for the purposes of comparison amounts to the cost of a car payment (depending on how luxurious the car). Nominal deposts will also be required. One thing not part of the conversation is the dreaded personal seat license, which is a good move given the stigma associated with PSLs.
These are aggressive moves and goals for True North and Winnipeg. We’ll see soon see if the fan response translates into chopping away into the 13,000 goal over the summer. As for the team name, I hope the Jets are available. If not, I have a suggestion.
(BTW, I don’t really care for the name “Polar Bears”. I needed an excuse to insert the clip.)
There are also some potentially good takeaways for the A’s, and especially ballpark supporters in Oakland, a city that has limitations like Winnipeg (though not as severe). If a goal can be set, perhaps 15,000 season tickets, with 3-5 year commitments, that would go a long way towards convincing Bud Selig and the owners that Oakland is viable. The same could also go for San Jose, in that it would prove that the T-rights battle is worth it. In any case, though it’s tough to see hockey leave Atlanta a second (and final) time, it’s nice to see that hockey is back in Winnipeg, where it belongs. Good luck, Manitobans.
Nate Silver’s plenty busy writing about politics year round, but occasionally he’s able to write about baseball in some capacity. In a blog post at FiveThirtyEight, Silver ranks all 30 MLB ballparks and 4 other previous ballparks via Yelp’s ratings system. The Coliseum ranks next-to-last among active venues with a 3.13 rating. Upon reading several pages of “reviews”, I had to conclude that at least for the Coliseum the rating is flawed. Numerous people based their review on the stadium as a football venue. Others rated based on attending both Raiders and A’s games. More than a few mistakenly rated Oracle Arena next door, instead of the stadium. I’d go through the trouble of parsing the reviews to get a better contextual sample, but not even I’m that patient with Yelp.
That’s not to say that the methodology is flawed for all venues. Most ballparks are getting reviews for being single-purpose baseball facilities, so there’s no contamination with most ratings as there is with the Coliseum. No, this is not a particularly scientific study, but as Silver notes, it’s more comprehensive than a single writer’s opinion as he takes an all-expenses paid trip all over North America to review venues. Silver also lists the standard deviation, which for the Coliseum is among the highest (1.21). All that means in laymen’s terms is that the ratings for the Coli were all over the place, whereas the ratings for PNC Park (st. dev.: 0.49) were uniformly excellent.
Two items left out of yesterday’s news post have to do with the ongoing financial struggles of the Mets and Dodgers, or rather their ownership groups.
- Hedge fund mover and shaker David Einhorn has dropped $200 million for a 1/3 share of the Mets, which may be enough to rescue Fred Wilpon. Or is it? According to ESPN and the New York Times, Einhorn has an option to acquire up to 60% (and controlling) interest in the team from Wilpon, should the beleaguered owner not be able to pay back the $200 million. If the Madoff trustee case ends with Wilpon having to liquidate much of his real estate holdings or other investments, he may not be able to pay back Einhorn, setting the stage for a takeover. Einhorn is no stranger to playing hardball, having called for Microsoft CEO Steve Ballmer’s ouster earlier in the week. Einhorn’s Greenlight Capital owns more than 9 million shares of MSFT. No matter how you slice it, the deal is not the safe one many expected Wilpon to make.
- Reports came in over the last couple of days showing that Dodgers owner Frank McCourt will in fact make payroll in time for the end of the month. By taking certain future payments up front to cover the May 31 payroll, McCourt has ensured that MLB won’t be able to pull the trigger on a takeover of the team. In doing this McCourt has written off that revenue for later in the season, and he merely pushes the deadline back two weeks. The next payroll deadline is June 15, and it is unknown what tricks McCourt has left up his sleeve to take care of business then. Combine that with flagging attendance, a lawsuit against the team and owner filed by the family of beating victim Bryan Stow, and the fact that another round of divorce settlement talks ended earlier in the week with no movement, and it’s clear that it’s only a matter of time before McCourt loses the team completely. The only thing up for debate is how delusional McCourt is to keep this charade up.
One interesting arena tidbit. Arena operators will be scrambling this summer to fill dates in anticipation of what may be a lengthy NBA lockout. A quote from Orlando executive director of venues:
Johnson said he can book a popular artist to replace a Magic game with a notice of 30 days. He said Taylor Swift’s concert next Saturday sold out in three minutes.
And that’s an arena is more lucrative to run than any outdoor stadium. It also reminds me of George Vukasin Sr.’s anecdote about Bill Graham getting The Grateful Dead to help the Coliseum Commission on occasion by booking a weeklong “residency.” It’s almost inconceivable to think that a local band could quickly and easily sign on for one or several dates just to help out an arena operator or city these days.
Sacramento has the feasibility study for its new arena at the its website, along with additional renderings. Besides the lack of financing plan that would have to be determined by the end of the “100 Day Plan,” I noticed one other thing. As part of the effort to cut costs, there is no separate club level. Instead, the club seats are largely confined to one side of the arena and courtside sidelines, with the club lounge taking up part of the main concourse.
While the Maloofs continue to maintain that the Kings are not for sale, as many as three groups have surfaced that could buy the franchise if it were available. Ron Burkle continues to be the popular choice, with the “mystery Nevada businessman” being second. Now a group fronted by former King Chris Webber has surfaced, and its chief moneyman is a Filipino businessman named Manny V. Pangilinan, or as he’s known in Manila, “MVP.” With frequent talk of Chinese interests getting a controlling piece of a NBA franchise, it would be somewhat poetic to have a Filipino be the first Asian to do so. FWIW, there are three national sports in The Philippines: basketball, boxing, and cockfighting. It’s not going to make me anymore a Kings fan than Erik Spoelstra (who is half-Filipino) being the head coach of the Miami Heat makes me a Heat fan, but it’s something to be proud of.
Another week, another arena proposal. This time it’s in Baltimore, a city whose 50-year old arena hasn’t fielded a major franchise in nearly 40 years. 92-year-old construction magnate Willard Hackerman is willing to pay for the arena as part of an elaborate redevelopment plan along the Inner Harbor. Like Sprint Center in Kansas City, the arena would be built on spec, without a major pro tenant. Baltimore has been without an indoor sports franchise for so long that it’s hard to know if one would be successful there. It appears that Hackerman is willing to give it shot. Hackerman’s company, Whiting-Turner, built M&T Bank Stadium, home of the Baltimore Ravens.
ESPN’s Jim Caple came out with his “official” MLB owner’s rankings. Lew Wolff placed 17th, higher than I would’ve expected. Must be the national media bias.
Here on the blog, 980 Park concept originator Bryan Grunwald received word from the City of Oakland that his concept will in fact be part of the Victory Court EIR, hopefully as a full alternative. Unfortunately, Grunwald also was informed that there is no schedule for the release of the EIR. With MLB moving glacially and putting the A’s on the backburner, I suppose it affords the City time to be thorough. Weren’t they supposed to have the whole thing done (and certified) in around a year?
On the redevelopment tip, there are now three bills working more-or-less in conjunction to provide a less wasteful alternative to the current scheme, which is enshrined in the California Constitution. A fourth bill works against redevelopment, as wished by Governor Jerry Brown. Here’s the list:
- SB 286 would restrict how projects are funded. Currently redevelopment dollars are a free-for-all as long as they can be applied to a “blighted” area. If this bill passes money for stadiums and arenas would require a public vote in the affected municipalities.
- SB 450 seeks to rein in waste by capping administrative costs, while pushing the requirement that 20% of funds be spent on affordable housing, to the forefront.
- SB 214 would allow the creation of new infrastructure districts whose purpose would be to finance infrastructure projects (roads, highways, sewers, etc.).
- AB 101 is the aforementioned anti-redevelopment bill. Should any municipality’s RDA have any surpluses after obligations are met, those surpluses would vest with the municipality instead of being sandboxed for redevelopment purposes.
The University of Michigan wants to expand The Big House to 120,000 seats. Might want to fix the football program first.
If you wear a “Yankees Suck” T-shirt at the O.co Liseum next week, will you get thrown out as this lawyer did at the Trop last week?
Added 2:15 PM – The Minnesota legislative session ended with no action on stadiums for the Minnesota Vikings and St. Paul Saints. A deal would have to be done in a special session.
NBA Confidential and SI.com writer Sam Amick snagged a copy of ICON Venue Group’s presentation to the City of Sacramento detailing the options for a new arena. Sadly, the copy is a scanned version of a black-and-white printout so it doesn’t look pretty, but it does have the numbers and the important details.
The arena, designed by Populous, looks like a scaled down version of Amway Center or Staples Center. Arena capacity is pegged at 18,594 seats, with the cost being $387 million. Here are the vital stats:
The reduction in square footage helps keep costs down, otherwise the price tag would soar to $500 million or more. Other amenities aren’t as plentiful, such as elevators or specialty bars. The ratio of standard suites (12+ attendees) to mini suites (4-6) is also interesting in that it’s an indicator of where the suite-buying market’s interests are. The full mix of premium seating options (in green) shows just how many ways teams and arena operators can squeeze out maximum dollars out of a venue, and how ARCO Arena/Power Balance Pavilion was devoid of those options.
Populous took pains to place the arena at two possible sites. One is the south end of the existing arena’s parking lot. The other is the downtown railyards site. Site prep costs for the two are very similar, separated by only $3+ million. Soft costs are not included. The question, then, becomes a matter of figuring out the financing piece. To that end, the preso outlines a “100 Day Plan” that would allow the City and other parties to figure out the financing model for the publicly owned arena. If that can be identified, the EIR process can start in September and funding sources can be secured by next March’s NBA relocation deadline. If all goes according to plan, construction would start in January 2013 with a May 2015 opening date, after the 2014-15 regular season is over. Accelerating the schedule to finish by the start of the season would incur some unknown additional costs.
Last week the Maloof brothers sent Mayor Kevin Johnson to Secaucus, NJ to be its draft lottery representative, which was a great gesture. Unfortunately for the Kings, they did not win the lottery and were stuck with the #7 pick. If the Maloofs and KJ really want this to happen, they’re going to need a little more luck when it comes time to complete that 100 Day Plan.
Just as the stock and housing markets have experienced bubbles, MLB appears to be in a bubble of its own when it comes to buying and selling franchises. Last week, Drayton McLane and Jim Crane came to a surprisingly high price of $680 million for the Astros. That follows up the auction-boosted $593 million paid by Nolan Ryan’s group for the Texas Rangers. In both cases the final sale prices were a combined $348 million more than Forbes’ valuations at the times of those sales. Prior to the two Texas teams, the Padres and Cubs pulled $100+ million premiums over Forbes.
It’s not only MLB. Last year the Warriors were sold for a NBA record sale price of $450 million. Again, this was around $100 million more than expected for the team. Compare these recent sales to those of a few years ago in the table above. In those cases the disparities weren’t nearly as vast and could be easily explained. Nowadays it’s hard to say. The Astros reportedly fetched a higher price due to projected higher revenues from a new regional sports network. Yet the Rangers’ premium price didn’t even include all of the parking lots surrounding the stadium, and it’s possible that a future sale of the Dodgers will have similar limitations. I have a few hunches as to why this bubble is occurring:
- Money has been sitting on the sidelines of the broader market for so long that interested buyers are willing to pay premiums for sports properties.
- Local TV revenue is starting go through the roof for more than the big market teams, which is encouraging investors to buy into teams with long, locked-in TV contracts.
- MLB’s CBA in particular looks attractive to investors because cost controls are inherent for each team and there’s little worry about labor strife.
- Someone (who?) may be priming the pump on franchises.
That last bit is complete speculation with no basis in fact, but how else can you explain it?
The next franchise likely to be sold will be the Braves (again), who were sold in 2007 as part of tax-free, debt-free equity swap between Ted Turner and John Malone’s Liberty Media. Those tax breaks expire next year, which means the clock is ticking for the Braves. I’m curious to see what price they fetch – and whether having zero debt load makes any difference.
As long as franchises continue to be sold for premium prices, the market creates yet another obstacle for Oakland. Let’s say the Wolff gives up on the Bay Area and announces he wants to sell with Fisher. Bidding could easily grow to over $400 million with no guarantee of a hometown discount. The best hope for the pro-Oakland crowd would be if Fisher could be convinced to stay on as silent majority partner and another managing partner were brought in, much the same way Bill Neukom was brought into the Giants. But if you’re Fisher, how do you sign on without guarantees you’re getting real returns? By real returns, I mean a ballpark that more than pays for itself. If I knew the answer, perhaps I wouldn’t be so skeptical about Oakland’s chances.