Crane names his price and it’s a discount

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Perhaps MLB should put the Astros out on Priceline. Wait, wrong Crane?

The New York Post is reporting that Jim Crane’s price for moving the Astros to the American League is not, as I speculated, a future franchise sale price guarantee. Instead, Crane wants the value upfront, asking for a $50 million discount off the $680 million sale price. Assuming that MLB and Crane meet somewhere in the middle, we’ll see how desperate Drayton McLane is to finally unload the franchise. Based on previous reports, McLane is quite desperate. (Additional coverage available from The Biz of Baseball.)

Crane may be trying to deflate the valuation bubble a little. **Astros sale is not final.

Crane’s argument is that moving to the AL West will cause more games to be broadcast at 9 PM Central time because of frequent trips to the West Coast. Let’s do some math on this. Setting aside the interleague rotation, the ‘Stros currently play 4 NL West opponents roughly 6 times apiece. Cut that in half and it translates to 12 road games against the West Coast, then take away a third of those games as daytime games for a total of 8 games at the 9 PM start time. If they play in a 5-team AL West, they’ll play 3 West Coast opponents 18 times (assuming the format stays unbalanced). Half of those games will be at home, translating to 27 total games on the West Coast, or 15 more than before. Roughly a third of these games will be either weekend daytime or weekday getaway day games, reducing actual number affected by the two-hour shift to 18, or 10 more 9 PM starts than before. Is a 10-game delta worth a $50 million discount?

Crane is actually coming into a very good situation with the Astros. $12 million was spent last year to upgrade the big scoreboard. Renovations to club areas have also been completed. The Astros will be moving to CSN Houston, of which they’ll own 40%, in 2013. They’ll be partnering with the NBA Rockets, who will move starting with the 2012-13 season. With the ‘Stros in full rebuild mode, it would make sense for Crane to keep payroll low until the team sniffs contention again.

Moreover, Crane’s request seems to fall in line with the thinking that, when it comes to dealings between teams and owners on the business side, money generally does not change hands. If Lew Wolff gets territorial rights and the Giants are awarded compensation, it’ll be interesting to see what form that compensation takes. Based on this news and the historical pattern of how franchises work out deals (other than player trades), cash payments are not the likely form of compensation.

36 thoughts on “Crane names his price and it’s a discount

  1. So what ideas are being thrown out as compensation for the Giants should the A’s get approval to build in San Jose? We know there is the possibility of the A’s and Giants sharing the whole Bay Area like all the other two team markets in MLB. Well I don’t think the Giants will take that offer. Lew Wolff bought the A’s knowing the Giants owned the territorial rights to San Jose. So why does he feel entitled to the T rights now?

  2. Actually, Wolff said recently that Haas acquiesced on t-rights to the South Bay because the Giants apparently wanted to build a stadium in San Jose, based on Wolff’s own review of the minutes of those deliberations. But the Giants never did move to San Jose. Now, Wolff seeks a return to the pre-1992 shared territory arrangement…Either way, with nobody wanting to pay for an Oakland ballpark, it’s going to be San Jose or bust if the A’s are to stay in the Bay Area….

  3. I wonder if there is any sort of “Cardinals Effect” on attendance, similar to the A’s “Yankee Effect.” I am sure that effect would be eclipsed a “Yankee Effect” in Houston, but I wonder if there is more than broadcasts behind this. $50 Mil is a lot for a few broadcasts annually.

  4. @Eric 19 – Based on what I’ve heard so far, neither the A’s nor Giants have said anything about compensation. Wolff doesn’t want to pay, and the Giants don’t want to give up Santa Clara County for any price. It’s impossible to establish a middle ground based on those stances.

  5. @eric19,
    Ditto what pjk stated. In terms of compensation for the Giants, I’ve theorized that a guaranteed franchise value would come into play say to the tune of perhaps $600 million. Perhaps guaranteed revenue levels through 2017. Remember that in 17 the Giants will pay off their debt on the ballpark (a core piece of their territory argument) and save an extra $20 million per year for eternity.

  6. I wonder why Haas would give the Giants San Francisco and Marin territories, if he really believed the Giants were going to build in San Jose. Anyway giving away territory rights will set a precedent for a team like the Tampa Bay Rays. Northern Jersey is a prime place for them. Do you really think the Mets and Yankees would allow that? Bottomline Wolff bought the A’s with T-rights for San Jose belonging to the Giants. Now he wants to change that important detail he knew going in when he bought the A’s. He might be a good guy but it might be time for him to sell the club if he is unhappy with Oakland and the East Bay territory.

  7. re; Haas’s reasoning. I guess he figured if the Giants move south, the A’s could hog up the East Bay and Frisco areas. If Wolff sells the team, bank on them being moved out of the Bay Area. As it’s been said 10,000 times in here before, no one is going to buy the team for $400 mill and then spend another $500 million or so of their own money to build a privately financed ballpark in Oakland, which doesn’t have the corporate base to support such a venture. The city itself feels entitled to a free ballpark but no one is willing to give them one. So the stalemate continues….

  8. Crane wants a discount because of the perceived higher value of being in the National League brings. I’ve never bought into it, but several owners (and many fans) clearly do. The start time thing is an excuse.
    .
    As far as our situation is concerned, can MLB make the Giants exempt from revenue sharing payments for a number of years? Their payment would be offset (to what extent, I have no idea) by the A’s no longer being on the receiving end.

  9. Wolff bought the team for $175M. It is widespread knowledge he got a discounted deal considering another group was willing to pay more. Why do we assume the A’s are worth $400M? Especially if a new stadium site theis limited to the EAST BAY in the Bay Area. They can move outside of the Bay Area but where? Oakland and/or the East Bay might be less attractive than the San Jose or San Francisco but economically speaking it is superior than Portland, San Antonio, Sacramento, Vegas, or any other place in America that does not have MLB. Oakland needs to do more homework to find a suitable site.

  10. @Eric 19 – Haas was a magnanimous man. He granted permission because that’s who he was. He ran the team more as a passion and a hobby than as a business, which is a big reason why he eventually lost a ton of money on it.

    Wolff’s argument is that a ballpark in the East Bay is impossible due to there being no feasible financing mechanism. I have yet to hear a single good argument against that. When that happens, then we can talk about selling the team. I doubt that MLB, after all this time, has been convinced otherwise.

    Oakland’s had 30 months to figure out the site, financing, line up sponsors, etc. Some people think they’re staying true to a gag order. Others think they aren’t showing their cards because the cards aren’t good. Either way, there’s a lot of missing information that the public could use.

    It’s thought that the Piccinini group could’ve brought in money. Problem is that they exhibited bad form by going with a low bid to start, trying to get an extremely low bid in, then adding partners (and presumably debt) at the last moment. We don’t know what bid Mandalay (Peter Guber) would’ve made, but I bet it would’ve been full market price. Of course, they would’ve moved the team to Vegas.

  11. @eric19 Wolff also bought the team knowing TR could be modified with a 3/4 vote of the owners.
    .
    As for Crane, who is going to provide this supposed discount? MLB? Seems that if they are the ones proposing the move they should provide the compensation.

  12. Oakland is far to built out for any site to really work in this day and age.

    Uptown was the spot that would have been the best but Jerry Brown sold it to a developer who had him in his back pocket.

    Now with VC, if it was not for the bad transportation issues around the site and the 16 businesses needing to be moved that would not be a bad site otherwise…..but that is a stretch.

    Crane is smart, get something out of Selig before he joins the lodge. 50M? I think that is fair since he is paying such a premium for the team itself.

    As for Giants T-rights….MLB will probably let the A’s explore SJ and if a ballpark is built only then will they talk compensation.

    No way MLB makes the A’s pay the Giants before opening day 2015.

    Meaning, MLB and the A’s really should have to pay 60M or the last 3 years of debt service on ATT Park at 20M a year piece….Revenue sharing will make that real easy.

    They may vote on the T-rights issue and share the market now but I would think let them try first before putting anything to a vote.

    Selig by doing this allows the A’s to try and has time to work this out.

  13. @ Eric 19 – “Oakland needs to do more homework to find a suitable site.” Exactamondo – Unfortunately Oakland has had almost 2 decades to do its due diligence and still we haven’t heard a peep, except for revised Coliseum site….for the Raiders. =/

  14. @eric19,
    By the way, welcome to the blog. The whole “Wolff knew that SJ was Giants territory when he bought the A’s, therefore he should only focus on his territory, Oakland” sentiment is strawman logic at its best (or worst). Why? Because 1) the Giants TRights to SJ exist for only one reason (which never happened) and 2) its simply wrong for the 10th largest city in the US to be banned from obtaining MLB (even Oakland only folk would agree with that statement). Simply put: Wolff freeing San Jose from the Giants and pursuing what’s best for the A’s franchise are what’s in MLB’s best interest.

  15. @ Tony – ” its simply wrong for the 10th largest city in the US“….and also the 2nd richest per capita income according to Bloomberg 😉

  16. I thought Wolff’s agrument is that he can’t find a site in Oakland. I think the argument of no Oakland corporate sponsorship is coming from people on this board. Good thing they did not go to Vegas considering the unemployment situation there.

  17. OT: RM, if you haven’t already, read this weeks thread over at SJInside re Wolff and the possible land deals. Just plain sickening! The stupidity and lies over the ballpark and “how much it will hurt SJ” are simply mind boggling. They (NIMBYS and naysayers) are the sole reason I wouldn’t want to see a referendum on the ballpark. These lies have the possibility of influencing the electorate and WHAM, no ballpark. If you’re confident that a pro-ballpark campaign can defeat, silence this element, then I will be confident as well.

  18. @eric19,
    You’re obviously new to this blog. You should really catch yourself up on private financing of stadiums and corporate support. Hint: they go hand and hand. Happy reading!

  19. @eric 19 “Lew Wolff bought the A’s knowing the Giants owned the territorial rights to San Jose. So why does he feel entitled to the T rights now?”
    .
    Giants previous ownership bought the team knowing that the T-rights to San Jose had been gifted to them by the A’s based on a premise that was not fulfilled. Giants previous ownership further bought the team knowgin that those rights could be removed at any time by owner vote without compensation. So why should the Giants feel entitled to piss and moan if that actually happened?
    .
    “Anyway giving away territory rights will set a precedent for a team like the Tampa Bay Rays. Northern Jersey is a prime place for them. Do you really think the Mets and Yankees would allow that?”
    .
    Adjusting territorial rights for two teams which have already been sharing the same market for decades sets no precedent whatsover for moving new teams into new markets belonging to other team. Further, teams like the Yankees and Mets might well be more concerned about the precedent of trapping a team in an economically untenable situation like the A’s face in the East Bay. The Yankees and Mets also stand to gain financially be getting the A’s off the dole. In any event, the Yankees and Mets do not hold veto power over the situation; they get one vote each like everyone else.
    .
    “Wolff bought the team for $175M. It is widespread knowledge he got a discounted deal considering another group was willing to pay more. Why do we assume the A’s are worth $400M? Especially if a new stadium site the is limited to the EAST BAY in the Bay Area.”
    .
    And why would we assume MLB would limit the A’s to the East Bay indefinitely knowing that doing so carried an opportunity cost of more than half the franchise’s value?

  20. @ eric 19 “I thought Wolff’s agrument is that he can’t find a site in Oakland. I think the argument of no Oakland corporate sponsorship is coming from people on this board.”
    .
    Wolff has said both. He puts more emphasis on the site issue for PR reasons, but the corporate support issue is the true driver. The site issue is a big problem, but could ultimately be solved. However, corporate support is sine qua non for a privately-financed ballpark, and therefore an absolute deal-breaker for Oakland.

  21. @Tony D. – SJ Inside commenters are even less representative of the public than SFGate’s. Come on, there’s a guy with the alias “John Galt”.

    • Thanks R.M., I’ll sleep better tonight knowing that ;o)

      @Tony D. – SJ Inside commenters are even less representative of the public than SFGate’s. Come on, there’s a guy with the alias “John Galt”.

  22. I went to that SJ Inside site and these guys are pissed on this whole ballpark deal. Poor TonyD was fighting a lost cause in there. It’s no slam dunk that it will pass a vote. Lew may have to actually spend some money like the 9ers did in SC to get his way.

  23. Who is John Galt?

  24. From day one that SJInside site has blogged about a possible ballpark with a jaundiced view.
    .
    Even if you say that Wolff would spend money on a ballpark, as if I’m not mistaken that was the parameters that MLB gave to Oakland in finding a site, the fact is that the onus starts with Oakland to find a site and fund a study and they still haven’t done that. It’s not an issue of an old regime or “looking into the past” we’re talking about inaction in the here-and-now.

  25. jk, SJInside is a fringe site run by a guy who hates all thing SJ Gov’t related. It’s about as bad a gauge of the situation in SJ as you could find. He was opposed to the Earthquakes stadium too…

  26. @gojohn A symbolic character from an Ayn Rand novel.

  27. re: ballpark opponents in SJ. I asked one of these people if he’d opposed the arena ( a runaway smash hit success by anyone’s standards) and if he thought it was a failure. He refused to answer either question. Either way, San Jose striking out on A’s still would not solve the problem of no $$ in Oakland to pay for a ballpark.

  28. @ pjk – ” Either way, San Jose striking out on A’s still would not solve the problem of no $$ in Oakland to pay for a ballpark.” Therein underlies the main point that pro-Oakland SJ sideline haters don’t get….if SJ isn’t granted the TR, then it goes back to the status quo for the A’s in Oakland, which I can’t comprehend how anyone in their right mind would support. Granted, if Oakland had an EIR, land acquisition, and finaccing in place, i can how it would be a two city horse race. Unfortunately, SJ is sprinting to the finish line, while Oakland is still pondering what to do at the gate…..

  29. John Galt saved the world with a static electricity machine in Atlas Shrugged. Despite what some want to believe, the novel is fiction.

  30. He didn’t save the entire world, just those that deserve to be saved.

  31. @ Gojohn10 Ha, woosh moment on my part.

  32. …maybe Selig said nothing about the A’s because giving an OK to San Jose is something that will be unveiled in a week or so, after the World Series?

  33. He is wrong in his statement that the Rays finished dead last in attendance in the AL—we actually have that honor…hopefully he is more optimistic about resolving our ballpark challenge than he is about the Rays–

    •The commissioner is “concerned” about the low attendance in Tampa Bay. The Rays “are a wonderful organization, produced a terrific team this year and finished last in the American League in attendance. I’ll let you draw your own conclusion. That’s bad.” The Rays’ quest for a new stadium is not quite a “lost cause,” as Russo describes, but Selig said he is “usually an optimist and I don’t have any reason to be too optimistic” about the situation.

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