As part of Forbes’ annual analysis of the NBA, staff writer Tom Van Riper put out a piece on our hometown heroes, the Golden State Warriors. Much of the info in the article has been dealt with elsewhere, such as the differences between Chris Cohan and the Joe Lacob/Peter Guber ownership group, or the latter’s interest in a new arena in San Francisco. More interesting and revealing is this tidbit about the new TV deal negotiated between the Warriors and Comcast:
That agreement paid the Warriors approximately $50 million up front—enough to take the sting off the purchase price—and roughly tripled the annual rights fee to over $25 million from $9 million. The agreement is for 18 years, with provisions to periodically renegotiate along the way.
Indeed, the $50 million probably did help pay down debt associated with the franchise purchase. Plus they didn’t take too much upfront, as $25 million per year is a healthy amount for an NBA team – though far less than the $150 million per year the Lakers are getting. No matter how bad the team gets (and they’re still bad despite a new coach this year), the Warriors remain an attendance and ratings bonanza. So hats off to Lacob and Guber for working the numbers. The TV deal runs well past the end of the new CBA, though it’s likely the team will option out and negotiate a new one before the decade is out.
When it comes to building a new arena, the obstacles are clear. It’s hard to build in this state. It costs 20% more to build than in most other markets. There is no redevelopment money available, let alone other public funds. The Bay Area won’t approve a stadium or arena tax. Yet it’s clear that ownership sees the gleaming lights of SF and wants to turn them into dollar signs. The only issue is the cost of a new arena, which Forbes pegs at up to $1 billion. That may be true, especially if the arena can’t open earlier than 2018. I think that $1 billion is the line of demarcation. Anything under that it and it would be worthwhile to invest in arena. Above that and it’s prohibitively expensive.
The actual raw cost to build at Mission Bay shouldn’t be more than $750 million even in 2017. Material and labor costs shouldn’t rise that high. The additional cost would be to furnish the arena, which would be co-owned and operated with the Giants, Burdened by a high construction cost (mortgage), both parties would be motivated to sell the arena for every kind of event from tiny to large, so the club areas, suites, and auxiliary spaces would be decked out to a degree never before seen in the Bay Area. And it’s likely that given the locale, the teams would attract a third party interested in fronting some of the construction cost in order to secure the operations contract for the venue. That could be AEG, Global Spectrum (a Comcast subsidiary), or even the Sharks, who operate HP Pavilion.
Right now the Warriors are a mere renter at Oracle Arena, and not for cheap at $4.7 million per year and little access to non-game revenues. They don’t have a say on who runs the arena, which has led to allegations that SMG didn’t try very hard to bring in events. Last summer, AEG and Live Nation were set to bid on the next deal to run Oracle Arena. Can’t exactly blame Lacob and Guber for trying to maximize their investment, though building in SF as opposed to staying in and improving Oracle Arena could prove a more cost-effective decision in the long run.
As the Warriors reach the end of their contract, SF and Oakland will be “forced” into a bidding war for the W’s. SF and the Giants will be ready with an infrastructure/development rights deal, probably at Lot C on the other side of Mission Creek. The lot measures 400′ x 514′ not including sidewalks, which should be enough for a typical roundrect or oval arena, though not wide enough for the circular bowl layouts utilized at Oracle Arena or Staples Center. (HP Pavilion is roughly 440′ square). If Lot C were used, only 800 parking spaces would be lost, which would be easily replaced by a garage and ancillary development on Lot A. Lot C has a T-Third stop right outside it, plus Caltrain is only a few blocks away.
Oakland and Alameda County’s pitch lies squarely in the Coliseum City concept. By the time the cities get to brass tacks, we should know where the A’s and Raiders will be playing in 2014 and beyond. The A’s have a long-term play, the Raiders have both short and long-term scenarios. If both teams were to sign onto Coliseum City, it’d be very easy for the Warriors to partner up with everyone else. If the A’s and Raiders are headed elsewhere, it would be difficult to convince W’s ownership to shoulder the load for Coliseum City, especially if a compelling offer were coming from across the bay. I’ve advocated in the past for a downtown Oakland arena or one at Victory Court, but the cost to make that happen would probably be higher than the already city-owned lots in SF, so that’s not happening.
All the while, David Stern (or his replacement) would be pumping up the “need” for the Warriors, just as he’s done in practically every other city. The Cohan-era Warriors were analogous to the Autry-era Angels, in that they were generally undervalued and have great potential. Lacob and Guber intend to make good on the potential, preferably both on and off-court, though they’ll settle for off-court at least in the near term. If that path leads across a shiny new east span of the Bay Bridge, so be it. At least they don’t have territorial rights standing in their way.
Maybe they could cut down the cost of the Frisco arena by making it basketball-only. Cut it down to size so NHL team would ever consider the place
@pjk – That would have no effect on the square footage of the arena, which is the real cost driver.
Didn’t that cut costs down in the Brooklyn arena? They downsized it right out of a chance to get the Islanders….
@ML How about 980 Park for a new downtown Oakland Arena? I have a hard time seeing it working for a ballpark, a lot easier time envisioning it for an arena.
Unlike for the A’s, I think Oakland is a very viable site for the Warriors. However, I don’t see the point of building a new arena at the Coli site. It should be either in downtown Oakland or downtown SF.
For Oakland’s sake, I still hold out hope an arena doesn’t materialize in Mission Bay. But I can definitely see the instant appreciation the Warriors would realize if they’re in on making it happen.
ML – the arena won’t end up on lots C or D on that map. Those are already spoken for. Half of C will be this project, which is approved and may have started site prep (I haven’t checked in awhile):
The arena will be somewhere in lot A (ie: Mission Rock), which the Giants already control with their partners.
BTW, here’s a cool map showing development plans for Mission Bay:
Mission Rock is the whited-out area in the upper right hand part (south of the channel). Last I heard, the port had given approval of the Giants’ plans, but they still have to go through Planning approval, EIRs, BOS approval, etc. Still plenty early to incorporate an arena.
if the w’s somehow can work out a arena in sf, why do they really need a new arena here in oakland? i think oracle is just fine. lacob said it’s one of the oldest venues in the nba since it was built in the mid 60s but it’s renovation make it only really about 15 years old.
is the city of oakland really gonna spend any more money on a new arena that maybe is a bit more state of the art and a little bigger in general but imo not that HUGE of an improvement of what oracle already offers you. the only bad thing i’ve read about oracle are the concourses aren’t wide enough or as wide as the newer arenas built over the decade.
Oakland and the county spent hundreds of millions of dollars on renovations for the Warriors and Raiders, presumably to keep them in town for a long, long time. But it’s not working. 15 years later or ltess, they both want brand new facilities.
ML- as a San Jose native and die hard Sharks fan, how likely (or substantiated?) do you think it is for the Sharks to partner/ be a part of a new arena deal in SF?
@lurker – Depends on the deal. If they get control of the venue the same way they control HP Pavilion I could see it happening. That kind of deal seems unlikely given the cost. SVSE changed their name to Sharks, so maybe they have loftier ambitions.
The Warriors will consider moving to San Jose and renovating the HP Pavilion with the Sharks if SF and Oakland fall through.
HP has big concourses, great location, great club sections, and is considered far more modern than Oracle Arena overall.
The reason why I say that is Oracle Arena and the Coliseum site have zero ancillary development around it.
While with the new A’s ballpark on the way in Downtown San Jose it will bring more development to the adjacent areas and the Warriors can get a piece of the action…..That makes it far easier to privately finance on top of the huge corporate base.
With 3 teams in Downtown San Jose it will be easy with so many games going on to build ancillary development around that area.
In Oakland, the Coliseum site is a dump in itself and crime ridden nearby. Plus building anything brand new in this day in age in California is impossible.
The Giants have even said there is no way they could privately finance a ballpark in San Francisco in this day and age….They expect to privately finance a 1-tenant arena?
The Sharks will never leave San Jose, their entire fan base is down there. They would take a hit fan wise in San Francisco and it would be a colossal mistake as this is already a non-traditional hockey market and to change things would be risky.
The Warriors can only build with the Sharks involved if they want something brand new. Plus the Warriors can get fans in San Jose and charge far more than the current $34 average in Oakland with ease.
San Francisco would be the best site since they can piggy back of the Giants and their development at China Basin. I truly hope that is where they end up.
Oakland needs a Downtown site to keep the Warriors and I just do not see any sites available. Even then to build privately there will be very tough.,
If not, San Jose is the next best bet for the Warriors, also if SF fails and they move to SJ, it blocks another team moving to this market as there would be no other suitable arenas in the market and no way to build a new one.
@letsgoa’s “if the w’s somehow can work out a arena in sf, why do they really need a new arena here in oakland?”
If SF and Oakland both offer equivalent facilities, SF probably wins. But Oakland could win by being first mover – making something happen before it could happen in SF.
(I know, we’ve seen nothing to suggest the City of Oakland is capable of this. Just sayin’).
“I think oracle is just fine. lacob said it’s one of the oldest venues in the nba since it was built in the mid 60s but it’s renovation make it only really about 15 years old.”
Oracle as a facility is adequate, but barely so. It’s really in the bottom 5 as far as NBA arenas go. I don’t think it’s accurate to say it’s equivalent to other arenas built new around the same time. And when you consider its location, it really compares unfavorably.
“is the city of oakland really gonna spend any more money on a new arena that maybe is a bit more state of the art and a little bigger in general but imo not that HUGE of an improvement of what oracle already offers you.”
In reality? Probably not. But the argument for doing it would be to revitalize downtown Oakland. As HP Pavilion has shown, a downtown arena can be a huge asset for a city. A new arena in Oakland could help bolster Jack London Square and Foxtown. Ideally it could help fill-in some of the dead spots between the two and help build critical mass for downtown (for example, if the 980 Park concept were viable). Detroit employed this strategy fairly successfully.
Coliseum City is a non-starter, fortunately for the City of Oakland. The last thing Oakland needs is a second, faux downtown competing with its real downtown.
“the only bad thing i’ve read about oracle are the concourses aren’t wide enough or as wide as the newer arenas built over the decade.”
The concourses aren’t wide enough, sightlines are mediocre, concessions are so-so, the architecture is bland, and it lacks the amenities and ancillary attractions/development of other modern arenas. But most of all, the location sucks.
@pjk “Oakland and the county spent hundreds of millions of dollars on renovations for the Warriors and Raiders, presumably to keep them in town for a long, long time. But it’s not working. 15 years later or ltess, they both want brand new facilities.”
No realistic observer should have thought the renovations would be sufficient for a “long, long time.” The lengths of the leases themselves tell a different story (sixteen years for the Raiders, twenty for the Ws). Most brand new venue deals have leases that are thirty years long or more.
It’s one think if you’re renovating a nice baseball-only or football-only venue, as in Kansas City. It’s another if you’re renovating a dumpy old multipurpose venue. (And I must say, as an original Raider PSL holder, I was deeply disappointed when I saw the results of that remodel, even for football).
@longtime lurker I have a tough time seeing the Sharks moving to SF. As others have said, they’ve been wildly successful in San Jose, and the track record for NHL teams in non-traditional markets is not good. Moving to SF would be a big risk for the Sharks in a way it would not for the W’s.
Also, they have a pretty sweet arena deal in San Jose, where they control everything. They wouldn’t get that sharing an arena with the W’s in SF. If anything, I should think the W’s would have more leverage, due to the overall greater popularity of the NBA.
My impression was that the Sharks were interested in possibility participating in an SF arena in some operational or management capacity a la AEG, not moving the hockey team there.
@ Sid “Oakland needs a Downtown site to keep the Warriors and I just do not see any sites available.”
i agree the location is the one thing that sucks about the entire coliseum complex. you have three pro teams playing there yet you don’t get the impact of 81 baseball games, 10 football games, and 41 basketball games. not to mention the other events held at both venues. those two venues bring in thousands for more than half the calendar year yet the city of oakland and the businesses don’t get much of an impact out of it if these tens of thousands of people came to a downtown/waterfront venue in oakland.
heck even if one team played in the downtown area how much that’d improve the area as a whole having thousands of people diverging into a place with restaurants/bars where before, during and after games they’ll be spending money which there is NOTHING to do in the immediate area at the coliseum. especially during night where even though the night life has improved with all the new people moving in, it’s still not all that great imo.
it’ll be great when the a’s do move down to sj where i’d be willing to bet there will be a sports entertainmaint district in and around cisco field/hp pavilion for fans to go to before, during, and after games just as we see what’s surrounded at&t over the past decade when that area before the park was built was a ghost town where nobody went to all year long. even as an oakland i’m disappointed that nothing big like this has or imo will ever happen with the politicos in charge.
as for oracle itself i don’t think there is in paticular a bad seat in the place. i’ve gone to oracle many times for different events be it basketball or concerts and i don’t have an issue. concessions can be improved upon. as for all the bells and whistles i guess if that’s your thing oracle doesn’t have what these other venues have but i still find it more than adequate. i think if you could lift oracle and put it in downtown oak/sf, it’d be just fine as a venue. maybe there could be some improvements made to make it more of an attraction and more fan friendly inside but it’s not the complete dump o.co or candlestick are.
Both teams draw well in their respective arenas. If it ain’t broke why fix it? God I hate San Fran… I can deal with The Oakland Sharks, but San Francisco Sharks makes me wana puke.
“it’s not the complete dump o.co or candlestick are.”
Agreed. And except for its location, it’s no worse than some other newer arenas (e.g. Target Field). But it’s also nowhere near as nice as many other NBA or NHL arenas (e.g. Rose Garden, Staples Center, Amway Center, XCel Energy Center, or, IMHO, HP Pavilion).
@Larry E – considering the Sharks also manage the arena and sell out every game I don’t think you have to worry about that- also- SF may have the glitz but SV has the money- any wonder why the ‘9ers are moving to SV-
If anything, this is perhaps a call to SJ/Sharks to start planning, or at least thinking about, a new arena for SJ by 2023, when the current Tank will turn 30 years old. Don’t believe “revamped” HP Pavilion would cut it against a spanking new SF arena. Just my opinion.
I don’t see any particular driving need to replace HP Pavilion. There’s no magic to the number 30 years; it just depends on the venue. Boston Garden served for 70 years. Madison Square Garden is at 44 years, and I don’t hear any talk about replacing it.
There have been some other venues that were considered obsolete after 30 years or less, it’s true, but they all had specific deficiencies: Built on the cheap (Arco Arena), too small (Miami Arena), too big (Charlotte Coliseum), no club seats (Amway Arena). I don’t see any particular deficiencies in HP: Great downtown location, plenty of premium seating, recently updated scoreboards, etc.
If a venue is done right at the outset, it can last quite a long time. I would put HP in this category. Certainly, it doesn’t have any deficiencies which would warrant a new 500-600 million dollar investment.
yeah planning ahead of the curve can extend the life of a new sports venue by decades. you mentioned arco, well look at the palace of auburn hills where the pistons play in the nba and it’s so much of a better venue since arco was built cheaply while the palace which is over 20 years old also is still more than viable as a venue and both opened in the same year too 1988.
same thing happened with the whitesox in the mlb when they opened us cell in it’s first stage in 1991 and just a year later bal opened up camden yards and it was night and day between the two parks even though they were built around the same time and were one year removed from opening from one another. now us cell has been renovated over the past half dozen or so years and it looks and feels more like the modern new parks built over the past two decades but that’s just another example that if you look ahead of the curve and plan accordingly, you won’t be stuck with a venue that could look obsolete even under a decade into the venue’s usage.
Sharks fans should relax- I don’t think that the Sharks would be nearly as successful if HP wasn’t a fantastic place to watch hockey. I haven’t heard one complaint about the place, and they sell out every game to passionate, very loud fans in an area where hockey once died (Seals). If you have ever been to ARCO, which is really only a few years older than HP, then you know the difference between a good arena, and a bad arena. And that’s before you remember that HP is at the heart of the largest city in NorCal- not an open field like at ARCO or a random lot like the Coliseum. Plus the corporate money, and the fans are already in San Jose- that’s why the A’s moving to SJ scares the Giants so much- and even the 49ers are heading south. The Giants tried to move to the South Bay 20 years ago too, which is how we ended up in this mess in the first place with TR. San Jose is the total package, and all of that waterfront charm you get at AT&T doesn’t really translate to an indoor facility at night- so you would have to spend far more than 750 million on a tiny lot to build something that would tempt the Sharks out of SJ- HP Pavilion is just aging too well.
HP is a long ways from a crumbling multipurpose facility or a band-aid job reno like Oracle. It is important to remember that even though Oracle was a fairly recent renovation (1997), it wasn’t about bringing it up to date as much as it was increasing the seating capacity. The old Oakland arena only held about 15K people, tiny by NBA/ NHL standards. That wasn’t really a problem because the W’s had terrible attendance until 1989. So yeah, even though they did shove an extra 4.5K seats into Oracle with the reno, they still need a more modern arena.
An interesting case the W’s- only one playoff berth in the last 18 years (and it isn’t looking promising for this year), and they still draw pretty well and get good TV contracts. I wonder if this really isn’t a two team market being served by one lousy team. The NBA makes tiny cities like OKC work with only about 1.3 million people, surely two teams could split the 7 million who live here in the BA. I would guess that only the NHL should have just one major league team in the area (Sharks) as a non traditional hockey market. But a second NBA team seems possible and might even force the Warriors to be better. The obvious way to split the bay area would be SF/ Oak and SJ, especially considering the arenas available/ planned. There is precedent- the Warriors set franchise attendance records in San Jose in 1996-1997 when the arena was being renovated in Oakland- and despite the novelty of a redone arena in Oakland (Oracle), the W’s didn’t eclipse the San Jose year in attendance until 2002-2003. I don’t know if it is possible, but it seems like a second basketball team in the area (probably playing at HP Pavilion) might do pretty well. I even heard that the Kings might have been trying to move there.
Lacob has stated that attracting free agents is difficult at Oracle.
Some things in SF’s favor:
1. SF just lost the 49ers and Mayor Lee will make concessions that Oakland will not be able to match. In fact, he just got Lacob to meet with the Giant’s less than a month ago.
2. There isn’t a venue for concerts in SF anymore. Van Halen is playing Oracle and the HP Pavilion. Concerts used to run through the Cow Palace, yet now the top shows go through Oakland and San Jose.
3. Mass Transit. Once the T-Line opens up in 5 years, the ballpark/stadium will have a direct connection to Bart along 4th street. Plus, Caltrain will open up the Warriors to the non-basketball crowd.
4. Franchise value. The franchise will go up in value 20-30% by moving to SF. Back in the 60’s, Oakland was the #2 city in the bay area. Now, it trails San Jose and San Francisco.
5. Free Agents – They want to play in the big cities.
6. Nightlife outside arena. 20 years ago the area around staples was very scary, now it is happening. I doubt it will ever be happening at the coliseum. Yet, it is at Staples, which is in downtown LA. It could happen in San Jose and SF Mission Bay, yet unless Lacob builds a stadium in downtown oakland, this will never happen.
7. Open up to the casual fan. In LA, it is showtime. The place to be seen. This isn’t happening in Oakland. The warrior fans are great, yet Lacob wants the casual fan. In SF, women actually go to Giants games alone. Not to be chauvenistic, yet this is pretty significant. The Giants have created a safe fan friendly environment. That is important.
Just my thoughts.