I got your lease right here!
In the world of pro sports, $85,000 is not much money. It barely pays for a month of a rookie minimum contract in MLB. It’s the rough equivalent of one decent section’s worth of revenue at a San Francisco Giants game, or the A’s typical daily parking take. In the grand scheme of things, it’s not much. For the City of San Jose, it might be a very important piece of leverage which the City can use against the San Jose SF Giants.
The Merc’s John Woolfork reports that the City wants to get more financial disclosures from the team before it authorizes $85,000 in maintenance funds for Municipal Stadium. The main thrust of the argument against the expenditure comes from a memo (PDF) jointly written by councilmembers Sam Liccardo and Pete Constant.
Finally, as we contemplate whether to continue subsidizing the rent and repair at Municipal Stadium or any other City facility, we should know the extent to which any related entity is financing litigation costing our taxpayers thousands of dollars. Extended delays caused by frivolous CEQA litigation could stall or prevent the most transformative private economic development project – a privately-financed half-billion dollar major league baseball stadium- in anyone’s memory. It would seem minimally sensible to know whether we’re paying for the bullets with which we’re being shot.
Indeed, why subsidize someone else’s antagonism? It’s not exactly neighborly of the Giants to continually come to the trough while suing the city.
Moreover, the memo shed some light on the sweetheart deal the SJ Giants have been getting from San Jose for years. The team is set up as a nonprofit, which is not entirely unique among minor league teams. Thanks to the Giants being a nonprofit, their rent at Muni starts at $1,000 per month. Think about that. The Giants pay less in rent than most apartment renters in San Jose, or the rest Bay Area for that matter. The Giants contribute to upkeep as part of the lease terms, as does the City. But keep in mind that whatever leasehold improvements the team makes can be a tax writeoff (one of many depreciation items), which makes it the costs only slightly more than trivial. And the nature of the improvements is important: the City has paid for structural maintenance and improvements, such as a new scoreboard, electrical equipment, and lockers. The Giants have paid for value-add items like flat screen TVs on the concourse. Next year, the last of the current lease, the Giants will pay $29,000 in rent, which is a tiny improvement.
The memo also compares the Giants’ deal with the Sharks’ lease at Sharks Ice (next door to Muni) and Team San Jose’s arrangement at the San Jose Convention Center. The Sharks paid $5.5 million over the last two years for capital improvements and debt service for Sharks Ice, in addition to $5.3 million in rent just last year alone at HP Pavilion. With the lease due for renegotiation next year, the SJ Giants will be lumped in with the A’s and Raiders, whose respective leases also expire in 2013. Just as you can expect the Oakland leases to reflect additional contributions from the teams, the same should be expected of the SJ Giants.
After all, the Giants definitely don’t need the nonprofit status they’ve had since the beginning of their existence in 1988. That might have made sense back then, when it wasn’t clear how well the community would support the franchise (Lew Wolff knows a little about that). The Giants are routinely one of the best gate performers in A-ball and have their operations almost completely subsidized by their SF parent club/owners. If the Giants want to keep operating as a nonprofit, per the next lease they should comply with the Council Policy 7-1 (PDF), which requires financial disclosures of nonprofits operating city facilities:
…under Council Policy 7-1, non-profit organizations obtaining use of city facilities at a reduced rent must provide a “certified financial statement, including sources of funding and any constraints applied to funds,” and the “City may require, prior to and during the lease/property use agreement, the submission of such additional information as may be needed.”
It would be the neighborly thing to do. If the Giants don’t like it, well, I’m sure there are plenty of other places ready to offer a sweetheart stadium deal. Then we’ll see what kind of blowback the Giants get for being both leeches and antagonists. The irony is delicious. Oh, and if you think this has no teeth, here’s some very interesting language from Council Policy 7.1:
A below market lease/property use agreement may be terminated by the City at any time for any of the reasons established in the lease/property use agreement…
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The City will not enter into leases or property use agreements at below market rates to organizations engaged in political activities or to religious organizations that would use the leased premises to promote sectarian or religious purposes.
Can the Giants’ efforts to derail Cisco Field be called political? Not overtly, but there’s something there.