If You Got Any Money Left Over, Buy Yourself Something REAL Nice, Clark.

The headline is a quote from one of my favorite movies of all time, National Lampoon’s Christmas Vacation. It is spoken by Cousin Eddie as he loads up a shopping cart with dog food that his Cousin-in-Law, Clark Griswold, is expected to pay for. At this point in the movie, Clark is telling Eddie that he wants to make sure Eddie’s children have a nice Christmas and that he is willing to buy them some gifts if it will help. Eddie’s “gratitude” is clear when he pulls out a prepared list of things his children want for Christmas. What the heck does this have to do with the A’s and a new stadium?

The elephant in the room, the one everyone seems to be ignoring, is that the details of any financing plan for a new Bay Area stadium are murky, at best. We all hear “privately financed” bandied about in media reports. But what does that really mean? After all, with rare exceptions, MLB has played Cousin Eddie to just about every city that has seen a new stadium go up in the past 25 years.

The only real exception, though it was not entirely privately financed, is AT&T Park. Using this park as an example, 96% was privately financed, we can back into what “privately financed” actually means. Roughly half of that funding was provided through corporate support,  or the combination of naming rights (Pac Bell) and Charter Seat sales. The other half was in the form of a loan provided by Chase Bank, secured with MLB’s help. It seems clearer and clearer that this is, mostly, the model that MLB has in mind for the A’s.

So what evidence do we have that a ballpark in either Oakland or San Jose will follow a similar model? For one, we have the report that MLB has discussed a loan of $150M with folks in Oakland. We have the letter from Ron Dellums and Jane Brunner talking up deposits from 35 companies (amongst other things). We also have a recent letter from Silicon Valley power players to Bud Selig supporting a move down 880. Now we have the follow up Op Ed in the Mercury News, authored by two of those power players (Mike Klayko of Brocade and Tom Werner of Sun Power) pretty much restating the original letter. The key line from the Op Ed is:

Along with other respected and diverse organizations, we stand ready to offer any support needed to move this important project forward.

And from the SVLG 75 CEO/Other Important People Open Letter (Fourth paragraph, first sentence):

The Silicon Valley Leadership Group, along with other respected and diverse organizations, stands ready to offer any support needed to move this important project forward.

On the surface, these are clear statements meant to persuade Selig. In part, they are meant to show that the corporate support needed for both long term viability and a private financing scheme is there, in both cities. This is where the similarities end.

In the San Jose case, There are a few other Easter eggs that are not getting much mention.

I think MLB’s propensity for being Cousin Eddie, to (Insert City Name Here)’s Clark, is part of what the letters and Op Ed are about. Or, in other words, these messages are not only intended to allay Bud Selig’s fears (assuming he has them). They are also a signal to let citizens know that their “Corporate Citizens” are ready, willing and able to buy Charter Seats and sponsorships as part of any plan. We already know that Cisco is going to play Pac Bell’s role in a San Jose version of San Francisco’s funding scheme.

Another part of this message is, Miami is mad at you MLB for playing Cousin Eddie while the Marlins weren’t really living out of an RV, as they had claimed. If you come to San Jose, you don’t have to worry about that. We, the SVLG, will be Clark instead of the tax payers.

Additionally, there is the repeated mention of Giants fans within the SVLG communiques. This is meant to let Bud Selig know that there won’t be a mass exodus of Corporate support up in Baghdad by the Bay. That the Giants won’t become destitute, as Larry Baer wants us all to believe, provided the A’s move south. To undercut Bill Neukom’s argument for locking MLB out of San Jose.

There is one other thing hidden in the subtext. Watch this video, the important part comes up at 5:05.   When you combine John Chambers’ message (We won’t put our name on a Stadium in New York because we are in San Jose) with the fact that the SVLG letter and the Brocade/Sun Power Op Ed go out of their way to avoid mentioning the word “Oakland” and “new stadium” in the same context, the message is pretty clear. Bud Selig, we want the A’s in San Jose and will buy sponsorships and ticket packages for both the Giants and A’s if it gets us a stadium in San Jose. Not so much in Oakland.

I think it is fair to say that this what the messages are, don’t you?

What we don’t know, what the letters don’t tell us, is how much of any new stadium will be financed by corporations/presales and how much by loans, exactly. In the San Jose case, if 60 of those 75 companies bought some bundle of seats and advertising, and Cisco maintained $130M in naming rights, they would each need to pledge $1.7M of their Selling, General and Administrative budgets to Cisco Field in order for the combination of naming rights and Corporate sponsorships to cover half of the projected construction costs. As a point of reference, Yahoo’s S, G and A budget last year was $1.8B, which means this overly simplified $1.7M number represents less than one tenth of a percent of the budget where it would need to come from. There is a similar situation with Cisco ($9B), Brocade ($500M), Ebay ($3.6B), and so on and so forth.

Of course, we know that SVLG has well over 75 members and more members might be willing to chip in (while others, like the San Jose Giants, won’t be). I am guessing Bud Selig knows this, too. This is the biggest thing going against the possibility of Clorox Coliseum. If Oakland isn’t pledging public dollars for construction, how does the thing get paid for? If Oakland really is pledging pubic dollars (as I have been told) for construction, how long before pitch fork wielding citizens show up at City Hall?

The answer to this question (How does stadium construction get paid for?), not Larry Ellison’s attempt to buy the Warriors, not Bill Neukom’s Anti-Trust case won/loss record, and not 15 years of back and forth between the A’s and Oakland is what will, ultimately, decide where the A’s will play.

In short, it is “tradition and history” v. “a clear source of funding.” We can handicap this however we want, but it is what it is. I don’t know which will win out.

****(I am adding a table that shows the split between private and public funding at the most recent 21 MLB ballparks built for all of our info. It originally came for  the San Jose Economic Impact Analysis)

Funding Mix Private v. Public

29 thoughts on “If You Got Any Money Left Over, Buy Yourself Something REAL Nice, Clark.

  1. Will we see in November?

  2. Jeffrey, it’s not “tradition and history” v. “a clear source of funding.” MLB doesn’t appear to give a damn about tradition and history (at least with the Oakland A’s). The real debate is “a clear source of funding” v. “modification of territorial rights,” but you knew that already based on the content of your post prior to the last paragraph.

  3. Besides, tradition and history = Philly, right? 😉
    PS: one of my favorite xmas movies as well. I often quote Aunt Bethany: “Don’t throw me down, Clark.”

  4. “Grace?!?!?! She died 30 years ago.”

  5. From the First NLV, which was the best of the series:

    Cousin Eddie: I don’t know why they call this stuff hamburger helper. It does just fine by itself, huh? I like it better than tuna helper myself, don’t you, Clark?
    Clark: You’re the gourmet around here, Eddie.

  6. Just a hunch, but I’m thinking (perhaps wishing) Cisco might up the ante with their naming rights. Say $200 million for 30-years! Even in this economy, Cisco Systems is still making money hand over fist and $200M would be a drop in the bucket for them (so to speak). $130M over 30 would still be awesome, but $200M would mean game over NOW! As for the rest of the ballpark: the Brocade Bleachers, iSuites, Adobe Terrace, EBay Club, etc. etc.

  7. The other part for San Jose is that the city of San Jose will give residential development rights for land that is currently zoned industrial / offices. That is what they did for the Soccer stadium. There is a bit of land in the Edenvale area that now I think won’t be built up with offices for a very long time. The reason they won’t build is they allowed much higher density along First Avenue than there is now plus the old Moffet Air Field will liked become office parks.

    Even in this depressed housing market, residential development rights for large chunks of land is still worth something. Wolff can sell these development rights to other developers and use this chunk of money to help build the stadium. This is the other big reason that Lew Wolff wants to build in San Jose. In the old plan for Fremont, it was for the ability to develop around the stadium. Since he won’t get the rights for development around Diridon, the city will give him rights (rezoning on his land elsewhere) to help pay for the stadium.

    Lew knows San Jose will do this for him because they already did this for the soccer stadium.

  8. One thing that has me intrigued about the extensive private financing/loan loan that would happen in a SJ ballpark is that rich corporations investing in it would be desirous to make a cool, innovative (re: expensive) stadium.

    Inevitably, if a stadium is built in Oakland with a lot of public dollars, it will end up being a cheaply built stadium. And I’m using “cheap” relatively, obviously, but the point stands. You can built a much better stadium for $600M+ than you can for $400M (don’t get caught up in the exact figures I’m providing, the point is the discrepancy).

    I think it would be very hard to build a $400M stadium in Oakland that becomes one of the 5-10 best stadiums in baseball. And I think that if they try to build in Oakland, using public funds, they’ll emphasize fiscal responsibility and a utilitarian design, in the name of staying near that tight budget. This is not exciting to me, because building a stadium is a once-in-40-years opportunity to build something that is a civic landmark of architectural and technological beauty.

    Conversely, let’s say that 75 extremely wealthy companies band together to provide financing/loans for a park in San Jose. It’s in their best interests to create a park that rivals Pac Bell, with cool technology and innovation that hasn’t been seen before. They should be willing to finance a $600M park to make that happen. It helps their brand if the park is actually cool enough to attract national or even international attention.

    The A’s new park will be on the back end of a huge wave of stadium construction league-wide. The A’s and Rays will basically be the last two teams to build for the next 15(?) years. The A’s need to create something better than everything else out there, to set the standard for the next wave a few decades from now. If they only build a cookie-cutter $400M park with no novelty or innovation, it will be an afterthought in five years, and surpassed almost instantly in the next wave.

    I guess my point is, they really need to think “big” and “visionary” here, and that’s much easier when multi-billion-dollar people are financing the park, rather than pitchfork-wielding citizens.

  9. @Jacob Jackson, Theres a lot of nice stadiums out there and all but 2 were built with pitchfork wielding citizen money.

  10. @jesse, what are the 2? I am not aware of even 1. The closest to “no public money” are San Francisco (which had a little over 4% TIF) and Citi Field (which had 20% public money).

  11. Added a table to show how many pitch fork wielding tax payers have funded stadiums and to what percentage. It’s small, click on it and it is readable.

  12. It’s a nice table, and I appreciate the effort that went into creating it…unfortunately, it really doesn’t paint an accurate picture of the situation the A’s would face.

    Most of those stadiums weren’t financed in California, which we all would agree is a different animal than anywhere else in the country; secondly, none of those stadiums were financed in the midst of the worst recession since the 1930s.

    My point still stands.

  13. Josh, I wasn’t challenging your point. Just wanted to throw the table up for discussion.

  14. Jacob, not Josh. Sorry

  15. @Jacob–the latest renderings of Cisco Field, if built in SJ, looks a tad on the bare bones side to me, and the smallest capacity in MLB at 32k, and cost around 430 mill. LW doesn’t want to spend much more than that it looks like, and figured 32k is max of what he can get in SJ, having to build up a whole new fan base, while throwing away at least 10k fans easy in the eastbay. I think it should be bigger park, like around 38-40k, to get to that magical 3 mill every year if they sell out most games. Make 10k of those seats affordable for families ($8-12). With a small capacity of 32k, the average ticket cost will be at least $35 a pop, with no discount days at least for 4-5 years.

  16. @Jeff, I was counting Dodger Stadium

  17. Looks like the old jk is back.

  18. @Jeffrey – Thank you for providing the table – I had never seen that info and it was very interesting to look over. I apologize. I looked back at what I wrote and it had a negative tone it shouldn’t have. I sure enjoy getting to read your’s and RM’s work here.

    @jk-usa – Good point about the park size. I hold the minority view of wanting the park to be the smallest capacity in the league (~32K), even acknowledging that doing so squeezes out a lot of families and promotes elitism.

    To me, this adds to the park’s uniqueness and will help ensure that it remains vogue to attend games there even when the product on the field has some bad seasons. It seems to be a decision that benefits the corporate folks who will be financing quite a bit of the park, which seems fair to me.

    If I had to pick a $430M, state-of-the-art park that houses only 32K in two decks, or $430-500M bare-bones park that houses 45-50K in three decks, I pick the former, every time.

    @Jeffrey and @RM: One subject that I would love to learn more about is the projected costs of different models. Assuming two decks and 32-36K in either scenario, just how much better is a $600M stadium than a $430M one? Can you do really cool architectural stuff with that extra cash, and build noticeably better amenities? I’ve never really seen any other stadiums in person so I’m very naive about what those extra millions could buy you, especially because I struggle to imagine what new confections a 21st-century stadium will offer, and what they would cost.

  19. i still say 36K-37k would be ideal. still would be one of the smallest parks in baseball yet wouldn’t be drastically smaller than the smallest parks built in baseball in the past two decades which would be in the 38k-39k range.

    For a 3 million year attendance, not something i think wolff would really care about. imo he’ll probably love to have all the luxury boxes sold out every game rather than have all the seats having butts in them, but for 3 million you’d have to average just over 37k per game in a 81 home schedule. doable even in a 36k park if they sell out every game with the extra standing room only per game also.

    some may say it’s unrealistic to expect sell out crowds for an entire season, pretty sure many thought of that with min and target field yet they’ve sold out all their games and are easily gonna past 3 million even in their smallish park of under 40k, one of the small handful of parks that doesn’t have a capacity over 40k, or to be more exact 39.5k capacity.

    add to that how well the sharks draw and you’d expect to see a majority at least of the a’s games in sj to be sold out especially during the summer when hockey season is over.

  20. As someone very familiar with corporate marketing, it’s a revelation to see some of these (and my own companies) name sprinkled throughout the net. Didn’t (lil) Bush purchase the rangers just so he can get more limelight in the public eye before his candidacy for president? Exactly the type of exposure the marketing dollars were allocated for, and if they get a luxury box or some good field seats in the process for the execs, customers, or top level talent, all the better! 😉

  21. “Throwing away” 10k fans in exchange for 32k on a regular basis? Sounds like a no-brainer to me (LOL!).

  22. @TonyD–32k on a regular basis in SJ? Hmmm, we’ll see in a few years when the novelty wears off and you’re out of the race when KC comes to town on a Monday night. You guys say Oakland would be like Pittsburgh west and I say SJ would be like SD north. Still not drawing that great after being in first most of the year. Dodgers still rule the southland, like San Fran rules the bay area. Keep them in Oakland, where they’ve had their best years and grown off those 10k diehards.

  23. The San Jose Economic Impact Analysis was pretty honest about what crowds may look like after 5 years. They projected 25k, if memory serves.

  24. jk-usa : have you seen the SJ Sharks attendance figures throughout the years? For supposedly a non-hockey town, attendance has average in the top 10 in the league year after year. In fact 17 years after they opened door at HP Pavilion, they are still averaging the same 17K attendance figures. You seem more of a Gnats apologist as opposed to a diehard A’s fan.

  25. ST–no doubt the Sharks are a solid franchise. Great support, good ownership, nice venue. But it’s the only hockey game in town, just like the Warriors are the only NBA team and they’ve gotten good support most of their years in Oakland with not as good of success as the Sharks the last 15 years and lousier ownership mngmnt.

  26. Real tomato ketchup, Eddie?
    Oh, nothing but the best!

  27. @Jeffrey- You are 100% correct that the SVLG will only help out if the new stadium is in San Jose and not Oakland. If these corporations were willing to fund a Oakland ballpark it would have been done several years ago. Steve Schott is from the South Bay and had just as many connections as Lew Wolff or more and he like Wolff failed in Oakland several times…

    Why won’t these corporations support a team in Oakland?? Their employees for the most part will not want to head to Oakland for a game battling through traffic on I-880 to spend their disposable income. Cisco for example knows this full well and Fremont was still close enough to put their name on it.

    @jk-usa- San Jose supports the Sharks not because it is the only hockey game in town but because it is the “only team” they have period. You would see the same support for any team that moves to San Jose as people have $$ to spend and Downtown San Jose is perfect weather for summer baseball (Warm days, nice evenings).

    San Jose would support the A’s incredibly like the Sharks and 25k a year after 5 years is way low knowing this area. The Giants would be seriously competing hard with a San Jose ballpark for fans hence why they refuse to give up the South Bay to the A’s amongst being selfish and greedy.

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