News for 7/3/13

There’s a lot of news during this holiday week. I figured it would be best to drop it all in here. First up, A’s news.

MLB announced today that it has retained John Keker of SF firm Keker & Van Nest to represent baseball in the San Jose antitrust lawsuit. Keker has a long and colorful history as one of the country’s top trial lawyers, and would be a formidable opponent for Joe Cotchett if the suit ever went to trial. Or, as a former partner at KVN, Wendy Thurm (@hangingsliders), put it:

Keker’s first statement about the case description of himself as a frequent defense lawyer is also colorful:

Keker also has his hands full defending Standard & Poor’s in the federal government’s lawsuit over allegedly fraudulent practices. Let the games begin, I say.

Besides MLB announcement, if you were worried that the lawsuit would leave the news cycle, there are new articles from the LA Times and Forbes covering the matter. In other news:

  • Members of the ILWU (Longeshoremen’s Union) are opposing the SSA settlement, which would close Howard Terminal and potentially convert it to a ballpark site. The union’s complaint is that the net effect of the settlement and consolidation is the loss of union jobs. This contention has evidently forced the Port of Oakland to again delay voting on the settlement to July 11.
  • BART’s still on strike. Last night’s announced attendance was 17,273, the smallest crowd since the end of May. Tonight’s a fireworks game with the 4th tomorrow, so crowds should be hefty despite the lack of BART.

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Away from the A’s…

  • The City of Glendale, Arizona, approved a 15-year lease deal to further subsidize the Coyotes NHL club, keeping them in town until at least 2018. The team has an out clause after only five years if they demonstrate they’ve lost $50 million over those first five years. In return, the team will be renamed the Arizona Coyotes. While the NHL continues to own the team in the interim until a purchase is finalized by Renaissance Sports & Entertainment, a new arena operator has been found in titan Global Spectrum.
  • Folks in Seattle were following the happenings in Glendale closely and were ready to pounce if no agreement could be made. Now the Emerald City and Chris Hansen are officially 0-for-2 in attempts to lure franchises to Puget Sound.
  • The City of Anaheim and the Angels are jointly funding a study to determine the cost to keep Angel Stadium up-to-date. Initial estimates have the cost to renovate Angel Stadium at $120-150 million. After the Dodgers spent $100 million to renovate clubhouses and scoreboards, I’d be surprised if the Angel Stadium tab was only $150 million.
  • As the cost to build a AAA ballpark in El Paso rises, the new owners of the franchise backed away from giving $12 million in personal guarantees towards the project.
  • Curbed has a neat pictorial retrospective on the various ballparks that have called New York home over the decades.

And a quick announcement: I plan to be in New York for a few days around August 24-25 Labor Day weekend. I’m still locking down the plans. The Yankees are in town that weekend and the Mets prior to that. I’m working to take in games at both ballparks, and some US Open tennis action if I can fit it in. If you’re there at that time, drop me a line (email, Twitter) and we can have a chat and/or take in a game.

Millionaires need not apply

In 1960, Arnold Johnson sold the A’s to Charlie Finley for $4 million ($31 million today).

In 1981, Finley sold the team to Wally Haas for $12.4 million (also about $31 million today).

Steve Schott and Ken Hofmann bought the A’s from Haas in 1995 for $95 million ($140 million in 2013), followed by Lew Wolff and John Fisher buying the franchise in 2005 for $180 million ($210 million today). If you’re looking for hockey-stick style growth, owning a pro sports franchise is a good bet.

That makes the big news this week out of Sharks camp rather eye-opening. Partners Kevin Compton and Stratton Sciavos are selling their stakes to Hasso Plattner, who has until now been the silent money in the ownership group. A reason cited was ongoing losses sustained by Sharks Sports and Entertainment, totaling $15 million during the 2011-12 season. Assuming that they’re not engaged in accounting hijinks, Compton’s and Sciavos’s individual losses (or cash calls) were probably in the $1-2 million range. While I can’t find a published net worth of either, it’s clear that neither approaches the wealth of Plattner, the SAP head (and Larry Ellison foil) who is worth $7.2 billion, more than the Giants’ Charles Johnson and Fisher combined. For Compton and Sciavos, $1 million is nothing to take lightly.

Plattner even admitted today that hockey teams don’t make money. A man of his wealth can truly own a team like the Sharks and absorb a loss without batting an eyelash. He also owns CordeValle golf course in South County (San Martin), several other golf courses in Africa and other hotels. That doesn’t mean he’ll start going crazy with free agent signings in the future, but he can afford to be less concerned about having to make cash calls when the time comes. The Sharks aren’t hurt by turnout at HP Pavilion. They’re hurt by lagging national and local TV revenues. Both of those can improve over time, but they’re definitely playing a long game, not one where a millionaire coming in might look for 8-10% annual returns. The Sharks’ lease is on the second of three five-year options, the last of which ends in a decade.

It’s that return-poor situation that probably doomed Greg Jamison, the former Sharks CEO who missed today’s deadline to assemble a group to save the Coyotes in Phoenix. That’s despite Glendale, AZ promising an eight-figure subsidy for each of the next 20 years to offset the team’s operating losses. Now that a new City Council has promised to not give away the farm for another Coyotes ownership group, speculation is rampant that the team will once again relocate. Prime candidates include the Toronto suburb of Markham, Ontario, where the City Council approved an arena last night. The favorite may well be Seattle, where an arena deal is in place and an ownership group has deep pockets, especially in the form of Microsoft CEO Steve Ballmer.

If you want to be taken seriously in the business, it’s best to have at least one multi-billionaire on your team to cover the occasional lean times and cash calls. Especially in hockey.

George Gund III: 1937-2013

I never met George Gund. I’ve heard quite a few stories about him. He was a character, an iconoclast, a real fan who just happened to be rich. He lived the kind of lifestyle many sports fans would’ve liked to live, jetting off to tournaments and film festivals and pretty much doing whatever he wanted. To appreciate the man, read these four articles about Gund:

What I’d like to do is tie his career into the fabric of the Bay Area sports world. First, we have to start in Cleveland. Gund was what we’d now call a trust fund baby. He loved sports, film, and classical music. In keeping with those passions, he bought two hockey franchises, married a filmmaker, and sat on the board of an orchestra. He partnered with his brother, Gordon Gund, to buy the Cleveland Cavaliers. George was always the hockey fanatic while Gordon was the basketball junkie. It worked out pretty well for both in the end.

The journey, however, was long and at times quite difficult for the Gunds. After George Gund permanently moved out to San Francisco, he took a minority stake in the California Golden Seals NHL franchise. The Golden Seals were sold by Charlie Finley, who tried and failed to establish his “branding” on the hockey club (green and gold colors, white skates). Gund partnered with Mel Swig, who owned the Fairmont in SF (like someone we know). For various reasons, running the Seals wasn’t working out at the Coliseum Arena. Swig tried to put together an arena deal in SF, but that fell through. The Gund brothers bought the team from Swig and relocated it to their childhood home of Cleveland.

Except that the team, now named the Cleveland Barons, played out in the sticks at the Richfield Coliseum, about halfway between Cleveland and Akron. The idea was to leverage the fanbase from both markets, and it failed miserably. With the Barons and the Minnesota North Stars in danger of folding and the NHL still struggling against the rival WHA, the league decided to merge the two teams. The franchise remained the Minnesota North Stars and would have a good deal of stability for the next decade, including a Stanley Cup Finals appearance in 1981 (a loss to the juggernaut NY Islanders). The Cavs stuck it out in Richfield for over a decade before moving back to downtown Cleveland. The new home was named Gund Arena.

In 1991, George saw his opportunity to bring a team to the Bay Area. The NHL was starting its Sun Belt expansion phase, and it seemed a good time to put a team in the Bay Area. Howard Baldwin, who was already known as a sort of serial franchise owner, was pushing hard for the franchise to be in San Jose. George Gund stepped in to swap the North Stars for the rights to the expansion franchise, which eventually became known as the San Jose Sharks.

The Sharks played its first two seasons at the aging Cow Palace, an arena that was already outdated for both the Warriors and Golden Seals by the mid-70’s. A new, hockey-focused arena deal was in the works in San Jose, with recent transplant and future Sharks play-by-play man Randy Hahn playing a key organizing role. Gund had the opportunity to try the Oakland experiment again even though the Coliseum was small and poorly set up for hockey, or try to get an arena built in SF. He found willing partners in San Jose in Mayor Tom McEnery and numerous business leaders, all of whom were willing to do what it took to put San Jose “on the map”.

With two major franchise moves under his belt, George Gund could’ve been considered a carpetbagger. He didn’t live in San Jose, choosing to stay in SF and build an apartment inside San Jose Arena. (Frankly, I’d do it if I was asked to contribute.) Yet his legacy stands as a key figure who made San Jose major league and cultivated a great, appreciative fanbase – even though the Sharks mostly sucked during the Gund era.

Gund’s story as an owner is similar to that of Wally Haas, Jr. Both were scions of very wealthy families. Both were revered by their respective team’s fans. Both made great efforts to make their teams successful, business of the game running secondary to winning. Both were well known as philanthropists. Both bought teams from Charlie Finley. The biggest difference between the two was the state of their leagues – while MLB was still clearly the national pastime during the 80’s, the NHL had major competition, growing pains, and difficulty carving out a niche as the fourth major North American pro sports league. Haas was 20 years older than Gund and part of the established SF gentry, so I can’t imagine they ran in the same circles. But I imagine that when Gund took the elevator upstairs over the weekend, he was greeted by Haas and Franklin Mieuli. Mieuli handed Gund a cigar and the beverage of his choice, while Haas showed him the way to the lounge. They could talk about how the Warriors and A’s are resurgent, and that Gund got there just in time to watch his beloved Sharks start their new season. You’re home now, George. Relax and enjoy the game.

Comparison of current (2013) CBAs

A few years ago I did a comparison of CBAs. Now that the NHL deal framework is in place, it’s time to update the table. Here’s what we have now.

MLB remains the only major pro sports league in the US/Canada that has no salary cap.

MLB remains the only major pro sports league in the US/Canada that has no salary cap. NHL cap and NBA salary floor figures are for 2013-14 season.

The untold story is league debt. The NFL is far and away the richest league, but it also has a massive amount of debt. In 2008 that figure was $9.5 billion and has only grown with the expensive new stadia in New Jersey, Arlington, and Santa Clara. MLB’s credit facility, which is meant as a short-term solution for teams, had $1 billion going into this summer and issued $300 million more since then. None of the leagues are in jeopardy because of their respective debt positions because in most cases, that debt is backed by long term TV deals. Individual teams are at greater risk due to the lack of revenue stability in weaker markets, which is frequently the case in the NHL.

Luxury tax structures implemented in MLB and the NBA have worked to reign in many free-spending teams. The NY Knicks are under the NBA’s luxury tax threshold for the first time in recent memory, and the Yankees are set to follow suit in baseball.

All of this goes to show that for all of the talk of economic parity in pro sports, there are instances of haves and have-nots everywhere. It’s unavoidable, and thanks to CBAs that will run for as long as a decade, it’s enshrined. Cheers!

NHL and NHLPA reach tentative deal to end lockout (Updated)

Update 12:30 PMMajor deal points from TSN and the NY Times:

  • The revenue share split is 50-50 of HRR (hockey related revenue)
  • While the salary cap remains at $64.3 million, the salary floor is $44 million.
  • An NBA-style amnesty provision has been inserted into the CBA to allow teams to drop salaries to get under the cap. Each team has two amnesty buyouts it can use to cut high salaries.
  • To keep teams from structuring deals that would circumvent the cap, no single player contract can have a year-to-year raise of more than 35%, and the highest salaried year can be no more than 50% above the lowest salaried year.
  • Revenue sharing from rich to poor teams will grow to $200 million. (I assume this is annual.)
  • The 50-game schedule would start January 15. The 48-game schedule would commence January 19.
  • Specifics regarding pro participation in the 2014 Winter Olympics in Sochi, Russia remain missing. Those are to be determined after the CBA is ratified. (My guess – owners will be very restrictive about allowing their players to go, perhaps not even allowing for a season carveout to accommodate the Games.)

Both sides heavily credited federal mediator Scott Beckenbaugh for pulling both sides away from the abyss. Until he guided the negotiations, talks were so acrimonious that it was common for one side to accuse the other of trying to screw them over or hide something whenever a deal point was brought up. It’s much akin to the recent federal fiscal cliff debate, which required both sides to come off hardline stances and let some level of common sense reign. Like the fiscal cliff talks, the actual deal came weeks, if not months later than it should have. Too bad that the people who really paid the price for the lockout are the fans. The hardcore fans will come back, somewhat begrudgingly. Will the casual fan?

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At 5:09 AM EST, reports started to emerge out of New York that a tentative deal to end the 113-day NHL lockout had been reached. It’s not a done deal yet as there are still issues to work out, but apparently the major deal points have been agreed upon. Here’s what we know so far:

  • The CBA will run 10 years, with either side able to opt out in year 8.
  • 2013 schedule will have 48-50 regular season games, all in-conference.
  • Season will start January 19.
  • Individual player contracts are limited to 7 years, 8 for re-signed players.
  • The initial salary cap for each team will be $64.3 million.

That last point is interesting, because that’s the same figure as the 2011-12 cap. That’s a pretty big concession on the players’ part. It’s not clear yet the revenue share percentages will be. Last summer, NHL commissioner Gary Bettman projected the cap to be $70 million or higher. During the most recent negotiations, the league was not budging from a $60 million cap.

If the NBA’s post-lockout schedule is any indicator, the upcoming 48-game schedule is going to be brutal. Expect lots of back-to-back games, maybe even some back-to-back-to-back scheduling. Starting on January 19, it’s extremely unlikely that 48 games can be fit into the remaining 12 weeks of the regular season (4 games a week!). Instead, the regular season should be extended 2 weeks to accommodate more rest, with the potential for a compressed or extended Stanley Cup Playoffs schedule on the back end.

This session was, like other fruitless sessions during the fall, handled by a federal mediator. It is unclear exactly how much influence mediator Scott Beckenbaugh had on the process as opposed to the desperation of the two sides, but Bettman made sure to thank Beckenbaugh during his press briefing after the 16-hour marathon session was over.

We’ll dig into the specifics later in the morning.

News for the End of 2012

It’s a light end of the year newswise, yet there are enough nuggets to put together a post.

  • The A’s are getting closer to a deal to play at Hohokam Stadium, the current spring training home of the Cubs. An announcement is expected to be made in January. The City of Mesa will contribute at least $15 million of the $20 million cost of renovations to Hohokam and Fitch Park, with the team and city splitting costs between $15 million and $20 million and then the A’s paying for the rest. When the announcement is made, I’ll devote a post or two to the transition and the differences between Hohokam and Phoenix Muni. [Arizona Republic/Gary Nelson]
  • For the two spring training games being held at the Alamodome at the end of March, no lower deck ticket can be had for less than $35 (plus Ticketmaster fees, natch). If you have time, watch the Alamo Bowl today and imagine what a baseball game would look like in there. Consider that the first row down the third base line will be several feet above the field.
  • Minnesota’s Hennepin County and the District of Columbia have pulled in greater tax revenues than expected for their respective ballparks. In Washington, city leaders have chosen in the past to pay for other budget items, whereas in Minneapolis they’re paying off ballpark debt early. In the case of Target Field, ballpark debt could be retired 5-10 years early – at long as the Twin Cities doesn’t turn into Detroit or Cleveland in the next decade. Or Cincinnati for that matter. [Minneapolis Star-Tribune/Rochelle Olson | Washington Times/Tom Howell Jr.]
  • Maury Brown estimates that revenue sharing for the 2012 MLB season is around $400 million. If you look at the history of teams and their relative financial status, there are usually 10-12 who constantly are on the receiving (welfare) end, including the A’s towards the higher end. By that measure, I figure that the A’s check for this year has to be in the $40-45 million range. [Biz of Baseball/Maury Brown]
  • AT&T Park is the #1 ballpark in America when it comes to Facebook and foursquare check-ins. What about the Oakland Coliseum? I mean, Oakland-Alameda County Coliseum? I mean, Oakland Stadium? I mean, O.co Coliseum? Um, nevermind. [ESPN/Bill Speros]
  • Take time to read @muppet151‘s request for the Victory Court EIR. It is on point. [TwitLonger]
  • Honestly, I should add an “Oakland dog park” item to the counter. This is laughably ridiculous. [SF Chronicle/Matthai Kuruvila]
  • If you’re not working or too hungover, head to the Exploratorium on Wednesday. That’s the last day in the wonderful Palace of Fine Arts location before it moves to Pier 15. It’s also FREE.
  • The NHL and NHLPA had conference calls to set up further talks. They’re running neck-and-neck with Congress for the most dysfuctional situation right now. Here’s the current NHL proposal. [ESPN/Katie Strang]
  • The Maloofs continue to say that they won’t sell the Kings, but privately say that they would sell for $500 million. [USA Today/Sam Amick]

Unless something major happens, this is the last post of the year. See you on the other side. Until then, have a safe and happy New Year.

News for 12/19/12

Update 9:00 PM - In case you missed it, the good folks at Next Media Animation in Taiwan posted their pithy take on the A’s signing of Japanese shortstop Hiroyushi Nakajima.

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News is fairly light, we’ll have to muddle through somehow.

  • After the summer defeat of multiple bills attempting to revive redevelopment in some form, another has surfaced in SB 33, introduced by State Senator Lois Wolk (D-Davis). The bill’s purpose is to create infrastructure financing districts, in which projects could get infrastructure such as roads, sewers, and other public facilities built. There is no stipulation about building stadia. Regardless, creation of an IFD could be an important piece of the puzzle as some stadium projects require utilities to be moved or other unsexy work.
  • The Dodgers are working with Fox Sports and Time Warner Cable on their ultra-rich upcoming TV deal. The sticking point is the structure of the deal, which has to work within the confines of a federal bankruptcy court’s decision to cap the Dodgers’ TV money subject to revenue sharing at $84 million. To work within the rules, the network may “force” the team to acquire an equity stake in the network, which would allow the network to pay an annual TV rights fee and a dividend. This is a similar arrangement to what the Giants and Yankees currently have with their respective networks. The Angels and Lakers are each paid a flat fee annually, which to date has been the normal arrangement. [LA Times/Bill Shaikin]
  • The cost of the mostly unseen renovations at Dodger Stadium will be $100 million. Key to this is expansion of clubhouse facilities, including the visiting clubhouse. [LA Times/Steve Dilbeck]
  • Robert Bobb may return to Oakland again, this time as the compliance director for the city’s negotiated settlement to prevent Oakland Police Department from falling into receivership. Bobb could potentially oversee all of OPD and report to federal judge Thelton Henderson on reforms being implemented throughout the department. Bobb was last hired by Oakland to fix its budget a few years ago. The position is meant to be temporary. [SF Chronicle/Matier & Ross]
  • Somehow the Oakland City Council had an hours-long discussion over whether to approve a dog park at Astro Park, and adjourned without making a decision. Think about it. A dog park created gridlock and indecision. [Oakland Tribune/Matthew Artz]
  • I don’t normally keep track of international soccer economics, but this was an eye-opener: Premier League champions Manchester City incurred a $158 million loss during the 2011-12 season. $113 million of that was transfer fees to buy players from other teams. That loss was actually half of the $307 million loss in 2012-13. Remarkably, the club is debt free because the owner, oil tycoon Sheikh Mansour bin Zayed Al Nahyan, has funded all expenditures out of pocket since he bought the team in 2008.
  • CSN Bay Area/California’s Brodie Brazil took a tour of the under construction 49ers stadium, which is a third complete.
  • Unable to come to an agreement in the Nats-O’s struggle over MASN, MLB may be bringing in buyers for the TV rights for the two clubs. Remember that the whole point of creating MASN was to placate Peter Angelos when the Expos were moved to DC. Commissioner Selig probably has this mess in mind while considering what to do with the Giants and A’s. [Washington Post/James Wagner]
  • The Rays ballpark plan at Carillon is for all intents and purposes, dead. At least that’s what the developer who pitched the plan says. There currently is no plan in the works for a new ballpark within St. Petersburg, where the Rays are locked into a lease at Tropicana Field. [Tampa Bay Times/Stephen Nohlgren]
  • The Sacramento Kings have to commit to Virginia Beach by January if a deal to move there is to commence. [KTXL-40/Dennis Shanahan]
  • The Edmonton Oilers have a deadline of six weeks from now to reach a deal on a new arena to replace aging Rexall Centre. Like Virginia Beach, Edmonton’s arena plan has a nine-figure funding gap.
  • The Yankees are going with Ticketmaster instead of MLB subsidiary StubHub as its official ticket scalper reseller. They’re also instituting a price floor on resold tickets, because otherwise their normal first-sale gouging looks worse by comparison. [Deadspin/Tom Ley]

More as it comes.