Prominent developer SunCal brought in for Coliseum City study

SunCal, a large developer based out of Irvine, was brought into the Coliseum City project this week. Their role isn’t as the project’s master developer, it’s to determine whether the stadium, parking, and ancillary development can all properly fit on the 120-140 acre Coliseum site. Intriguingly, SunCal was brought in by the Raiders and Mark Davis, who have lingering concerns about having enough parking for football games.

SunCal has plenty of experience in the East Bay, having worked previously on Alameda Point before the project drowned in a sea of hubris and red tape. They also resurrected the long dormant Oak Knoll redevelopment plan, which had previously suffered from the depths of the recession.

New City’s Floyd Kephart wanted to make clear that SunCal’s role here is as a consultant:

Presumably, SunCal’s study, which was not a specific requirement for the ENA, will help guide Davis’s decision making process later this year. Just as important, it will probably guide the NFL’s. The league really likes plans with tons of parking, as seen in both the Inglewood and Carson plans. The hypothetical, then, is what if SunCal comes back with a larger parking requirement than is prescribed in Coliseum City? Of the 13,000 spaces programmed into the project, only 4,200 are surface parking (good for tailgating and buses). Everything else is in a garage, which when Lew Wolff mentioned the difficulty with garages, he got hammered. I wonder what will happen when the Raiders want more surface parking for their stadium.

Sure, there is BART, which according to the Raiders currently serves 30% of fans. You still need, well, 13-15,000 spaces for everyone else. And we have no idea whether SunCal’s study will include a baseball stadium.

SunCal could also find the project attractive enough to become the master developer, which would be a huge positive. Unlike Alameda, where SunCal is persona non grata, they don’t have a poisoned relationship with Oakland. They could be exactly what Coliseum City needs, though it’s clear they are acting in a thoroughly noncommittal role at the moment.

When I first heard the news I was surprised that it hadn’t gotten out at the beginning of the week, as the NFL owners meetings started. Then I saw SunCal’s limited role and it made more sense. If they express more interest in May, then it’s something for Kephart and Oakland to hang their hats on.

The small market A’s and some serious equity

Like clockwork, the annual Forbes MLB valuations roteere released yesterday, just prior to the start of the regular season. Unlike last year (which I didn’t bother to write about), there were several surprises. The biggest was the Giants’ 100% boost from $1 billion to $2 billion, on the strength of the team’s third World Series win and development potential at Mission Rock.

The other surprise was the huge gains for small market teams, led by the Royals, Indians, and yes, your Oakland Athletics. Forbes awarded the A’s a 46% gain, from $495 million last year to $725 million this year. While many revenue-related factors are responsible, Forbes also chose to up its revenue multiplier in determining the valuations, which had been falling behind actual sale prices in what has been over the last several years a hot seller’s market.

Higher enterprise ratios are being fueled by the stock market’s six-year bull run (which has inflated asset values and created a lot more buyer than seller of teams), baseball’s unmatched inventory of live, DVR-proof content, real estate development around stadiums, higher profitability (which reduces the need for capital calls) and the incredible success of Major League Baseball Advanced Media, the sports’ digital arm that is equally-owned by the league’s 30 teams.

Even the new A’s valuation may be behind the teams a bit. When Bloomberg released its own independently derived valuations after the 2013 season, then-PR man Bob Rose suggested that the number was closer to $700 million based on revenue. Before franchises started going for insane amounts, it was common for franchise owners – including Lew Wolff – to claim that Forbes’ numbers were incorrect, overselling certain aspects of a franchise’s operation. Now we’re starting to approach $1 billion for a team that has at best average TV/radio deals and no new stadium. A 300% return in a decade is pretty impressive, no matter how slice it – though Wolff and John Fisher can’t realize that until they sell the club. They’ve shown no indication that they’re interested in selling, despite how much the stAy crowd clamors for it.

As nice as the new valuation looks, it’s miles from where the Giants, Dodgers, and almighty Yankees ($3.2 billion) are. The Bronx Bombers recorded more than $500 million in revenue last year, confirming a quote from an unnamed Yankee exec in the fall. The luxury tax was designed to dissuade teams from profligate spending, but until recently that hasn’t stopped the Yankees and the Dodgers don’t seem to care one iota about the luxury tax. Redefining luxury tax penalties may become a sticking point in the next CBA negotiations, one that goes hand-in-hand with shifting the revenue sharing model for lower revenue (small market) franchises.

Let’s do a deeper dive into the Forbes figures. First the A’s:

numbers

Forbes breakdown of the A’s valuation

 

Now the Giants:

Forbes Giants valuation

Forbes’ Giants valuation

In nearly every key measurable, the Giants double or even quadruple the A’s. The Giants hit a perfect storm of on-field success and savvy management, which was parlayed into impressive revenues. The Giants are a money-making machine. They are also a big market club, no doubt. Though they aren’t profligate spenders in terms of payroll, everything else about them is big market, just like the Yankees, Dodgers, and Red Sox.

The A’s, on the other hand, bear all the marks of a small market team. Gate revenues are abysmal compared to the Giants. It’s so lacking that the A’s could untarp all the regular upper deck seats, sell out the entire season, and still only reach 50% of the Giants’ revenue. The flipside to that is that the A’s are a far more affordable, accessible product for baseball fans in the Bay Area. The market itself, which is defined as the East Bay, compares to a lot of other small markets like Tampa Bay and Kansas City. As long as the A’s are pigeonholed to the East Bay, it’s likely they’ll remain small market, or perhaps boost themselves to a medium-sized market if a new stadium comes.

New and improved national media revenues are the tide that has lifted the A’s boat. As big market teams keep getting bigger and bigger annual revenues, the A’s will continue to be a club that receives a nice revenue sharing check, at least as long as they play at the Coliseum. Per the current CBA, they’ll continue to be eligible for revenue sharing until they start playing in a new Bay Area ballpark. So the A’s are in a sort of limbo in which right now they’re considered a small market team in that they receive revenue sharing, but will be redefined as a big market team once they open a new park. That arrangement could continue into the next CBA, or it could change. I suspect that if the A’s build a new park in Oakland, they’ll remain a small market team by definition, simply because they don’t have the same direct access to big sponsors as they would in San Francisco or San Jose.

The other big takeaway from the valuation news is that the A’s debt position has significantly improved from doing nothing. Forbes reports that the A’s debt is now 8% of franchise value, or around $60 million. That leaves an astounding $665 million of equity for the ownership group. Wolff has suggested that he would use equity to help finance a ballpark. He could conceivably cover the entire cost with the team’s equity, but MLB rules about debt load preclude such a plan. The most debt the A’s can accrue without running afoul of MLB is 12 times their operating income if they’re building a new ballpark, 10x if not. If you take the average of income from the last three years you get $25 million. Multiply that by 12 and you get $300 million. The A’s have $60 million of existing debt, but according to MLB rules they can exempt $40 million of that. Combine all of those together and the A’s can in theory finance $280 million of a stadium. Even with the added debt, chances are that by the time the stadium opens it would hit only 35-40% of the franchise’s value, an acceptable amount for a sports franchise.

Naturally, the problem is servicing that debt. $280 million over 30 years at 4% is $16 million a year. To ensure that gets covered and it doesn’t have a deleterious effect on payroll, the A’s would have to get 30-32,000 average attendance per game for several seasons, at much more expensive prices than the Coliseum to boot. Then there’s the combination of suite sales, sponsorships, and maybe even seat licenses if fans are willing to invest. If this sounds similar to what the Giants did, that’s because it is. Maybe there’s a real estate component that can come in to offset that debt service requirement, but Wolff indicated in recent comments that grand development concept such as Coliseum City is not forthcoming from him.

Nevertheless, if Wolff and Fisher want to build, and fans are willing to pay, the path is there. Getting to a deal is the hard part.

P.S. – Speaking of getting to deal, there’s been some noise about wanting Wolff to show his plans. Show a rendering, something to indicate that he actually wants to build in Oakland. To which I say – come on. He just finished opening a soccer stadium, the spring training facility renovation, and is finishing scoreboards at the Coliseum. Are those not indicators of wanting to build?

All of these sentiments, while well-placed, are based on some unrealistic expectations. Fact is that the stadium development process is dog slow. It’s tedious. No premature release of renderings will do anything other than getting a small handful of fans excited. Believe me, I’m one of them. But I’ve also learned over the years is that all of that is sizzle, not steak. If you want real progress, you need rules. You need a framework. Here’s the “framework” for the A’s right now:

framework

That’s not a framework for anything other than random discussions between the A’s and East Bay pols. If the A’s, City, and County are going to work on an actual deal, they need to establish a real framework for talks and for a stadium/development deal. It would help if Oakland or the JPA started by creating an RFP (request for proposal), that would allow the A’s to formally propose something. The A’s are in the process of hiring a person to interface with City/County/JPA. If the Raiders wanted to present their own vision, the RFP could accommodate them too. That is how the Coliseum City process started, and is the proper – not to mention legal – way to do government business. Frankly, I’m past renderings. I want steak. You should too.

Alameda County approves ENA, draws line in sand at public money

Early during the Board of Supervisors meeting, President Scott Haggerty hinted that the assembled gallery could see how the Supes were going to vote, as they all had roughly the same comments during their part of the discussion. Nate Miley said he was going to vote for the ENA, but didn’t support “wholesale” use of public resources (land, money) for the project. Richard Valle called the project an “opportunity for private investment” before affirming his long-held no public funding stance. Wilma Chan felt the same while talking about community benefits. And Keith Carson considered the ENA a prudent step so that they could find out if the project had legs.

That sentiment of limited public support didn’t begin yesterday. It was brought up in public in December 2013, at the joint discussion between the Supes and Oakland City Council. It’s a topic that City and County haven’t been able to reconcile when County wasn’t part of the ENA. Now that they are equal partners, they’ll have no choice. It’s impossible to undersell the impact of this. County has taken a hard line on this, and it’s hard to see how City or Floyd Kephart’s New City will be able to reconcile it. In other words, it’s a potential showstopper.

The public contribution issue is big enough for the County that at the same meeting they commissioned a $200,000 study by CB Richard Ellis to appraise value of the Coliseum complex, land and buildings. Even that proved divisive:

Why would the County want the appraisal so badly? If the County wants to work from the notion that it could sell the complex at fair market value, it would help to understand what that FMV is. That doesn’t mean that they’d actually sell it at FMV. They could do a deal like San Jose, offering land at a discount provided that there was a certain price based on use. If County trends towards FMV pricing, that may be to force a decision on preventing a land giveaway by the City. While there are no deal terms yet, Coliseum City has long operated from the idea that the value of the land would offset sunk cost items like new infrastructure or writing off the Coliseum’s debt. The money saved by not spending it on land could be funneled towards the football stadium’s funding gap.

parcels

ENA covers ~140 acres of Coliseum area land

 

But if FMV was sought for the land, there’s no redirection of money to the funding gap. How, then, does that gap get addressed? If all three parties are going to have even a rough framework of a deal by the June deadline, they’ll have to come to some serious compromises that satisfy all three. That problem is one of those proverbial above my pay grade type of problem.

Miley made sure to mention his contingency plan of retrofitting the Coliseum instead of building new. While all five Supes approved the ENA, they didn’t express a ton of confidence in the project coming together. Left unsaid was another even more radical option that may prove more viable in time, one that was briefly mentioned in the adult conversation 16 months ago.

What if the City bought out the County?

If the County were leaning in that direction, an appraisal would make even more sense. Then they could start to figure out how to split the property, the remaining debt, and the JPA itself. Divorces are always messy, so don’t expect anything like this to happen as long as talks with Kephart continued. It’s not hard to see Coliseum City’s demise leading to a divorce. After all, if the sports teams are the JPA’s kids, and the kids have all grown up and moved away, what’s left?

Yet another possibility is that the County, which has a good relationship with Lew Wolff, is waiting just like Wolff for Coliseum City to die. Then they can work with the City on ballpark plan at the Coliseum. The no public funding demand would arise yet again, which would scare off many developers – but not Lew Wolff, who is not thinking about developing the Coliseum extensively right now. But that would be at odds with the City, which has grander visions for the Coliseum area than a stadium surrounded by parking.

Going back to the next-six-months-narrative, Friday’s City Council approval had optics that were designed to look good in reporting progress to the NFL. However, the NFL’s LA point man, Eric Grubman, continues to maintain that Oakland is neither “aggressive” nor “specific” about its plans. It’s easy to figure out what he means by “aggressive,” but “specific” appears to be a vaguely coded term. Is that just about Oakland’s desire for a 80,000 dome? That appears to have been put aside in recent weeks, especially by Mayor Schaaf. Does it mean something else? Coliseum City continues to be this amoeba that could contain anywhere from three to zero teams. The next three months are meant to provide some specificity, and the following two months even more fine tuning. The NFL signaled that it may announce or authorize moves during the fall, before the 2015 season ends. That puts Oakland, San Diego, and St. Louis under the gun to resolve their stadium problems, or else become abandoned. Even as it seemed the NFL had lost control of this game of musical chairs, they may have regained it.

Are we having fun yet?

Corey Busch talks Blue Ribbon Committee on CSN

Comcast Sportsnet Bay Area provided a bit of a surprise on Yahoo! Sports Talk Live, when they had Corey Busch, former Giants executive and member of the three-person Blue Ribbon Committee (Irwin Raij & Bob Starkey were the other two). Busch explained some of the panel’s activities and charges. Jim Kozimor did his best to pry what little information he could out of Busch, who didn’t answer a number of key questions because of the state of the San Jose-vs.-MLB lawsuit.

Corey Busch interview Part 1

Corey Busch interview Part 2

Busch clarified the territorial rights deal that occurred in 1991, giving the Giants control of the Santa Clara County, which prior to that point had been an open territory. He also called San Jose’s lawsuit a mistake on their part. While you may glean additional information from the segment, you’ll probably come out of it even more frustrated than before, whether you’re an Oakland or San Jose partisan or are location-agnostic. My preference for the show: Ray Ratto in a talking head box in a corner, providing running commentary as Busch answered questions. Good work on the interview Koz, and maybe we’ll get to uncover the bodies when the lawsuit business is over. Busch promised!

City and County set new targets for Coliseum City ENA

Update 3/19 1:20 PM – Oakland’s City Council has scheduled a special meeting for Friday, March 20 at 11:30 AM to vote on a resolution supporting the ENA. You can find the agenda at the meeting link. In addition to the deadlines set forth in yesterday’s news, there’s also an option to extend the agreement for up to six months if some of the deliverables aren’t met or other holdups. There’s also this:

competing

Nothing about the “alternative proposals” shows up in the resolution, however. Once the City and County both approve the ENA including this facet, the A’s (and Raiders for that matter) could start sending in their own concepts. I expect one at some point from the A’s, but as noted previously, they are under no deadlines to deliver anything as New City and the Raiders are.

Original post:

Yes, we wrote two months ago about how the City of Oakland and Alameda County were coming together to work on Coliseum City. The signs were that both parties were finally on the same page.

Well, we’re hearing the same thing again, though this time it might actually be for real. After some back and forth between the County and Floyd Kephart of New City, the County’s Board of Supervisors are looking to vote on the ENA at the end of this week. Or early next week. Or something. The SF Business Times’ Ron Leuty has the details.

Besides the ever plodding deal machinations, Leuty also picked up the new terms of the ENA. June 21 marks a midterm deadline for New City to provide certain deliverables. The “final” deadline is August 21, with even more deliverables. All told it’s 23 separate items, all important, few minor.

June 21st’s set is all about creating the framework of the deal. It should answer basic questions like How many teams will be involved? and How long will it take to develop?

  • An initial financing plan for a new stadium for the Raiders, including ancillary development and land and infrastructure to support a potential new stadium for the Oakland Athletics. It will include projected sources and types of funding as well as the estimated equity stake from New City, its partners and affiliates.
  • Terms and conditions required to win a commitment from the Raiders, A’s or the Golden State Warriors to Coliseum City. This will include an update on the status of negotiations between New City and each team.
  • Initial site plans for new Raiders and/or A’s stadiums.
  • Financial and market feasibility analyses for various elements of the development other than sports facilities.
  • A development schedule for the sports facilities and ancillary development, including the timing of entitlements for all phases of the project.
  • An estimate of infrastructure cost and a funding plan for the infrastructure, including a list of potential regional, state and federal grant sources.
  • Plans for tax financing districts for infrastructure.
  • A preliminary plan for subdividing parcels, if needed.
  • Proposals for addressing the existing Coliseum debt.
  • Proposed timetables for disposing of land for various parts of the project.
  • An outline contracting plan.
  • An outline community benefits plan for the project.

August 21 is about buttoning up the deal and figuring out all of the little details defined in June.

  • A detailed description of the plan for project development.
  • Refined terms and conditions required to win a commitment from the Raiders and/or A’s and a project schedule for obtaining a commitment.
  • A refined financing plan for Raiders and/or A’s stadiums, including identification of all sources of financing.
  • A refined description of the financing structure for ancillary development and the proposed developers for each element of those pieces of the development.
  • A clearer schedule for development of the stadiums and the ancillary development, including the timing of entitlements.
  • A better estimate of infrastructure cost and a funding plan for the infrastructure.
  • A refined proposal for establishing tax financing districts for financing infrastructure.
  • A clearer plan for subdividing parcels.
  • A refined proposal addressing existing Coliseum debt.
  • Proposed terms for the lease disposition and development agreement and financing for various elements of the project.
  • A refined contracting plan and community benefits plan.

By late April we should expect that the EIR will be certified and the Specific Plan approved, which are their own framework in that it defines zoning. With that zoning component there are no entitlements on which developers can build at the Coliseum.

To date many of the deadlines put forth by the City have been about timing in concert with some important date for the Raiders and the NFL. Previously the ENA was supposed to be completed before the 2014 season over, then before the franchise relocation window opened, then 90 days from that (April). Now the ENA deadline is being pushed to just before the 2015 NFL regular season starts. That itself is arbitrary, and allows for yet another 3-5 months of slack before the Raiders have to make a decision on LA or another possible move. With that in mind, I fully expect Coliseum City to slip yet again past August. The list of deliverables above is daunting. The DDA alone can take months to put together. While everyone’s operating from the notion that once a team signs on everything else will fall into place, there’s little reason to believe that negotiations will be that tidy. This project has a growing number of stakeholders, including housing and jobs activists who will make their stamp on a community benefits agreement. The financing for a project of this size is incredibly complex. And the City and County have to be on their toes to ensure that they don’t get taken by the private stakeholders in the project: New City, developers, and the team(s). Without clear terms done in thoughtful, deliberate manner, you get Mt. Davis.

I haven’t mentioned the A’s or Lew Wolff yet. Wolff has made his position clear in that he has no interest in Coliseum City. The difference for him is that he and the A’s have no deadlines, arbitrary or otherwise. What happened to the idea of allowing competing bids? That appears to have disappeared into the ether. For now.

Tenth Anniversary Edition: A Decade of Running in Place

If you’ve been around from the beginning (you probably haven’t), you may have read the very first post I made to this blog on March 14, 2005. That was ten years ago. Here’s a quick, incomplete list of things that have happened since then:

  • Bud Selig stays commissioner until 2015, is replaced by Rob Manfred
  • Expos move (are bought-contracted-expanded) to Washington, DC
  • Six new ballparks open throughout MLB (in St. Louis, DC, New York twice, Minneapolis, and Miami)
  • Levi’s Stadium developed and opened
  • Warriors get new ownership, declare intent to move to SF, buy land for arena
  • AEG moves SJ Earthquakes to Houston. Team is reborn in 2008, has stadium built for 2015 season
  • A’s propose ballparks at sites in Oakland, Fremont, and San Jose – none are successful
  • Oakland is on its fourth mayor since the blog started

That same day I posted about the A’s potentially building a ballpark south of the existing Coliseum. Pending what happens with Coliseum City, we may be talking about that very same possibility in the future. Weird how things might come full circle, eh?

As we wait for good news on the stadium front, I have some good news of my own. A couple years ago I asked for donations for the site to keep it running. Many of you responded very generously. which helped keep the site and my continuing work going. This site is a labor of love, so I haven’t asked for donations much (twice to my recollection). Back in 2013, I promised those of you who donated that I’d provide a sort of digest of previous posts. I tried many times to compile and curate that digest, but over time I’ve learned that I am a much worse editor than I am a writer (which is already rather questionable). Everything read like filler, not moving the narrative forward. I put that aside for a while and swore to get back to it. It wasn’t until earlier this year, when I put together the timeline feature, that it all came together. I was able to put together all the necessary posts, with additional context inserted where necessary. So I’m proud to announce that I have that “book” ready. The download link is below. Those of you who previously donated have already gotten the link via email. Please take a look at it and provide feedback if you like. If you donated and haven’t gotten the book, send me a note/tweet and I’ll make sure to take care of you. And if you have already donated, you don’t need to do anything else, but if you want to donate again I won’t stop you.

I’ve titled the book:

A Decade of Running in Place: A Digest of Selected Blog Posts from the First Ten Years of Newballpark.org

Book download link (Scribd, PDF)

Donate Button

I’ve poured over a million words, 10,000+ hours, and my entire heart and soul into this site. The A’s getting a new ballpark has been a dream of mine since high school, when I first saw drawings of New Comiskey Park and Camden Yards. I don’t expect anyone to have the same kind of obsession with this topic that I have. I figure that I’ll be the obsessive so that you don’t have to be. Thousands of people read this site every day. About 2% of them have donated. If you value the work here and the process, please consider donating. $10 would be great.

The book weighs in at 210,000 words and 664 pages in PDF format. It’s entirely in chronological order. There are what appear to be section or chapter markers. Those are points at which I think the scene shifts. They aren’t meant to encapsulate the story.

Editing and pagination are rough, mostly having to do with the transition from web to print-ready format. I’d like to take the time to give it a whirl in InDesign, with the ultimate goal of making printed copies. A donated of $25 or more would get the ball rolling.

Since this is the 10th anniversary, I’ve started thinking of other things to commemorate this milestone. What do you folks think? T-shirts? Caps? Stickers and decals? Should I do a crowdfunding campaign? I’m all ears at this point. Some of you readers are creatives of different stripes. Send me your suggestions.

Finally, many thinks to all the readers over the years. I’ve met and become friends with many of you. We’ve broken bread, gotten beers, talked plenty of things besides an A’s ballpark. It’s been a pleasure. It will continue until the day that this blog is no longer necessary. After all this time I still hope. I think many of you do too. It’s what binds us. I don’t know how much longer it will take for the A’s to get a new home. Another 10 years? 10 months? However long it takes, I’ll be here for the ride. I hope you enjoy appreciate it as much as I do.

P.S. – Special thanks to Susan Slusser, who suggested the timeline a couple months ago while working on her own A’s history book (due this summer and highly anticipated). Without that I never would’ve gotten properly organized.

P.P.S. – This is not “the book” that I’ve been talking about writing. That book is still very much in progress.

 

Manfred: No blue ribbon panel for A’s

From Susan Slusser:

The commish is checking in with every team during the spring, so he should’ve expected this and other questions about the A’s future. While it’s encouraging that Manfred won’t hide behind a panel, that’s a long way from actually working things out. We’ll know for sure if Manfred becomes more hands-on regarding the A’s. If he is, that’s because he’s eager for a quick resolution. The same couldn’t be said for his predecessor.