Monthly Archives: October 2010

10.12.10
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Target Field a revenue bonanza

I last wrote about a new ballpark revenue model almost exactly three years ago. Back then, I had estimated that the A’s could net $24 million more per year, after revenue sharing. One thing I did not focus on was the possible gross revenue the team could realize, which would be $44 million more than at the Coliseum. Little did I realize that the delta could become even greater over time.

Minnesota Public Radio called up Forbes and the usual gallery of sports economists to get an idea of how much the Twins have benefited from Year One at Target Field. The answer: $50-70 million more than 2009 at the Metrodome, perhaps more. That figure is based mostly of gross revenues from the stadium, before the team has to hand over its share of revenue sharing and get its piece of the central fund.

Curious about how a similar effect could be applied to the A’s in new digs, I re-ran the numbers. This time, with the 2009-10 drop in revenue, I figured the difference would be vast, but I had no idea how vast. The current model looks like this:

There is some debate as to what the A’s final revenue is. Forbes said that in 2009 it was $160 million, $155 million for 2010. Lew Wolff said that the number for 2009 was $130 million. Lacking a look into the A’s books, I’m splitting the difference for illustrative purposes. That puts final revenue at $149 million and gross local revenue at $86.7 million. Now for the future model:

In this case, the new gross local revenue is a whopping $160 million, while final revenue is slightly higher at $170 million. This is because the A’s will be able to deduct debt service and a host of other expenses as part of the “Actual Stadium Expenses” deduction against revenue sharing allowed in the CBA. Interestingly, it creates a situation where the A’s would continue to be revenue sharing recipients instead of payers, to the tune of $20 million. This is mostly due to rising revenues league-wide, as the average annual revenue per team is approaching $200 million (thanks, Yankees). The best way for the A’s to stop being revenue sharing recipients under the current CBA would be to ink richer TV and radio deals.

It goes to show how the A’s aren’t just being left behind on the revenue front, they’re getting lapped. Repeatedly. Going back to the gross local revenue figure, note the difference between the future and current models: $74 million. And it could be even greater, since the numbers don’t account for in-stadium merchandise sales. Those sales all get counted the same in the long run, but it’s all about when they get counted. Every year the A’s count on their windfall coming in December, after all of the books are closed. The rich teams get their windfalls throughout the year. November when thousands upon thousands of large season ticket deposits are made. Merchandise sales when purchases are made. Millions of advance tickets, often sold well before Game 1 on the schedule. Plus the various sources that come in during the season. There’s a constant, predictable, heavy stream of dollars that makes it much easier to project payroll and operations.

(The next couple of paragraphs are not for the purist A’s fan or Oakland partisan. You have been warned.)

With that in mind, I’m starting to think that if/when the San Jose move is confirmed, in the ramp-up to the ballpark opening the A’s will unveil new alternate uniforms, hats, perhaps even team colors, all with the idea of capturing the San Jose audience dollar while the iron is hot. There’s no official “O” hat for the team now, but you can bet there will be a second “SJ” hat when the time comes. I’m not too keen on this, and I worry that the team will go D-backs crazy while attempting this. I sure hope they rein this in.

Beyond that, I would also expect that once the confirmation is made, the A’s will open up and sell “Oakland” as much as it can in a sort of  “get it while you can” manner. Those nods to history that fans criticize the team for not honoring? You’ll see it. And it will be for sale. It reminds me of the latest episode of Mad Men, in which Don Draper rebounds from losing a major tobacco account by buying a full-page ad in the New York Times. In the ad he swears off tobacco accounts forever, shocking everyone in the office, Madison Avenue, and the public. The motivations for both are anything but altruistic, yet completely shrewd and understandable. They also hold a great risk of backfiring. At least in the case of Mad Men, we’ll pretty much know what happens next Sunday night.

10.09.10
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Coliseum sans Coliseum

Update 10/11 1:20 PM: SFGate’s Raiders blogger Vittorio Tafur has some choice words from Amy Trask, indicating where much of the inspiration for this vision came from:

“There is no short answer. … We’re having ongoing discussions about the stadium opportunities. We’re working very, very cooperatively with the city and with the local officials. We’ve been extolling the virtues of this site for a quite awhile now. It was a year and a half, 18 months, give or take, maybe more, just under, but about a year and a half ago that I started talking about this site and using a new-stadium on this site as an opportunity to revitalize the whole area.

Why not, rather than look simply look at the stadium project, look at how one can use a stadium as an anchor for, or a catalyst for, an urban redevelopment that provides economic stimulus for the whole region? You guys know as well as I do that this site is centrally located, it’s tremendously well-served by public transportation. There are stadiums and facilities all over the country where they’re trying to figure out, how do we get subways or trains to come to our stadium? We’ve got BART. We’ve got Amtrak, the capitol corridor, the ACE train. So, it’s a central location on a freeway, well-served by public transportation.

So, about a year and a half ago, we started proposing and extolling the virtues of proposing the possibility of doing a stadium project on this site. Not as a stand-alone facility but as a catalyst for an urban renovation in the manner in which to bring economic stimulus for the whole region. We have been working very cooperatively with the city and the Joint Powers Authority. You guys understand this region. Right now, fans come to this facility and there’s nowhere for them to spend their money in the area. There’s one or two spots on Hegenbereger, but how about doing something here like was done on the waterfront.”

If the Raiders get a new stadium built in the Coliseum complex, be prepared for the place to look something like this:

You may notice something’s missing. That’s because there’s a large pedestrian plaza where the old Coliseum infield used to be. The finished product includes a $862 million stadium, which includes $144 million in debt remaining on the the original (and to be demolished) Coliseum. A stadium built for two teams would cost $880 million. Either way, costs would be slightly less than the $954 million projected for the 49ers stadium, though likely rising costs haven’t been accounted for in the Oakland model.

These and other facts come from a recent feasibility study (PDF) commissioned by the Coliseum Authority. The analysis was done by CSL, a firm that has done plenty of other similar studies, including the study for the Santa Clara stadium. Not surprisingly, CSLI breaks down the financing for the stadium (minus Coliseum debt) along very similar lines to what was pitched for the Niners:

  • $96 million in public funds (redevelopment)
  • $133 million in personal seat licenses membership equity fees
  • $150 million from the NFL
  • $339 million from the Raiders

If the 49ers and Raiders roomed together at the stadium, the financial picture would be vastly different:

  • $110 million in public funds (redevelopment)
  • $133 million in personal seat licenses membership equity fees from Raiders fans
  • $133 million in personal seat licenses stadium builders licenses from 49ers fans
  • $300 million from the NFL
  • $30 million from the Raiders
  • $30 million from the 49ers

One of these is impossible, whereas the other makes too much sense to actually happen. Keep in mind that the two-team model is the only truly feasible model in either Santa Clara or Oakland. Naming rights could be worth double for a shared stadium. There would be less competition for a bowl game, soccer friendlies, mega concerts – all of these big events would gravitate to one place. It’s just a matter of executing.

While the Niners are well ahead of the Raiders process-wise, the Silver & Black hold the trump card. Ever since the Santa Clara concept was unveiled, I was skeptical that the Niners could do it alone and I remain skeptical. It’s no fault of the team, it’s simply too expensive. It would be one thing if it was the Giants and Jets working together; at least they had a working relationship to help make the deal possible. Nothing like that exists here. And for the Yorks to hope that Al Davis’ wandering eye will somehow cease long enough to pen a long-term deal is, well, not very promising.

The holdup here is that Al could very easily move the Raiders south to Santa Clara. But you can’t expect him to agree to the same kind of 40-year lease to which the Niners are committing. It would be hard to see him commit to anything longer than a decade, hell, even 5 years. The Raiders are going to want to keep all of their options open, whether that means a new stadium in Oakland, or waiting out what happens with the Chargers in San Diego (or LA). Any short-term lease or flexible situation makes it harder to secure important pieces of financing, which will make it harder to get the stadium built. Not to sound callous, but the best thing for both teams – if they want to get something done together – may be for Mr. Davis to slip into a long coma. Or, you know. Then again, maybe Amy Trask’s eye is just as wandering.

Going back to the plan, I think they’re making a mistake. Instead of demolishing the entire Coliseum, they should reuse the East Side stand the way I described in March, transforming it into a convention center. The space is there and there’s plenty of opportunity for integration, whether it’s extra parking through a garage under the facility or a green roof creating a large amount of open space. After all, you’re already talking about a billion dollars, what’s another half-billion among friends? It would allow the employment base to be stabilized, since the low-wage service jobs common with these facilities could easily float between the arena, stadium, and convention center.

Beyond that, it’s clear that any stadium project would need TIF to help it get built, TIF that would come from surrounding development. Various industrial and commercial development projects would be encouraged, along with more sprawling parking across 880 (notice the pedestrian overpass). Not sure what that would mean for tailgating. I’m somewhat curious about the “Live/Work” area occupying the Coliseum North area (thanks Jeff), as it’s a stage that would probably trail the rest of the development.

Is it a pipe dream? Yes. I was somewhat disappointed that the Trib’s panel didn’t raise any questions about the Raiders’ future in Oakland, even though a feasibility study for the Raiders was due and up for review. Certainly, the Coliseum Authority, City, and County don’t want to lose the Raiders, but at what price? Knowing that Raiders could very well want only short-term deal in the South Bay, the Authority may be best served by waiting the Santa Clara process out – for if that fails, an East Bay stadium sounds like a decent fallback (though not as cost-efficient as a rebuilt Coliseum).

Other notes from the presentation:

The cited population figures are strange. They completely omit Sonoma, Napa, and Solano counties, which indicates they did a fairly lazy CSA lookup-and-add to derive the numbers.

I hadn’t seen a corporation count in one of these studies until now. Even with the omitted counties, the Bay Area would place third (fourth if LA had a team and was included in the comparison).

I took the corporation count further by making a before/after comparison. If a new football stadium were built along with a new ballpark for the A’s, there’d be a visible shift in the amount of premium options available to interested parties. There could even be some oversaturation of the premium product, especially club seats. The suite numbers look the same, but should be treated differently because the future total includes “minisuites,” which are smaller and more affordable than typical luxury suites. The oversaturation phenomenon is evident in New York, where the old stadium only had 500 club seats (2X teams) and the new one has 10,000 (also 2X teams).

I’m sure that many of you South Bay partisans will quickly say that the market can support the jump. I’m not so sure. Good thing club seats aren’t counted as part of the TV blackout quota.

It’s also not clear what the effects on the Warriors would be. BTW, the team currently owes $10.7 million in back rent and expenses to the Coliseum Authority, a likely goodbye present from outgoing owner Chris Cohan. The drive to rename the Warriors won’t go anywhere as long as there is this tension regarding financials between W’s and the Authority.

10.06.10
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Trib Editorial Board asks mayoral candidates about A’s, Warriors

Blog fave Dave Newhouse reports on a panel held for the four leading Oakland mayoral candidates about two major sports issues affecting Oakland. The one with the most ink is the matter of whether the Golden State Warriors will finally adopt the Oakland moniker. I suspect the answer for incoming W’s owners Joe Lacob and Peter Guber lies in money. Chris Cohan hinted a long time ago that some amount of relief from the team’s lease might do it. It’s not clear whether the same thing would satisfy the new owners. There is also some question as to what value each designation has. Is “Oakland Warriors” more or less valuable as a brand than “Golden State Warriors?” Some sports marketing folks out there know the answer to that better than I do.

Following that question of pride was a question about a pending fall. All four were asked to address the A’s situation:

(Jean) Quan: “I think this (city) is the soul of Major League Baseball — great diversity, ethnically and income-wise. I met Lew Wolff after I got elected. He didn’t say ‘girlie,’ but almost. There’s not a transit-rich (baseball) site that’s more ready to go in the entire Bay Area than ‘Victory Court’ (in Jack London Square). We own most of it, and could develop it as an entertainment (center).”

(Rebecca) Kaplan: “I love the A’s. Lew Wolff felt (Mayor) Jerry Brown didn’t care. The A’s could succeed here very well. I believe we could have a football and baseball stadium on the Coliseum site. We own the land. San Jose is not a done deal. They have a local law that requires a ballot measure, and they did not put it on the November ballot. So there’s a window of opportunity here.”

(Joe) Tuman: “I’ll be blunt. In professional sports, it’s ‘show me the money.’ … I won’t spend a dime of public money on keeping the Oakland Athletics here when I can’t pay for police officers or keep the streets safe. I’m not saying it can’t work, but let’s be objective.”

(Don) Perata: “I probably know a little more about this stuff than most people. I was part of two Raider deals that both failed. We got held up; we really did — by both (the A’s and Raiders). We got rid of the Coliseum board and then politicized it. … In retrospect, it was a disaster. I don’t think the A’s are going to stay here. We can’t play in this game, putting up the money. We haven’t been smart with our franchises.”

So from this, we can gather that one candidate backs Victory Court, another backs a Coliseum-sited ballpark, another won’t put up a dime, and the frontrunner has given up. Well, no one can ever say Oakland lacks diversity, and that goes for sports politics too.

According to this DIY poll by TellFi (via The Oakbook), Perata is garnering 34% of the vote, with Quan at 27%, Kaplan at 16%, and Tuman at 10%. If Perata and his rather brutally honest mindset prevails, it’s probably curtains for MLB in Oakland. Absent a simple majority, Perata would have to win via the instant runoff that would occur on election day.

Strangely, Newhouse follows up Perata’s comment by writing, “But we’ve been smart enough to keep them.” I’m not sure that smart is the operative word, Dave.

(Thanks, Ed)

Quick postscript: I wonder how linusalf will spin this Newhouse article? Update 10/8: He finally did, and it doesn’t say much. Also, supposedly Lowell Cohn was on Ken Dito’s show this morning and is no longer opposing a move south because of Oakland’s inaction. Wonders never cease.

10.04.10
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More end of season tidbits

Let’s roll it out, shall we?

  • New Twitter update (and article) from A’s beat writer extraordinaire Susan Slusser (@susanslusser): Beane feels optimistic about prospects for new stadium. He says team expects news sooner than later.  #Athletics. More on this from MLB.com’s Jane Lee.
  • The Quakes named David Kaval as its new President. Kaval replaces Michael Crowley (the one who owns a piece of the A’s, not the journalist), who will be bumped up to Managing Director. Kaval’s previous gig was at the independent Golden Baseball League. Quick analysis: the Quakes need to make more headway with sponsorships, and Kaval’s experience indicates he knows the angles.
  • –
  • Target Field ended the regular season with the 3rd worst home run rate (1.35 HR/game) of any MLB ballpark, just behind Safeco Field (1.22) and yes, the venerable Oakland-Alameda County Coliseum (1.33). Some of that may be attributable to the half-season absence of Justin Morneau and Joe Mauer‘s almost inexplicable power dropoff, from 28 to 9 HR in one year. Mauer should be able to adjust, as David Wright did at Citi Field (10 to 29 HR from 2009 to 2010).
  • The Twins are criticizing the T-Wolves for placing a large ad sign at Target Center that will be visible from Target Field and Target Plaza. Seriously?
  • Home runs are down slightly at New Yankee Stadium, but it’s still the most HR-producing park in the majors.
  • MLB instituted new sky ground rules at Tropicana Field for the playoffs. The upper “A” and “B” compression rings/catwalks that hold up the dome are no longer in play, as balls that hit the rings are now automatic dead balls. Previously, balls that hit the rings were in play, and were ruled fair or foul based on where they landed. The lower “C” and “D” rings are home runs if balls hit them in fair territory.
  • Matier and Ross report that the 49ers are getting ready to open a sales office for their planned Santa Clara Stadium. The office will be in the Tech Center, which is adjacent to the Santa Clara Convention Center, which itself is across the street from the stadium site. No seat license prices yet, of course.
  • Mesa, AZ voters are mulling over Prop 420, a proposal to replace HoHoKam Park with a new city-owned ballpark complex with a bunch of ancillary development to help pay for it. If you’ve ever been to HoHoKam, you’ll know that the only thing ancillary to the park right now is a cemetery.
  • Firing up stogies in the clubhouse to celebrate the Reds’ first division crown since they opened their new ballpark is apparently verboten.
  • The nonprofit group that runs the Memphis Redbirds (AAA, Cardinals) has been struggling financially, causing them to consolidate a bunch of debt in an effort to stay afloat. What hurt them? The arrival of the Memphis Grizzlies, a blip of excitement for U of Memphis basketball when John Calipari was there, and bad projections for attendance at AutoZone Park. The team and ballpark will probably be sold in the near future.
  • The Giants are getting the late game slots (6:37 PM PT) for their first two home NLDS games, which is great for West Coast viewers, not so great if you’re a young Braves fan who has to go to school Friday morning. The Rangers are getting the crappy day slots that we as A’s fans have been rather familiar with.
  • Attendance at yesterday’s Raiders-Texans game was a scant 32,218. There are often comments about how whether or not the Bay Area is a two-team baseball market; are we sure it holds up as a two-team football market? They could’ve saved some money and left the tarps on!

Update: Tonight’s fresh articles by Susan Slusser and Jane Lee have done a better job of clarifying where management’s position is going forward than the quotes Slusser got from Lew Wolff last week. From Lee’s article:

“I was talking to one free agent last year, trying to tell him to concentrate on the field, that we had the best playing facility in the league, the best groundskeeper in the league. He said, ‘You’re right — until August.'”

…

“I think we’re going to be planning a new stadium at some point soon,” Beane said. “That’s just my own gut feeling. We have to at some point. I’m an optimist.

“I think it will allow us to start to plan around some of these guys here from a long-term standpoint. Hopefully, it’s not a revolving door, like it’s been the last decade. Hopefully, we could do some long-term planning, which we really haven’t been able to do. I think it would be pretty invigorating for everybody involved, and I think everybody would sort of be relieved having a direction for the franchise.”

Thing is, if MLB rules in Oakland’s favor, there’s an immediate quandary because I don’t think the owners have been planning on staying in Oakland.