Oakland Sports Forum, Wednesday October 29, 6-8 PM

Oakland has had a slew of mayoral candidate forums and debates, all leading up to the election on November 4. Surprisingly, there has been little coverage of the sports franchises and their impacts, save for the occasional easy-to-dodge question here and there. Thankfully, Zennie Abraham has seen fit to host his own forum. Named the Oakland Sports Forum, the event will be held this Wednesday, October 29, from 6 to 8 PM at Lakeshore Baptist Church in Oakland.

Abraham, who does a lot of video in addition to blogging, will be livestreaming the forum on YouTube as well. If there’s a Game 7, you may have to multitask.

A set of four questions will be posed to mayoral candidates who show up. So far 12 of the 15 have confirmed. Here are the questions:

  1. Wild card question from audience submitted beforehand, asked by that person. (1 min per candidate, then 10 minute conversation period with moderators.)
  2. The Golden State Warriors are working to build an arena in San Francisco. Some say the deal is done and its too late to stop it. But others say that the Warriors belong here in Oakland, still owe Oakland and Alameda County rent that would pay off the bond that was issued to pay for arena renovation in 1998, and should not be allowed to skip town. What is your take? (1 min per candidate, then 10 minute conversation period with moderators.)
  3. The Oakland Raiders and the Oakland A’s need new stadiums. As I speak, Coliseum City is in the early planning stages, but could progress better – financing has not been completely secured. Is Coliseum City the right approach, and if it’s not, then what would you push for as Mayor? The ballpark waterfront proposal? (1 min per candidate, then 10 minute conversation period with moderators.)
  4. The Oakland / Alameda County Joint Powers Authority was formed to provide a government issuing body for the Raider Bonds. Lately, the JPA has been the focus of strained City and County relationships, and I’m presenting that in an open-ended fashion. What, if anything, should be done with the JPA, and as Mayor what will you do to make that happen? (1 min per candidate, then 10 minute conversation period with moderators.)

It’s a good set of questions which should keep the candidates from being too vague in their responses. The responses will be scored – how very sports – and a winner will be announced at the end of the proceedings.

It’s been eight years sense the “Choose or Lose” forum prior to the 2006 election. This shapes up to be a more substantive event than the last one. Maybe there will even be an adult conversation.

Welcome to the Toto Neorest Center

The Warriors and Snøhetta continue to provide sketches and renderings of the planned Mission Bay arena. Socketsite showed them first. The overwhelming impression most everyone gets from these renderings is that it looks like a toilet. A fancy toilet, to be sure, but a toilet nonetheless. The “back” with its two wide supports definitely doesn’t help.

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For reference, here is the product I referenced in the post title.

neorest_600

Toto Neorest

It used to be that most arenas were simple ovals or circles with some sort of façade. No more! In order to accommodate the growing need for auxiliary spaces inside each arena (offices, practice facilities, special hospitality areas, restaurants), just about every new arena has had a side section or wing grown onto it. The “appendage” trend started with Staples Center.

Staples Center with administrative building “appendage”

Architects have to solve the problem of integrating such structures into the arena footprint. Inevitably it all looks like some variant of an oval with something on the back. From the top Staples Center kind of looks like a record player. The new arena in Edmonton (architected by 360 Architecture) looks like a skillet. And then there’s the Warriors’ arena, whose resemblance to a toilet is rather uncanny.

new-edmonton-arena

Rogers Place in Edmonton is warming up for an order of sunny side-up eggs.

A big reason why a fairly up-to-date arena like Oracle is being dumped for a new home is this. And there’s a consistent effort to make such buildings less monolithic, a hallmark of many 60’s-80’s arenas. Different materials, surfaces, glass, and angles are designed to soften the appearance while making it an object of demand (if not desire). Most arenas are utilitarian in nature and don’t bring up the kinds of feelings of nostalgia or place as ballparks do so successfully. Really beautiful, transcendent works are few and far between. Even though Staples is only 15 years old, every time I pass by it I feel that it has aged 25 years.

Perhaps the role of an arena is to be of an era, to represent a time. I only hope that Snøhetta somehow gets rid of the unintentional comedy element in this design. There’s still time to do so.

Reusing an abandoned arena

This post is not strictly related to the Coliseum City EIR, though the ideas within are somewhat germane.

It’s been a few months since the Warriors gave up their effort to build at Piers 30-32 in San Francisco, electing instead to buy land at Mission Rock to the south. So far, the team has received practically zero resistance from the parties that either opposed the waterfront arena or who would typically oppose such projects. From a regulatory standpoint, the arena should go as easily than Pac Bell Park went, perhaps easier since it’s technically not on the waterfront. While it’s too early to call the arena a slam dunk, it’s a good idea for Oakland and Alameda County to start thinking about what will happen to Oracle Arena after the W’s leave.

First, the JPA and the W’s will surely go to court over the $61 million in debt owed on the arena after 2017. Once that’s settled, a series of choices will need to be made. One possibility is to demolish the arena and reclaim the land, about 8 acres worth. Should the arena stay put, more choices will have to be made about what its purpose is and how to best utilize it.

Alternative 2A: Two new stadia + existing arena

Alternative 2A: Two new stadia + existing arena

The market for a third 17,000+ capacity arena lacking an anchor tenant in the Bay Area is not good. The SF arena will be the new must-see, must-book venue in the Bay Area, with arenas in both Oakland and San Jose suffering to some degree. If the arena debt falls back on Oakland/Alameda County, operating costs can run as much as $17 million a year through 2027. With the arena in a prime site within the Coliseum City development, the temptation will be huge for O/AC to cut their losses and recoup whatever they can through redevelopment. Countering that will be pressure from the community and preservationists to keep the arena intact, as it retains significant historical value.

Functionally, the arena is still an excellent venue. Steady improvements have been made since the 1997 renovation, including new club areas and seating options, new scoreboards, and revamped technology inside the building. The biggest problem remains poor circulation, as the main concourse is narrow and cramped. While well appointed, the sideline club areas also have a tendency to feel congested. It also has way too many seats for anything other than a NBA or NHL franchise and should be downsized.

My first suggestion then, is to remove the upper seating bowl. The lower bowl has 10,000 seats on its own, plus another 1,000-2,000 available on the floor depending on configuration. That’s the perfect size for the sort of second-tier arena that every major market should have. For decades, that venue has been the Cow Palace, but the old joint is so antiquated and generally undesirable as an arena that acts avoid it like the plague. Besides the Grand National Rodeo and the usual touring circus, very little happens at the Cow Palace. Therefore it would appear that there is an opening in the market for a 10k arena. It’s the right size for the WNBA and minor league hockey. Most touring concert acts aren’t looking for 15k seats or more, 7-12k may be plenty sufficient. That venue doesn’t really exist in the Bay Area. SAP Center and the forthcoming SF arena will be able to reach that with curtaining or other tricks. The reconfigured Oakland arena should be able to hit that without any visual tricks.

Oakland Coliseum Arena shortly after construction was completed

Oakland Coliseum Arena shortly after construction was completed

You’re probably saying at this point, Okay but what about the upper deck? Glad you asked. The picture above illustrates how beautiful the arena used to be, with its sense of symmetry and different types of geometry. It also shows the amount of available vertical space. That largely went away with the renovation, but would be available again after the upper deck is lopped off. I’ll put out a couple different ways to utilize the space.

Arena lower bowl plus suite levels

Arena lower bowl plus suite levels (Image from Ballena Technologies)

One way is to put a new ceiling on the arena at the rim of the upper suite level. That would require putting in an extensive truss system to support the ceiling/roof and whatever is on top. Once that’s done, the upper level can be finished, leaving a 10,000-seat arena below and an exhibit space above. That exhibit hall could have a much as 100,000 square feet of clear span, column free space. That’s nearly twice as much as the downtown Oakland Convention Center, and more than Moscone West’s main hall. The drooping ceiling would create a weird visual effect for many (most similar buildings have an arched or flat ceiling). Beyond that, the new exhibit hall would fill a need not met by anything currently in the East Bay. The best part is that the arena could be run completely separately below or in conjunction with the exhibit hall, providing additional hospitality and exhibit space, the arena itself largely unchanged. Some new infrastructure would have to be built, such as a large freight elevator and ramps to the revamped upper level.

Old sketch of arena elevations, note drop ceiling

Old sketch of arena elevations, note drop ceiling

Another option is more conventional. In this case the seating bowl would be torn down but the upper concourse would be expanded to the perimeter of the building. There would be no second ceiling above the arena bowl. Available square footage would be cut down to 60,000 or less. Uses would be fairly limited, such as commercial (office) or even retail. If there ever was a natural spot for a movie theater multiplex, this is it. 15-20 screens could easily fit in the space, even an IMAX theater. Again, there’s a need that’s unfulfilled in Oakland right now, and Coliseum City would be well positioned to capture that market with its expected higher-income residents, office workers, and visitors. Cost would be fairly minimal for the JPA, as the theater operator would presumably bear the cost of constructing the auditoriums.

The name “Oracle Arena” is expected to expire after 2016, when the naming rights deal ends and the Warriors have construction underway. When that happens the name will probably change back to the Oakland Coliseum Arena, the venue’s original name. That’s fitting, whether the arena continues as is or is transformed in some manner. The building may not have seen much winning in its 40+ years, but it’s full of great memories and events. If there’s a way to keep it operating that works for the public, it should be explored to its fullest.

Clippers sale: Bubble burst or new reality?

The pro sports valuation bubble officially hit a bursting point last week, when outgoing Clippers co-owner Shelly Sterling accepted a $2 billion bid for the team. The winning bid came from former Microsoft CEO Steve Ballmer.

Confusion reigned as the bids came in fast and furious early in the week, while at the same time Donald Sterling filed a lawsuit against the NBA for $1 billion. Eventually, language was included in the bid that would have lawsuits and punitive measures dropped, including the league’s lifetime ban against Donald Sterling. NBA commissioner Adam Silver and the notoriously litigious Sterlings managed to get done in one week what normally would take three months, and with the Sterlings was expected to get dragged out for perhaps years.

Ballmer, a longtime basketball junkie, had been involved in Chris Hansen’s bid to move the Sacramento Kings to Seattle. With lion’s-share financier Ballmer out of the picture, the prospects for a team in the Emerald City look rather slim for the foreseeable future. Ballmer has said that he won’t move the Clippers to Seattle, mostly because his $2 billion investment would be immediately be devalued upon relocating the franchise.

Even in the 2nd largest media market in the US, the $2 billion price has to be questioned. Sure, the Clippers are due a local boost when their TV deal comes up for renewal in a few years, and a national boost when the league’s TV deals get negotiated at the end of the decade. Those boosts still won’t properly support a $2 billion valuation. Forbes’ January valuation of the team was $575 million, based on $128 million in annual revenue, or 4.5X revenue. That’s already pushing things a bit, since it’s customary to value a team at 3X revenue. To justify $2 billion, the Clippers would have to realize at least $500 million annually, or a 4X jump from their current circumstances.

There’s no chance that such revenue will come from the new TV deals. The Clippers could get an additional $30 million a year from national TV, and another $100-150 million from Fox Sports West. Even so, that boosts their annual revenue to around $300 million, which would support a valuation of $1 billion. Of course, there’s no accounting for the competitive bidding activity that has surrounded recent franchise sales, so $1 billion would have to be considered a baseline, which was the case. Forbes’ Kurt Badenhausen laid out the case for why the team could fetch such a high multiple, but it still doesn’t quite add up.

The Dodgers sold for $2.1 billion, which came about because they too had a local TV deal up for bid. That bidding culminated in the birth of Sportsnet LA, the Dodgers-only regional sports network that will provide the team nearly $250 million per year. As one of the marquee franchises in the Southland along with the Lakers, a $2 billion sale price was considered enormous but not outlandish, especially when the value of Dodger Stadium and the 100 acres surrounding it are taken into account. The Clippers don’t have their own arena, or their own land outside of a recently built practice facility. They are mere tenants at Staples Center, and for the most part get the runt’s pick of dates and times at the arena. While the franchise has experienced a good run of success since they drafted Blake Griffin and traded for Chris Paul, Paul’s going to turn 30 next year and on-court success tends to be cyclical.

Ballmer will take over a team that has had few playoff appearances, let alone division, conference, or championship banners. He’ll look for ways to get the team to the summit, perhaps with an analytics-focused general manager. The Clippers are locked into their lease at Staples for another decade, so no new arena deal is in the offing – not that a new arena plan is emergent. Many in the media are calling for the Clippers name to be changed, its legacy tied to Donald Sterling’s long tenure as the worst owner in sports.

Then again, Ballmer may simply view the Clippers as a way to park $2 billion. Surely there are better growth strategies available, but when you have $20 billion and you have to diversify anyway, why not take on a franchise where you can reasonably expect the franchise growth to outpace inflation, where you’re virtually guaranteed to not lose money? Plus he’ll have a nice toy to play with. Ballmer attended many Sonics games as a season ticket holder when the franchise was in Seattle, and his old Microsoft colleague Paul Allen has long owned the Portland Trailblazers. If you’ve got the cash, it sure beats putting money into something boring like municipal and corporate bonds.

Should a 6X multiple become a new standard for franchise valuations or sale prices, it would grow the valuation bubble to enormous sums. The Warriors would be worth $1 billion, double the then-record 2010 purchase price of $450 million. The trend could quickly take hold throughout the rest of the NBA and spread the other major sports, where the Raiders and 49ers could hit $1.3 and 1.5 billion respectively, and the A’s could reach $1 billion. The market dynamics could be balanced out if a number of owners decided to cash out at the same time, so the leagues will be hard pressed to draw out any new franchise transfers in order to prevent a buyer’s market from breaking out, crazy as that sounds. The simple truth of the matter is that pro sports teams are exclusive and extremely lucrative, whether playing the long game or running the team annually. Budgets are fairly easy to work out and costs are incredibly well-controlled thanks to collective bargaining agreements and pools of centrally-derived revenue. Even paper losses can easily translate into profits at the end due to owner-friendly depreciation rules. You favorite team has turned into a part of some rich guy’s portfolio. The hedge fund guys started figuring that out during the recession, and it has only grown since. That’s the world we live in.

Announcement: Writing for Bloguin network, too

I’m happy to announce that in addition to my regular, roughly every other day posts at this site, I will be contributing to a regular column on the Bloguin network, home of Awful Announcing and a slew of sports blogs. While I don’t have an automatic fit with a particular site, my first piece was published today at The Outside Corner, Bloguin’s general baseball blog. The post is titled, “Can the A’s Survive California’s Stadium Drought?”

First post on The Outside Corner

First post on The Outside Corner

I expect to make contributions weekly, maybe even twice a week or more if time permits. The topic will be largely stadium construction, though I’ll also cover sports economics occasionally. I’ll post links here and immediately on Twitter. Bloguin CEO first proposed the idea last week, and I felt that I had the bandwidth so I said yes. I look forward to taking more of the general sports posts that I used to write more frequently here to Bloguin, where I feel they’ll have a more appropriate home.

As usual, feedback is welcome. Thanks to all of you loyal readers. It’s you who have helped build this site’s creditability so that I could spread knowledge elsewhere.

Sacramento City Council approves arena deal 7-2

They overcame the Maloofs, Chris Hansen and Steve Ballmer, and forces from Orange County. In the end, the City of Sacramento voted to approve the final form of its downtown arena deal, which will pave the way for site demolition and the eventual construction of the ESC, to be opened as early as 2016 (deadline set by the NBA is the start of the 2017-18 season).

Final estimate of the arena (ESC) cost is $477 million, $222 million coming from the Kings and $255 million from the City. The Kings are providing much of the upfront money while the City secures either short or long-term financing. The team has also asked for a short-term, $12 million loan from the City to cover permits and other related expenses. That request was approved as part of the vote. A CEQA challenge may be filed by opponents as early as tomorrow, but it won’t be able to halt construction.

Sacramento is banking on the arena to revitalize downtown, especially as the venue replaces the largely failed Downtown Plaza mall. While regional spending on Kings games and some concerts/ice shows should show at least a modest improvement due to the ESC replacing Power Balance Pavilion, additional concerts should come thanks to the more attractive facility, which should boost ticket sales and ancillary economic activity. The City is rerouting a great deal of parking revenue to pay for its share with the hope that new construction will spring up the same way Staples Center catalyzed downtown Los Angeles.

Most of the country has not seen the economic boom that hotspots like the Bay Area, Texas, and North Dakota are experiencing. Sacramento is see some improvements, though it’s not close enough to the Bay Area to see any major benefits. Hopefully a widespread boom will sustain growth in downtown Sacramento, because if the country hits another one of those bust cycles, the dream of a revitalized urban core will have trouble coming to fruition. Personally, I’d be more impressed if the many Silicon Valley interests who have ownership stakes in the Kings open offices in the Sacramento area. That would really be putting money where their mouths are.

The large public subsidy remains a sore spot for me. I’m a bit of a hardliner on the issue. I realize that the subsidy issue is often considered a value proposition by many. X dollars may be the price required to attract or retain a team. If the public supports that, so be it. It’s happened in Santa Clara, now in Sacramento, and maybe in the future in Oakland. Nevertheless, I’m happy for Kings fans that they’ll be able to see their team locally for decades to come.

 

NBA Commissioner Adam Silver bans LA Clippers owner Donald Sterling for life

Some of you may not be aware that I am every bit as much a basketball fan as I am a baseball fan. It is with that fanaticism that I am proud that NBA Commissioner Adam Silver has banned LA Clippers owner Donald Sterling for racist remarks made on tape that were released over the weekend. There is no place for these kinds of comments in pro sports, let alone the NBA. Commissioner Silver may have only been on the job for three months, but he has already leapt above the other Big 4 commissioners in terms of forcefulness. Thanks, commish.

There will be plenty of time in the future to speculate on the fate of the Clippers, Sterling, or new ownership. For now let’s reflect on where we are as a society in terms of race relations, and remember that sport in its purest form transcends race.