Big market, low budget
- 11.22.11, 22:18
- 115 Comments
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.
@eb the Giants have in fact drawn very well in China Basin, their attendance has been best in the NL three times out of 12 and in the top five ten times.
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How about showing a little respect for the truth?
@Mossback Right, interesting that you omit all of the history before the new park. The Bay just didn’t draw well to baseball throughout the most of its history. You can probably cite the low population for two teams during the 70′s but it’s still a fact. However, a new park for the A’s would draw well in San Jose and in Oakland. How it gets built is the issue.
How about not bringing your trolling from SFGate over here(if this is the same Mossback)?
I see the usually cooler heads are getting steamed … its been an interesting journey to this point. Chess and Poker.
@eb – History? At some point it ceases to matter because of changes in the demographics, competition from other sports, competition from other forms of entertainment, the quality of the teams, and the waxing and waning of the appeal of baseball in general. There have been times when the Bay Area was a good baseball draw. When the Gnats had it all to themselves (1958-1967) they had some very good years in terms of attendance. From 1960-63, they were second in the NL in attendance, and in the middle of that period (1962) they went to the WS.
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The A’s had a short period of good attendance during the Haas/steroids years; in ’89 and ’90, they were second in the AL in attendance while the Gnats were fifth and eighth in the NL. Haas spent like crazy in ’92 – tops in the league – but finished fourth in attendance despite a run at the ALCS.
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For most of the history pre-China Basin, however, both Bay Area teams drew in the lower third or fourth of their leagues. So yes, if we judge strictly on what happened 20, 30, or 40 years ago we would conclude that the Bay Area is (or was at the time) too small a market to support two teams.
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But baseball attendance is up across the board in the last 10-15 years, and we’ve seen a dramatic increase in attendance for the gnats since they moved from the football stadium at the Stick to their precious park at the tourist- and transit-friendly China Basin location. With no improvement in team quality, they jumped from 11.2 place in attendance in the five years before China Basin to 1.6 in their first five years in the new place. That’s a major move and nothing like that happened before. They had some good teams then, going to the PS three out of the five years, but the A’s also had better teams, going four out of five times.
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When the gnats were in the Stick and the A’s were in the Bay Area, the attendance of the two teams tended to follow their success on the field, with the gnats outdrawing the A’s when they had good teams and the A’s outdrawing the gnats when they had good teams. Overall, the gnats trailed the A’s with 98% as many wins and 98% as many ticket sales before China Basin.
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But we’ve seen this dynamic change since China Basin opened, with the gnats out-drawing the A’s even when they totally suck, as they did from 2005-08 when they were winning 71-75 games. The gnats drew 3.2 million fans in 2007 with a team that lost 91 games and finished in the cellar, while the A’s went to the ALCS in 2006 and drew slightly less than two million. So the park is making the difference, not the team.
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So the only question is how much of it is the park’s design and comfort and how much is the location. I suppose you could believe that an AT&T park in the Candlestick location would draw just as well for the gnats as the real park in China Basin, but I don’t see why. Part of the appeal of China Basin is the transit connections, but the Coliseum has that going on, with the exception of Cal Train from San Jose. There is a Capitol Corridor train from San Jose to the Coliseum, but I don’t think many people ride it. So my guess is that the Gnats sell a lot of tickets to people who work in Frisco in all those high-rise buildings. I’m sure others have done the analysis on where the gnat fans come from.
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Frisco has had a little renaissance with the fluffy social network crowd moving in over the last few years, such as Twitter, but they’re not major employers and probably not sports fans. In general Frisco is hostile to business. So I suppose it’s possible that a new park in Oakland might improve the A’s attendance to the point that they could compete with the gnats payroll-wise, but it’s a real leap of faith to simply assume that when there are masses of data that say otherwise. You can be sure that the A’s have crunched all the numbers on that option, since crunching numbers is what they’re good at (after all.)
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It comes down to this: Would any sane baseball owner bet $400-500M on a new ballpark in Oakland on the prayer that it’s going to draw better than the Coliseum did during the heyday of Oakland baseball but not for the last 20 years, or are they going to take a page out of the book of recent history and go to a location that has more demographic promise? To me, that’s a no-brainer.
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And I’ll ignore that name-calling nastiness, it’s not becoming.
To clarify my “screw the (insert bay area sports team name here)” stuff. I don’t think the Raiders, Sharks or Warriors attendance really matters. That’s all I was trying to say.
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Eb is right. San Jose or Oakland there will be an initial boost. We can all argue about what happens in the long term at either locale, none of us have any real data to support that it would be better in San Jose or Oakland. We have plenty of data to talk about what has happened in Oakland and as they say “past performance is on indication of future success.”
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I really don’t care where it is eventually built. If I can get there regularly, I will be there regularly.
PS- I think the atmosphere for the Raiders is awesome and only going to get better. I hope they find a way to stay right where they are for a long, long time.
Jeffrey,
The Raiders have their bags packed and ready for LA; Al Davis was the biggest obstacle to that move.
Now that he’s gone, LA officials will have a lot less trepidation in dealing with the Raiders brass.
I think that in an ironic twist, we will have both the Raiders AND the Rams sharing a stadium in SoCal, rather than the Raiders and Niners.
I would love the Raiders to stay right where they are too, especially if the A’s go to SJ. Rebuild the baseball side to make it all football, or start from scratch and blow the sucker up. The NFL wants the R’s and SF to share a place, so a move to SC will be more likely than LA,, but the Coliseum site is better than SC IMO.. SD will probably go up to LA, having trouble getting a new place in SD.
The Raiders will never leave the Bay Area again. By doing so, they would alienate the heart of their fan base in the East Bay for life.
Those fans forgave the Raiders when they moved back from LA but not twice.
This plus LA needs expansion in order to get a football team and here is why:
-How are you going to sell tickets/suites when there is no team currently playing in LA? Or anywhere near?
You cannot, a team would have to relocate to the LA Coliseum or the Rose Bowl temporarily so that they can get fans to start buying tickets/suites.
The only team who might make sense is the San Diego Chargers. But even they are pretty far away from Los Angeles.
The only the NFL can return to LA is via expansion. Then they can start a new brand for fans to cheer for.
Also, most heads in LA are from somewhere else and have their own teams that they watch on the weekends. The Raiders and Rams struggled because of this. By the end each team was blacking out every week and it was obvious no one cared about them in the region.
NFL is better served with no teams in LA and concentrating on their other markets that actually have fans who care.
The Bay Area has 2 teams but LA has zero…that is because the 49ers and Raiders have local fans who care about them.
While in LA no one cares about a local NFL team.
Sid,
Respectfully, whatever.
The raiders have an established fan base in Los Angeles. A sizeable contingent makes its way up north for home games in Oaktown, just as fans from the bay area went down to LA back in the day.
Sid, I dont think the Raiders brass cares whether or not they break the hearts of fans in the bay area (again) – simple reason being, i dont think they cared the first time, nor do i think they ever thought in a million years they’d move back.
Unfortunately, it comes down to luxury suite sales, and the Raiders can’t get it done in the Bay Area. In LA, I think it’s more likely to happen. Remember, the reason they left the first time is for those suites, which were promised but never delivered – this time, it’ll be a brand new stadium.
@pllraz- If they cannot sell luxury suites in the Bay Area what makes you think it will happen in LA?
Raiders fans in LA or the Bay Area do not have the money to spend on suites like the 49ers fans do. Essentially the Raiders need another team like the 49ers to get a stadium built with their fans and piggy back of them.
The Raiders brass does care and them leaving for LA in 1982 was a colossal mistake, that is obvious as by the little attendance they got in LA over the years. They moved back in 1995 to a market that is half the size with another team in the 49ers who won 5 titles in that 13 year time period.
The Raiders sold out all day before they left to LA and Al Davis learned the hard way LA is not a good NFL market.
The Bay Area is a big NFL football market, the Raiders are selling out consistently for the first time since before they left for LA and the fan base is energized. The Raiders would be wise to carry this momentum for the long haul in the Bay Area.
LA is a land of false hope for the NFL. Does any NFL team want to risk moving to the LA Coliseum temporarily and have financing fall through and get stuck? That is what the Raiders would have to do in order to sell anything in LA.
For this reason it is too risky for the Raiders to leave the Bay Area again. In Santa Clara they can be a sub tenant to the 49ers for 5-10 years and in the new CBA in 2020 ask for a stadium credit to build in Oakland…..They would sell out all day in Santa Clara since it is so close to the core of their fan base in the East Bay.
LA fans just do not care about having an NFL team of their own. The south-land is full of transplants and people who have their teams. DirecTV makes a killing of the NFL package out there, it is their #1 market for this reason.
LA is just not a good NFL market period, that is the sad truth of the matter. One team would have a hard time getting fans much less 2 teams once the novelty of the stadium wears off.
I lived out there and know full well the landscape. I am a 49ers fan too and I think the Raiders are better served sharing this market rather than be the only team in LA.
Football is boring.
Sid… are you for real? Raiders fans don;t have money for suites like 49ers fans? It isn’t “fans” who buy luxury suites in either case.
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I am not advocating for the Raiders to move to LA, but to pretend that if they were the only game in town that they would have some trouble selling luxury boxes to LA Area corporations is ridiculous.
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Why do you talk out of your ass all the time?
@Jeffrey- Hold up….I never have once said “Jeffrey, stop talking out of your ass” once. Please show some respect for my thoughts and views….This is a blog for fun after all.
As bartleby pointed out the Raiders in Oakland have had a hard time selling premium seating in this market despite the 49ers not having anything close to the suites Oakland built for the Raiders back in 1995.
Corporations should have lined up for the Raiders but did not. Even the SF metro market should have been enough, forget Silicon Valley.
The 49ers get corporations to sign up because their executives are fans of the team in Silicon Valley.
So in the end the “fans” do buy the suites. The executives use their corporations to do it because it is a great tax write off.
The East Bay is the Raiders ancestral home and the heart of its fan base. If they could not sell luxury suites here with little competition it is going to be easier in LA? Where they have several more teams in the same general area. (Lakers, USC, Dodgers, Clippers, and Kings all play in or near Downtown LA).
LA corporations have their teams and their money is allocated. Their executives are fans of the teams that are there already. SV works because there is only the Sharks nearby hence why the 49ers are killing it selling suites for a stadium that is 3-4 years away.
The Rams had LA all to themselves for years and could not cut it despite the fact from 1973-1979 they won the NFC West every year and still moved to Anaheim because of lack of fan support.
What does this tell you? Even winning consistently the Rams struggled at the gate in LA and in OC they had luxury suites and could not sell anything if their lives depended on it in a far richer area.
The evidence is clear cut that LA is bad NFL market. I am not just saying the Raiders here. The Bills, Vikings, Jaguars, could all move to LA and they would all struggle long run because LA is bad market for the NFL.
The Raiders and Rams were wise to leave. LA does not deserve a football team when they had 2 teams for a long period of time and each struggled to sell tickets…..much less luxury suites.
If regular seats have a hard time selling, luxury suites will be a far tougher sell. Why? Because they are far more expensive.
LA has a history of being a poor NFL market. That is something that will never change. Too bad the Raiders left, as you said “they lost a whole generation of fans” in the Bay Area when they moved.
As you said before in a nutshell “past performance is a good indicator of future results”..