It’s late March, and you know what that means: the new Forbes MLB franchise valuations are out. With a few notable exceptions due to debt problems (Mets, Dodgers), things in baseball are going quite swimmingly. The A’s are back above the $300 million mark with a $307 million valuation, up 4% from 2010. The team remains second-to-last among all MLB franchises, eclipsing only the Pirates. Forbes also listed at $23.2 million, which is probably due entirely to revenue sharing.
To understand where the A’s may be headed, I took five teams and looked a little deeper at how their valuations were constituted. The teams are the A’s, Giants (natch), Red Sox (Giants’ aspirations), Rockies and Padres (aspirational western mid-markets for the A’s). The numbers are quite interesting.
First off, it’s important to note Forbes’ explanations for some of the components of each valuation. “Sport” is described as attributable to revenue shared among all teams. You’ll see there’s an inverse relationship between the bigger revenue teams and this number. If a team is highly dependent on revenue sharing, this number will be higher. “Market” seems self-explanatory, though for the two Bay Area teams it’s interesting that according to Forbes they share the same market, which based on its size (4,274,000) is probably defined as the SF-Oakland-Fremont MSA. That leaves out both the South Bay and all of the North Bay save for Marin County. Not clear on what impact this has, so I’ve reached out to Forbes editor Kurt Badenhausen for a clarification. Here’s his response:
We publish the population and revenue per fan numbers based on the San Francisco-Oakland-Fremont MSA. We use the official MSA designations for all those numbers. Market size plays a role in the value of teams in terms of how they drive revenues, but a bad stadium situation in a big market is still not going to help a team out.
“Stadium” is fairly straightforward, though it should be pointed out that just because you build a $500 million dollar stadium you’re not going to see a similar appreciation in your franchise valuation. That makes “Stadium” more a function of gate revenue and attendance, areas where the A’s and Padres fall behind while the Giants and Red Sox excel. “Brand Management” must be related to marketing efforts – or in the case of the A’s, a lack thereof.
Debt/value is a tricky beast, both in how it’s defined and how MLB’s debt rules get enforced. It always includes stadium debt, and should the A’s get their new ballpark in the next few years that number will jump up significantly from its 29% position, which has hovered there for several years. Since it’s possible that some of that debt may come in the form of a loan from MLB, it will be extremely important for Wolff/Fisher to ensure that revenue streams are locked in to service that debt (and then some) for the foreseeable future.
Surely, this annual release by Forbes will be followed up by a denial of the veracity of the figures by Commissioner Bud Selig. Despite this, it’s telling that franchise sales tend to use the Forbes figures as a baseline at the very least, leading me to believe that they’re far more accurate than Selig, who is loathe to provide any real financial data from MLB, is willing to let on.
newballpark.org 
Interesting that SJ/SV Biz Journal states that the A’s lost 8% of value to $295 million. I’ll go with the positive and the 4%/$307 million. “Since it’s possible that some debt may come in the form of a loan from MLB, it will be extremely important to Wolff/Fisher to ensure that revenue streams are locked in to service that debt (and then some) for the foreseeable future.” Pure gospel R.M.!…Cisco Field anyone? Giants have absolutely no room to cry poor or “The A’s in SJ will hurt us, whaa!” with these numbers; also considering SJ/SV is a completely different metro area. Lastly, it’s also interesting to see Fremont lumped in with SF/Oak, considering they’re more aligned/attached with the South Bay/Silicon Valley in terms of proximity/region/economics. Overall, good stuff as always R.M.
The Pirates are worth less than the A’s? I guess they need a new stadium then.
I think it will be absolutely hilarious if Wolff is told he can only build in Oakland and instead signs a 20-year lease extension with the Coliseum, ensuring more decades of empty seats and hundreds of millions of more welfare payments from the other owners Owners: Too terrified to let the A’s go to San Jose? Enjoy decades more of the status quo instead. Just keep those checkbooks handy.
@pkj — that will never happen “you can only build in Oakland”. Already, the A’s can build anywhere inside there current territory.
I read on Yahoo news that Selig is going to retire after the 2012 season. I wish he was leaving sooner …
David: There doesn’t seem to be any place at all to build in the A’s “territory.” The NIMBY’s and the real estate market killed Fremont and no other place in Contra Costa or Alameda counties is clamoring to get the A’s. Dublin wanted nothing at all to do with the Raiders, FWIW. Al Davis’s son tried to sell the mayor on a Raiders stadium and was told thanks but absolutely no thanks.
@ Brian,
Re: Pittsburgh, its all about corporate support and the fact that Pirates ownership doesn’t invest revenue sharing back into the actual team. Hence the Pirates are constant cellar dwellers.
Pittsburgh, city of champions!…and the Pirates.
I imagine they use census metros for the same reason I have used them in the past… They are easy and for most markets they are good enough. The Bay Area is different, because of how huge the place is. But really, census metro numbers work for all but about 7 MLB markets.
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These Forbes things always have me fascinated. For each of the sports really.
R.M.,
Any particular reason why the A’s debt/value is higher than the Giants? Especially since the G’s have that annual mortgage payment of $20 mil (payment the A’s don’t currently have yet)? And why is San Diego’s 49%?
@Tony D. Usually that’s team debt incurred to purchase the team or debt carried over from the previous ownership group. Notice how the debt for the Yankees is only 4%? Their debt was shuffled off to their parent holding company.
@pjk “The NIMBY’s and the real estate market killed Fremont and no other place in Contra Costa or Alameda counties is clamoring to get the A’s.”
Mark my words, if the A’s can’t get to San Jose, Fremont will come back. The real estate market won’t stay down forever, and even if it did, I see no reason why San Jose financing mechanisms wouldn’t mostly work in Fremont. A deal can be had with the big-box stores, and the dynamics in Warm Springs have changed with the closing of NUMMI.
Fremont again? I doubt it. Not a very interesting place to put a park. Might as well stay at the Coliseum. Even the Wolff said he’s done with Fremont. He said he was done in Oakland too before the Fremont plan (even though that’s up for debate), so if you’re going to revisit a city, start over with Oakland, than Fremont, then back to Oakland again, back to Fremont, etc…, if SJ is out.
@jk “Not a very interesting place to put a park.”
Perhaps not, but it’s primarily about the financials.
“Might as well stay at the Coliseum.”
Ugh. How is that preferable in any way? It’s just as bland and boring a location as a suburb, but with added grime and crime thrown in. And no corporate base.
“Even the Wolff said he’s done with Fremont.”
Of course he did, he’s all in on San Jose. Honestly, if he said Fremont was even a possibility at this point, do you think he’d have any chance of getting T-rights to Santa Clara County lifted? The whole argument is “We’ve exhausted all other viable options, this is our only hope.” For now, he has no choice but to say he’s exhausted all possibilities in Alameda County if he wants any chance at San Jose. But if that decision goes against him, it’s going to be about the most lucrative possible location. C’mon, man, think this stuff through.
“He said he was done in Oakland too before the Fremont plan (even though that’s up for debate), so if you’re going to revisit a city, start over with Oakland, than Fremont, then back to Oakland again, back to Fremont, etc…, if SJ is out.”
When he says he’s done with Oakland, I’m a lot more inclined to believe him. It’s about economics. Nothing personal, just business. Fremont gives access to Silicon Valley, Oakland doesn’t, it’s as simple as that. When probably 50% or more of your gate revenue comes from premium seating, that’s a deal-breaker. You’re just not going to make the ballpark pencil out without the corporate money.
@Bartleby–I’d bet my last paycheck against yours (yours is probably a lot higher than mine, counselor), that Fremont is dead in the water. If SJ is shot down, he and the Fish will probably give up and sell locally, almost doubling their purchase price in 6 years. Pretty damn good return on their investment, coming out to about 15% a year.The Dow Jones has only increased 12% since 2005.
I’m with jk-usa less the word locally.
@jk We shall see. If I’m wrong, I’ll be the first back on this board tipping my hat to you. I hope you’ll do the same. 🙂
I don’t think this is really about the money for Mr. Wolff. He’s comfortable financially, could retire if he wanted, has had a great career with nothing left to prove. I think this is about the fun of being a baseball owner and the satisfaction of creating something; taking the A’s to the next level, securing their future for decades to come. If I were in his position, I’d be doing the same thing. And, if I already had more money than I could possibly spend and was in my ’70s, I don’t see how running up the net-wealth scoreboard could compare with the satisfaction of actually getting the thing done.
I could be wrong, but I don’t think, left to his own devices, Mr. Wolff would sell. I think this is more wishful thinking on your part.
Now, Mr. Fisher could be another story. He’s much less in the public eye, and I have less of a sense of his motivations. However, if I were a billionaire, I think I’d also be more about the glory of preserving a local institution, creating an architectural gem and an edifice with which I would always be linked, than I would with racking up a quick profit. Plus, he’s not the one who’s putting in all the work to make it happen. If the ballpark eventually happens, he’ll make a much bigger profit than he would selling today. If he doesn’t – chances are his take will still increase from what it is today. Does anyone foresee a scenario where the price of MLB teams is going to go down? So what’s his downside from waiting?
Look how long Cohan hung on to the Warriors, despite very little success. Wolff/Fisher haven’t been in the drivers seat nearly as long, and have a lot more reason for optimism of better things in the future.
I think fundamentally the reason rich guys become sports owners is for the fun of being sports owners, not as much for profit. In which case, why quit early? What other project is Mr. Wolff going to work on that’s more fun than this one?
By the way jk, don’t worry, I wouldn’t feel right taking your money. 🙂
bartleby if this isn’t money then why bother with San Jose and all this smoke and mirrors that he has put up since taking over seven years ago?
Oh yah. Fremont won’t happen. It won’t get the popular support long term.If 42 years of Oakland attendance was bad….
The Pirates are the type of team given lots of money, and–perhaps literally as well as figuratively–stuff it down their pockets. Is it any wonder they have sucked for almost 2 decades, even with a nice new park?
Does anyone remember that final game of the interleague series between them and the A’s last summer when a dropped pop-foul by the catcher was followed by a game-winning homer by Zook? That was one of 3 or 4 errors that day by them, and to most Pirate organization folks, it was as normal as the Sun rising in the east.
Fremont won’t happen for a reason we have seen already: NIMBY-ism, and opposition period. Also, when the Nummi plant was taken over by Tesla, that pretty much killed Fremont, and Wolff’s desire to continue there.
@DJ “bartleby if this isn’t money then why bother with San Jose and all this smoke and mirrors that he has put up since taking over seven years ago?”
Because……(wait for it)…..the ballpark still has to be paid for. There’s a difference between not being in it to make a killing, and being willing or able to actually LOSE huge amounts of money.
Everyone forgets, AT&T Park was considered a big gamble, despite the fact it had no SOTA competition, was in a far richer location vis-a-vis the corporate market, and the Giants were first mover. Oakland has none of these advantages. In fact, by building in Oakland, the A’s would virtually assure themselves a fractional share of the Bay Area corporate market – which likely accounts for at least 50% of gate revenue.
Mr. Wolff and Mr. Fisher may be in this primarily for fun, but they still need to break even.
@dj “Oh yah. Fremont won’t happen. It won’t get the popular support long term.If 42 years of Oakland attendance was bad….”
You say this based on what evidence? Many MLB ballparks are in suburban locations. Fremont allows access to Silicon Valley corporate money, AND is still relatively convenient for the existing fanbase (such as it is).
Plus, you remain unduly focused on attendance. A Fremont ballpark likely increases the potential for increased attendance, as it remains convenient for the East Bay while enhancing convenience for the South Bay. But at 32K capacity, attendance won’t be a problem.
And that capacity figure should tell you something: It’s not about getting bodies in the seats, its about selling suites and club seats.
“Fremont won’t happen for a reason we have seen already: NIMBY-ism, and opposition period.”
NIMBYism pretty much only applied to Warm Springs. NUMMI’s closure altered the economic equation in Fremont; the city can no longer afford to be royal about an economic opportunity. Plus, the fact that Tesla is using only part of the Nummi site offers siting possibilities that will have less impact on neighboring communities.
Regardless, I believe Pac Commons remains the most likely site simply because the A’s own so much land there.
“Also, when the Nummi plant was taken over by Tesla, that pretty much killed Fremont, and Wolff’s desire to continue there.”
If anything, Tesla’s taking over the Nummi plant made it more likely as a site, for the reasons described above.
Bartleby, interesting read. I recall however, Wolff giving up on Fremont right after the Tesla take over. Perhaps he was originally looking forward to it all being torn down and using that land for the ballpark and housing, no? As for NIMBYism, no argument on my part. However, opposition in Fremont seems strong, wherever the park could possibly be.
Wolff gave up in Fremont in February 2009. Tesla announced Fremont and in May 2010.
Freaking iPhone fail… Wolff gave up on Fremont in February 2009. Tesla announced the NUMMI move in May 2010
re: Warm Springs. I could be wrong, but I get the impression the Warm Springs NIMBYs were formed to fight a baseball stadium under any circumstances. No more NUMMI, meaning there’s going to be a now-useless, expensive BART extension that would benefit greatly from an A’s ballpark? Doesn’t matter – it’ll be no ballpark under any circumstances and 700 people protesting every night.
You guys are fooling yourselves if you think sold out luxury boxes but empty seats is sustainable.
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And those other suburban stadiums work because there is no other option. Across the bay is the “worlds best stadium” in the “worlds best city” that will continue to draw the crowds and attention away from a tiny suburban stadium in Fremont. You might get a small boost when it opens, but long term its not gonna work out. (unless wolff really does only care about his short term ROI)
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Its Oakland or San Jose. Not Dublin, Pleasnanton, San Ramon, Fremont, Morgan Hill ect. The new stadium has to be Urban and has to be connected to transit if you want to compete long term with AT&T.
The Pacific Commons version of Cisco Field has been my favorite, but private financing or not, I wouldn’t be thrilled if Fremont reentered the picture. A family illness had me making daily commutes to the Fremont/Milpitas border for a few months last year and traffic through that corridor is a nightmare during commute hours, carpool or not. Regardless of where the A’s play during the next phase of their Bay Area existence, they need to be a part of a community instead of the sports team that plays at the edge of town. When the Giants were on their World Series run last October, the City was alive. Regardless of how you feel about the Giants, they were the buzz of the town whether you liked baseball or not. I could open my window and see crowds outside restaurants and bars between innings. I could hear the muted cheers during run-scoring plays. It was like the World Cup, but with real passion because it was about being a part of something that brought a community together. From my roof, in the distance I could see AT&T Park’s light towers. People everywhere of every socio-economic class were wearing some form of Giants paraphernalia. They weren’t exclusively wearing them to support for the Giants. It was to embrace the city and the community. The same applies for the Yankees and BoSox. When you wear their caps, you’re wearing a symbol of a city. As more astute baseball fans, we here can have our gripes about T-rights, play roll inequalities, etc., but for the average person watching a ballgame, it’s about escaping daily life and enjoying something with other people.
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This isn’t meant as another unnecessary praise of the Giants. It’s meant to paint a picture of the sort of future the A’s could have—where they have a cathedral of a ballpark within a community. The A’s cap and colors could be a symbol for a community. When they do well, they’d be a functioning organ within the biology of a city. Fans without tickets would gather “just to be there.” Fans attending the game would spill out into the city following big wins and energize things. Fans coming from the suburbs (who have to deal with parking, traffic, etc.) would have a true destination rather than just a 3 hour ballgame sandwiched between 2 hour-long commutes. This is a real possibility in San Jose, and maybe if the stars align, in Oakland-proper. It’s not a jab at Fremont, but that future just isn’t a possibility there.
@pjk “Doesn’t matter – it’ll be no ballpark under any circumstances and 700 people protesting every night.”
As I recall, closing of the Nummi plant opened the possibility for some re-siting in Warm Springs that would greatly reduce the impact on the neighborhood which was protesting. This might very well reduce the level of opposition.
Even if it didn’t, lots of projects have been built over NIMBY opposition. It’s not all about that neighborhood, it’s about the rest of the city too. Loss of Nummi may make greater Fremont more likely to tell that neighborhood, “Sorry guys, you’re just going to have to deal with this.”
Anyway, as I’ve said before, I think the more likely site is still Pacific Commons. There’s no true NIMBY opposition there, just a couple of big box stores who need to be paid off.
I think the Pirates would be a great investment opportunity if they ever went to sale. The team value seems undervalued due to the prolonged poor team performance. Yet, when they have had good team, IIRC fan support has been pretty good. That, coupled with fact that they have one of the best ballpark in MLB, makes that team an attractive target. If they could just somehow turn it around. The same could probably be said for KC.
@briggs. that was exactly what i was getting at.
@dj “You guys are fooling yourselves if you think sold out luxury boxes but empty seats is sustainable.”
First of all, this is a straw man. I don’t anyone seriously believes a Fremont ballpark is going to sit empty.
And let’s at least have some consistency in our arguments. I see post after post from Oakland partisans complaining that 32K is too small; now we’re hearing it’s going to sit empty?
I believe it would be wildly successful, continuing to draw existing fans while broadening the market to new fans for whom it was previously inconvenient to get to games. At 32K, I think it would be sold out for years or decades, as ticket scarcity ramped up the A’s season ticket base.
But to take the bait, let’s assume for the sake of argument attendance fell back to the 20,000 range. 20K attendance plus sold out suites and club seats minus debt service on privately-financed ballpark equals profitable business. 30K attendance plus Raiders-level suites and club seat sales minus debt service on privately-financed ballpark equals money-losing business.
“And those other suburban stadiums work because there is no other option.”
Anaheim fans have the same “other option” that Fremont A’s fans would. And the Angels are one of the most wildly successful teams in MLB in terms of gate attendance.
“Across the bay is the “worlds best stadium” in the “worlds best city” that will continue to draw the crowds and attention away from a tiny suburban stadium in Fremont.”
That’s all very well and good, but doesn’t really matter that much once you’ve settled in your seat. It’s a draw, but a far bigger factor is “how long does it take me to get there.”
@Briggs From a fan perspective, I agree with virtually everything you’re saying. Urban ballparks are better. But from an economic standpoint, access to a corporate base and providing more convenient access to an underserved geographic area are far, far more important. I might agree that a downtown Oakland ballpark would make for a better fan experience than a Fremont ballpark, all other things being equal, but it’s just too close to AT&T Park and doesn’t have access to one of the main revenue sources MLB teams depend on. A Fremont ballpark, while a fallback, is financially viable; an Oakland ballpark is not.
For the Oakland-only folks, think about it. If what I’m saying is true, doesn’t it pretty well explain every action Mr. Wolff has taken so far?
Jorge Leon got a picture and a blurb on SFGate this morning. Why does this guy get any attention? He’s the sorta guy Oakland-only-ers shouldn’t want speaking on their behalf. He was embarrassing on the Athletics After Dark ballpark debate.
I felt like Jorge came across as passionate on Athletics After Dark. The other dude, however, came off as a total tool.
My objection to Leon being a spokesperson for the Oakland-only movement wasn’t so much his ignorance of the facts. We all are wrong on occassion. My problem was his unwillingness to engage and maturely respond to points you brought up in support of your case. However, aside from Leon no one else is rising to Oakland’s case so in that regard, I admire his devotion for Major League Baseball in Oakland.
You don’t have to be some baseball scholar to express love for your (hometown) team. Although I don’t share all of Jorge’s sentiments, I support his right to air them. I am a “Oakland-Only” guy and have no problem with Jorge, because, as Jorge is famous for saying: ” Lew Lied!”
So you pro-SJ guys believe packing the stands isn’t as important as filling the luxury suites?
Ken Korach, 2016: “Tonight’s attendance at Cisco is 11,694, but the suites are packed; back to you Vince.”
once again, jk pretends that A’s attendance in San Jose would be similar to what it’s long been in Oakland (i.e., lousy), even though San Jose’s record of support for major league sports is sterling – year year after year after year of sellouts for the Sharks, playing a nontraditional sport.
A part of me wants the attendance to suck where ever the A’s build their ballpark. I’ve grown very accustom to their low prices. I just bought tickets to the 4/23 A’s/M’s game at Safeco and about to get tickets to an A’s game at Angels Stadium. Their ticket prices are a sobering reminder of the perks we have as A’s fans. Enjoy $2 Wednesdays while they last.
@jk Not just the luxury suites, also club and charter seats, etc. And 11K for a new Fremont park is absurd. But fundamentally, filling the premium seats makes up for a LOT of missing or empty upper deck seats.
Go look at a map of AT&T Park. Observe how much of that map is club, suite or charter seats. Now look at how much they’re getting for those seats relative to the upper decks seats (Field Club is something like $140 for premium games; suite prices aren’t published but I believe I heard they go for something like $5K per game each). Now consider the fact that a huge percentage of that seating was sold on the basis of full-season, multiyear commitments.
I believe a 32K park in Fremont would be perpetually sold out. But even if it wasn’t: 20K per game with full premium seating would generate a lot more revenue than 30K per game with 1/3 of that made up of upper deck tickets at $10 or $20 each.
Look at it this way: 40 suites at $5K each generates the same amount of ticket revenue as 10,000 upper deck seats at $20 each. Club seats also generate a multiple of the revenue per ticket that regular seats do.
So yes, it is far more important to pack the premium seats than the regular seats. Even if you built a 40K ballpark and packed it every night, I don’t think you pay the mortgage on it if you can’t sell the premium seats.
PJK we’ve been over this over one thousand times. but keep repeating the same useless rhetoric.
Does anyone have the charter/personal seat license pricing break down for any of the recently opened ballparks?
jk- as a pro bay area guy I have to point out that the reason packing suites is important, and perhaps more important than the total attendance, is because of the modern economics of professional sport. In the A’s case, it is doubly important, because selling suites is what will actually pay for the park. This is the double edged sword of “privately financed” ballparks.
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In soem circles this would be referred to as the 80/20 rules (or one variant of that rule). 80% of your revenue comes from 20% of your customers. an 18 Person suite at the coliseum is $1500 (though as a season ticket holder, I can get one for $1000!). Contrast that with 18 bleacher tickets at $13 bucks a pop.
@gojohn. Contract Pirates. Move Rays to Pittsburgh. Two situations solved. Won’t happen, but…
Jeffro you are right but the thing is that unless the stadium remains trendy all the time those luxury box holders will skip town. It has happened all over baseball. The clients that Cisco hopes to entertain will not be entertained by an empty stadium. If a stadium is very popular with regular folk and there is demand for more tickets than there is demand for luxury boxes. No one in the bleachers = no one in the luxury boxes. Also keep in mind that gate receipts only account for a small portion of the over all revenue. You will still TV ratings, merchandise sales, radio rations and other things that would require the participation of large amounts of non-corporate fans.
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What I am trying to say is that you need them both to be sustainable. You can’t be so dismissive of the regular fans and hope that luxury boxes will carry the weight.
@Dinosaur Jr.: Who’s saying single-game ticket sales and TV/radio ratings aren’t important?
@bartleby- Fremont will never happen for these reasons:
1. Warm Springs- The NIMBY’s there are all Asian, East Indian, Afghan, Pakistani, etc….All of whom do not care about baseball and bought their homes for peace and quiet. They will sue forever around the EIR and use it as a lever to prohibit the A’s from ever moving there. I know this because I have several friends who grew up there in the 1990s and their parents are away against any ballpark near their 500k-1M dollar homes. They do not care about baseball in the least bit, although their kids actually would want it.
2. NUMMI site- Tesla coming in eliminated this right off the bat.
3. Pacific Commons- Lew Wolff went on record stating 95% of the Pacific Commons retailers were all for the stadium because they are restaurants/retail shopping but there were 2-3 large ones who were not such as Lowe’s and Kohl’s who argued that who is going to shop for home improvement with a ballpark nearby? People will want food, drinks and perhaps small electronics but not home improvement items.
-The problem that came up was that Pro-Logis who leases the land to these retailers has in their contract with Lowe’s and the other retailers that if anyone develops the adjacent land sold to Cisco near Pacific Commons and it hurt the current retailers business then there would be “unlimited liability” on the part of the new owners of the adjacent land, in this case was the A’s and Cisco.
Cisco and Lew Wolff because of this had to “back off” because who in their right mind was going to take on unlimited liability if for some reason the A’s or Cisco had deteriorated their business?
http://www.athleticsnation.com/2009/5/6/866487/oakland-as-owner-lewis-wolff
This plus the fact Lew Wolff was going to use Residential Entitlements from the mini-Santana Row he was going to build around the stadium to fund it but the recession hit and that will not work any more. He spent $84M in Fremont with 30M non-recoverable. He says he maybe able to sell the land down the road but it will not be a while due to the slow economy.
This plus the fact Fremont has no traditional down-town therefore he has to create one in order to support the ballpark from an ancillary perspective.
Therefore Fremont is dead in the water….
It is San Jose or bust for Lew Wolff and the A’s….
@Sid “Fremont will never happen for these reasons:
1. Warm Springs- The NIMBY’s there are all Asian, East Indian, Afghan, Pakistani, etc….All of whom do not care about baseball and bought their homes for peace and quiet. They will sue forever around the EIR and use it as a lever to prohibit the A’s from ever moving there. I know this because I have several friends who grew up there in the 1990s and their parents are away against any ballpark near their 500k-1M dollar homes. They do not care about baseball in the least bit, although their kids actually would want it. ”
I don’t see this situation as materially different than the opposition you see to a lot of big projects built near residential neighborhoods. Yeah, a lot of times the neighbors fight it tooth and nail, for whatever reason, and regardless of their ethnicity. But a lot of times those projects get built anyway. NIMBY’s have influence, but not veto power.
Anyway, this is kind of a moot point, because as I’ve said before I believe Pac Commons is the most likely site.
“2. NUMMI site- Tesla coming in eliminated this right off the bat.” Please provide a link or cite for this. I remember reading no such thing; in fact, I remember reading Tesla would likely be more receptive than NUMMI because their operation needs are different.
“3. Pacific Commons- Lew Wolff went on record stating 95% of the Pacific Commons retailers were all for the stadium because they are restaurants/retail shopping but there were 2-3 large ones who were not such as Lowe’s and Kohl’s who argued that who is going to shop for home improvement with a ballpark nearby? People will want food, drinks and perhaps small electronics but not home improvement items.
-The problem that came up was that Pro-Logis who leases the land to these retailers has in their contract with Lowe’s and the other retailers that if anyone develops the adjacent land sold to Cisco near Pacific Commons and it hurt the current retailers business then there would be “unlimited liability” on the part of the new owners of the adjacent land, in this case was the A’s and Cisco.
Cisco and Lew Wolff because of this had to “back off” because who in their right mind was going to take on unlimited liability if for some reason the A’s or Cisco had deteriorated their business?”
Yah, I get all this. “Unlimited liability” might sound scary, but in this context it cannot possibly exceed the value of those two stores. It seems highly unlikely the ballpark would drive those stores out of business. But if it did, worst case would be the value of the stores. Or the A’s could just buy out the stores and operate them themselves. The 49ers were contemplating buying out an entire theme park; I don’t see this as being that different.
Anyway, we’re only talking about incremental impact to the stores’ profits, and the stores would have to prove those losses were the result of the ballpark. The more likely scenario would be some kind of financial settlement reflecting a percentage of the store’s profits. I’ve been involved in enough business negotiations to believe a deal is out there if the motivation is high enough.
“This plus the fact Lew Wolff was going to use Residential Entitlements from the mini-Santana Row he was going to build around the stadium to fund it but the recession hit and that will not work any more. He spent $84M in Fremont with 30M non-recoverable. He says he maybe able to sell the land down the road but it will not be a while due to the slow economy.”
This is the main reason I believe Pac Commons is the most likely site. There may not be residential development there any time soon, but looking further down the road a ballpark could still help Fisher/Wolff recover their investment in the land. The “clean slate” nature of the site and potential for ancillary development means there’s actually a huge amount of potential upside in 10 or 20 years, upside that wouldn’t even exist in downtown SJ. In the meantime, I see no reason whatever financing mechanism was planned for San Jose couldn’t also work in Fremont.
“This plus the fact Fremont has no traditional down-town therefore he has to create one in order to support the ballpark from an ancillary perspective.”
Wolff doesn’t “have to” create a downtown; he “can” create a downtown. Big difference. As I’ve said before, just because ancillary development was the original planned financing mechanism doesn’t mean it’s the only possible financing mechanism. He can build the ballpark now; bank the land for later opportunities as market conditions warrant. It’s the same strategy Disney has used in Orlando – with terrific success.
“Therefore Fremont is dead in the water….”
We shall see. I hope we never get to find out because San Jose succeeds, but if not, remember you read it here first.
Remember what Selig once said: If a community doesn’t want baseball, MLB won’t be there. Clearly, there are enough NIMBYs in Fremont to kill off any chances of the A’s going there. MLB will not want loud nightly protests and lawsuit after lawsuit. Wolff canceled Bob Dupuy’s appearance before the Fremont Council or planning board because he did not want Dupuy subjected to screaming and yelling. Fremont is history.
@pjk One neighborhood not wanting MLB does not translate to the entire city not wanting MLB. And the NIMBY factor does not apply at Pacific Commons. There, it is just two big businesses to negotiate with. Everything is negotiable in business. And if putting a ballpark there allowed the A’s to recoup their investment in the land, there’s $30 million right there they could throw at the big box stores just to get started.
Someone is going to get a payout regardless…. It could be the big box stores, or it could be the Giants.
@LS You may well be right – and this may be why the A’s suspended efforts in Fremont. If they came to the conclusion they were going to have to make a big payment either way, why not take a run at SJ, the superior site? Doesn’t mean they won’t come back to the table in Fremont if that fails.
@Sid–i pretty much agree with your entire post on why Fremont is dead in the water. However, I disagree with you on your very last sentence: ” It is San Jose or bust for Lew Wolff and the A’s….”
I think he will revisit Oakland if BS says lets revisit Oakland and the VC site.
@jk He’s made it pretty clear he’s not going to revisit Oakland. He very recently pointed out, MLB can tell him where not to build, but they can’t tell him where to build.
Fundamentally, the economics just don’t work there. No amount of phone calls to Ms. Quan or whatever can change that.
If San Jose is out, the only place in the A’s territory which is economically viable is Fremont. And it just so happens the A’s own a massive, readily buildable piece of property there which doesn’t require a redevelopment agency, doesn’t require a vote….
Fremont won’t happen. The options are:
* A privately built ballpark in San Jose
* An MLB-built ballpark in Oakland.
* More decades (and MLB welfare checks) at the Coliseum.
* Relocation out of the Bay Area..
@pjk Um, ipse dixit pronouncements that something won’t happen don’t, you know, actually mean it won’t happen. A Fremont park is FAR more likely than your last three options.
– MLB: So far as I know, there is zero precedent for an MLB-built ballpark. MLB is in the business of squeezing cities to build parks they don’t even really like privately-financed yards because they make it tougher to get publicly-financed yards. Why in the world would MLB invest in a project the owner has concluded is not financially attractive and where it would face double risk: Not making back the cost of the project, AND then having to continue to subsidize the A’s? Of all the things I’m sure won’r happen, this is the one I’m most sure of.
– Coli: Building a park on land you already own in Fremont is way more lucrative and appealing than staying at the Coli. Fremont is still the path of least resistance: Only two big box stores to deal with; no land to acquire, RDA money, MLB approvals, or city votes needed. The A’s might end up at the Coli five or ten more years; they’re not going to be there decades.
– Relocation: This one could happen, but is less likely than Fremont. Fremont could happen much more quickly, and I can’t think of a single open market in North America which has more economic potential than Fremont. It may be bland, but it’s definitely a “have your cake and eat it too” kind of market in its proximity to both Silicon Valley.
People on this board put way too much stock in public pronouncements. Just because the A’s said, “we’re done in Fremont,” doesn’t actually mean they’re done in Fremont. Just because someone said, “we can’t reach a deal with the big box stores” doesn’t mean they can’t reach a deal with the big box stores. It’s posturing. When that becomes the most financially appealing option, those talks can spring back to life very quickly. You see this dynamic in M&A deals all the time.
…If Fremont wants to get back in the game, the proponents will have to shout down the opponents (the opposite of what happened last time).
@pjk You’re kind of talking past me a bit here. I keep saying, if it’s Fremont I think its going to be Pac Commons. There will be no shouting opponents there; whatever discussions take place will be conducted quietly behind closed doors.
@bartleby–“I can’t think of a single open market in North America which has more economic potential than Fremont.”
You got to be kidding, right?
I have no problem with Fremont – they could be the San Jose A’s at Fremont. But will Wolff want to deal with the NIMBYs, the big box stores, the bad real estate market again? (Isn’t there still a problem involving the SJ GIants, in which technically no team can move within 10 miles of the border of a county with a minor league baseball team? This wasn’t going to stop the Fremont project before, though.)
the only thing i would like about a fremont park is the design of the initial park which is better than what we saw from either the coliseum north site or the site in sj.
just don’t care where a park is built, just get one built and said it all along even as a oaklander all my life that sj probably is the more realistic and financially feasible place to build a park somewhere here in the bay area. not to mention the potential it the park and the a’s org as a whole would have with the south bay money behind them.
–”I can’t think of a single open market in North America which has more economic potential than Fremont.”
You got to be kidding, right?
Not hardly. (At least, other than putting a third team in New York, which I don’t consider an open market). From a geographic standpoint, Fremont is ideal, positioned to tap into Silicon Valley corporate money; provide big time professional sports to a large, affluent, South Bay market that has had limited convenient access to it; and maintain convenient access to the large number of people in the South Bay. It optimizes the market the A’s could draw from without going head-to-head with the Giants in their primary geographic area of influence.
You continue to underestimate the importance of Silicon Valley. SV is arguably one of the top 5 or so corporate markets in the U.S., after New York, LA, Chicago, and…I dont even know what I would place fourth. None of the other theoretical locations (San Antonio, Portland, etc.) can touch Fremont in this regard.
If you think you know an open market in North America that has more economic potential than Fremont, name it.
In my previous post, the second “South Bay” should read “East Bay,” of course.
@bartleby- You must understand Lew Wolff wasted 84M (30M non-recoverable) in Fremont already. He went “all out” and failed.
He tried 2 different sites in Pac Commons and Warm Springs to no avail. Those Big Box Stores you talk about are the “anchors” of the shopping center with extremely deep wallets. They do not care about baseball in the least bit and who in their right mind would accept “unlimited liability” for loss of their business in the event a ballpark is built?
Lew Wolff has built so many huge real estate structures in his lifetime and knows how this game works better than all of us combined in this “great forum” ML runs. If he could have hammered a deal out he would have with those retailers.
The A’s nor Cisco can take that risk on hence why the deal died. Lew Wolff does not want to deal with the Giants/MLB over San Jose if he didn’t have to. Now with Fremont dead he has no choice to go down this path with San Jose that he has dreaded for years.
Fremont is still far away enough from Santa Clara, Sunnyvale, North San Jose, Mountain View, Palo Alto or the other parts of Silicon Valley that its location is still no where near as good as Downtown San Jose.
Oakland if they got their act together in March 2009 when the BRC was appointed would have a completed EIR to move the last of their RDA funds to get VC ready. Because of them “lagging” when Jerry Brown kills RDAs finally, Oakland will be done.
I will say it again guys….Its San Jose or bust for the A’s.
@Sid “You must understand Lew Wolff wasted 84M (30M non-recoverable) in Fremont already.”
None of that is a real loss until he actually sells the land. The “30M non-recoverable” was an estimate based on market conditions at a certain point in time. Such estimates are inherently imprecise.
Market conditions can change rapidly, and that supposed 30M loss could easily turn into profit if they do. One possible way to make this happen is….(wait for it)…build a ballpark there. The fact that the A’s have so much invested in that site is one of the main reasons I think it will come back to life if San Jose fails.
“who in their right mind would accept “unlimited liability” for loss of their business in the event a ballpark is built”
As I said before, it’s not really “unlimited liabiity.” The max they could recover is the value of those two businesses overall – that is a quantifiable figure. I don’t know what those stores are worth, but if it was $50 million, lets say, they couldn’t collect more than that. And the real number is likely a fraction of the total business value, and could be zero.
Anyway, as I recall, a main reason the negotiations with the big box stores failed was their demands regarding positioning of the balllpark on the site. The A’s might solve that one by simply saying “We accept your proposal.”
“If he could have hammered a deal out he would have with those retailers.”
My theory is, a deal wasn’t available at that time on terms that were more attractive than his next best
option, trying to get the T-rights lifted in San Jose. If the San Jose option goes away, that completely changes the dynamic. Also, a lot could have changed on the stores’ end in the meantime. New management, for example. Or the stores aren’t doing so well and they’re looking for an exit strategy.
“Now with Fremont dead he has no choice to go down this path with San Jose that he has dreaded for years.”
Dreaded for years? San Jose has always been first choice. Conspiracy theorists might suggest the other efforts (and the decision to walk away from them) were all part of building a case for lifting the T-rights.
“Fremont is still far away enough from Santa Clara, Sunnyvale, North San Jose, Mountain View, Palo Alto or the other parts of Silicon Valley that its location is still no where near as good as Downtown San Jose.”
It’s not as good, but it’s good enough. It won’t draw quite as well from Silicon Valley, but does have the benefit of being more convenient to the East Bay, which partially compensates.
Just my opinion, but FWIW, I think Fremont would be more convenient for SCCo. south of Palo Alto than AT&T Park up in SF.
“Just my opinion, but FWIW, I think Fremont would be more convenient for SCCo. south of Palo Alto than AT&T Park up in SF.”
No doubt. More to the point, it’s WAY more convenient than the Coli, and WAY, WAY more convenient than VC.
Also, although Fremont might be a bit less convenient for Silicon Valley companies than SJ, it may be slightly more convenient for the Tri-Valley companies the Oakland-only’ers point to everytime the subject of East Bay corporations comes up.
bartleby – you continue to be a voice of reason and I thank you for that. If SJ can’t happen, I would much prefer the A’s move on to VC. But your analysis of the Fremont situation makes sense. Some folks are just too emotionally invested in a particular site to look at this with any objectivity. But successful business decisions aren’t made on emotion. They are made on cold hard facts and rational analysis. Just like you’ve done here.
@Dude Thank you for your kind words. I’ll admit, if you ignore economic factors and what it might mean for the quality of the team, I’d be conflicted between VC and Fremont. No question VC would be better from a fan experience perspective. OTOH, Fremont would be more convenient for me personally, and I’d get to see more games.
Big story on the news last night about Oakland’s low-morale, understaffed police department. Can Oakland spend even 10 cents on a ballpark under these conditions? I don’t think so.
Anything from the news is tough to believe outright. Could the police have pumped up their side of the story for sympathy? I wouldn’t doubt it. The news likes to run stories with a charged slant that could be polarizing to viewers and drive up ratings.
Every city in California is cutting social services. Its just good “copy” to pile on Oakland.
Big difference between social services and basic public safety. 70 fewer cops in Oakland than before.
Easy there PJK.
.
http://www.mercurynews.com/crime-courts/ci_17397188?nclick_check=1
There are always both sides to the story. Why won’t the unions make their members take pay cuts so that less jobs would be lost?
That’s posturing to get union concessions. They’ve already gotten a lot of them. Anyway, San Jose doesn’t need to spend much $$ on a ballpark because the work is already done, most of the site is acquired and private companies such as Cisco are ready to build the ballpark. In Oakland, massive public subsidies likely would be needed and Oakland doesn’t have the money. While San Jose went ahead and bought properties and did an EIR, Oakland fiddled.