The bubble effect

While my team was coming up short in bar trivia last night, news came over the wire that the group headed by Magic Johnson, Stan Kasten, and Peter Guber (yes, that Peter Guber) won the extremely competitive bidding for the Dodgers with a $2.15 billion offer. As recently as last week, the Dodgers were going to be sold for $1.4-1.6 billion, and New York hedge fund magnate Stephen Cohen seemed to have taken the lead thanks to having more cash in the bid compared to the Johnson-Kasten’s larger overall offer. The facts of the sale have been trickling out throughout the morning, and the details couldn’t have been more surprising.

  • The $2.15 billion bid is in two parts: $2 billion for the team and stadium, and $150 million for the parking lots through a joint venture with outgoing owner Frank McCourt.
  • Despite McCourt’s bankruptcy foibles, he’ll end up clearing around $1 billion in profit after dealing with creditors, including his ex-wife. In 2004, McCourt bought the Dodgers from Fox for $430 million, not putting up any cash to do so. Plus he gets the parking vig.
  • The bid appears to be ALL CASH. If so that’s incredibly impressive and has major implications down the road.
  • Johnson and Kasten had six private investment firms come in to bid for the right to claim the majority share. The winner was Guggenheim Partners, a Chicago/New York firm that manages $127 billion in assets. As part of the deal, the control person or managing partner will be Guggenheim CEO Mark Walter. The new entity that owns the team will be called Guggenheim Baseball Partners.
  • For now it appears that nothing will change day-to-day in the Dodger front office. That means that Ned Colletti stays put as GM, though Stan Kasten will slide in above him as President and Magic Johnson will probably have an Executive VP role, similar to the one he had with the Lakers. Keep in mind that while Kasten oversaw much of the Atlanta Braves’ successful run throughout the 90′s and early 00′s, he had John Schuerholz run the baseball side of the house.
  • There is potential in developing the parking lots, though everyone in the joint venture would have to sign off on any plans.

Local and national writers have run the gamut speculating what this new ownership group will do going forward. The first obvious step is to get some kind of new TV deal done, which McCourt tried to do under the gun but was blocked from doing by a bankruptcy court judge. The Dodgers could continue with Fox Sports for $200 million or start their own network. A Dodger network may be the best call, though ownership will most certainly run into some hard negotiations with Time Warner, LA’s predominant cable operator. Time Warner will operate the Lakers’ upcoming dual-channel, dual-language sports network, so there is built-in competition.

Ticket prices will also go up at some point, commensurate with rising payroll. For 2012 the active roster payroll is only $90 million, plus $11 million in deferments to Manny Ramirez and Andruw Jones. The Dodgers had been dropping ticket prices precipitously over the past year or two, allowing for a great amount of headroom for hikes when the time comes. That time may be next year, when the team has to make decisions on Andre Ethier and James Loney, while deciding what kind of extension to give Clayton Kershaw. Those three alone could translate to some $40 million per year in additional salaries. Even so, that only brings payroll to $130 million. The Dodgers could make one or two additional huge free agent splashes in the next 48 months, which is why the Giants have to be absolutely frightened.

From a macro perspective, every owner now has to be wondering what this clearly overpriced sale will mean for them. Sale prices have already been trending some 20% higher than Forbes valuations, so this only extends the bubble that’s been forming over the past five years. The bubble was created by great increases in media revenues, chiefly from new and often team-owned regional sports networks like YES and MASN. In response, several incumbent RSNs have overpaid to keep teams on their channels, such as the Fox Sports regionals in Dallas (Rangers) and Los Angeles (Angels). The table below shows franchise valuations and sale prices, in conjunction with relative values to generated revenue and the aggregate value of all franchises. Most franchises are in the 2.5-3 range. The Yankees sport a 4+ multiple, whereas the Dodgers nearly reach 9 – an artifact of how the Dodgers have been run lean while in bankruptcy. Have-not and small market teams have a multiple in the low 2 range.

Right-hand column shows franchise values as a function of revenue. If the Dodgers got a $200 million/year TV deal, their multiple would be in line with the Yankees'.

Higher valuations or potential sale prices doesn’t mean that there’s going to be a bunch of franchises for sale. For one, Commissioner Selig doesn’t want to have a “glut” of teams available since that will only decrease competition and deflate if not pop the bubble. We know that Padres and Orioles are  available, even if they’re not being actively shopped at the moment. Maybe that will change now, with both current owners looking for $500+ million paydays. MLB can also draw out the sales process to unbearable lengths (see: Astros, Padres) while it completes its “due diligence” on any buyer. And if higher sales prices are being propelled by new media deals, teams in small markets aren’t necessarily going to receive huge valuation bumps if their TV deals aren’t bumped in accordance.

The A’s could see something of a bump, but how much is very unclear. They’re locked into CSN California for at least another decade. Since the terms aren’t public, we don’t know if moving to San Jose would provide a bump, but I have to think that it does simply from the much larger, healthier pool of available advertisers in the South Bay. When prospective buyers look at the books, they’ll know this going in or find out soon enough. Wolff and John Fisher aren’t going bankrupt anytime soon, so if they wanted to sell they could hold out for as high an offer as they wanted. In any case, Selig would probably dissuade Lew Wolff from even considering a sale, stalling while he “figures out” a solution. On the flip side, the Giants could actually harden their stance on territorial rights, saying that it’s their only way to compete with a soon-to-be mega money Dodger franchise. At the very least, the news should force the Giants to make a commitment to Matt Cain, since the Dodgers would be well-positioned in six months to blow the Giants out of the water with an offer. To that I have to say, Welcome to the club, Giants. Enjoy your stay.

OT Note: The second game of the season vs. the Mariners will be shown live on MLB Network, as MLB has been so magnanimous as to lift its blackout. Oh thank you, capricious TV gods. /s

49 thoughts on “The bubble effect

  1. I would love it, absolutely LOVE IT, if Matt Cain signed with the Dodgers. Man, that would be a total dagger to the heart of the Gnats and their fans. It would be sooOOOOoo sweet!
    .
    In the past, I’ve never been a schadenfruede kind of guy. But with the Gnats, I most definitely am. :-)

  2. Again, solid, solid work, ML.

  3. Better one for you. Dodgers sign Cain and Lincecum when each hits Free Agency, respectively.

  4. The Giants’ fans were subjected to the same relocation anxieties and an even worse stadium than A’s fans had to deal with. It’s a shame when any core of homegrown talent is broken up by free agency.

    .

    An all cash payment? So, to new owners typically put a down payment on a team? I’m curious what percentage is a typical downpayment for a team.

  5. @Briggs – Usually it’s around 30%, though defining “cash” can be tricky.

  6. The Giants can harden their stance all they want; the MLB universe does not revolve around them. THE BEST INTEREST OF ALL OF MLB.

  7. RE: MLB TV, does anyone have it? I’m curious. A’s and Giants games are blacked out. Is it possible to watch the feed from the opposing team? In other words, if I got MLB TV, could I just want the A’s opposing teams’ broadcasts all season to follow the A’s?

  8. @Briggs – As long as you’re not in the local broadcast blackout area, yes you can do that.

  9. Marine Layer – you rock. Thanks again for your insightful coverage.
    .
    As MLB revenues are driven more and more by TV deals, income inequality will only get worse. But as the problem gets worse, I think it gets even harder to really fix (because the haves would need to give up so much $$$$$ to level the field).
    .
    Ideal system is NFL, where TV deal is league-wide. It works because it was set up that way long ago.
    .
    But can you imagine trying to convince the Yankees, Dodgers, etc. ownership groups to give up their mega millions for the “good of the league”?
    .
    I doubt there will be any real change to MLB structure. Just more half-measures, like maybe increased revenue sharing. Although even that is being limited now to exclude mid-to-large-market teams (except the A’s, so long as they’re in the Coliseum.)

  10. Steve, the NLF plays a vast majority of it’s games on the same day every week at one of two start times and every game is covered by a national TV contract. MLB games are played every day of the week at all different times and are thankfully broadcast under local contracts that allow us to see almost all of our favorite local teams’ games as well as quite a few out of market games. If there were less than five national TV contracts we would end up with all coverage being like Saturday Fox, ESPN Sunday and Wednesday Night Baseball or even worse that nightmare NBC baseball night format where all games started at 8:00 Eastern and only one game was shown that night.

    On another note:
    The Giants hate in response to ML’s post seems kinda odd.

  11. That’s a good point Ted about fans being better served by local broadcasting deals. But my point was that it makes for vastly different revenue levels among the MLB clubs.

  12. Steve, revenue sharing is definitely a tough thing to manage in MLB. I’d like to see stiffer luxury tax penalties and a lower luxury tax level. There also needs to be a way to ensure that revenue sharing takers aren’t the most profitable teams (revenue sharing should only go to payroll and scouting/minor league operations) and that teams are not rewarded for poor business deals.

  13. @ Briggs:

    No, it doesn’t work like that. If your computer is physically in the Bay Area, you are blacked out. I don’t know if it’ll work with a proxy server. I’m sure it would work if you could remote access a computer in a different market and log in.

    I used to subscribe to MLB.TV back when I lived on the East Coast. Funny thing is, when I mo Ifved back to the Bay Area, I ended up watching FEWER A’s games, because I would miss alot of them while at work when I can’t tune into local network but can access MLB.TV. Now I’m moving back East, which means an uptick in my A’s game viewing, ironically. I will be unintentionally boycotting the system, only watching out-of-market (A’s) games. I won’t even bother setting up pay TV at home.

    Blackout restrictions suck, and they are helping the crazy escalation of media money paid out to some teams these days.

  14. @ted
    The Gnats hate was in response to ML’s last comment in his post, about the resigning of Cain. ML’s comment was a less obnoxious, more subtle, dig on the Gnats. Then I was just totally blatantly bombastic about it.
    Believe it or not, I like a lot of gnats players, and I have friends and family who are gnat fans, and I used to be a fan of the gnats (2nd fav to the A’s), until this TR crap. But for obvious reasons, the gnats organization are evil incarnate as far as I’m concerned. I very strongly consider their TR to be bogus, because the minutes of the Haas meeting clearly said the TR was contingent on the Gnats building in SCCO. And the whole idea of having separate, unfairly carved up, TR in a two team market is so insanely stupid and asinine it’s surreal. Also, it was a “for the good of baseball” gesture by the A’s. In return, the gnats organization spits in the face of MLB and the A’s. There’s no other way of looking at it. The sad thing is, they totally don’t need to do this crap. They are in a great position – world class stadium that they always sell out with inflated prices, in a world class city, in one of the richest corporate markets in the world, with a burgeoning media empire. The simple fact is, the A’s moving to SJ would be nothing more than a minor nuisance to them – they would still be raking in money like it’s going out of style. That’s where the hate comes from, and I’m sure most who read/post here can relate.
    .
    And like I said before, I generally don’t engage in schadenfreude – it’s not my thing. But with the gnats, I can definitely see pleasure in their misfortune (possibly losing Cain and/or Lincecum).
    .
    Anyway, huge compliments to ML for yet another excellent analysis.

  15. jeff-athletic, have you seen copies of the minutes? I have not and I would like to see minutes from all the meetings in order to get a better idea of why the TR were granted to the Giants. Who said that SCCTR’s were “contingent” on the Giants building a stadium in SCC? Glenn Dickey’s recollection of what went down seems to contradict what Wolff says happened.
    If Haas decided not to fight the TR change it seems more likely that he did so to get the Giants further from Oakland and out of San Francisco.
    If the A’s move to San Jose they are a threat to take current and future fans and corporate dollars from Silicon Valley and the Peninsula.

  16. @Ted- sandy alderson who was with the A’s organization at the time and is now with MLB has publically stated that it was an error that the TR rights weren’t rescinded after the giants failed to build in Santa Clara county- who besides the gints has gd talked to to get his side of the story….no one

  17. Alderson actually works for the Mets but I would like to see something official and in writing that indicates the Giants rights were contingent on building in SCC. These TR have been ratified more than once. Funny how Alderson, the A’s and everyone else just failed to act for all that time.

  18. The key here is the Giants “slyly” pocketed the rights because Wally Haas after the 3 year WS appearance run where he lost a ton of money was trying to sell the A’s.

    As we know he was not a good business man but a “saint” for his philanthropic efforts and good community work.

    When the leagues combined in 1993, the Giants had every county written in deliberately. The A’s simply sat back and accepted Alameda and Contra Costa counties alone not knowing what the future would hold as they were looking to sell at that exact time.

    Bad luck and bad business for not trying to increase their franchise value by sharing the entire market.

    It is in fact MLB’s fault for not noticing this error in their system and for not catching the Giants “trying to pull a fast one”…..This is why I argue “MLB” not the A’s must pay the Giants a settlement.

    The other three 2-team markets are shared because those owners in each market made sure everything was shared to avoid a situation like this and to avoid a big gap in “market value”.

    If the Angels want to move to Downtown LA they can do so without the Dodgers permission.

    Or if the Mets wanted to move to Manhattan the Yankees could not cry foul.

    This is in reality MLB’s fault but the A’s are not absolved either…..How they did not notice the difference between the other 2-team markets is astonishing to me.

    The fact 3 other 2-team markets do not have this problem shows the Giants were vastly more “forward thinking” than the A’s were in this market and knew it would increase their value as a franchise.

    In hindsight I am sure MLB wishes they caught the Giants walking out the back door but hindsight is 20/20 and they know the screwed up badly.

    The delay will end once they broker a deal with the Giants……They will pay a king’s ransom to open up Silicon Valley as they know in this post-recession era free ballparks are no longer possible.

  19. @ted “have you seen copies of the minutes? I have not and I would like to see minutes from all the meetings in order to get a better idea of why the TR were granted to the Giants.”
    .
    Sure, I’d like to see them, too. We may or may not get that opportunity. But Wolff has seen them, and Selig and seen them, and the owners who would need to vote on this have the opportunity to see them, too. So Wolff has a high degree of credibility when he puts his rep on the line by putting out a press release that can be easily verified by the people who hold his fate in their hands.
    .
    “Who said that SCCTR’s were “contingent” on the Giants building a stadium in SCC? Glenn Dickey’s recollection of what went down seems to contradict what Wolff says happened.”
    .
    Dude, you’re not seriously comparing the credibility of Wolff, who’s actually seen the documents, and who has a lot to lose by mischaracterizing them in ways that can be easily checked, and Dickey, a hackey columnist with an agenda who has not seen the documents and who will suffer no repercussions by getting the facts wrong (other than the love and adulation of his Oakland-only worshippers)? Alrighty then.
    .
    “If Haas decided not to fight the TR change it seems more likely that he did so to get the Giants further from Oakland and out of San Francisco.”
    .
    So why then won’t the Giant’s do the same favor of self-interest and try to get the A’s further from San Francisco and out of Oakland?

  20. @ted “have you seen copies of the minutes? I have not and I would like to see minutes from all the meetings in order to get a better idea of why the TR were granted to the Giants.”
    .
    Sure, I’d like to see them, too. We may or may not get that opportunity. But Wolff has seen them, and Selig and seen them, and the owners who would need to vote on this have the opportunity to see them, too. So Wolff has a high degree of credibility when he puts his rep on the line by putting out a press release that can be easily verified by the people who hold his fate in their hands.
    .
    “Who said that SCCTR’s were “contingent” on the Giants building a stadium in SCC? Glenn Dickey’s recollection of what went down seems to contradict what Wolff says happened.”
    .
    Dude, you’re not seriously comparing the credibility of Wolff, who’s actually seen the documents, and who has a lot to lose by mischaracterizing them in ways that can be easily checked, and Dickey, a hackey columnist with an agenda who has not seen the documents and who will suffer no repercussions by getting the facts wrong (other than the love and adulation of his Oakland-only worshippers)? Alrighty then.
    .
    “If Haas decided not to fight the TR change it seems more likely that he did so to get the Giants further from Oakland and out of San Francisco.”
    .
    So why then won’t the Giant’s do the same favor of self-interest and try to get the A’s further from San Francisco and out of Oakland?

  21. @Ted- alderson worked for MLB prior to accepting his current role with the Mets- he has no skin in the game so why would he lie….unlike the individuals u support-

  22. Funny how Ted demands “facts” when it comes to statements by Wolff, but will treat as Gospel pieces by hacks such as Dickey, Madden, and M&R. Funny, but at the same time (supposedly being a SJ resident) sad.

  23. re: The Giants can harden their stance all they want; the MLB universe does not revolve around them. THE BEST INTEREST OF ALL OF MLB.

    …Apparently, the MLB universe DOES revolve around the Giants. All the evidence we have is that MLB would rather lose tens of millions of dollars in Oakland every year than make tens of millions of dollars every year in San Jose, all to protect the best interest of the Giants.

    re: The delay will end once they broker a deal with the Giants……T
    …Unfortunately, the Giants won’t negotiate and Selig is obviously terrified of them,.

  24. @pjk- if that was the reality do you really think that they would continue on the game- even Ray Ratto concedes in an article today that MLB wants into SJ and now that the Dodgers and Mets are done things will pickup- The recent profile for the attorney who negotiates these deals for MLB said he was looking for a successful resolution in the next several months- puts us out into May- patience….

  25. @pjk: Why is it ‘obvious’ that Selig is scared of the Giants?
    .
    The main argument they had originally (it may have changed a little since then) is that if they lost exclusivity to SCC, they wouldn’t get the 3.0 or 3.2 or whatever million fans that would help them make their loan payments. By stalling, the loan is going away and will be done in 2017. That would, in effect, take care of their argument. This is a way more plausible reason than Selig being terrified.

  26. Pingback: Back in the Swing of Things | Life In Right

  27. Ray Ratto has been really making me laugh lately with his columns on the topic. I don’t usually agree with him, but he sure is funny (and sort of point in the last two I have read on this topic).

  28. @pjk: The only thing Bud Selig is afraid of is smiling.

  29. Can somebody point me to this Ray Ratto column?

  30. Jose Canseco tweeted that he’d buy the A’s and keep them in Oakland if he won the lottery. Sounds like a plan. Time to sound the alarms and inform Matier and Ross of a third potential buyer.

  31. @ Sid – “The key here is the Giants “slyly” pocketed the rights because Wally Haas after the 3 year WS appearance run where he lost a ton of money was trying to sell the A’s.” In regards to Haas losing a ton of money I would like to make a comment. I have looked into this allegation in the past and I was able to determine several things while also unable to do so with others. From 1981-1987 the franchise lost just under $30 million, largely due to refurbishing the Coliseum and the farm system. By 1988 the franchise began earning profits, albeit not huge. From 1988 to 1992 the team was profitable but I have been unable to determine just how much so, to be conservative, I will just say the financials were flat, i.e. didn’t make or lose money during those years. From 1993 until the team sold in 1995 the franchise lost a further $15 million approximately. Haas bought the team for $12.7 million and sold it for $85 million. Depending on what the rules were back in those days for booking losses and offsetting gains, etc., I have determined that this investment for Haas returned about 5.234% annualized versus 10.6% annualized for the S&P 500 during those same years. Again, I’m assuming he made zero money during the 1988-1992 seasons so, at worst, his investment was earning savings account rates. Surely he would have made more money elsewhere but his ownership wasn’t a money loser to him. Of course, like I said, I have been unable to get accurate data particularly for the profitable years. If you have financial data during his ownership that contradicts mine and proves he lost “tons of money” I would be happy to retract my post and stand corrected.

  32. @ Ted A serious question: You keep prattling on about how an A’s ballpark in the South Bay will erode the Giants corporate base there. Granted, Silicon Valley has a huge corporate base. But San Francisco has a large corporate base as well, especially in terms of service-based firms that are prime premium seat customers. For example, virtually every AmLaw 100 law firm has an office in San Francisco, and every large law firm I’ve ever worked with maintains suites and/or club seats at local sporting venues to entertain clients.
    .
    Why are you more worried about the A’s eroding the Giants base in Silicon Valley, and not worried about them eroding the Giants corporate base in San Francisco from only 12 miles away? Unless, you know, it’s not really about whether a move hurts the Giants, but more about making dead sure that the A’s are crippled and cannot compete?

  33. I forgot to mention a couple of things. 1) When I say 5.234% is akin to savings rates, I’m talking about during those days. If you recall rates were much higher in the 80′s and I remember when my father passed away in 1993 I remember Metlife money-markets were around 5%. I didn’t want anyone to think I was referring to the present day. 2) Haas sold the team for $85 million which has been quoted as being “well below” it’s actual value. Again, it’s hard to determine the exact figure but most appraisal estimates I have found for the franchise during that time were more than $100 million. This means that had Haas sold for the actual valuation his annualized return might have been in the 8%-8.5% range.

  34. Just to add to Bartleby’s question: supposedly erode the Giants WHOPPING Silicon Valley corporate base, which constitutes only 15% of Silicon Valley corporations, which have all stated they would stick with the Giants even with the A’s in San Jose. Facts can sure be annoying (at least for some).

  35. @Tony D.

    “Just to add to Bartleby’s question: supposedly erode the Giants WHOPPING Silicon Valley corporate base, which constitutes only 15% of Silicon Valley corporations, which have all stated they would stick with the Giants even with the A’s in San Jose. Facts can sure be annoying (at least for some).”

    Wouldn’t it be great if those same companies say that they will stop supporting the Giants if they successfully block the A’s to San Jose…one can dream.

  36. Despite the pile on, ted is correct about a few things here. The supposed minutes of the meeting at which the T-rights were granted do not mean anything. If they did, those minutes would have given Selig (who was actually present at the time, by the way), a perfect excuse to “correct” this clerical error under which the Giants retained T-rights after not building in San Jose. The fact that he has not done so after YEARS of having this issue in front of him means only one of two things:
    .
    1. The A’s are incorrect in claiming that T-rights are a clerical error.
    OR
    2. The A’s are correct in their interpretation, but Selig does not care because he does not intend to award them rights to SJ.
    .
    There really are no other options.
    .
    And obviously the Giants did not need T-rights in order to build a ballpark in Santa Clara County. They only needed the T-rights in order to prevent anyone else from building there.
    .
    The only way this gets resolved is with a deal that compensates the Giants significantly. What form of compensation that will take I don’t know. The other 28 owners don’t have much incentive to chip in directly, as they did in the Washington situation. The Giants are clearly taking the hard ass position that they won’t negotiate at all, and MLB is not showing any signs, at least publicly, of forcing them to the table. But the idea that T-rights are going to be changed without compensation — which is what the claims of “fairness” and “clerical error” imply – is and always has been fanboy fantasy.

  37. “The supposed minutes of the meeting at which the T-rights were granted do not mean anything. If they did, those minutes would have given Selig (who was actually present at the time, by the way), a perfect excuse to “correct” this clerical error under which the Giants retained T-rights after not building in San Jose. The fact that he has not done so after YEARS of having this issue in front of him means only one of two things:
    .
    1. The A’s are incorrect in claiming that T-rights are a clerical error.
    OR
    2. The A’s are correct in their interpretation, but Selig does not care because he does not intend to award them rights to SJ.
    .
    There really are no other options.”
    .
    This is a great oversimplification. Let’s say just for argument’s sake this situation were before a court. Let’s also say that the A’s are right about the meeting minutes. Nevertheless, it is also true that they have waited a long time to take action.
    .
    Under these circumstances, a court might apply the doctrine of laches to bar action by the A’s, even if they are fundamentally right. But as an equitable doctrine, there’s a lot of discretion and subjective judgment in applying the doctrine. So, they also might not. Or they might dictate a “meet in the middle” result. To a large extent, the outcome could come down to what a court believed was fair.
    .
    The A’s and Giants are not before a court, but a lot of the same considerations come into play. Basically, Selig and the other owners play the role of a court. The outcome remains likely to turn on factors other than strict application of legal principles.
    .
    In other words, what the A’s are saying could be easily true, but at the same time the passage of time will also factor in. It’s just not true that claims of “fairness” and “clerical error” imply T-rights will be changed without compensation, nor that this is what those of us who have argued these points believe will happen.

  38. Teds right? Now I’ve heard it all. I tell yah, crow will be served up here in due time, and I and most here won’t be eating it.

  39. barteby, add to that Selig may know, in general, what value the rest of the owners would think is fair enough to be willing to let him “fix” or “overturn” the rights to open SJ up to the A’s, but also knows that value would also make building stadium and creating a healthy, profitable team out of the A’s difficult. And simon is right, that requiring the other 28 owners to pitch in for the A’s would/could be a non-starter leaving Selig the ugly mess they’re in now.

  40. This isn’t that hard folks. While I personally don’t think the Giants should get anything for the A’s moving to San Jose, the truth of the matter is that they will be compensated for loosing exclusivity to SCCO. Now, will they get a huge bounty that will require all 28be MLB clubs to pay up; I highly doubt it. Again, this will most likely involve a guaranteed franchise value (which a hypothetical future ownership group would have to pay, not MLB) and guaranteed revenue levels through 2017. THAT’S IT! No need to take the A’s through the ringer or obtain ransom from the other clubs.

  41. Sid, Walter Haas took Levi-Strauss from a local niche market company to a worldwide apparel powerhouse. He was a darn good business man. In 1993, every MLB owner including A’s ownership approved the TR for this market which makes me believe that it wasn’t a mistake but a deliberate decision.
    Bartleby, Wolff has reason to lie or tell partial truths, he has a lot at stake here. His claim about the minutes and contingency of the TR that they really hold no weight.
    The Giants don’t want to give up their rights to SCC because they are a valuable asset and they have been part of their business plan since day one.
    There are a lot of large law and VC firms in the South Bay and on the Peninsula as well.
    Tony, what purpose do Dickey, Mattier and Ross and Madden have to help the Giants?
    PJK, the Giants have put themselves into a great position by taking risks and being aggressive in their marketing and media presence and MLB benefits from this. Would it be in the best interest of baseball to hurt them to help the A’s possibly become revenue sharing contributors rather than takers?
    Simon wrote:
    “And obviously the Giants did not need T-rights in order to build a ballpark in Santa Clara County. They only needed the T-rights in order to prevent anyone else from building there.”
    That is a fantastic point. If SCC was shared SCCTR had nothing to do with the Giants ability to relocate to SCC.

  42. @Ted “Wolff has reason to lie or tell partial truths, he has a lot at stake here.”
    .
    No one has reason to lie about things that are readily verifiable. Selig and the other owners can read the meeting minutes for themselves. It’s not like they’re just sitting in a drawer in Wolff’s desk no one else has access to. The fact that he put something readily verifiable in a press release should tell you there’s something to it.
    .
    “His claim about the minutes and contingency of the TR that they really hold no weight.”
    .
    Again, his claim is readily verifiable and if true, factors heavily into the equities of the situation. Whether or not it can be legally enforced, this factors into MLB politics the same way the Giants whining about how much the move would hurt them does.
    .
    “The Giants don’t want to give up their rights to SCC because they are a valuable asset and they have been part of their business plan since day one.”
    .
    Valuable asset, maybe. Part of their business plan from Day 1: BAH! I would bet the pink slip to my car there is nothing in writing evidencing the territorial rights were factored into the Giants purchase price in any way, or that they were a material factor in the decision to buy the team.
    .
    “There are a lot of large law and VC firms in the South Bay and on the Peninsula as well.”
    .
    Yes there are, but this is irrelevant to my question. Although SC County has a larger corporate base, I’d bet a larger percentage of the Giants premium seat customers still come from San Francisco. So why the concern over a move to San Jose but not a new park in Oakland? If the Giants are that vulnerable to having existing customers stolen away, the A’s would presumably presumably do them a lot more damage only 12 miles away in Oakland. And an A’s team in Oakland would do nothing to increase the size of the pie in the way a team in San Jose would, so there it would be a zero sum game.
    .
    In other words, I’m saying the arguments about how much an A’s move to SJ would hurt the Giants are disingenous, and conceal the true motives of the parties advocating them.

  43. @Ted “the Giants have put themselves into a great position by taking risks and being aggressive in their marketing and media presence and MLB benefits from this.”
    .
    And also by exploiting an unearned, artificial barrier on competition that would be illegal in most industries.
    .
    “Would it be in the best interest of baseball to hurt them to help the A’s possibly become revenue sharing contributors rather than takers?”
    .
    Absolutely. Two strong teams is better than one uber team and one crippled team.
    .
    “If SCC was shared SCCTR had nothing to do with the Giants ability to relocate to SCC.”
    .
    I believe you’re getting the history wrong again. If I recall ML’s explanation correctly, SCC was neither the A’s nor the Giants’ territory, but either needed the consent of the other to move there. So in practical terms it was “shared,” although technically it was not.
    .
    In other words, the Giants’ did need the A’s permission to move there, which the A’s graciously gave. For free.

  44. @ bartleby – I have a question for you that is a bit OT. You seem to be pretty cognizant of MLB revenue streams and premium seating, etc. In your opinion why have the Mets suffered in this area since their brand new Citi Field opened in 2009? Obviously they can’t win ballgames but what other factors do think are in play for the ridiculous decrease in not only overall attendance, but in premium seating? I mean the honeymoon period was short-lived. They didn’t even sell out in their inaugural year (they were short nearly 3,000 seats per game that year). In an area like NYC I would have never expected something like that to happen, much less drop from 39k per game to 29k in 3 years at a brand new field. The most shocking thing is that their premium seat sales have dropped 50% in just 3 years. NYC obviously has no shortage of corporate support, wealthy professionals, and a large fan pool in general. In your opinion can having a .465 winning percentage be the only reason for this? I would have expected, in an area as large as NYC, to sell out suites and premium seats for eat least the first 5 years regardless of the product on the field because of the brand new stadium.

  45. Bartleby, Wolff didn’t mention which meeting or what exactly the minutes said specifically. What we do know is that the TR were ratified in the constitution by the A’s and every other MLB owner a few years later. No one has verified Wolff’s claim or put the alleged minutes into context.
    The fact is that the TR were the Giants for all this time as the Giants planned their ballpark and positioned themselves to get to the point where they are at today and that is all that matters.
    San Franciscans aren’t going to go to Oakland to see the A’s just because the A’s have a new stadium when they already have a team in their own town.
    We don’t know that an A’s move to San Jose will result in two strong teams for the long term.
    If SCC was a shared territory and the Giants needed the A’s permission to move there what good would having the territory shared do they A’s, wouldn’t they still need the Giants OK to move there? If the Giants simply needed permission from the A’s, why give the Giants rights to SCC?

  46. @Columbo I haven’t really been following what’s been going on with the Mets all that closely, but I’m happy to speculate.
    .
    I think it’s a number of factors. For one thing, both the Yankees and Mets badly overreached in pricing their premium seating, especially in the midst of a recession. The Mets are getting something like $300 per seat for a large percentage of their club seating. That’s double or more what the Giants get for comparable seats.
    .
    For another thing, as much as it pains me to say it, the Mets are the second banana team in New York. It certainly didn’t help them sustain that “new stadium buzz” that the Yankees opened their new stadium the same year. Then you add three losing years, with heartbreaking exits from playoff contention…
    .
    Also, the Mets suffer from some of the same geographic disadvantages in Queens that the A’s do in Oakland relative to their premium seat customers. If you look at where the corporate money is in New York, Yankee Stadium is more convenient for the vast majority of them. From Wall Street, it’s a 45 minute subway direct to Yankee Stadium, while it’s 55 minutes and a transfer to Queens. Plus, many of the money men in New York live in Jersey, Westchester or Connecticut. Yankee Stadium is on their way home; Queens is way out of the way.

  47. @Ted “Wolff didn’t mention which meeting or what exactly the minutes said specifically.”
    .
    So what? The other owners know which meeting and what the minutes said exactly. If Wolff wasn’t extremely confident that what he’s saying is true, he wouldn’t have put it in a press release.
    .
    “What we do know is that the TR were ratified in the constitution by the A’s and every other MLB owner a few years later.”
    .
    It’s highly questionable that anyone was particularly focused on SCC TR, as they weren’t really relevant to anything that was going on at that time.
    .
    “No one has verified Wolff’s claim or put the alleged minutes into context.”
    .
    I’m sure Selig has, he just hasn’t chosen to share his thoughts with you.
    .
    “The fact is that the TR were the Giants for all this time as the Giants planned their ballpark and positioned themselves to get to the point where they are at today and that is all that matters.”
    .
    We under stand that the Giants have held the TR since 1992. You haven’t put forth a convincing reason why this is particularly relevant to what MLB should do, let alone “all that matters.”
    .
    “San Franciscans aren’t going to go to Oakland to see the A’s just because the A’s have a new stadium when they already have a team in their own town.”
    .
    Casual fans in San Francisco would go to a new A’s park in droves, particularly if they’re winning, just as East Bay fans go to Giants games now. Casual fans are far more important to the bottom line than hard core, “I’ll only go to a team in my own town” fans. On overall attendance, an A’s park in Oakland would be far more damaging than one in San Jose.
    .
    As far as corporate fans, I would agree it will be tough to draw them out of SF to Oakland, which is one of the reasons I’ve said many times that an A’s ballpark in Oakland is not viable. But although I don’t think the A’s could draw enough corporate fans from SF to fill their own clubs and suites, I do think they could draw enough to damage the Giants as much or almost as much as if they build in San Jose. The far greater proximity of Oakland to SF is one reason. Another is the fact that the Giants will remain more convenient than the San Jose A’s for corporate customers in San Mateo county, which frankly (and unsurprisingly) appears to be where they’re drawing primarily from as far as Peninsula/South Bay.
    .
    “We don’t know that an A’s move to San Jose will result in two strong teams for the long term.”
    .
    All one needs to do is look at the demographics for the region to see this is the case. Certainly, no rational person can argue it wouldn’t be the best way to maximize the overall market for MLB in the Bay Area.
    .
    “If SCC was a shared territory and the Giants needed the A’s permission to move there what good would having the territory shared do they A’s, wouldn’t they still need the Giants OK to move there?”
    .
    You’re misstating what I said. As I understand, technically it was not a shared territory. However, since either the A’s or Giants could bar other teams from moving there, and needed the other’s permission to move there themselves, for practical purposes it was a shared territory.
    .
    “If the Giants simply needed permission from the A’s, why give the Giants rights to SCC?”
    .
    As I understand, MLB rules required a team to have TR to a territory in order to move there.

  48. @ bartleby – Thanks for the reply. That’s makes sense.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s