Monthly Archives: November 2011

Quakes introduce suites at SJ stadium

When the San Jose Earthquakes announced their plans for a stadium near SJC, observers noted the capacity (15,000), shape (horseshoe), and the seeming lack of luxury suites. Now the team has remedied that last flaw, unveiling a package of luxury suites to be located on both the field level and the rim of the stadium.

The stadium’s original design had a very short first deck and a large second deck, which made it easy for the Quakes to add suites if the economy was friendly enough to do so. In going this route, some other premium seating will be displaced, but the 12 field suites alone should boost the team’s bottom line significantly.

View from behind a suite at field level

What may be more interesting is how the suites are being pitched to potential buyers. The suites have NanaWall-esque moving glass walls instead of a typical door-and-fixed window setup. It’s expected that a number of high school and college events will be held there, which is a smart move given the lack of modern facilities in the South Bay. Concerts are not in the sales brochure, which indicates how sensitive the Quakes are about noise and the venue’s potential as competition for HP Pavilion. Field level suites are $350,000 for a 5-year contract.

Suite seating arrangement. Note non-suite seats to the right.

You might remember how the Fremont ballpark concept would’ve had a level of suites only 10-15 rows from the field. It looks like that amenity will go to the soccer stadium instead, with the ballpark getting the traditional level of suites cantilevered over the lower deck.

Just as the ballpark may grow in capacity as a late game tweak, changes such as the addition of luxury suites can be made for the Quakes’ stadium. We can look forward to more such changes as these projects move from paper to concrete.

A’s plan spring training move to Mesa

In April the A’s and the City of Phoenix were set to extend a lease at Municipal Stadium and Papago Park, assuming that the parties could figure out a way to pay for around $10 million in improvements. Unfortunately the deal fell through, which led to discussions with neighboring Mesa, where the Cubs are building a new, $99 million facility on the west side of town to replace HoHoKam Stadium (ballpark) and Fitch Park (training facility). The A’s would move into HoHoKam/Fitch after the Cubs leave in 2014.

It’s terribly unfortunate that the A’s and Phoenix couldn’t come to some kind of agreement. Muni is the most transit-accessible Cactus League facility and it has a ton of parking around it. The Phoenix Zoo is within walking distance, and the views of Papago Park beyond the outfield are excellent. HoHoKam’s best attribute is its size, with a capacity of 12,623 (nearly 4,000 more than Muni). It also has a berm in the outfield, a feature never built into Muni.

By 2016, Valley Metro will extend its light rail line to downtown Mesa, putting it roughly 1.5 miles from HoHoKam. It’s unclear what improvements would be needed or requested by the A’s to move to HoHoKam/Fitch. With the A’s leaving Muni for good, only one Cactus League team will remain within Phoenix city limits, the Milwaukee Brewers (at Maryvale). The Brewers may leave Maryvale at some point because the neighborhood is a bit sketchy. That would leave Phoenix with zero Cactus League sites, which is strange considering how big the city is.

It’s gouging season

Hello everyone, I hope you’re having a splendid Thanksgiving weekend.

I have another CBA article coming tomorrow. For now, there’s an item in the Merc’s Internal Affairs column today. Apparently, AT&T is holding out on their land for a a whopping $150 per square foot, or $6.5 million per acre. That’s roughly the market price in 2005, when the ballpark process started in earnest and the real estate market was still bubblicious.

Real estate professionals familiar with the industrial area chuckled heartily, saying that the AT&T land is worth closer to $25 to $35 a square foot.

AT&T and the other holdout landowner have every right to ask for as much as possible. It’s fair business for them, and there will be some displacement that needs to be addressed. The threat of eminent domain, coupled with MLB’s blessing, should bring the price down since those two factors will reduce the landowners’ leverage. As I’ve written before, the most likely outcome will be that the Wolff/Fisher group will make one offer once they get MLB’s approval and let the chips fall where they may. If the landowners want to get as much as possible they’ll want to avoid the possibility of eminent domain, since there’s always a chance a judge will give a minimal land valuation. Legal fees will only make the whole ordeal more wasteful. That said, the holdouts may have a threshold that they’re not willing to drop below, so it could very well go into eminent domain proceedings. There is no given at this point. We’ll just have to see how it plays out.

Big market, low budget

In February I wrote about a potential revenue sharing rollback in the new MLB collective bargaining agreement. While today’s joint announcement didn’t produce a percentage rollback (or contraction for that matter), there is a sort of rollback coming for revenue sharing. And the way it’s constructed, it’s targeted at one team in particular – the Oakland Athletics. Here’s the relevant text (courtesy of The Biz of Baseball):

IV.. REVENUE SHARING

a. The net transfer value of the Revenue Sharing Plan will be the same as the current plan. Net transfer amounts will continue to grow with revenue and changes in disparity.

b. The fifteen Clubs in the largest markets will be disqualified from receiving revenue sharing by 2016. The revenue sharing funds that would have been distributed to the disqualified Clubs will be refunded to the payor Clubs, except that payor Clubs that have exceeded the CBT threshold two or more consecutive times will forfeit some or all of their refund.

c. The Commissioner’s Discretionary Fund will increase from $10 to $15 million per year.

Again, no percentage rollback (A). It’s item B that has enormous implications for big market teams. The revised revenue sharing system effectively shuts the big market teams out of the program by the end of the CBA, gradually losing 25% of any revenue sharing receipt annually until 2016 when it’s eliminated entirely. The Bay Area is the #4 media market and is #6 in population, so neither Bay Area team would be eligible for revenue sharing in the future. Sounds like a deadline and a decision for the A’s, right?

Not so fast. SI is reporting that a provision in the new CBA allows the A’s continue on revenue sharing past 2016 if there is no resolution. So what does this all mean?

The A’s are in a unique and unenviable position among the 30 MLB franchises. They are both a big market team and a low budget team. In the long run, they can’t be both. No other big market team operates on revenue sharing, year after year. When Lew Wolff and I talked two years ago, I mentioned that the A’s were the only two team market where one franchise pays into revenue sharing while the other receives it. He replied that he hadn’t heard the Giants-A’s dynamic phrased in such a manner. I joked that he could take that up to the league office if he wanted at no charge.

MLB appears to be taking the steps to ensure that the A’s are positioned to become a full-fledged big market team. Getting a stadium deal in place is only the first step. Vastly improved media and sponsorship deals are just as important. That doesn’t mean the A’s will reach the Red Sox or even the Giants in terms of revenue, but if they can achieve the medium revenue levels of the Nationals or White Sox, they’d be considered self-sufficient. Both Wolff and Billy Beane are aware of this.

One explanation for the provision may be that the A’s might not be able to open a new ballpark in San Jose until after 2016, though there has been no indication that this is the case. If Wolff isn’t given the go-ahead to move to San Jose, there’s no telling what will happen down the road. It should set up the A’s for a sale at some point. The problem with this is that we know that an Oakland-based buyer with knowledge of the area’s low revenue generation would have to buy the team at a discount, whereas other buyers looking to move the team elsewhere would be willing to pay full price. Hopefully it never gets to that point. MLB is not going to approve Oakland’s continued stay on welfare. They’ll move the team out of the area instead.

Summing it up (with Slusser update)

Mark Purdy takes all of the stuff we’ve learned over the past couple of weeks and neatly summarizes it, with a few more tidbits thrown in for good measure.

  • The January owners meetings will by January 11-12.
  • Lew Wolff says that he has not been any discussions about selling the team.
  • San Jose Mayor Chuck Reed craps all over Oakland’s plans (such as they are).

I get the feeling that a lot of San Jose boosters are very excited this holiday season. Their gift will have to wait until after the New Year.

Updated 11/22 1:30 AM – Susan Slusser also adds to the story, describing Wolff’s trip to Scottsdale to meet with Selig two weeks ago. This time, Billy Beane was reportedly on board. Here’s the sure-to-be-controversial bit:

Oakland lost money last season for the first time this century, with an expected shortfall of several million dollars, according to Beane. The team is consistently a recipient of $20 million or more in revenue sharing, and Oakland’s attendance actually went up in 2011, but the payroll also went up $15 million, from $52 million to $67 million.

In past years, when the A’s were clearly out of contention close to the non-waiver trade deadline, the team’s modus operandi was often to sell off players. Part of the reasoning was to get young players (probably with little-to-no service time), part of it was to dump salary. 2011 was different in that despite the team was mired near the cellar for much of the second half, yet Beane and David Forst did not sell off Josh Willingham, Coco Crisp, or any of the starting staff. The only notable trades were of Brad Ziegler and Mark Ellis, and in Ellis’s situation the A’s actually sent the Rockies a little cash to make the deal work. While it would make sense to hold onto Willingham if they weren’t receiving anything they wanted in trade, if they held on they’d potentially get a first round or sandwich pick as compensation when some other team signed Willingham.

By not trading any of the veteran free-agent-to-be outfielders (Willingham, Crisp, Matsui), the A’s kept $3-6 million on the payroll. That’s probably the difference between breaking even and losing money in 2011, if Beane is to be believed. Keep in mind how this works from an accounting standpoint: unlike moneymaking teams who get virtually all of their revenues either in advance or throughout the course of the season, the A’s revenue sharing check only comes in December, well after the season is over. They and the other have-not teams don’t consider the revenue sharing receipt as part of their P&L because it’s not there when it can make a big impact. (No, the check is not going to impress Scott Boras if Beane calls about Prince Fielder.) On the other hand, it has a short-term turbo-boost effect on teams that recently opened or are about to open new ballparks, since those teams can get both the receipt for the past season and higher projected revenues for the first season in the new park.

Did Beane and Wolff hold onto to the outfielders in order to prove a point to Selig and MLB? That the M.O. of the past decade(s) was untenable in the long run, while bucking the trend doesn’t work in the short term? Surely they must have realized that Type B compensation was going away – it was talked about throughout the season – so why keep David DeJesus? It wouldn’t surprise me in the least if this was planned, given the current spending freeze until a resolution to the stadium problem is found. It reminds me of that silly fake-to-third-throw/fake-to-first play. It’s plainly obvious what’s happening and it elicits a chorus of boos. Once in a while it actually works.

Tony LaRussa is a reasonable man

The Chronicle’s John Shea caught up with retired skipper Tony LaRussa a few weeks after the afterglow of winning yet another World Series. TLR said this about the A’s future:

Q: Your A’s teams often packed the Coliseum. What’s your take on A’s ownership’s desire to move to San Jose?

A: “The A’s should stay in the Bay Area with a legitimate shot to compete economically, and there are some real doubts it can happen in Oakland. The Giants got the (territorial) rights (to San Jose in the early ’90s) because (former A’s owner) Walter Haas just said ‘here.’ There was no reason other than to be real nice and fair and give them to the Giants. I don’t know what the grounds would be for the Giants to say it’s ours and not the A’s.”

Couldn’t have said it better myself. TLR clearly knows of what he speaks. He and his family have maintained their East Bay home all this time and run ARF out of Walnut Creek, so he’s still very much plugged into the Bay Area.

Later in the interview, TLR talks about having a role with one of the Bay Area teams, though he thinks there may not be room for him in either organization. There’s always room for TLR as an advisor, if I have anything to say about it.