So, what was that we were saying about San Jose’s Redevelopment Agency being broke?
Well, it’s true. From an operational standpoint, they’re very close. From an asset standpoint, not really. RDA head Harry Mavrogenes authorized the sale of $25 million of property in the downtown core, or 11% of its land holdings. The Merc’s Tracy Seipel has the details.
Said Mayor Chuck Reed: “A lot of people have been wondering how we’re going to put together the transaction to do the land for a baseball stadium. I think this is an answer. And it’s a message for Major League Baseball — just in case they had any questions.”
In an interview with the Mercury News, Mavrogenes acknowledged that the governor’s proposal to eliminate redevelopment agencies could throw a wrench in the city’s plan to acquire the land for the ballpark.
He and the mayor said Friday that the agency’s land-sale plan has been in the works for at least a month. Reed added that the memo about the plan was prepared in advance of a discussion he has been trying to have with MLB Commissioner Bud Selig about “how we can finish the land deal.”
While the $25 million should cover the land, there’s still the cost of the Autumn Parkway project, which will probably exceed whatever is remaining (depending on how many corners are cut).
Interestingly, two of the properties are adjacent to Lew Wolff’s Fairmont Hotel. One is the parking garage underneath, while another is a small retail strip underneath the hotel’s annex, which has a McCormick & Schmick’s restaurant as one of its tenants. Two others are parking facilities. The final property is an undeveloped lot.
One way to think of how San Jose approaches redevelopment is like what Alan Mulally did with Ford several years ago. In what is now considered a highly prescient move, Mulally arranged for Ford to borrow $23.6 Billion to help aid the company in its restructuring efforts. GM and Chrysler chose to try to tough it out, and the economic collapse killed them both in the process. Instead of having to raise new bonds for every project while dealing with whatever the market conditions are at the time, San Jose has chosen to buy large properties early on with the idea of reselling them down the road – for profit or future project. While there is a legitimate argument as to whether or not this is how the RDA should operate, the fact is that San Jose has been in the position to make key moves when the time was right. Now they have assets they can sell as needed, and unlike Oakland, they don’t have to raise bonds or worry as much about the state impacting their timeline to raise bonds (also Oakland).
Does this mean San Jose is a done deal? Of course not. But it is yet another small yet consequential move that comes from a strategy borne of small yet consequential moves. Judging by the reactions of Wolff and Baseball San Jose head honcho Michael Mulcahy, they’re not small moves in the least.
newballpark.org 
ML, why do you think Reed has to meet with Selig to discuss how to finish the land deal? Why would San Jose have to involve MLB?
@fc – I think it’s just a matter of reassurance more than anything else. Remember that Reed said towards the end of 2010 that San Jose wasn’t going to make anymore land acquisitions until Selig decided to allow the A’s to explore SJ. They know that this won’t necessarily force Selig’s hand, but it’s better to show that they’re making progress than not.
San Jose can fully assemble its site. And when MLB continues to cower in fear of Neukom, San Jose can challenge baseball’s anti-trust exemption in federal court. That’ll be the next step for San Jose…
@pjk. The exemption is not really vulnerable in court, the Supreme Court upheld it in a rather remarkable decision that said basically that Congress could do whatever it wanted because baseball is such an integral part of the culture. (St. Pete was a different situation involving promises that would have stuck the city with an empty stadium). San Jose’s way in is simple economics that benefit all but one MLB team (which could be paid off), perhaps coupled with a threatened boycott of the Giants by SV businesses.
Anything is vulnerable in any court if the judge says it is. San Jose, the 10th largest city in the country, is being discriminated against economically – it is forbidden from pursuing major league baseball. Shouldn’t be too tough to get a judge to want to hear about it.
@pjk – It won’t be the judge, it’ll be judges. Multiple court levels and appeals are guaranteed. MLB has plenty of resources and the stomach to withstand that. Does San Jose?
pjk,
Trust me; it’ll be much easier for SJ to simply “get it’s ducks in a row” and for MLB to deal the T-Rights than to resort to lawsuits and such. And with that, something I’ve been thinking about for awhile. In what has become a four-letter word on this site, the infamous “MLB Blue Ribbon study”:
I don’t think a study has ever existed about the A’s situation in the Bay Area, nor will one ever exist. Simply put, 664 days ago MLB gave marching orders to SJ, and perhaps Oakland and Fremont, to get a ballpark deal in place for the A’s…the BEST ballpark deal; meaning acquired land, corporate support, and (with some locales) some form of public financing. Whoever comes out on top first, crosses the finish line, with the best deal, MLB will then announce a decision and work with said municipality on getting the A’s ballpark done. In the case of San Jose, Irwin Raij is on board as a committee member, and at MLB’s ready to assist in territorial rights negotiations with the Giants. So this isn’t about MLB cowering in fear to Neukom/Giants; it’s about getting the best deal possible for the A’s and a ballpark. “Rome wasn’t built in a day”…DAMN STRAIT!
The AE is vulnerable in that its origins were established with the precedent that MLB was a local sports / business, hence not subjected to interstate scrutiny. With MLB continually expanding with international players and businesses, the core reasons in today’s environment is a bit perplexing. A hotshot lawyer would be able to challenge this at any moment, especially one with a lot of government anti-trust experience like say Neukum who came from Mickeysoft as their top counsel. My theory is that MLB has to let all the Oakland scenarios play out otherwise if it grants the TR to SJ with the Gnats objecting, they may be in for some serious litigation. However, as I have stated before, it would be ironic if Neukum wins to break up the AE, therefore allowing thee A’s (and SJ) to automatically decide their own fate and TR.
Actually, i forgot to add the most obvious fact about the MLB AE, the NFL and NBA do not have such a clause, so what makes MLB so unique amongst these popular sports? In fact, in 2001, Congress proposed such an bill called The Fairness in Antitrust in National Sports (FANS) Act due to the possibility that MLB was threatening to contract 2 teams. This would eliminate the TR powers that MLB employs directly. So, this is not the first time that congressional lawmakers have thought about repealing parts or all of the AE…
@ST – San Jose’s beef with T-rights and possible contraction of two teams are not really comparable, at least in terms of rallying political support. With contraction, it’s much easier to get sponsors from other potentially affected communities. In SJ’s case, it’s going it alone.
Congress has more important things to worry about, like keeping a lid on all the hatred that got Rep. Giffords shot…
@baycommuter – ah yes, they need to worry about a shooting incident at a grocery store instead of a multi-billion dollar business with interstate (and international) ramifications across America. /rolleyes
Uh, domestic terrorism isn’t more important?
@BC–“Uh, domestic terrorism isn’t more important?”
I agree with you. It’s crazy out there.
@BC – Terrorism now, eh? Sensationalize much don’t we? Next thing you’ll say then is Oakland shouldn’t spend upwards of a billion dollars on sports facilities when it has one of the highest crime rates in the U.S. Oh wait…. 😡
If the anti-trust exemption was ever over turned, why would San Jose continue to pursue the Athletics? I wouldn’t count on a court case paving the way; they’d better be off creating a franchise from whole cloth. San Jose could certainly continue to puruse ’em, but the only reason why there aren’t sixty-odd teams in MLB is the anti-trust exemption.
@Nic
You’re off base on this one. The AE allows MLB to enforce territories and take certain other anticompetitive actions which would otherwise be illegal. However, nothing in the antitrust laws requires MLB to admit new teams against its will, with or without the AE, any more than Taco Bell is required to accept new franchisees simply because they open burrito stands. Revocation of the AE would make it harder for MLB to restrict territories of its member franchises, and would make it easier for leagues/teams outside of MLB to compete with MLB. But MLB has a big head start, and an existing MLB team would still be vastly more valuable than any upstart team/league, so San Jose would certainly continue to pursue the Athletics.
@ST
Why on earth would Neukom challenge the AE? It’s the only thing keeping the A’s out of SJ.
I see a lot of posts here attributing superhuman litigative powers to Bill Neukom, as though he can bend the law to his wishes through the sheer force of his supposed talent. He may be a good lawyer, but his opposition will have high powered lawyers as well. It’s not as though Microsoft is unbeaten in court. The law simply does not favor the Giants if MLB rules against them (and the supposed claims of San Francisco don’t even pass the straight face test). Whatever Selig and the other owners do, it most certainly will not be because they fear losing to the Gs (or SF) in court.
Perhaps the best post we’ve seen in a long time. Excellent Bartleby! But alas, we’ll continue to hear about Selig being weak against the Giants, cowering in fear to Neukom, doesn’t have the votes of 75% of owners, yada yada yada…oh well.
@bartleby – I think you underestimate Neukum. Google Microsoft Anti-Trust and check all the litigation that went on in the 80’s and 90’s. It’s unfathomable that Mickeysoft hasn’t been broken up into pieces with the a monopoly of OS, Office, and IE. However, to answer your question, why would Neukom challenge the AE? Because the AE is the ONLY thing BS and MLB have that is dear to them that separates them from other sports. Yes, it would be more of a Defcon 1 move and seems counterproductive in the long run (see what i wrote above about irony), but it is still a tactic that everyone wants to avoid.
“I think you underestimate Neukom.” Respectfully ST, again, Neukom isn’t some god or even superhuman. It’s irrelevant what he did for Microsoft as it relates to MLB. He’s one of the most junior owners in the circuit and was confirmed knowing full well that he had to play by the rules of “The Lodge.” I think even Neukom would laugh at the thought of the Giants becoming a “rogue state” of MLB. Remember, it’s all about what’s in the best interest of baseball, not just the SF Giants. FWIW, there are many a powerful lawyer in the MLB ownership ranks; not that it matters (see Peter Angelos and the Orioles/Expos/Nationals saga).
Giants cannot sue MLB
@Tony D- I like your logic on who “finishes first” but San Jose is part of the SF Giants territory and unless that changes the A’s will never be in San Jose nor any other team.
I will say that no way San Jose buys all of this land and does all this work to let MLB AE stand in their way.
They have a great case to take to court and with the Clippers/Raiders as precedent it has always been questioned whether the MLB AE even extends to franchise relocation.
It could be ruled that AE only extends to marketing (I.E. All the teams wear New Era in the league based on a league wide contract).
The Raiders/Clippers lawyers (same firm) argued the “rule of reason” and that while owners may want to geographically disperse their teams it has to hold up again the reason that the prospective can make more $$ in he new market with fans, corporations, or it violates anti-trust law.
San Jose would win hands down in the Supreme Court while MLB would keep its AE but in a more diminished form….could be the case.
I hope it does not come to that but the way BS works and how slow this process is going it is a possibility.
I don’t see why San Jose would be hesitant in purchasing the remaining pacels of land. Seipel’s article says that if the ballpark doesn’t get built, the RDA would then turn around the sell the land to developers. Why not purchase the land and remove that hurdle.
@ST I don’t think I’m underestimating Neukom. He may be a talented lawyer, but most of the work on those cases would have been done by outside counsel. At the end of the day, Microsoft lost its case in U.S. v Microsoft (suffering several findings of misconduct by its legal team along the way). It’s true it avoided being broken up, but that’s an extremely rare and controversial remedy to begin with. It seems likely the ultimate outcome of the case had as much to do with Washington politics as anything else. It was the Clinton-era DOJ that had been seeking breakup as a remedy; once the Bush administration took over, DOJ quickly changed course. It’s also arguable that the final remedies chosen were appropriate; after all, today the browser market is extremely competitive.
Even if the Giants were interested in doing something as idiotic as challenging the AE, I don’t think they have legal standing to do so because they are being helped rather than harmed by it. Also, the AE is only relevant to a decision to keep the A’s out of San Jose; MLB would not be relying on it for a decision to allow the A’s to move to San Jose.