Monthly Archives: January 2012
According to Team Marketing Report’s NFL Fan Cost Index for 2011, the San Francisco 49ers had, on average, the 9th highest priced tickets in the league at $83.54. That price was a 9.4% rise over 2010. Given the facts that the team was in the bottom 10 in terms of payroll, and the 49ers play in one of the more decrepit stadiums in the NFL, that’s a bit of a shock. But that’s nothing compared to longtime season ticket holders experiencing sticker shock when they found out how much their locations would cost in the new Santa Clara Stadium.
The 49ers have been preparing for the blowback for a while. It’s happened everywhere else seat licenses have been offered: Dallas, New York, and yes, Oakland. Priced at up to $80k per seat for the premier 50-yard line lower club locations, it’s clear that these seats aren’t for the guy who makes less than $80k per year. These seats are for the corporate crowd. Will they sell? Of course they’ll sell, just as suites are selling. Even so, don’t worry about whether they sell or not – the NFL doesn’t count club seats against its minimum ticket sales requirements for games.
I’ll put the stadium financing dilemma in the most basic terms. Let’s say you’re buying a $1 million house. You have 15% down, or $150k. You need a loan of $850k over 30 years. Your credit isn’t the best, so your interest rate is 8.5%. That puts your monthly mortgage payment at more than $6,000. Every month. Now add three zeroes to that payment and convert it into an annual payment. That’s more than $72 million per year.
Now let’s take the attendance the 49ers can expect every season. The Santa Clara stadium will have a capacity of 68,500. They’ll play eight regular season games and two preseason games, or 9+1 if the league ever gets around to moving to an 18-game regular season. That means that every year the team needs to 685,000 tickets to pay for that $72 million mortgage. Broken down per ticket, that’s $106.42 baked into the cost of every ticket. That’s 27.4% higher than the entire current ticket price.
Of course, the 49ers won’t be adding $106.42 to each ticket to cover the cost of the stadium. They’ll make it a more progressive payoff. The premium seats and suites will carry much of the burden. Sponsorships, naming rights, pouring rights, and other revenue sources will cover a piece. When I wrote an analysis in 2009 trying to suss out how the place would be paid for, the financing was fairly well separated, the public burden lower ($330 million then vs. $850 million now). Perhaps fans in some of the cheaper sections will only be stuck with $15-20 per ticket of stadium building costs. The truly interesting part hasn’t begun yet, as the team hasn’t announced prices for its lesser club and non-club seats, many of which will also have seat licenses attached. If those don’t sell, we may see a return of the dreaded OFMA. Of course, the Giants sold their seat licenses without much difficulty and a secondary market even thrived for a long period, so there are success stories to be found.
I still remain skeptical as to how to everything will be paid for, at least by the 49ers themselves. Having the Raiders onboard would help an enormous amount. Yet even if the Raiders had signed on at the outset, it’s unlikely that the 49ers’ seat license prices would be much different. They’d probably just pay down the debt earlier or plow the money into the team at different points. Without the Raiders, I wonder if it’s more sensible to have a domed stadium in Santa Clara despite the good weather. At least with a dome, it’s a more flexible venue that can hold all sorts of other events, including multiple Super Bowls and the NCAA Final Four. Then again, the Marion County (Indianapolis) Capital Improvement Board is expected to lose money at this year’s Super Bowl. Nevermind on the dome idea.
And that’s how the drive for a downtown Oakland ballpark ends – with a whimper.
The Trib’s Angela Woodall reports that as a result of redevelopment cuts, the Victory Court ballpark site is now officially dead. We called it before the New Year, so it’s no surprise. But wait, weren’t there two sites near Jack London Square?
JLS North was dropped quickly. Perhaps it was too expensive to acquire. Or maybe there weren’t enough business interests pushing for the site. Whatever the reasoning was, it wasn’t disclosed. Now Victory Court has also gone quietly into the night with little explanation by those who pushed for it.
Let’s step back through memory lane on Victory Court. Our time writing about it, your time reading about it, gone forever:
- Oakland FD Training Site [4/13/09]
- I called it! [12/8/09]
- Navigator Called It! (Or Victory Court: An Overview) [12/14/09]
- Questions without answers [4/26/10]
- Oakland’s report and what it means [4/29/10]
- Liveblog from the Oakland community meeting 5/1 [5/1/10]
- Not so breaking news (EIR) [11/16/10]
- Oakland Planning Commission Session 12/1 [12/1/10]
- Put up or… [12/10/10]
- A Cup of Joe with the Georges [12/13/10]
- What’s next for Oakland? [12/22/10]
- Quan talks tough as cities race [2/7/11]
- News for 3/14/11 (hiring of negotiator Paul Jacobs)
- Waiting for the Victory Court EIR [4/14/11]
- What we know about Oakland [9/30/11]
- Retreat! [12/10/11]
- It’s a bargain, I swear [12/14/11]
- Oakland focuses on EB-5 funding to replace redevelopment funding [1/8/12]
I guess it’s Coliseum City or bust. Or something.
In a session with the print/broadcast media yesterday (before the blogger session), Lew Wolff suggested that 2016 would be a more realistic date for Cisco Field to open due to the permitting process. To understand why this might be the case, it’s best to look at what’s happening with the Earthquakes stadium project, only two miles northwest of downtown San Jose.
Nearly a year ago the Quakes got a demolition permit for the Airport West/FMC plant site. A large industrial building had to be torn down and the ground had to be graded for the eventual construction. A soft groundbreaking ceremony was held, after which the demo took three months. Now it’s the end of a January 2012 and the actual building permit has yet to be granted, thanks in large part to objections by a neighborhood group near the stadium site. San Jose’s Planning Commission will have a hearing on February 22, at which point all grievances and objections should be aired in public. If you read this list of items to discuss regarding the project, you’ll see that it is on par with what has been (and would continue to be) discussed for Cisco Field.
If slipping to 2016 is real it brings up one critical issue for the franchise in that the ”2014 situation” stretches out to 2014-15. Either a two year lease (maybe with an option year just in case) would have to be negotiated with the Coliseum Authority or a two-year temporary home would have to be found, the latter seeming less likely. There may also be an inside baseball reason to slip a year: if MLB and Commissioner Bud Selig (thanks for waiting) has a compensation plan worked out that is too costly for the A’s and/or the other owners to swallow, allowing one less overlap year between the remaining mortgage on AT&T Park and the opening of Cisco Field may be more palatable. To me this is one of the more frustrating aspects of making such a deal. As I was pointing out to Lone Stranger yesterday, high eight figures or more in compensation is a big deal for anyone, including a billionaire who owns a franchise. I get that. Big picture, $75 million is only 1% of MLB’s annual revenue. Stretched out over three years, it becomes 0.3%. That amount shouldn’t cause extended bellyaching. It should be manageable.
I’m in, credentialed and good to go. Line wrapped from the arena entrance down through the north VIP parking lot. Gates opened at 10 sharp. I’m heading to the clubhouse tour right now. At 11 I’ll meet folks inside the entrance and to the right, where the Warriors inside ticket booth is.
Update 12:50 – The retired player panel (Rudi, Tenace, Blue, Hatteberg, Justice) fielded a question about a move to San Jose. Many boos rained down. Rudi spoke up, saying that the Coliseum was ruined by the return of football (followed by applause) and a plea that the A’s need a ballpark, whether it’s in Oakland or not. Very diplomatic answer.
As part of Forbes’ annual analysis of the NBA, staff writer Tom Van Riper put out a piece on our hometown heroes, the Golden State Warriors. Much of the info in the article has been dealt with elsewhere, such as the differences between Chris Cohan and the Joe Lacob/Peter Guber ownership group, or the latter’s interest in a new arena in San Francisco. More interesting and revealing is this tidbit about the new TV deal negotiated between the Warriors and Comcast:
That agreement paid the Warriors approximately $50 million up front—enough to take the sting off the purchase price—and roughly tripled the annual rights fee to over $25 million from $9 million. The agreement is for 18 years, with provisions to periodically renegotiate along the way.
Indeed, the $50 million probably did help pay down debt associated with the franchise purchase. Plus they didn’t take too much upfront, as $25 million per year is a healthy amount for an NBA team – though far less than the $150 million per year the Lakers are getting. No matter how bad the team gets (and they’re still bad despite a new coach this year), the Warriors remain an attendance and ratings bonanza. So hats off to Lacob and Guber for working the numbers. The TV deal runs well past the end of the new CBA, though it’s likely the team will option out and negotiate a new one before the decade is out.
When it comes to building a new arena, the obstacles are clear. It’s hard to build in this state. It costs 20% more to build than in most other markets. There is no redevelopment money available, let alone other public funds. The Bay Area won’t approve a stadium or arena tax. Yet it’s clear that ownership sees the gleaming lights of SF and wants to turn them into dollar signs. The only issue is the cost of a new arena, which Forbes pegs at up to $1 billion. That may be true, especially if the arena can’t open earlier than 2018. I think that $1 billion is the line of demarcation. Anything under that it and it would be worthwhile to invest in arena. Above that and it’s prohibitively expensive.
The actual raw cost to build at Mission Bay shouldn’t be more than $750 million even in 2017. Material and labor costs shouldn’t rise that high. The additional cost would be to furnish the arena, which would be co-owned and operated with the Giants, Burdened by a high construction cost (mortgage), both parties would be motivated to sell the arena for every kind of event from tiny to large, so the club areas, suites, and auxiliary spaces would be decked out to a degree never before seen in the Bay Area. And it’s likely that given the locale, the teams would attract a third party interested in fronting some of the construction cost in order to secure the operations contract for the venue. That could be AEG, Global Spectrum (a Comcast subsidiary), or even the Sharks, who operate HP Pavilion.
Right now the Warriors are a mere renter at Oracle Arena, and not for cheap at $4.7 million per year and little access to non-game revenues. They don’t have a say on who runs the arena, which has led to allegations that SMG didn’t try very hard to bring in events. Last summer, AEG and Live Nation were set to bid on the next deal to run Oracle Arena. Can’t exactly blame Lacob and Guber for trying to maximize their investment, though building in SF as opposed to staying in and improving Oracle Arena could prove a more cost-effective decision in the long run.
As the Warriors reach the end of their contract, SF and Oakland will be “forced” into a bidding war for the W’s. SF and the Giants will be ready with an infrastructure/development rights deal, probably at Lot C on the other side of Mission Creek. The lot measures 400′ x 514′ not including sidewalks, which should be enough for a typical roundrect or oval arena, though not wide enough for the circular bowl layouts utilized at Oracle Arena or Staples Center. (HP Pavilion is roughly 440′ square). If Lot C were used, only 800 parking spaces would be lost, which would be easily replaced by a garage and ancillary development on Lot A. Lot C has a T-Third stop right outside it, plus Caltrain is only a few blocks away.
Oakland and Alameda County’s pitch lies squarely in the Coliseum City concept. By the time the cities get to brass tacks, we should know where the A’s and Raiders will be playing in 2014 and beyond. The A’s have a long-term play, the Raiders have both short and long-term scenarios. If both teams were to sign onto Coliseum City, it’d be very easy for the Warriors to partner up with everyone else. If the A’s and Raiders are headed elsewhere, it would be difficult to convince W’s ownership to shoulder the load for Coliseum City, especially if a compelling offer were coming from across the bay. I’ve advocated in the past for a downtown Oakland arena or one at Victory Court, but the cost to make that happen would probably be higher than the already city-owned lots in SF, so that’s not happening.
All the while, David Stern (or his replacement) would be pumping up the “need” for the Warriors, just as he’s done in practically every other city. The Cohan-era Warriors were analogous to the Autry-era Angels, in that they were generally undervalued and have great potential. Lacob and Guber intend to make good on the potential, preferably both on and off-court, though they’ll settle for off-court at least in the near term. If that path leads across a shiny new east span of the Bay Bridge, so be it. At least they don’t have territorial rights standing in their way.
Prior to FanFest, Lew Wolff is making the media rounds again. Friday’s Chronicle has decent length discussion between Wolff and John Shea about both on-field and off-field issues. There isn’t anything new on the business side other than Wolff’s admission that the team actually made $370,000 post-revenue sharing in 2011 thanks to the World Series going seven games. Wolff can thank fellow St. Louis-area native David Freese for that.
Wolff’s scheduled one-on-ones with fans are going to be interesting. I see why he’s doing this, but I don’t expect much to come of it. Maybe if he convinces a few fans regarding the earnestness of his effort it’ll be worth it. It just seems like people on one side or another have such ingrained opinions that it’s a futile task.
Later this morning, Wolff will be on The Game with The Rise Guys at 9:15, probably talking about FanFest, Johnny Gomes, Bartolo Colon, and maybe Manny Ramirez.
Quick note about FanFest – I expect to be there at 9. Jeffrey should be there around 11. I will be tweeting throughout, so pay attention to the @newballpark feed for updates from FanFest.