Category Archives: San Jose

Ninth Circuit grants San Jose’s expedited appeal request

A simple, one page order came out of the Ninth Circuit Court of Appeals today. In it, the court granted the City of San Jose’s request for an expedited briefing and hearing. While it was previously thought that briefs wouldn’t be field until the summer at earliest, the court is setting a March deadline for the opening brief.

Before: LEAVY and TASHIMA, Circuit Judges
Appellants’ opposed motion to expedite briefing and hearing on appeal is granted. The opening brief is due March 5, 2014. The answering brief is due April 4, 2014. The optional reply brief is due within 14 days after service of the answering brief.

This case shall be placed on the next available calendar after the completion of briefing. Any request for an extension of time to file a brief is disfavored and must be made under Ninth Circuit Rule 31-2.2(b). No streamline requests for extensions of time in which to file briefs will be approved.

While I’m not going to go so far as to say that the court will rule in favor of San Jose (the case still looks pretty weak), this shows that the court acknowledges the high-profile nature of this case. Both San Jose and MLB will get the opportunity to make their filings, just as spring training and the regular season are starting. It could mean a summer trial oral argument date, too. Even if San Jose’s chances of winning aren’t great, it means a potential resolution for this case could come more quickly and a little more work for MLB in the meantime. Plus the timing of the briefs will keep the story in the news cycle.

Of course, March 5 is coming pretty soon. Chop chop, Joe Cotchett!

San Jose files reply brief in Ninth Circuit

The City of San Jose fired a salvo in the appellate court case against Major League Baseball. In the reply brief submitted yesterday, the City asserts that a decision by the Ninth Circuit court should be made before the land option agreement expires in November.

A decision on the antitrust issues concerning the Athletics’ move should be made before November 2014 or the Athletics may choose another site for their new stadium. Reed Decl., ¶22. If that occurs, San José will suffer irreparable harm because an eventual judgment in the City’s favor will be too late to allow the Athletics to successfully relocate to San José.

While damages for the economic harm caused by MLB would still offer some remedy to the City of San José, such a remedy is inadequate. Ultimately, MLB’s illegal conduct would have been successful in preventing free competition in the baseball market. Dkt. No. 1, ¶ 133; Gregory Decl., ¶2, Exhibit A. The only true remedy is an expedited briefing schedule and hearing with a final decision from this Court prior to November 8, 2014 in order that the Athletics will be permitted to exercise the option set forth in the Option Agreement.

This seems like a hollow stance for the City to have, since the land won’t necessarily go away just because the option agreement will expire. It will still be there, waiting for development, whether from a ballpark or something else, and in the future the land could easily be negotiated at the same price, as long as Santa Clara County and the Successor Agency signed off on it.

The other takeaway is the phrasing in the first paragraph: “…or the Athletics may choose another site for their new stadium.” Well, that would certainly be a November Surprise, wouldn’t it?

In addition, the City argues that MLB has delayed long enough – which it certainly has, but MLB has responded time and time again that it can make a decision on whatever timeline it chooses thanks to its antitrust exemption. If the judge rules in the City’s favor, that would be an indication that there’s substance to San Jose’s argument about economic damage.

Speaking of the antitrust exemption, another lawsuit was filed yesterday against MLB. This time it’s a potential class action suit in federal court alleging that baseball fails to pay minor league players minimum wage. At Fangraphs, Wendy Thurm wrote an examination of the lawsuit and its ramifications. With this suit and related ones, attacks on MLB’s broadcast blackout policy, and the City going after territorial rights, the antitrust exemption is defending itself on at least three fronts. Essentially all of these lawsuits go after the outdated notion that baseball is not a business, but rather a number of recreational exhibitions. As an $8 billion enterprise, you have think that at some point that notion shouldn’t hold water.

San Jose files appeal in Ninth Circuit, also files state claims in Santa Cruz County

Sure, we knew that San Jose was going to file its appeal in the Ninth Circuit early this year, which they did today. The filing runs only two pages, with much more to follow.

The surprise was that the lesser state claims about economic damage via MLB’s alleged interference were also refiled – in Santa Cruz County Superior Court. That’s right, Santa Cruz County.

City attorney Philip Gregory brought up MLB’s mysterious denial of the A’s petition to move to San Jose. Although the state claims are not considered as substantial as the federal antitrust case, it’s clear that San Jose aims to dig up some dirt on MLB’s machinations, which could help their case. The denial letter, which MLB has refused to release citing confidentiality, is probably the big prize. Santa Cruz County may also have a lighter docket compared to other nearby counties, which could be a factor in San Jose choosing to look south. Nothing’s expected to happen in either Santa Cruz or the Ninth Circuit until spring at earliest. Until then, the sides will prepare their next filings.

The stage shifts in 2014

As we bring on a new year and a new baseball season, let’s reflect on the rather tumultuous year that was 2013.

  • January - FanFest was a great event again, though the cramped concourses at Oracle Arena had many fans wishing for the event to be held at the Coliseum instead.
  • The Coliseum Authority raided scoreboard funds to pay for the ongoing Coliseum Study.
  • February – Oakland officials were forced to apologize to A’s owner Lew Wolff for misplacing a letter requesting further lease extension talks.
  • March – The City of Mesa, AZ, approved a renovation plan and 20-year lease for Hohokam Stadium that will bring the A’s over from their longtime spring home, Phoenix Municipal Stadium. 2014 will be the last year at Muni for the A’s, after which the stadium will be home to the ASU Sun Devils. The Cubs, who vacated Hohokam after 2013, are moving to their own mega-complex on the west side of Mesa.
  • San Jose was dealt the first of a series of setbacks when the state rolled back the City’s transfer of the Diridon ballpark site to the Diridon Development Authority. Eventually the City and Santa Clara County worked out the details of a deal, though it remains up in the air for now. In addition, a request to disqualify the Stand for San Jose lawsuit failed.
  • April/May – Kevin Johnson rallied Sacramento and Bay Area interests to put together an ownership group that eventually bought the NBA Kings from the Maloof family.
  • SAP takes over for HP as naming rights sponsor of San Jose’s Arena. Most fans continue to call the building The Shark Tank.
  • The Giants refinance the remaining debt at AT&T Park (originally due to be paid off in 2017) in order to provide funds for their own project in the parking lot across McCovey Cove from the ballpark.
  • Oakland Fan Pledge kicks off a campaign to build a list of fans willing to buy  season tickets (and in some cases PSLs) at a new A’s ballpark in Oakland. Currently there are just over 5,000 pledges.
  • Levi’s Stadium and the 49ers are awarded Super Bowl L in 2016. While the game will take place in the new stadium in Santa Clara, most of the other festivities will take place in San Francisco at venues like Moscone Center.
  • June – San Jose files an antitrust lawsuit against MLB, alleging that the league’s stalling is costing the City tax revenues.
  • A settlement between Howard Terminal operator SSA and the Port of Oakland could help clear the way for a ballpark on the waterfront site. Site proponents call this move “site control.” The Port was also motivated to get rid of an expensive, ongoing lawsuit by SSA over more favorable lease terms given to a nearby rival operator.
  • A sewer main at the Coliseum is clogged, causing sewage to overflow the clubhouse level and requiring the teams to use the Raiders’ facilities (up one level). Eventually a towel or piece of clothing is found to be the culprit.
  • July – A feasibility study for Coliseum City outlines the funding gap (now $400-500 million) that needs to be bridged for a new stadium, along with an explanation of the economic weaknesses of the East Bay market.
  • The Earthquakes’ stadium is further delayed (until 2015) when numerous underground bunkers are found and need to be demolished before building anew. Erection of the stadium bowl would begin in late December.
  • August – Raiders owner Mark Davis starts crowing for a long lease extension at the Coliseum, with the condition that the extension comes with a replacement to the Coliseum, preferably on the same site as the current stadium.
  • MLB and the San Jose make filings in anticipation of an October hearing in their antitrust lawsuit.
  • September – Lew Wolff clarifies that he seeks a five-year lease after the current lease ends after the 2013 season, with flexibility to leave early if impacted by a Raiders stadium.
  • October – A federal judge throws out San Jose’s antitrust complaint against MLB, but allows the City an immediate appeal (Ninth Circuit) and for the state tort claims to continue. The state claims were also thrown out at the end of the year.
  • A private investor group headed by LA mega-hedge fund Colony Capital and Dubai’s HayaH Holdings signs on to be the financial muscle behind the Coliseum City development. The group, teamed up with architecture firm JRDV, is tasked with providing a series of deliverables that will determine the feasibility of the project.
  • Bloomberg estimates that the A’s are worth $590 million, a huge jump over Forbes’ preseason estimate of $468 million.
  • November – With talks between the A’s and the JPA at an impasse, MLB steps in and negotiates a two-year extension for the A’s, resolving an outstanding issue regarding parking taxes. The Raiders receive a one-year extension with a one-year team option, which they would presumably exercise if they saw sufficient progress on the stadium front.
  • December – The Oakland City Council and Alameda County Board of Supervisors hold their first joint session to discuss the pros and cons of Coliseum City. The Supes claim that the City has dragged the County along, and the County has not been sufficiently involved in the process.
  • A court filing in the antitrust case states that MLB denied the A’s proposal to move to San Jose in June, just before the lawsuit was filed. MLB is unwilling to disclose the contents of the rejection letter. Sources inside baseball indicate that the A’s proposal, not the City of San Jose, was denied, opening the door to another proposal that MLB could conceivably accept.
  • Renderings of the Howard Terminal ballpark are released. It appears that the vision would try to avoid the BCDC’s jurisdiction by placing the footprint sufficiently inland. It is unclear if such a move will work. Normal CEQA issues remain, and proper environmental review has not started yet. Meanwhile, the Port solicits bids for use at the vacated terminal per state law.

What can we expect in 2014? A lot of follow-up to many of the issues above. Lawsuits will continue, and short-term leases only kick the can down the road. With the leases temporarily out of the way, 2014 is the year of the election. Both Oakland and San Jose have mayoral races this year. Oakland Mayor Jean Quan finds herself at the top of a list of five declared candidates. The race to replace San Jose Mayor Chuck Reed will also be hot and heavy, with several current council members facing off against a former councilman and current county supervisor. We should expect to see some serious progress on Coliseum City’s feasibility, as several project deliverables are due in the first half of the year. Oakland partisans will continue to flog Wolff, while San Jose partisans flog Mayor Quan. 2014 is also Commissioner Bud Selig’s last full year in his job. The search for his replacement could be interesting, though the favorite is currently COO and longtime MLB exec Rob Manfred. Movement on the antitrust lawsuit is not expected until the spring, and the “forgotten” Stand for San Jose lawsuit continues its machinations. All in all it looks to be a very newsworthy year. Will attendance continue to grow? Will it be an eventful 2014? That depends on whether anything gets resolved. This site has been running for nearly nine years. The stadium situation has never looked more muddled, with no end in sight. Something’s gotta give, right? Right?

How to negotiate a ballpark deal without giving away the farm

If you haven’t heard, the City of San Jose finalized a five-year lease extension with the San Jose Giants this week. Talks were somewhat contentious for several months, as it was Giants ownership (San Francisco Giants) that spearheaded the Stand For San Jose-vs.-City of San Jose lawsuit two years ago. The relationship was so sour that the SJ Giants had to remove themselves from the lawsuit in order to repair the relationship with the City. The Giants, usually at the tops of the California League in attendance, had things pretty good with a favorable lease and a vast array of corporate sponsors to choose from.

In fact, it wasn’t that long ago that the Giants took the City for granted. In 2007 they even played the old stadium ransom game, threatening to leave if they didn’t get as much as $8 million to renovate Municipal Stadium. City let the San Jose Arena Authority manage the situation, so renovations on an annual basis were kept reasonable, a little over $1 million from that point until now.

So when the time came for the two sides to talk, you can imagine how uninterested the City was with the Giants’ sales pitch. The S4SJ lawsuit involved the Giants’ law firm, Pillsbury, and from what I heard, City was happy to let the Giants twist in the wind a little. Eventually cooler heads prevailed, resulting in the five year extension through 2018.

The lease remains dirt cheap at about $25,000 per year. In addition, the City is for the first time granting the sale of naming rights to Muni. Money from any naming rights deal will go into a capital improvements fund. The important takeaway is that the City is no longer responsible for general upkeep at Muni, nor will it be pushed into funding other improvements at Muni as the Giants had previously requested. In a related move, a deal to share parking with Sharks Ice next door was also reached.

With the coffers running low to fund ongoing facilities improvements, City has used naming rights successfully to take care of various small projects. Most recently, the venerable Civic Auditorium received a name change to the awkward sounding City National Civic, after City National Bank. And of course, there’s also SAP Center, which changed from HP Pavilion in a rather quick manner after the CEOs of HP and SAP talked it over. City National Civic’s deal is worth $240,000 a year, within the range of single-A ballpark naming rights deals. It remains to be seen if Muni will fetch more because of the Giants’ name and the size of the market or less because Muni’s elderly condition. In either case, there should be a number of local sponsors who should be expected to bid, Adobe and Orchard Supply Hardware to name two.

Or, if the parent SF Giants wanted to get really snarky about it, they could rename it Giants Stadium. Talk about planting a flag. The Sharks took over the naming rights to their practice facility from Logitech, and have been expanding that brand ever since with rinks in Fremont and uptown Oakland.

Reaction time

It would be silly to devote a post to every single new tidbit that comes out, so I’ll do one of those rare newswraps here.

  • The East Bay Express’s Robert Gammon reported that the previous group showing interest in buying the A’s (Don Knauss, Doug Boxer, Mike Ghielmetti) is back again talking up buying the franchise. This time, they’re not alone. There could be up to three groups, including one fronted by Warriors owners Joe Lacob and Peter Guber. Lacob and Guber were previously associated with the Dolich-Piccinini group in 2001. Lew Wolff continues to maintain that the team is not for sale.
  • Bill Shaikin of the LA Times partly shot down the Warriors connection when he contacted Guber, who said unequivocally that he’s not interested in the A’s. Lacob and others may be interested, though Lacob is not commenting at the moment.
  • BANG’s Marcus Thompson wrote a quite stirring column asking Oakland to act now to save the A’s in Oakland. Thompson also asked many of the important questions about both Howard Terminal and Coliseum City that currently have no answers.
  • SFGate has a new editorial imploring MLB to make a decision, once and for all. In the column is a quote from Wolff claiming that Howard Terminal’s cost would be more than $1 billion.

Pretty heavy news day, huh? Well, not according to KCBS’s Doug Sovern.

Is there actual news to report? Why yes there is!

  • The FCC is moving forward with its proposal to eliminate TV blackouts of sports broadcasts. The proposal mainly targets NFL games, so naturally the NFL opposes it.
  • The 49ers struck a partnership with fellow Santa Clara resident Intel for a major sponsorship & technology deal. Intel will provide a great deal of tech infrastructure while taking control of the big northwest gate.

Finally, Bizjournal’s Nate Donato-Weinstein has been tracking the iStar development and has an update. If you’re not aware, iStar is a developer and land owner tied to the Earthquakes stadium project. While the stadium is going up west of San Jose Airport, the iStar land is in South San Jose’s Edenvale neighborhood. The plan was to take some of the proceeds of various development activities at iStar and funnel them towards the stadium. The numbers:

  • 260,000 square feet of office space
  • 150,000 square feet of retail
  • 720 housing units
  • $10 million would be funneled to the stadium

Those numbers are important because they can provide a comparison to what is being proposed at Coliseum City.

  • 837,000 square feet of office space
  • 265,000 square feet of retail
  • 837 housing units
  • 2 hotels comprising 478 units

iStar went through numerous struggles and iterations as the recession ravaged the real estate market. Now that things are on the rebound, projects like iStar are picking up again. It’s surprising that despite the fairly large scope of the project, only $10 million is being made available. That’s one-sixth one-seventh the $60 $70 million budget for the Earthquakes stadium. Now consider that Coliseum City, whose Area A phases cover comparable development plans (other than the much greater office space) over a very long timeline. How much could the development activity realistically provide? $50 million? $100 million? While revenue sharing formulas will probably be different, there is a practical limit before eating into profitability. The Raiders stadium will cost more than 15 times as much as the Earthquakes’ new digs. Bridging the gap is the foremost issue for these stadium initiatives. Without that puzzle solved, there really isn’t much else to talk about.