The Knauss Plan, for now

Clorox CEO Don Knauss has been making the rounds, first on KQED yesterday, then on KNBR this morning, and finally on The Game during the lunch hour. All three are worth consuming, so if you haven’t done that yet, get through all three links, then come back and read the rest of this post. Cool?

Okay. Knauss was very consistent with his messaging, which should be no big deal for a CEO of a high profile public company. The bullet points from his pitch were these:

  • Knauss and other East Bay business interests would like to meet with Lew Wolff and perhaps MLB to discuss options in Oakland.
  • If current ownership (Wolff/Fisher) continues to believe that there is no shot in Oakland, Knauss has put together a potential ownership group with members in the East Bay and others in SoCal that could buy the team, keep it in Oakland, and build a ballpark.
  • The group has identified three sites in Oakland. The preferred sites are the two on the waterfront: Howard Terminal and Victory Court. The Coliseum complex is the third site, though it is not “preferred”.
  • Financing for the stadium would be patterned after the model the Giants used to build AT&T Park. This includes the selling of seat licenses.

During The Wheelhouse, Mychael Urban pressed Knauss for answers about plan specifics and why the group has never directly contacted Wolff. Knauss replied that in the first case, he wanted to at least until after the May owners meetings (though he didn’t say anything would be released at that point), and in the second case, he “wanted to respect the process” MLB has put forth with the commissioner’s panel and so forth.

Well then, how does one go about making it work as the Giants did in China Basin? Thankfully, some very smart economists - John M. QuigleyEugene Smolensky, and Stephen J. Agostini - have gone to the trouble of diagramming the process.  The flowchart below comes from a paper titled Stickball in San Francisco. It’s better known as the San Francisco Giants’ case study in the book Sports, Jobs, and Taxes by noted sports economists Roger Noll and Andrew Zimbalist. Ready? Here’s the secret recipe:

Step-by-step instructions on how to follow the Giants' plan. Click for a larger version.

See? Easy peasy, no sweat right? Sure, there are a few things that are different, such as the need for a ballot measure. Oakland has long claimed that it doesn’t need one. That claim originated from two theories: that either Oakland could leverage redevelopment money or the powers within the Coliseum Authority (JPA). The latter still stands technically. The former? As long as Oakland’s pledge to take care of costs to put the site together stands, and those site costs keep rising (Victory Court was at last count $250 million), the Mayor and City Council are going to have an extremely difficult time convincing the voters that they shouldn’t vote on it. Even in the Coliseum’s case, going without a vote is inherently very risky because many of the people on the JPA board are standing office holders, such as Ignacio De La Fuente and Scott Haggerty. The stench of the Mt. Davis deal still hangs thick and heavy over the Coliseum, and the Authority is having trouble refinancing existing debt at the complex. Does anyone honestly think a $2+ billion megaproject like Coliseum City won’t go to a vote? The project is calling for its own streetcar! Maybe Knauss will don a Harold Hill costume the next time he does a press conference.


View Larger Map

Then again, Knauss expressed a preference for one of the waterfront sites. We know that Victory Court is incredibly expensive and that some current landowners aren’t exactly going to roll over for a ballpark, even though they are great Oakland supporters. Maybe it’s time to revisit Howard Terminal one more time. It’s difficult to see how the Howard Terminal site would work. Matson, one of the key corporate supporters at yesterday’s press conference, consolidated operations at HT several years ago. There’s no readily available place to relocate Matson should they give up HT. I suppose it’s possible they could give up a portion, say 15 of 50 acres, in exchange for some kind of break from the Port. Then it just be a matter of dealing with the nearby power plant and prepping the site, which would require completely new pilings/foundation work (just like AT&T Park). Judging from the price tag for SF’s Piers 30 & 32, the cost would be around $80 million to start plus whatever the price is to compensate Matson. Whatever that total is, it’s probably cheaper than Victory Court. (Personally I’d pick HT just because of its proximity to Beer Revolution, but that’s just me.)

Finally, there’s the matter of seat licenses. Knauss and his partners think there’s a market there. Lew Wolff has said there isn’t a market from the beginning. Who’s right? I’ll defer to Wolff, who has access to the season and advance ticket sales rolls and has a pretty good idea of what people are willing to pay for tickets and premium offerings. The Giants’ $255 million financing package included $75 million from 15,000 charter seat licenses. That’s a $5,000 average upfront payment (available in installments, of course). Is the market really there as Knauss claims? Consider for a moment that the 49ers are selling seat licenses right now. The Raiders, if they get a new stadium built at the Coliseum, will require their own seat licenses. They may also be in the mix for whatever venue the Warriors cook up. The A’s would be entering the fray with, if using the formula the Giants used, 20% of the ballpark cost, or $100 million of seat licenses. The A’s don’t have the Giants’ 25,000-strong season ticket roll, or the reputation of having a large number of premium ticket buyers (Green Collar Baseball, anyone?). So you’d have three, possibly four teams selling seat licenses along with more expensive tickets. That’s a good way to oversaturate the East Bay, a market which has historically shown trouble maintaining solid fanbases unless the teams are ultra-successful. These financing terms don’t work unless great support can be maintained through thick and thin, or at least if some of the load can be sloughed off to corporate interests. Otherwise someone has to make up the shortfall, and as we saw from the OFMA debacle, the results can be disastrous. MLB and Selig know this, and they won’t be impressed just because someone says “we can work it out”. Selig will want to see pledges, upfront payments, real tangible proof that seat licenses can be supported and that there won’t be a shortfall that drags down the franchise. The CBA has a provision that the A’s have to come off revenue sharing by 2016, unless they’re still at the Coliseum. MLB is not going to approve a plan that creates huge risk for the team and causes them to stay on revenue sharing even with a new ballpark.

Perhaps the best predictor of how portable the Giants’ financing model is comes from a 2002 AP article which quotes former owner Peter Magowan and  Rob Tilliss, the JP Morgan consultant who put the deal together. Magowan:

“You cannot expect a private ballpark to be built in Cincinnati or Milwaukee, there’s not the economic base there. It’s not the Silicon Valley,” he says. “And we couldn’t do it today. We were very lucky in our timing we had low interest rates and a very good economy.”

Tilliss:

“It definitely is not a one-size-fits-all kind of model.”

Knauss’s argument is that economically, Oakland is closer to San Francisco or Silicon Valley than it is to Cincinnati or Milwaukee. I find that hard to believe.

138 Responses to The Knauss Plan, for now

  1. Tony D. says:

    Maybe someone should have asked Knauss why he moved most of Clorox out of Oakland to Tri-Valley (ouch!). Sure seems like back to the future with all this Oakland waterfront talk. Oh well…next topic.

  2. eb says:

    Are you of the opinion that a handful of companies in Giants “territory” could not be siphoned towards a new stadium in Oakland?

  3. Tony D. says:

    @eb,
    Wolff and MLB are most likely of the opinion that (thinking long term revenue) its better to have one of its franchises milk the untapped potential of Silicon Valley / San Jose rather thank drink from the same well as the Giants. Remember, only 15% of SVLG companies do business with the Giants.

  4. Marine Layer says:

    @eb – Perhaps. The Giant brand is as strong as it’s ever been. If the two teams had similar records on the field, what would convince a SF business to support the Oakland team? Cheaper tickets? A view of SF? Those seem like minor selling points.

  5. eb says:

    “Remember, only 15% of SVLG companies do business with the Giants.”
    Exactly, so 85% of SVLG wouldn’t do business with a new beautiful Oakland stadium? How about 10%of that 85%? No sizable group of businesses would be interested?

  6. dmoas says:

    @eb I’d guess that a portion (a small one) does do business with the A’s now. I think the problem is that if you want to get the big money folks in the SVLG you’re going to struggle. Because of the distance and the traffic corridor, I think it would be a stretch to take on a 10% *gain*, at least with comparable dollars to the Giants. More importantly though, getting (probably) less than half of the general area they’re in and a small percent (even say 15%) of that south bay chunk i think you’re still going to fall short of what you’d need. At best it’s an extremely risky proposition to gamble on that money being there and the potential fall out if you fail. That’s not to say SJ isn’t risky too, it’s just less risky financially with more breathing room. In business it’s generally a bad move to take a high risk/low reward proposition, which is how Wolff sees Oakland.

  7. Dan says:

    Hey if Knauss can do it more power to him. I’m hesitant to believe it given that there will likely have to be an Oakland contribution which I just don’t see as forthcoming since the city is nearly broke and a vote would likely be required to get public funding. Not to mention the plethora of other issues ML raises. But if Knauss and Co. can actually make a go of it maybe new ownership wouldn’t be a bad thing. God knows Wolff hasn’t exactly been a very good owner. But talk is cheap and so far, like always, I hear a lot of talk coming out of Oakland rather than anything tangible, but maybe, just maybe, Knauss is that white knight the Oakland-Only crowd has been waiting for. Time will tell. Until he proves otherwise however I still see this as nothing but a big cock block.

  8. Marine Layer says:

    @eb – SVLG directly supports a team in SJ. Oakland interests and the Giants are actively blocking that effort. Do you expect many of those companies to say, “No hard feelings, it’s just business. Here’s a check”? Those companies can spend their money elsewhere, like at HP Pavilion, 49ers, Shoreline, or the Warriors. If the ballpark is on the Oakland waterfront it’ll be even further away from those companies than before. That’s not the makings of a great sales pitch.

  9. Tony D. says:

    @eb,
    Like it or not, all we know is that the SVLG wrote a letter to MLB stating their support for the A’s in San Jose. They did not do the same for Oakland. Perhaps some SV companies might support the A’s in Oakland, but as many with the team in downtown San Jose? Probably not.

  10. dknight.007 says:

    Knauss moved Clorox to Pleasanton from Oakland, because he went to a newer, bigger and cheaper facility.

    Smart move by him.

    If Knauss and his investment group is serious, then they need to be on the same page as developers and other on the site. Right now Coliseum City is the priority, at least to keep the Raiders and Warriors.

  11. dknight.007 says:

    IF the A’s team does move to SJ, then they better come up with a better design than the existing Cisco Field in SJ plan. The Cisco Field design for the Fremont ballpark was far better than the existing design for the SJ ballpark IMO.

  12. Marine Layer says:

    @dknight.007 – You’ve made that point in every thread no matter off-topic it is. We get it.

  13. dknight.007 says:

    marine,

    You have a revised design for the SJ ballpark by any chance? If so, I would like to see what you can come up with. Also, any potential designs for the Coliseum City stadium and ballpark?

  14. dknight.007 says:

    Marine,

    BTW, most of the stuff we have been discussing for two years has been said over and over again as well.

  15. Marine Layer says:

    @dknight.007 – I’m going to start deleting your comments if you stay OT. If it’s repetitive to you, don’t read it. It’s not like I’ve spent a couple hours slaving over 1200 words only to have it willfully ignored and diverted.

    BTW – No, I haven’t seen new or updated designs for either. When I get them I’ll post them immediately. Then I’ll be all over the commenter who goes OT about economics or attendance.

  16. pjk says:

    So what happens if Wolff sells the team to Knauss and, lo and behold, in 5 years from now, Knauss finds out Wolff was right all along and Oakland won’t work? Here’s what happens: “We gave it our best shot and just couldn’t make it work. We’ll be selling the team to investors in San Antonio.”

  17. Marine Layer says:

    @pjk – Knauss won’t get that chance. Selig’s panel wasn’t put together just so the team can be handed to someone with an iffy plan. Whatever Knauss and his partners are planning, it has to be rock-solid and airtight.

  18. mrsteve5150 says:

    I’m not a pro SJ, Fremont or Oakland. I’m a pro new ballpark in the bay area guy. Heck, I’m from Vacaville and get to commute wherever they relocate. The only thing I heard from Knauss was how to get a park done. I didn’t hear one word on how to make the A’s financially independent so they can compete. A ballpark would be great but without a team it’s not really that cool.

    What really gets me is the timing of this whole thing. Where was this coalition when the A’s were winning, in the playoffs and some corporate sponsorship could have really helped? Where was this coalition when the A’s seriously started looking for a new home? Where was this coalition when Fremont was almost a done deal?

    I recall reading somewhere that B.S. (how those initials are so appropriate) wanted no obstacles in the way to San Jose. There is the lawsuit in S.J. which is a shill group for the Gnats. Then the mysterious interested parties in buying the A’s (one, another shill for the Gnats) and now this guy. And this comes on the heels of the mayor talking with Gnats ownership. Is it me, or is there a common theme here?

    I also remember a comment by the Gnats that it might be in the best interest for the A’s to look outside the bay area. And there is the comment by B.S. about caring more about baseball than self interests.

    I think it is clear where the problem for the A’s is. And it is not Wolfe/Fisher.

  19. eb says:

    @ML I would imagine those business or at least some of them would not carry a personal grudge. If a beautiful on the water venue is built, I’m sure there would be interested parties. Especially if the A’s are a competitive team or the park was the new trendy place to be. I just can’t imagine it would be such a hard sell for professionals to make. I mean, a new yard comparable to At&t or Wrigley or whatever, could change the whole aura around the A’s to something we’ve never seen before. Oakland is lacking in some areas, but it does offer potential sites that are incredibly appealing and exciting.

  20. thisplanetsux says:

    “Where was this coalition when the A’s were winning, in the playoffs and some corporate sponsorship could have really helped?”

    The A’s owners had long since given Oakland the finger by the 2000 season. There were efforts back then to try and work on a stadium deal with Steve Schott, but he was not interested, and was in fact already in talks with Santa Clara. The topic of territorial rights was already an issue. Wolff was only brought in to ratchet up the intensity of their Get-Out-Of-Oakland agenda, no other reason. Let’s quit pretending that either the Schott or Wolff ownership groups ever lifted a finger to get a ballpark built in Oakland. These 17 years under those two ownerships are the reason there is no new ballpark for the A’s. They’ve been gunning for downtown San Jose all that time, and still, nothing to show for it.

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2001/03/22/MNE233126.DTL

  21. Marine Layer says:

    @eb – I don’t see a compelling reason to choose Oakland over SF in your argument. SF already has a gleaming waterfront ballpark, what is Oakland offering that’s a differentiator? There should be something novel about Oakland’s approach that makes it stand out.

  22. Marine Layer says:

    @tps – All that and you didn’t answer the question, choosing to pull out yet another talking point. The answer is that they were working in stealth mode and getting ignored by Selig.

  23. GoA's says:

    @tps- gunning for SJ and nothing to show- how about an agreed upon site, land, certified EIR, $120M naming rights deal, bs actively negotiating with the gints on TR…. And what does Oakland have to show during this same period- absolutely nothing- and don’t blame that on Wolff- SJ pursued lots of things while not having any idea if they would end up with the team- Oakland has the team and chose to do nothing!!

  24. Columbo says:

    @ ML – “…what is Oakland offering that’s a differentiator?” IMHO, it would be probably 15 or more years newer. Assuming it’s planned properly, I think it would be easier transportation for fans. I work in the city not far from AT&T and, often, on foggy days the fog does not spread across to Oakland so I would add better weather and, thus, better views. I saw an image today that someone put together of a JLS ballpark with the centerfield view pointing directly toward the downtown skyline. One could imagine that views from the upper deck of the RF side would be that of downtown SF and the bridge; from LF it would be the Oakland hills. Lastly, again if it’s planned properly, the location itself perhaps would offer the amenities, like bars, clubs, restaurants, shopping, etc. Not sure if I can post a picture of this JLS illustration but it does look cool.

  25. letsgoas says:

    would like to see it too. i remember it was posted here a few years ago how a park location in or around jls would look like but without the details explained above.

    http://newballpark.org/wp-content/uploads/2009/12/oak-aerial-1024×691.jpg

  26. thisplanetsux says:

    GoAs, I was not aware that Oakland had the team. The team belongs to Wolff/Fisher, and they’ve said categorically for six years now, “It can’t be Oakland.” And I doubt you’re incapable of reading between the lines to know it is was anything more than code speak for that same thing prior. I don’t know what you gain from pretending otherwise.

  27. GoA's says:

    @tsp- and the gints and lb have said n to SJ for many more years than that- and did that stop them from moving forward? Nothing but excuses and finger pointing by the city that has screwed over the A’s consistently- it isn’t Schott’s or LW fault- it’s bumbling Oakland politicians who have never given a rats ass about the A’s- and still have no plan in place– and still no preferred site- wtf???

  28. MrSteve5150 says:

    @tps, I think you missed my point. This conflict between the A’s and Oakland/Alameda has been going on since 1968. My point, and perhaps not clearly articulated, was I question the sincerity and commitment of this coalition. After all these years they show up now, when it appears San Jose is in play? Again, where was this commitment from this business coalition when the A’s were winning or when the A’s were off to Fremont? And what kind of commitment have they really made?

    Naming rights at 120 million and construction through PSL at 200 million. That’s 320 million from corporate money. And these guys bring less than 1% to the table as a sign of good faith? I had to more than that percentage on my home as a sign of good faith. Someone can correct my math but the point is made. These move by Knauss and Oakland is just more smoke and mirrors stuff that is even evident in the article you link.

  29. Marine Layer says:

    @Columbo – I think I’ve seen this somewhere. I can’t remember where.

  30. Stomper00 says:

    wow that stadium idea in Oakland looks great!!! I like the name in center field too, “Oakland Tribune Field”…one can dream i suppose. But either way, this whole mess needs to be resolved soon!!! eff the giants (ownership group, not so much the fans.)

  31. Columbo says:

    @ ML – Thanks for posting it. I’ve seen different renderings over the past few years but today was the first time I saw this one with the skyline in the background.

  32. thisplanetsux says:

    Could use a little more foul territory.

  33. dknight.007 says:

    http://newballpark.org/wp-content/uploads/2012/05/NewOaklandStadium-sm.jpg

    Looks nice….more work needs to be done to that design, specifically in left field. Love the low fence in right center.

  34. eb says:

    I’m sure the structure would be different, but the views would be pretty awesome.

  35. dknight.007 says:

    Home play backstop is too far back as well. I think left field grandstand can be opened up more a bit. The scoreboard takes too much space.

  36. dknight.007 says:

    Personally, I would much rather see a ballpark in JLS and than in Victory Court or even Howard.

    At least JLS already has most of the necessary infrastructure/restaurants and bars. Victory and Howard areas would need to be completely redeveloped as would Coliseum City.

    After JLS, Coliseum City should be the 2nd choice for an A’s ballpark in Oakland IMO.

  37. dknight.007 says:

    This is how the ballpark in Fremont would have looked like. Love the pool party area on the top in center field:

    http://imgs.sfgate.com/c/pictures/2005/08/13/ba_ballpark_112_pc.jpg

  38. dknight.007 says:

    Another great idea, put in the back burner for a new ballpark in Oakland:

    http://www.brucewagg.com/blog/oakland-as-proposed-ballpark-near-jack-london-square.html

  39. letsgoas says:

    that img from the chron website archive was that of the coliseum north plan back around 07 i think that was shot down quickly.

    this was the fremont design
    http://www.ballparksofbaseball.com/future/AthleticsBallpark.htm

  40. Marine Layer says:

    @dknight.007 – Where would you place a ballpark in JLS exactly? It’s largely built up. There’s the JLS West site, but that was ruled out a while ago.

    Also, the last thing anyone needs is to bring up all of these old sites that have been killed a long time ago (Uptown, O29). It only causes confusion. The Knauss group is looking at three sites. Let’s stick to that.

    The image on Bruce Wagg’s site is Howard Terminal.

  41. Pudgie says:

    @dknight.007
    .
    That was actually the proposal for the ballpark in Oakland, not Fremont.
    .
    http://www.stadiumpage.com/stpages/oakland05.html

  42. eb says:

    A swimming pool should never be in a ballpark, IMO. The Giants Corona “beach” area is bad enough.

  43. letsgoas says:

    where would the image of that park above be built at? howard terminal? wouldn’t you want a park near the estuary to actually face the waterfront so intead of looking east the park would be pointed towards southwest.

  44. thisplanetsux says:

    uptown is badass first fridays:

    http://oaklandartmurmur.org/

  45. Columbo says:

    @ letsgoas – I personally do not think that picture above is HT. The orientation to the Trib Tower is all wrong if it was from that location. I think this artist put this park somewhere either northwest of VC (where I don’t know) or across the estuary in Alameda. I say this because, if you look really closely you can see the entrance to JLS beyond CF. So this image is definitely west of 1st street and possibly across the estuary. I say this because if it is where I think it is, there is currently a marina there and the park would extend at least 50 feet out into the estuary. In theory it would be a great location but, since I’m not an engineer, I have no clue how you would create a “solid ground” over the existing water/marina. I have no clue how deep the water is there. Moreover, I’m not sure how easy it would be to move an entire marina somewhere else plus any businesses in the area. Personally, though, I do like the idea of a CF view toward the skyline with the RF having views of SF/Bridge and LF with views of the skyline and the hills.

  46. letsgoas says:

    you’re right that location is much more south than howard terminal, probably just north of where the ktvu studios are.

  47. letsgoas says:

    howard terminal post at this blog back 3 years ago at this time.
    http://newballpark.blogspot.com/2009/05/oakland-hinting-at-howard-terminal.html

  48. JL says:

    @Columbo/letsgoas

    Whoever made that render probably photoshopped their stadium onto a photo similar to this:

    http://weddingmapper.s3.amazonaws.com/assets/photos/0/56/53634_l.jpg

  49. Burton says:

    I think when Knauss uses the statement the he’s going to “respect the process” in regards to Selig’s panel he’s being disingenuous. This process doesn’t involve public negotiations through third parties, he’s trying to bully his way into the process. That’s fine. His outlining of financing a ballpark in Oakland is not. My biggest fear (outside of the team leaving) is that the A’s become the Pirates of the west, bogged down with a ridiculous mortgage. My “fan experience” is based on a winning product, not wider concourses. I do wonder however, if Mr. Knauss isn’t so much trying to save the A’s for Oakland, as much as marketing himself, his group as future owners of some other pro sports team down the line. What better way to be taken seriously, than having put together a plan to finance a stadium; good plan or not. As far as Selig even giving even one thought about this, and please correct me if I’m wrong here, was it not Bud Selig who told Lew Wolff back in 2008 or so that if Fremont fell through that he should begin discussing ballpark plans with San Jose?

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