On Friday there were actually three big news stories that could affect the A’s future for some time to come. Naturally, there was the Oakland press conference that amount to very little, followed up shortly thereafter by the trade of Trevor Cahill to Arizona for prospects. The biggest news, however, may be not directly related to the A’s at all. After the Angels’ blockbuster signings of Albert Pujols and C.J. Wilson, it was revealed how Arte Moreno is going to pay for them: a new TV contract with Fox Sports worth $3 billion over 20 years.
Think about that. $150 million per year for the next 20 years. The previous Angels TV contract (also with Fox) was worth $50 million a year, which already probably tripled what the A’s were getting via TV. Now they’re getting ten times as much as the A’s. They’ll get more from TV than the A’s get from all sources save for revenue sharing. Jonah Keri wrote in September how the Rangers’ big TV deal with Fox Sports (20 years, $1.6 billion) made the Rangers poised to become another dynasty, and then the Angels come along and blow that out of the water with a deal worth nearly double. The Angels can practically service their entire payroll just with TV, radio, and a little bit Central Revenue money, which makes every ticket sold, every hot dog served pure gravy. And because the Angels have historically had among the lowest ticket and concession prices in the majors, they now have massive headroom to raise those prices and the obvious justification to do so.
Forbes’ 2010 revenue figure for the Angels was $222 million. For the 2011 season, that probably edged up to $230 million. You may recall that I wrote about $230 million being a revenue target for the A’s – in 2015. The Angels hit that mark this year, and will absolutely blow past $300 million in the future thanks to the new TV deal. The next edition of Forbes’ list could have the Angels jump from #9 to #3 or even #2, past the Cubs, Red Sox, Mets, perhaps even the Dodgers. (Don’t worry about the Dodgers though, they’ve been court-approved for a new TV deal that will zoom past the Angels at around $4 billion over 20 years.) That’s scary. It doesn’t portend well for the A’s in the future. Seattle is just as much in a pickle. The Bay Area is home to 7 million residents, with less than half “devoted” to the A’s. The Seattle Metro has 3.5 million residents. The DFW Metroplex has 6.4 million. The LA-to-Riverside MSA has nearly 18 million. It would seem that TV deals tend to scale based on the number of households in each market, factoring in some level of fan interest. It also helps if there’s competition. LA’s chief cable provider, Time Warner, partnered with the Lakers to start their own RSN starting with the NBA’s 2012-13 season. The numbers for the deal look familiar: $3 billion over 20 years. That competition doesn’t exist in the Bay Area, where Comcast, Fox Sports, and the Giants partner on CSN Bay Area and Comcast wholly owns CSN California.
Given the massive amounts of money being thrown around, there doesn’t seem to be any practical way for the A’s to compete. In the October article I wrote that the A’s would have to double media revenues to compete, they might need triple or quadruple. Even then they’ll be way behind the Rangers and Angels. The best way to effect change might be for the A’s to start their own RSN, though that’s a huge gamble since running a network isn’t exactly cheap and the A’s aren’t the kind of ratings bonanza that’s attractive to advertisers. Plus there will be the immediate friction from Comcast, though in the end I’d expect it to be a ploy to get a better deal at CSNCA. Until then, if you’re the A’s braintrust what do you do? Sure, you work diligently for the stadium and you’ve been trying to improve your station in terms of media revenue. But despite your best efforts, with the new deals for rival teams threatening to make them Yankees equivalents of the West, the long rebuild strategy more than makes sense – it may be the only way to go.
Now let’s circle back to yesterday’s press conference. It was accompanied by a letter to MLB from Mayor Jean Quan (PDF). The letter affirms the City’s commitment to the A’s and outlines the support it can provide for its (now) two sites: Victory Court and Coliseum City. Here’s what was written about Victory Court:
Based on updated analysis, the City believes that the costs associated with the Victory Court ballpark project entitlements, land acquisition, and completion of site improvements and infrastructure have changed substantially since its earlier estimates and that those costs remain in the $250 million range. Although the mix of funding sources has been modified, the City remains confident that it will be able to deliver on its commitment to fund each of those elements. With regard to timeline, we believe we can deliver a site, which includes land assembly, full entitlement of the Ballpark project, and completion of infrastructure by November 2014.
The City claims that a new ballpark would be ready for the 2016 season. But that’s wrong. Assuming they were able to assemble the land and infrastructure pieces, construction would take 24-30 months from the ready date. That puts the opening of the Victory Court ballpark at 2017, not 2016. Remember, this is only one year after Victory Court was unveiled, with Quan saying when she got the mayor gig that Victory Court could be “fast-tracked“. Does 2017 sound like fast-tracking to you?
Beyond the problem grasping the schedule, there’s a major problem with the $250 million. City says that the “mix of funding sources has been modified”, which may be code for a reaction to the coming changes in redevelopment. Regardless, it’s clear that the money for this project would come from redevelopment, which means that the bulk of it would come from some form of TIF (federal grants? Don’t make me laugh.). Pushing the completion of the project out to 2017 suddenly becomes convenient. Why? The state’s plan to redirect “excess tax increment” would run for as much as the next five annual state budgets, with the system reverting back to normal once the budget crisis ends. As 2017 approaches and developers start to move on speculation near an approved-for-construction, vetted-by-MLB Victory Court site, property taxes should rise, which means that funding for the $250 million land/infrastructure piece should materialize. But there’s a fundamental flaw with the plan. Does anyone honestly believe that redevelopment will simply go back to normal and the state’s budget woes will be fixed in the next five years? The money to be realized from redirect redevelopment funds is only a small fraction of what’s needed to bridge the budget gap. Already, Governor Brown is pushing hard for new taxes next year and massive automatic budget cut triggers thanks to ongoing monthly revenue shortfalls. Then there’s the looming possibility that redevelopment will be abolished or transformed into a form that requires a new tax structure and local ballot measures.
Now on to Coliseum City. Exactly one year ago, I wrote an analysis of the Coliseum’s plans to build a new stadium for the Raiders along with ancillary development. Back then the plan looked like this:
The new version:
Most of the immediate ancillary development has been moved to in-between the venues and along 880. The scope has gotten much bigger. At 750 acres, the new initiative requires two specific plans, one for each side of 880. Coliseum City (at least the immediate area) is conceived of as three venues plus L.A. Live. It would require all three tenant teams to pony up most or all of the cost for their new or improved venues, with the possibility of ancillary revenue to help pay the bills. City is pitching the concept as having two big advantages over other cities or sites: No EIR required and land already owned by the City. While it’s correct that the environmental process should be streamlined, I think that having a third venue will require at least some form of EIR since planners have to account for the possibility of three events happening simultaneously and the impacts that would occur from that kind of situation. As for land, okay. And? The Coliseum has already been dismissed by MLB, so why pitch it as a feasible site now? Nothing has changed to explain how anyone can (not) pay for a privately financed ballpark there.
When I got word of the Friday event, I was curious, then suspicious. First of all, why do this on a Friday? What was the rush? Obviously, it was a reaction to the news that the Warriors are exploring an arena deal at China Basin. Here’s the irony of the situation: While the Giants are exploring with the Warriors a way to leave Oakland, Oakland has been consulting with the Giants on ways to derail the A’s efforts to move to San Jose. Strange bedfellows, indeed. Oakland’s strategy has turned into having a viable backup plan if San Jose doesn’t pan out, in which case not being able to deliver by 2015 or 2016 doesn’t matter since the A’s have no other choice in the Bay Area.
Very few members of the public were present since there was little advance notice. City could have drafted a resolution that would have been discussed at a future City Council session, but decided not to. Instead it was a short press conference with a short Q&A. That’s what it’s come to. A feeble punt of a letter. Even Quan’s letter ends on an odd note:
We are advocating for the A’s to remain in Oakland because we believe that sports franchises can lead to economic growth. So long as a team creates jobs and enhances economic development in the City, then we will encourage them to remain in Oakland. My advocacy for keeping the A’s is not about baseball or a particular sports franchise, it is about doing what is best for the City. I am convinced that Oakland has the best weather, transportation, fan base and sites available to MLB.
It’s all about what the City gets out of it. It’s not about the franchise. That’s refreshingly honest. Yet in the same paragraph Quan touts the sites, process delayed and shaky as they are, as the best. It’s this kind of fragmented, incongruous argument that melts under even the lightest scrutiny that’s had me so frustrated lo these many years.
With that, we have two big cases of retreating. The A’s know the new economic landscape, what steps they have to take to address it, and what shortfalls they face even if they achieve their immediate goals. Oakland has been flailing with its incoherent strategy, not revealing details or taking important steps. When I spoke to Doug Boxer yesterday, I told him that showing progress on an EIR matters. Milestones matter. He said it didn’t matter since the decision rested with one man (Bud Selig), and that the average fan doesn’t care. I was flabbergasted. What’s the point of having a Facebook operation if the average fan doesn’t matter? Why even have a press conference? He’s right about one thing, that there are no parties involved in this mess with clean hands. I came away saddened and I felt like a little bit of my soul died. Thankfully I had a few beers and nice conversation with LeAndre, then went to a friend’s donation party later that night. I could have drunken myself into a stupor, but I chose to ease up because I wanted to write this long article. Because I’m sick of the bullshit. It needs to stop. We need to move forward. Maybe the end is coming soon, maybe it isn’t. I’m not sure if I want to keep writing this blog if things don’t or can’t change. They say it’s always darkest before dawn, right? It’s pitch black right now.