Category Archives: News
Michael McCann’s Sports Law Blog, which has been keeping track of the legal maneuverings in the MLB-vs.-San Jose case, has uncovered a bit of a bombshell (hat tip Nathaniel Grow). From the most recent filing (defendant’s section):
In fact, MLB denied the Athletics’ relocation request on June 17, 2013, one day before this lawsuit was filed. On that date, Commissioner Selig formally notified the Athletics’ ownership that he was not satisfied with the club’s relocation proposal. The sole basis of Plaintiffs’ only claims that remain after the MTD Order—the purported failure of MLB to render a decision within the initial two-year term of the Option Agreement—is therefore meritless.
MLB is arguing that the land option agreement the A’s and San Jose entered into in late 2011 is invalid, making the case moot. To back up its claim, MLB cites this heretofore (and still) unseen letter, the ongoing Stand for San Jose-vs.-City of San Jose lawsuit, and the lack of a public vote. To be clear, that last part is because Commissioner Bud Selig discouraged a vote way back in 2010 (which to this day I consider a strategic error on San Jose’s part). MLB wants to keep the letter confidential and doesn’t want to show it unless the plaintiffs agree to confidentiality.
Of course, that’s the opposite of what San Jose wants, because they’re pushing for complete discovery. From their filing:
In fact, Defendants’ sections of this CMC Statement are filled with Assertions of fact. This Court should order immediate commencement of discovery so that these “facts” (and others) surrounding the Athletics proposed move to San Jose and their reasons for entering into (and then not exercising) the Option Agreement may be explored.
MLB is fighting hard to avoid any degree of discovery.
Timing is the issue here. MLB argues that Selig sent the letter 19 months after the option agreement was signed, and that 19 months was reasonable timing for a decision, even though MLB started formally addressing the ballpark issue and San Jose two years earlier. Did San Jose file the lawsuit upon receiving the letter, or did MLB send the letter preemptively, knowing that the lawsuit was coming? I knew the lawsuit was coming the week it was filed, and I figure MLB did too. Addtionally, what other communications could be brought up that could contradict the letter?
It is of course possible, and perhaps even likely, that MLB would reconsider the move [to San Jose] in the future.
While we’re left to wildly speculate on everything, let’s consider the idea that MLB doesn’t like San Jose’s proposed contribution of land-and-infrastructure, and wants more than that to seal the deal. And understand that all the activity we’re seeing is happening because of the lawsuit. Everything should be understood within the context of the lawsuit. For better or worse, that’s where we are. I won’t be in town next Friday for the hearing, but I’m sure it’ll be juicy.
It’s been awhile. Today’s unusual joint meeting of the Oakland City Council and the Alameda County Board of Supervisors was the first such joint session in several years. It’s also been more than a couple of years since I wrote a post titled The adult conversation, which implored Oakland (and Alameda County) to start talking about what it will truly take to keep the pro sports franchises in town, and what it might mean to lose one or more of them. After watching today’s proceedings, I can say that we’ve had our first session, one of many to come.
If you were an unabashed supporter of Coliseum City, things didn’t get off on the right foot as AlCo District 5 Supervisor and Board President Keith Carson demanded to know the state of the Coliseum’s outstanding debt. Oakland City Council President Pat Kernighan tried to reel the discussion back in, but Carson insisted, and eventually he got what he wanted – a plain telling of debt for both the stadium ($113,790,000) and arena ($90,290,000) by County Auditor Pat O’Connell, who also happens to be the JPA’s auditor. That’s $200 million combined for the complex, though that figure goes down every year thanks to a $20 million annual debt and operating subsidy paid by City and County. Carson emphasized that there will be no future project if debt isn’t addressed first. The debt may prove to be a structural problem, since whatever public borrowing has to be made for infrastructure or other uses will be on top of or consolidated with the existing debt. The City and County want the teams or the private development group, BayIG, to cover that debt as part of the plan. Incidentally, Carson’s district covers Berkeley, Albany, and much of Oakland.
The debt talk lingered for 10 minutes, then Kernighan got the discussion back on the rails. Assistant City Administrator Fred Blackwell gave an overview of the current situation, with the renewed leases for the Raiders and A’s, their desires, and the Warriors’ plans. Blackwell said that the funding gap for the Raiders stadium, which he called a “sunken cost,” was $400-500 million after the Raiders’ contribution. AlCo Supe Scott Haggerty cast doubt on the viability of the three venue configuration of Coliseum City, noting that so far only the Raiders have been willing to listen. Haggerty suggested that the most effort should be put towards the Raiders’ venue because of that reality, and that the A’s, who don’t even have a set date for their Phase III ballpark, could easily show that information to MLB and say, “we’re not even on the radar.” CM Desley Brooks, a previous JPA Board member, expressed doubt in a different way, citing the need for multi-use venues instead of single-sport venues. Brooks was also concerned that the project wouldn’t pencil out, asking for a pro forma for that configuration (and others, presumably).
Next up in the presentation were two members of Oakland’s Office of Neighborhood Investment, Larry Gallegos and Gregory Hunter. Gallegos gave more detail about the project’s phases and master plan. Due to the photocopied quality of the images, I skipped over this slide initially. Upon closer inspection, something needs to be explained further.
The top image, Phase I, shows an outdoor football stadium, some ancillary development, and outlines for the “spine” of the project and the ballpark. The next image shows a dome on top of the stadium and the spine in place. Hold the phone – is the dome part of Phase II? There’s no other mention of a dome anywhere else in the presentation, nor was it brought up during today’s session. That dome, assuming that it is part of Phase II, is no trivial matter at $300 million to construct. Oakland Mayor Jean Quan has been pushing for a dome, and while the interest in holding conventions and other types of events is understandable, it seems like this rather important detail was merely snuck into the preso with no explanation whatsoever.
Discussion then centered on the phases and once again, the venue configuration. Blackwell admitted that if only the Raiders’ stadium were built, ancillary development potential may be limited as few examples of such a plan were found. The limited number of football game dates contributes to this problem. CM Rebecca Kaplan, a staunch supporter of Coliseum City, talked up the need for more density within the project as that’s where the payoff is. Of course, that brings to mind the question of whether Coliseum City is even feasible if it never goes past Phase I. In addition, how dependent is the project on Phases II and III to provide enough funding for everything? Those questions won’t be answered until the spring.
Mayor Quan repeated her usual hackneyed sports metaphor and pushed for more information. If that’s the case, why did this meeting occur because of a letter from Carson to the City of Oakland? Quan, who hastily made her remarks before heading to the airport, is supposed to be the champion of this project. Yet Kaplan is clearly the more informed, more passionate advocate. Someone desperately needs to grab this thing by the reins and control it, as it’s considerably late for all this confusion given the very tight timeline imposed on the City and County. CM Libby Schaaf was silent during the session, just hours after she filed papers to run against Quan for mayor in 2014.
Hunter talked about the goals and key elements of the project, one of which is the property transfer element. It’s unclear what that means. City has indicated in the past that it’s not willing to give away land, and may not even be interested in selling land. Unfortunately for them, the only valuable resource the JPA has at its disposal is land. Discussion of this topic was deferred to the DDA, though it will clearly become a hot topic before then.
Members of the public spoke, followed by questions and remarks by members of the City Council and Board of Supervisors. General bewilderment gave way to soapbox speeches. CM Larry Reid, already on the outs with the JPA, claimed that Quan took credit for his concept while calling Coliseum City “insane.” Supe and JPA board president Nate Miley asked if there had been an appraisal on land the JPA owns. Hunter said it wasn’t. Miley expressed frustration that developer BayIG hasn’t put down earnest money to kickstart some of these studies. Blackwell said that only recently the agreement was finalized in which BayIG (Colony Capital & HayaH Holdings) replaced Forest City as the investor group. Miley then dropped a mini bombshell when he asked if the City could buy out the County’s half of the JPA. Blackwell laughed it off, replying that the City didn’t have the resources to pull off such a move. Nevertheless, it’s quite telling that Miley could even suggest that the Coliseum is such an albatross that the County would be fine divesting its share. There’s also a situation in which the County could buy the City’s half. Judging from the across-the-board sentiments from the Supes, that seems even less likely.
- District 2 Supe Richard Valle: “Gifting of public funds to any franchise is not part of my political framework.”
- There was continued confusion over Howard Terminal. Blackwell mentioned that the Port of Oakland has to explore all possible maritime uses before moving to non-maritime uses like a ballpark. That would explain why a recent RFP for Howard Terminal makes no mention of a ballpark.
- There was no discussion about how long the teams would be displaced or where they would play if Coliseum City came to fruition.
- Blackwell mentioned that the market study, which is key to determining the project’s feasibility, would be delayed 30 days.
- I tweeted that the football stadium deal could come by the end of the 2014 NFL season, but that seems like a long ways away considering the amount of work that has to be done.
- Brooks got in a shot when she said that leverage had “walked out the door” when the new lease extensions were approved.
As the first substantive meeting of this kind for Coliseum City, it was bound to be at times painful and awkward, and it sure delivered. That’s part of the process and a welcome one, because there’s no way in hell this thing moves forward without much greater detail. Everyone on the dais was keenly aware of the political fallout that could occur with a bad deal. The Board of Supervisors felt that Oakland was leading and dragging them into the deal, which brought about Carson’s letter and this session. There was a general consensus that communication about the project has been poor. Right now there’s a lot of skepticism to go around, most of it healthy. Project proponents have every opportunity to whip up sentiment and numbers to back their claims of renaissance and jobs. As long as the numbers are there, Coliseum City has a fighting chance. If it doesn’t pencil out, that information and the new short-term leases will conspire to make MLB’s and NFL’s decisions easy. And they’ll make today’s recriminations look like a civil dinner party.
The City of Anaheim is poised to give away development rights for virtually all of the land surrounding Angels Stadium in exchange for two simple things: the team staying in Anaheim, and the city no longer having to pay to maintain the old stadium. Is that too much to give? We’re about to find out in Orange County, and the same could be said in Oakland, where Colony Capital is being asked to provide hundreds of millions to bridge a funding gap at Coliseum City.
How big a funding gap? It depends on the scope of the project. Planning aspects of Coliseum City will be shown in presentation Monday to the Alameda County Board of Supervisors and the Oakland City Council for discussion and a vote. The session will be held at 1:30 PM, which means that there probably won’t be many members of the public on hand.
Initially, the football stadium would be built along with needed infrastructure to support future development. Included would be transportation improvements, which indicates to me that they’re counting on the transit funding that was narrowly voted down in 2012. Stadium capacity remains within a broad range, and there’s no indication of whether it will have a retractable or fixed dome.
Phase II looks relatively modest, as it includes a lot of housing and limited retail (40,000 square feet). By comparison, Bay Street Emeryville has 382,000 square feet of retail and 400 housing units. It would commence in 2019, the year following the completion of the Raiders’ stadium. Also included would be a 220-room, 3.5 star hotel, signifying a mainstream brand such as Sheraton, Hilton, etc.
The final phase is most aggressive, as it likely anticipates a boom sufficient enough to make Phase III buildout feasible. Along with the ballpark there would be over 15,000 parking spaces (presumably in garages), an “Upscale” hotel, much more retail space, and nearly a million square feet of office towers. At any point one or more of these components could be removed or scaled back, which is often the case in such large projects. Since the A’s haven’t signed on with the project in any capacity, there’s no date for the ballpark’s opening. Also not included is the replacement arena, which is technically part of Area B from a planning standpoint (the focal Area A is the Coliseum and land east of 880).
We’ve covered the complexity of Coliseum City as a development project in the past. The presentation works to delineate the many issues. Compared to the DDA of the 49ers stadium in Santa Clara, Coliseum City is several orders of magnitude more complex. The big X factor is the $100+ million in remaining debt on Mt. Davis, which Mayor Quan and the City Council have said has to be baked into the new deal. There will be some sort land sale agreement that will invite scrutiny, as that’s a major key for the cost assessment for Colony Capital. Colony has some limited experience in the football realm, having recently partnered with the Chargers on their stalled (or failed depending on who you ask) plans in Downtown San Diego. This is an important framework from which many important questions about Coliseum City will be answered. Better late than never.
Update 11/25 9:10 AM – Resolutions passed nearly unanimously, with one vote against.
— Steven Tavares (@eastbaycitizen) November 25, 2013
— Steven Tavares (@eastbaycitizen) November 25, 2013
— Steven Tavares (@eastbaycitizen) November 25, 2013
Original post from Saturday:
In your typical Friday disclosure before a hastily called meeting, the Coliseum Authority (JPA) released its agenda for a Monday board meeting in which it will vote on short-term lease extensions for both the Athletics and Raiders. It’s funny to see how the negotiations have progressed. The A’s offered up a 5-year deal last year which the JPA ignored because it thought it had leverage, only to be that perceived leverage taken away by MLB two weeks ago. The Raiders have talked up a long-term deal, but only if it came with a serious plan for a new stadium. The resolutions that the JPA board is looking to pass will undoubtedly amplify the uncertainty surrounding the two franchises. Highlights:
- The A’s will get a two-year extension with no additional option years, thus extending the lease through December 31, 2015.
- The A’s would pay a slightly higher rent payment than previously negotiated at $1.5 million per year.
- In addition, the A’s would pay a mere $250,000 to maintain control over concessions.
- The parking revenue dispute between the A’s and JPA would go to arbitration, which should be decided before the end of 2014. The A’s would agree to put the disputed amount (not disclosed) in escrow.
It’s good to see that the parking issue will be resolved soon. Apparently the A’s are raising parking prices for 2014, which makes the actions seem linked. The big takeaway is that the JPA caved on concessions. Under the new terms, the A’s have the right to choose a new concessionaire, whose contract may long extend past the A’s stay in the Coliseum. However, you have to think that any concessions contract has to factor in the significantly lower value of the Coliseum should the A’s and/or Raiders leave. Yes, this could mean Aramark is replaced by someone else.
- The Raiders have a one-year deal plus an option for 2015, with both years costing the Raiders $400,000. The end of the lease is described as 45 days after the end of the team’s season.
- The Raiders could pay up to $525,000 per year to use their Harbor Bay headquarters in Alameda.
- The lease terms acknowledge that the Raiders may play one regular season or preseason home game away from the Coliseum (London in 2014).
Also wrapped up in the Raiders’ extension language is something that I’d like to call the Santa Clara clause.
7.5 Additional Payments for Use of Permanent Training Facility and Training Site. If the Raiders announce a relocation or sign a lease to play football games outside of the City of Oakland or Alameda County for the 2015 season prior to March 1, 2015, then, commencing on March 1, 2015, Raiders shall have the option of continuing to use the Permanent Training Facility and Training Site for up to twenty-four (24) months, up to and including February 28, 2017 as determined in Raiders’ discretion and Raiders shall make an additional payment to Licensor each month for continued use of the Permanent Training Facility and Training Site in an amount equal to the fair market rental value of the Permanent Training Facility and Training Site on a monthly basis, as determined by a mutually agreeable licensed commercial real estate broker based on comparable rental space. Raiders and Licensor agree that the fair market rental value shall not exceed $525,000 per year. In the event the Raiders are engaged in good faith discussions concerning an extension of the Operating License or other arrangement for the Raiders to play future Football Events in the OACC Stadium as of March 1, 2015, any obligation to make payments shall not commence while such discussions are continuing and the twenty-four (24) month period and obligation to make additional payments shall begin when Raiders agrees to play football games at a location other than OACC Stadium for the 2015 seasonal provided, however, that if Raiders agrees to play football at such other location, Raiders shall pay such rental payments retroactively from March 1, 2015.
Got that? The Raiders won’t be charged to use the Alameda headquarters as long as they’re in talks about Coliseum City, even if they’re playing somewhere other than the Coliseum for 2015 and 2016. If the Raiders play elsewhere while using HQ and aren’t in talks over Coliseum City, they pay $525,000 annually. Obviously, the only place where they could play in this scenario (and while the Coliseum is demolished, presumably) is Santa Clara. UC Berkeley is forbidden by legal settlement from hosting NFL games, and Palo Alto would sue Stanford to high heaven for even considering it.
Both extensions should be easily passed, unless one or more of the commissioners complain that the terms are too favorable to the teams. The teams are effectively trading rent payments, and the JPA’s incoming revenues will not make much of a dent in ongoing debt service. At least the JPA will get the parking revenue they’ve clamoring for, which at the very least should help pay for additional Coliseum City studies or minimal prep work. As for scoreboards – you weren’t banking on that, were you?
P.S. – The resolutions would have to be passed by Oakland’s City Council and Alameda’s Board of Supervisors shortly after JPA approval.
The story is familiar. An out-of-town ownership group sees a development opportunity on cheap land and a chance to build a ballpark in tandem. At the same time it moves away from its long-time home to a location with more money. No, I’m not talking about the Braves moving 12 miles to Cobb County. I’m talking about the A’s moving to Fremont.
Conceived in 2006, the Cisco Field/Ballpark Village concept had support from the Mayor and City Council of Fremont. Cisco went to A’s ownership and suggested the deal, which included the ballpark’s naming rights in partial exchange for heavily discounted land it controlled in south Fremont, near what was then the NUMMI plant. After negotiations stalled with landowner ProLogis and several retailers in the area, the A’s looked across the Nimitz to Warm Springs before giving up on Fremont completely.
Some blame the demise of Fremont on NIMBY concerns. While that had something to do with it, the biggest problem was the impact of the recession. As new home starts ground to a halt with the collapse of the real estate market, mega-developments like Pacific Commons failed to pencil out. That project and many others of similar scope sat dormant for several years, or died on the vine.
In 2013, the real estate market is recovering even if the broader economy is still somewhat stalled. In hot markets like the Bay Area and DC we’re back to real estate boom times. Investors from China and India are swooping in to make cash offers on houses sight unseen, and foreign money is coming in to support big projects such as Brooklyn Basin in Oakland.
It’s that backdrop that has allowed the Atlanta Braves to seek out their own mega-development in Cobb County, just in the suburbs outside Atlanta city limits. A more affluent area closer to corporate interests and away from mass transit? What you or I would call white flight, the Braves would call working to remain competitive.
The Braves, owned by DirecTV owner Liberty Media, recently moved a package of TV game broadcasts from local independent station Peachtree TV (WPCH) to Fox Sports South and SportSouth, the sister Fox-run RSNs in Georgia. While that will help boost revenues, it’s not nearly as lucrative as the single-RSN deals that the Mets have and the Phillies are seeking. To help their own revenue streams, Braves ownership are looking at the next avenues, a new ballpark and ancillary development.
Yesterday an article by the New York Times’ Atlanta bureau chief Kim Severson asked a question that seems relevant for the times: what defines urban and suburban areas? While Turner Field (and Atlanta-Fulton County Stadium previously) were in the middle of Atlanta, the location didn’t match what many would consider urban. Far from transit and surrounded by large parking lots, the neighborhood wasn’t vibrant the way we expect urban ballpark surroundings to be. Similarly, the Oakland Coliseum is set in a hundred acres of parking, and while its connectivity to BART is excellent, the neighborhood leaves much to be desired. The Braves are planning a dense, walkable community that should be largely self-contained, though again it’s far from MARTA. For years either new communities or established smaller cities and towns have used redevelopment funds to create the kind of urban environment that could attract new residents – or at least a subset of that urban environment.
There’s no clear definition of a properly urban neighborhood. Oakland has plenty of excellent established neighborhoods, such as Rockridge, Montclair, and Grand Lake. San Jose has Willow Glen, Rose Garden, and Naglee Park. None of those places have 12-15 open acres for a ballpark. Nor do they have a citizenry who won’t fight tooth and nail over parking and traffic concerns. Often developers will work for years to create that neighborhood feel and it doesn’t work out. Witness how Jack London Square developer Ellis Partners has practically thrown in the towel on making JLS an energetic retail district, electing to push for more housing instead. San Jose has an unquestioned success in the form of Santana Row, though it may not have been possible without Valley Fair already there across the street. With Coliseum City (and to an extent, Howard Terminal), Oakland is attempting to create that vibrance where none currently exists. The list of failures is long: Fremont, Arlington, and Coliseum North to name a few. Will Atlanta and Anaheim prove successful and create the blueprint?
And what of the white flight element? Atlanta and the Braves have jointly, proudly displayed their heritage regarding race in baseball. With the Braves poised to move to a decidedly more white, more moneyed location closer to most of the team’s ticket buyers, what will this mean for the Braves’ legacy?
While deflecting criticism over the Braves’ pending move, Atlanta Mayor Kasim Reed made one of the more magnanimous statements about cities I’ve read in some time:
“We’ve got to make a decision — either we’re going to be a region or we’re not. It bothers me that we have not come far enough as a community that people feel that a team moving 12 miles is a loss to the city of Atlanta.”
Of course, Reid just helped Atlanta give away the farm for the Falcons and their coming new uber-dome. Other motivations were at work to keep the Falcons downtown while allowing the Braves move to Cumberland, such as lobbying from the Georgia World Congress Center. The Braves weren’t allowed to get control over the land around Turner Field, so they looked for greener pastures. Which is how this sort of deal often gets started.
Atlanta’s population is just slightly above 430,000, which makes the city a little larger than Oakland. In California, Atlanta’s size would supplant Oakland as 8th-largest in the state, below Long Beach. Even though Atlanta is arguably the most prominent city in the South (non-Texas), it’s much smaller than other Southern cities such as Louisville and Charlotte. The Atlanta metro has over 5 million residents in area 20% larger than the Bay Area metro. Yet Atlanta remains the historical and cultural hub of the region and of the state, a claim that can only be made by LA and SF in California. Pushing for regional unity is easy when you don’t have to worry about a team changing names. That’s definitely where the comparison with the Bay Area ends.