Monthly Archives: March 2012

03.20.12
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Dominoes are falling

One by one, the various ownership crises facing baseball and Commissioner Bud Selig are being resolved. Yesterday, the Mets settled with a trustee in the ongoing Madoff suit for at most $162 million, probably less when the final bill comes due. Compared to the threat of a $1 billion judgement against the team, it’s a bargain. They’ll get even more of a reprieve by not having to make any payments for four years.

The Mets managed to pay off $65 million in short-term debt, thanks to a $240 million selloff of minority shares in the team (8 x $30 million). While Sandy Alderson will have to run the team on the lean side for at least this season, prospects for a rebound are decent.

On the other coast, MLB and Frank McCourt have narrowed down the lister of bidders for the Dodgers to four groups. MLB’s favorite appears to be the group headed by Magic Johnson and former Nats president Stan Kasten, largely because the bid is local. McCourt’s favorite may be the bid by New York hedge fund magnate Steven Cohen. The Cohen bid boost may have gotten a boost thanks to Patrick Soon-Shiong, an LA billionaire whose sudden presence as a minority partner gives Cohen some local bonafides. Unlike the Johnson-Kasten syndicate bid, Cohen was going solo (until Soon-Shiong) and is ready to post an incredible $900 million cash as part of his $1.4 billion (not highest) bid. Ironically, Soon-Shiong picked up Magic’s minority share of the Lakers last year. Magic vacated that share and his executive position within the organization to get his ducks lined up for the Dodgers bid.

The other two bids are by Rams owner Stan Kroenke and a joint bid by possibly outgoing Grizzlies owner Michael Heisley and LA financier Tony Ressler, who initially headed separate bids. By the terms of McCourt’s divorce settlement, he must pick a winning bidder and close the sale by April 30 so that he can make a massive $131 million payment to his ex-wife, Jamie McCourt.

All of this movement should put the A’s situation truly on the front burner, press release wars and gossip aside. That doesn’t mean that Selig will be able to come to a mutually beneficial agreement for the A’s and Giants – for some time my argument has been that this is the obstacle, not gathering votes or self-serving agendas. With the next owners meetings coming in mid-May, perhaps this is the chance to truly address the issue once and for all. Selig deserves as much blame for allowing the Mets and Dodgers to fester as he gets credit for saving them from the financial disaster, but from both quantitative and qualitative measure both teams are worth more (and deserve more attention) than the A’s and Giants’ squabble. Let’s hope, then, that he’ll be able to muster enough resources to resolve the A’s problems once and for all, instead of playing the perennial game of kick-the-can with the green and gold. Seven years is long enough.

03.18.12
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Ellison in talks to buy Memphis Grizzlies

Oracle CEO and billionaire Larry Ellison has been getting some sun down in Indian Wells, where one of his sports properties, the BNP Paribas Open tennis tournament, has been going on for the last two weeks. That hasn’t stopped him from accelerating his quest for an NBA franchise. The basketball fan almost bought the New Orleans Hornets with the possible intent to move the franchise to San Jose. After those overtures were denied by the league, he’s back to buy another Southern team, the Memphis Grizzlies. CSN Bay Area’s Matt Steinmetz reports that Ellison has a “handshake agreement” with current Grizzlies owner Michael Heisley to acquire the franchise.

The Grizzlies are locked into a lease at FedEx Forum through at least 2017, so there’s no chance of Ellison being able to relocate the franchise immediately (if he wanted to). The Merc notes that Heisley’s asking price is $350 million, a $40+ million premium over the franchise’s most recent Forbes valuation. That figure is also in line with the amount the NBA is looking to get for the Hornets, who are expected to be sold to a consortium headed by LA businessman Raj Bhathal sometime in the next few weeks.

Both Heisley and Ellison were expected to be bidders on the Dodgers. Only Heisley submitted a bid. Frequently criticized for being cheap in his tenure as Grizzlies owner, Heisley managed to end up on the short list of Dodger bidders, making it past the first two rounds after he teamed up with Tony Ressler.

The $350 million sales price appears to be the key for Ellison, as he bid lower than Joe Lacob and Peter Guber when the Warriors were put up for sale. That’s the same amount he bid on the Hornets in late 2010. Still, the franchise is in Memphis and is not going to move for a while if at all. With his interest tied up in the ongoing America’s Cup defense and running a NASDAQ-100/S&P 500 company, you have to wonder if Ellison would end up being something of an absentee owner. An hour jet ride to Palm Desert once a year is a lot more manageable than frequent four-hour trips to Memphis. Despite that “hardship” it’s clear that Ellison wants in on owning an NBA franchise, which is more than I can say for his supposed interest in baseball.

03.15.12
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Ownership Swap

Note: This is another “what if” scenario for this week. The conjecture within is not based on any recent news or reports.

Several teams throughout MLB are in some form of transition, whether it’s a venue (Marlins) or a sale (Padres, Dodgers, Astros). Some of these teams are taking far longer than they initially expected to get their transitions completed, creating a bit of heartache for their constituent ownership groups and business partners.

In January I wrote about the problems facing Jeff Moorad in his quest to gain control of the Padres. As reported last week, Moorad withdrew his application to become the “control person” in order for the team’s new TV deal with Fox Sports San Diego to go through. Moorad’s deal to buy the team from John Moores was set to take as much as five years on a sort of layaway plan, though Moorad has already assumed operation of the team. He also has clearly been looking to accelerate the process, yet hasn’t made any headway within The Lodge for several months. The control person issue hasn’t even gone to a vote, unlike the uncontentious decision made in when Larry Baer was approved by MLB four months ago. Maury Brown thinks that in addition to financial concerns, there may be others among the other owners who have it in for Moorad, including Jerry Reinsdorf and Moorad’s former partner, Ken Kendrick of the Diamondbacks.

With the troubles that Moorad’s facing in San Diego and Lew Wolff is dealing with in Oakland, could the time be coming for the two to switch places? Moorad’s group, which famously includes Save Mart CEO and one-time A’s bidder Bob Piccinini, would be able to get in the club with a lower price ($100+ million less) in Oakland than in San Diego. The group, which is reportedly full of Modesto-area interests, would be able to see a locally-based team. There still the fundamental issue of what to do in terms of a venue, but I’ll get to that later.

For Wolff and John Fisher, it would be an acknowledgement of defeat in terms of trying to build a venue. However, Wolff and his family would at least be able to continue to be owners of a franchise, and a Wolff-Fisher ownership group would have more capital on hand to pass muster with the Elders at The Lodge. Wolff himself is based in LA, so a move to the San Diego franchise would also be relatively local. Future revenue streams are far more stable and predictable for the Padres than they are for the A’s at this point, so aside from the fact that there’s no dream legacy-piece stadium to build (except maybe for AAA), it’s a good investment.

There’s a $100 million difference between the A’s and Padres valuations (latter is higher), which would have to be accounted for. Politically, a franchise swap could be the catalyst Oakland needs to get its Coliseum City/Victory Court/980 Park/Flavor-of-the-week stadium plan moving. It would allow Piccinini the opportunity to prove that he could keep the team in Oakland. It’s possible that Andy Dolich, who Piccinini teamed with last time and recently lost out in the Dodgers bidding process, could come on with a minority share. And if Oakland can’t get its act together or if the cost to stay in Oakland were too great, the group would be well-positioned to move the team to Sacramento, which is closer and a more hassle-free drive from Modesto (and further away from the Giants, who would rent the Mayflower trucks for the move).

Obviously, swapping ownership groups is not nearly as simple as I’ve described. It’s only been done once in modern baseball history when John Henry took over the Red Sox while Jeff Loria sold the Expos and bought the Marlins. The important thing is that unlike the T-rights dispute, there is a real precedent for this. Whether you think this is realistic or farfetched is probably dependent on your view of current ownership and your opinion of Oakland or San Jose.

I look forward to the comments on this one. Fire away.

03.14.12
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A way to Sacramento

A year ago, Giants CEO Larry Baer hinted that it would be good for the A’s to look somewhere outside the Bay Area for a new ballpark, if a deal for an East Bay park couldn’t be worked out. I wrote three years ago that an expansion to Raley Field would cost at least $250 million. It would be hard for the A’s to make a large contribution towards the expansion project because Sacramento’s government town status makes the corporate revenue pickings slim. If the A’s are going to pay for it, and MLB isn’t going to pay for it, who will?

The Giants, of course.

Now, I’m not actually suggesting that the Giants will pay for the stadium directly. They’re coming to the end of their own mortgage, so why would they saddle themselves with someone else’s? They wouldn’t. Yet if the A’s were forced to vacate the Bay Area, the Giants would likely pay the A’s to surrender the territorial rights to the East Bay. Such money which could be used to build or expand a stadium elsewhere. The Giants would end up indirectly funding the A’s stadium as a result.

We’d start with the MLB standard compensation package: $75 million, half coming from the commissioner and half coming from the paying team. That’s too small of compensation for the 2.5 million-strong East Bay, especially when you consider that the Giants’ franchise valuation could get a 2-3x boost from the A’s leaving. $150 million is probably a fairer package with the same 50/50 terms.

By the time the A’s were able to consider such a move in 2016-17, the $250 million cost could easily balloon to $300 million. That puts the Giants/MLB contribution at half. The A’s might be able to contribute $75 million on their own (via a new lease and revenue share), meaning the rest would have to come from a public source. This is absolutely important so that the A’s don’t get relegated to being another small market team. If the A’s move to Sacramento and have to pay a fat mortgage, that’s not an improvement upon staying in Oakland. The A’s best chance to thrive in Sacramento is if their stadium costs are as minimal as possible.

For Sacramento’s part, the plan only makes sense if the Kings are gone. The A’s still need corporate support to sell out premium offerings, and it’s expected that the Railyards Arena will suck up all of those customers. Involvement of AEG will only enhance that. The controversial parking revenue play won’t work because the plan is to expand Raley Field in West Sacramento, which is out of the Capitol City’s jurisdiction. A joint powers agreement between Yolo and Sacramento Counties sounds like a possibility.

At the actual stadium, the hard work includes taking down the press box and suites, ripping up the concourse to put in new columns, and putting in new facilities under the concourse such as modern, MLB-standard team clubhouses and a kitchen/commissary. Then the A’s could focus on putting in a club level, new suites, an MLB-standard press box, and a third deck to bring in those extra needed seats. The scope of work reminds me of this:

Mount Davis added 10,000 seats in a three-deck grandstand, an expansive indoor club, and 96 suites. The scope of work is similar to what would be required at Raley Field (sans tarps).

Would $300 million be enough in the end? It’s hard to say. It would be easy to argue that MLB wouldn’t want to skimp on amenities, or else Raley Field could be viewed as a cheap, temporary solution. Terms published for Nationals Park showed that MLB wasn’t interested in cost effectiveness – except in terms of external finishings. Marlins Ballpark is a testament to excess with its bizarre center field sculpture and aquarium behind the plate. The “wedge” in the Railyards dedicated for the arena isn’t large enough for a ballpark, so if MLB weren’t satisfied with Raley and wanted to look in Downtown Sacramento, it would have to use another plot within the project area for a completely new stadium, and a $500+ million price tag to go with it. Unless MLB was really desperate (which they usually aren’t), it seems iffy for baseball go along with the expansion plan when Sacramento was willing to foot a large part of the bill for a brand new arena.

There’s also at least one inside baseball consideration. MLB is fully aware of what Sacramento’s market limitations are. If the Railyards arena deal falls through, it won’t look good to MLB that the City couldn’t put together either a cohesive local or regional plan to retain a team. Sacramento wouldn’t show up on the top of anyone’s “viability” list, even though the resources to support a baseball team alone are there. Yet if the arena deal were successful, the market is too limited to exploit for a second major sports franchise, especially one whose economic requirements are much greater than those for a basketball or hockey team. It’s definitely a strange paradox.

03.13.12
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The price of contraction

Tomorrow marks the 7th anniversary of this here blog. Seven years! That’s an amazing amount of time to have nothing happen. Regardless, the blog has been a great learning experience for me, and based on the many positive emails I get, for the readers as well. Since we nothing concrete to go on, this week calls for a series of “what-if” posts. The first one was Monday’s examination of a hypothetical group buying the A’s from Lew Wolff. Today’s post is about the word I hate talking about, contraction. It’s not an idea that has legs at the moment. If the A’s and Rays continue to stagnate money-wise at their current homes, it’s something that could become a wedge issue when the next CBA negotiations come around in 2016.

If MLB were to attempt contraction, they’d run into myriad issues, from a difficult-to-break lease at Tropicana Field to MLBPA complaining about lost jobs (or at least salary) to potentially huge PR and legal muck. If MLB were to move forward on the path towards cutting down the leagues to 28 teams, it’s important to understand what the potential economic impacts are. To that end, I’ve put together a simple table showing lost direct revenues and jobs. I’ve not gone so far as to claim indirect economic loss, because I don’t know enough about the specific economic models of the various major and minor league franchises to make such a claim. Even so, you might find that the figures are staggering.

Contraction is not as simple as changing 25-man roster to 27 in order to compensate. There's a lot more at stake.

Thursday marks Day 1096 of the MLB panel counter, the three year anniversary of the “Blue Ribbon Commission” as so many of you like to call it. I had gone back into my archives to find a specific date on which Commissioner Selig may have convened the panel – no such luck. Absent such a date, I chose to line it up with the Ides of March. So there you have it. Happy Anniversary Week!

03.12.12
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Two groups express interest in A’s

UPDATE 6:40 PM – Lew Wolff responds, reiterating that team is not for sale. From the article, Andy Dolich was contacted and denied that he was one of the “suitors” interested in the A’s. Oakland Mayor Jean Quan said that if the team were sold to a more Oakland-friendly group, the Victory Court site may be considered again. There may even be a third group interested.

The A’s are not for sale, at least from everything I’ve read and heard. That hasn’t stopped two groups from expressing interest in buying the club, according to Matier and Ross.

Let’s play this little hypothetical out: If Bud Selig can’t broker a deal to get the A’s territorial rights to San Jose, then it would seem that Lew Wolff’s next step may be to put the team up for sale. Such a sale probably couldn’t be completed until 2013 at the earliest, which coincidentally is the same year the A’s lease ends at the Coliseum.

Forbes valued the A’s at $307 million last year, and should have a similar valuation this year. The going trend for franchise sales would have the team sell for a significant premium over that valuation.

Recent MLB franchise sales prices compared with Forbes valuations

The environment during which a hypothetical sale of the A’s occurs is much different from 1995, when Wally Haas sold the A’s to Steve Schott and Ken Hofmann, or even 2003, when Schott sold the team to Wolff and John Fisher. Nowadays, Bud Selig is pushing hard to get the biggest possible sale price for outgoing owners, even rogues like Frank McCourt. Given the trend, I can’t see the A’s selling for less than $400 million on the open market, especially if there are competitive bids. This would happen even if the A’s low-revenue problems show few signs of improvement anytime soon.

Of course, after soon comes 2016, which is when the new CBA expires. There’s also that CBA provision in which teams in the largest markets become ineligible for revenue sharing. The Oakland situation is odd in that the A’s are supposed to be exempt from that rule as long as they’re stuck in the Coliseum. There’s still a little confusion on this which probably won’t be resolved until we actually see the document in final printed form, and that hasn’t happened yet. Here’s my guess as to why the A’s situation is so foggy:

  1. As long as the A’s only have Alameda and Contra Costa Counties as their defined stadium territory, MLB has an excuse to consider them a low-revenue franchise despite the broad NorCal TV territory.
  2. If the A’s go to San Jose, it’s likely that Wolff will have gotten his wish that the Bay Area will become a shared territory (though I would expect the City of San Francisco to remain strictly with the Giants). If that shared territory deal occurs, the A’s would become a large market team by CBA definition.

The trouble facing any prospective buyer is that he’d be paying for the team in situation #1, with limited opportunities for growth. $400 million for just the franchise, perhaps more given that Wolff will want something for all of the headaches he’s gotten in pursuing a ballpark deal. Unlike the Haas-Schott sale, there are no hometown discounts anymore. The obvious revenue growth prospect is a stadium at Coliseum City, which by the time it could actually happen would cost at least $500 million. But, as we hammered here repeatedly, there’s a lot of doubt about the ability for the A’s to pay for a ballpark in Oakland. If the A’s pre-sold $100 million of the $500 million ballpark thanks to naming rights and such, the remaining $400 million converts to a $30 million annual mortgage payment over 30 years. Matier and Ross indicate that the 1990 record of 2.9 million in attendance is proof of the support, but that’s not the concern. The concern is what happens when the A’s are losing and fans don’t show up? The A’s recent revenue sharing receipts have been in the $30 million range. If the revenue sharing receipt effectively gets transferred to a bank to pay for the ballpark, it doesn’t solve the A’s competitiveness problems since they’d remain a poor team, in this case “house poor”. That’s a terrible investment on the owner’s and league’s part. I’m also skeptical that, with Selig’s focus on incoming owners’ liquidity, such a plan to keep the A’s in Oakland would pass muster. Selig or his successor isn’t going to sign off on Oakland becoming another Pittsburgh: great stadium, poor team.

A few months ago, some pro-Oakland. keep-them-at-the-Coliseum interests called Wolff to see if he was interested in selling. He confirmed that he wasn’t. So it’s funny, though not surprising, that the interests mentioned by Matier and Ross are from Los Angeles and Silicon Valley, not Oakland or the East Bay. With the A’s ongoing presence in Oakland precarious, it would seem better to have some kind of homegrown ownership group, lest an incoming group be called carpetbaggers all over again. If either of those groups were to go in, they’d invest at least $400 million in the team and $500 million in the stadium, with no guarantee of a great sales price once they feel like selling. That’s a tough proposition for any prospective buyer, and just one of the endgame scenarios Selig has to consider when deciding the A’s fate.

03.09.12
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News for 3/9/12

Feels like we need this since the week has been dominated by the PR war.

  • The A’s announced today that they will have a private entrance for season ticket holders. The terms are that you’ll need the credential from your season ticket book along with your ticket to use the entrance. In addition, for any extra tickets you buy for a particular game, those holding the extra tickets won’t be able to use the entrance. It seems like this was done to reward STH during bobblehead and other high-demand giveaway games, though the FAQ emphasizes that distribution of giveaways will be proportional. The entrance will be next door to Ticket Services.
  • Jeff Moorad withdrew his application to become the “control person” of the Padres, leaving John Moores as the control person for the time being. The move is considered a procedural one, with the need to consummate a TV deal between the Padres and the new Fox Sports San Diego channel first. Moorad’s deal to acquire the team from Moores was constructed so that Moorad could stretch the timeline out to four years if necessary, though his intent was to acquire controlling interest sooner than that. MLB had raised concerns that Moorad might take a lot of the Fox money upfront and use it to buy out Moores or to pay down debt, instead of putting it into the franchise (the McCourt-Dodgers TV problem). It’s a smart move by MLB, because if the rumor had some merit it could’ve sapped some $10 milion per year in revenue from the team. Now the Padres are Exhibit A in how to pull off a sale that puts the team on the best financial footing. If anything, it looks like Moorad was putting the cart before the horse. And this article from the SD Union-Tribune sheds light on the group of owners set in opposition to Moorad. There’s a big difference between that and the supposed foment against T-rights changes that Lew Wolff faces.
  • In Miami, the 5,700+ parking spaces at the Marlins ballpark are proving to be a logistical nightmare, not like we didn’t see that coming. The suggestion: buy pre-paid parking or else you’re taking your chances finding a spot on someone’s lawn.
  • As he is wont to do, Peter Hartlaub went into the archives and found a concept for a huge, multipurpose stadium on what looks like Laney College. The year: 1960. 80,000 for football and 48,000 for baseball? Not without a lot of Astroturf.
  • MLS Commissioner Don Garber really wants a stadium and team somewhere in the five four boroughs of New York City. Sorry, Staten Island.
  • Bruce Jenkins has a few words about the A’s-Giants tete-a-tete. Surprisingly, he wants the Giants crushed and calls them bullies. Sounds good to me.
  • There’s a movement afoot to get rid of the television blackout once and for all.
  • Robert Gammon considers Coliseum City the last, best chance to retain Oakland’s teams. Sad then, that Oakland’s announcement was drowned out by the A’s-Giants drama. There was a press conference on Wednesday, though no representatives for the three teams showed up to provide support.
  • Tim Kawakami thinks Joe Lacob and Peter Guber should announce where they intend to settle by next year sometime. That might be a little premature. If the Giants were to build an arena in time for the 2017-18 NBA season, they wouldn’t have to break ground until summer 2015. That puts EIR and related prep work at the beginning of 2014. Even then, if there were some snags the Coliseum Authority isn’t going to say no to a year-to-year lease, since the debt service on Oracle Arena runs through 2027.
  • BTW – Yoenis Cespedes is expected to play his first MLB game ever on TV tomorrow against the Reds (CSNCA, Noon). Don’t miss it.

One more thing about the Giants’ press release: They implied that Wolff/Fisher got a no-San Jose discount when the A’s were purchased for $172 million in 2005. What then, do they say about Arte Moreno, who bought the Angels for $185 million in 2003? He didn’t have any territorial restrictions that called for a discount, and that was for a much larger market. Weak sauce Gigantes. Maybe if some of The Game’s and KNBR’s radio talent actually did some fact-checking they’d know this stuff.

Added 2:50 PM – The field is almost done!

03.08.12
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The difference between 1990 and 2012

Following along with the previous post, I wanted to point out how things progressed during the Lurie-Haas era, and compare that to the Magowan/Neukom/Baer-vs.-Wolff era.

Lurie-Haas:

  • In anticipation of a stadium referendum in Santa Clara County, Bob Lurie asks Wally Haas Jr. for consent to claim Santa Clara County.
  • Haas approves. Santa Clara County, which had not until that point belonged to either team, becomes part of the Giants’ domain.
  • 1990 – Santa Clara County measure goes down to defeat.
  • 1992 – San Jose votes down another utility tax plan to fund its own ballpark.

At no point did the Commissioner or League Presidents have to intervene or rule on behalf of either team.

Magowan/Neukom/Baer-vs.-Wolff:

  • The Giants have SF, San Mateo, Marin, Santa Cruz, Monterey, and Santa Clara Counties as their defined territory. The A’s have Alameda and Contra Costa Counties.
  • 2009 – After striking out in Fremont, Wolff looks to San Jose. Giants object. Commissioner Selig convenes three-man panel to study issue. A’s are not allowed to make an official stadium deal (including referendum) with San Jose until T-rights issue is resolved.
  • …wait through rest of 2009…
  • …wait through 2010…
  • …wait through 2011…
  • Giants astroturf group Stand for San Jose sues City of San Jose over preliminary land deal terms for ballpark.
  • 2012 – Commissioner Selig claims that issue is now on “front burner”.
  • …waiting…

Waiting.

P.S. – Tim Kawakami has called Billy Beane the designated grown-up in their chat today, while Ray Ratto’s analogy wins the day.

03.08.12
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Giants revisionist history

One thing that I don’t think can be argued is that over the last 15 years or so, at least since Peter Magowan took control of the Giants franchise, the Giants have had a better PR machine going than the A’s. When the A’s hired former Giants PR head Bob Rose, it was a tacit acknowledgement of that superior effort. The Giants’ needling of the A’s in their Wednesday press release was a great example of their skill.

Except they missed a few facts.

Here’s a chunk of the release:

The Giants territorial rights were not granted “subject to” moving to Santa Clara County. Indeed, the A’s fail to mention that MLB’s 1990 territorial rights designation has been explicitly re-affirmed by Major League Baseball on four separate occasions.

If you read that quickly, you might think it’s a simple, cut-and-dried scenario. In reality, the two sentences aren’t related at all. The Giants actually argued that Santa Clara County was not granted “subject to” a move. It wasn’t? Why was it granted, then? The Giants didn’t go into any explanation for what occurred (bullet points would’ve been helpful). The facts are these:

Bob Lurie asked Wally Haas for permission to take Santa Clara County in 1990. If the Giants feel that’s a myth and desire to dispel that myth, they should explain how they got Santa Clara County in 1990. As far as everyone knows, this is how it happened (via the Chronicle’s John Shea):

As Wally Haas [III] tells the story, the A’s were approached by Giants exec Corey Busch requesting exclusive rights to the area before the Giants’ proposed ballparks in Santa Clara and San Jose.

The A’s said OK, and the transfer became official when baseball owners granted approval.

That was it.

“We shared the territorial rights up to that point, the Giants and the A’s,” Haas said on the set of “Chronicle Live” on Thursday. “They asked if we would cede those rights to them so they could go through the referendum, and we felt that was fine.”

It takes some temerity to deny long-held history and not even provide an alternative. Quick chronology:

  • 1987 – San Francisco Proposition W fails at the ballot box. Bob Lurie throws the door open to building outside of San Francisco.
  • 1989 – Lurie works with San Francisco Mayor Art Agnos and Spectacor on a ballpark at China Basin (Proposition P). That effort fizzled in the wake of Loma Prieta.
  • 1990 – Lurie looks south to Santa Clara, where a ballpark could be built north of Great America. He asks Haas for permission and is granted county. The Santa Clara County (unincorporated)/San Jose/Mountain View/Los Altos/Milpitas/Santa Clara (city) utility tax goes down to defeat.
  • 1992 – Lurie turns his attention to San Jose, where Mayor Susan Hammer worked on a ballpark plan at 237/Zanker. The San Jose-only utility tax lost, and with it the hopes of having the Giants in the South Bay.
  • 1992 – Lurie comes to an agreement to sell the Giants to an investment group in St. Petersburg, where a domed stadium was built on spec.
  • 1993 – Walter Shorenstein and Larry Baer rally SF civic leaders in an effort to rescue the Giants. Peter Magowan, the head of Safeway, is brought in to be the managing partner. The price of the franchise is $95 or $100 million, depending on who you ask. The price is considered a discount in exchange for keeping the team in the Bay Area, as the Tampa Bay bid was higher. Magowan would go on to sign free agent Barry Bonds, and resign his Safeway post to focus full time on the Giants.
  • 1995 – Magowan and Baer craft another China Basin ballpark plan, partnering with Mayor Frank Jordan and later his successor, Willie Brown. In the meantime, Haas sells the A’s to Steve Schott and Ken Hofmann for $85 million, with some $10-15 million of incurred debt discounting the price as well as another “hometown discount” to keep the team local.
  • 1996 – Proposition B, the Giants’ privately financed stadium plan, wins by a landslide.

This goes back to a question I posed when the Bill Madden article came out last weekend. Read it carefully, look back at the chronology, and think about it.

If Bob Lurie had not gone after the South Bay, he wouldn’t have been granted the rights by Wally Haas. After Lurie struck out in SF for the last time and threatened to move to Tampa Bay, Magowan/Shorenstein swooped in to save the Giants. Would Magowan have asked for rights to the South Bay in 1993-96 in order to finance AT&T Park, knowing that he wasn’t actually going to build there but rather in downtown SF?

The Giants maintain that because territorial rights were confirmed with subsequent CBA/Constitution ratifications, Santa Clara County should remain theirs in perpetuity. The problem with that argument is that until recently, no other team has formally pushed for a move to Santa Clara County. Sure, Schott had talks with Santa Clara in 2001, but those went nowhere fast and no serious prep work (EIR, feasibility study) was done. What is there to defend if no one is asking? Now the A’s are challenging those rights, and both teams are getting a little hot under the collar.

Finally, the Giants argue that because of the way the Bay Area was gerrymandered, the Wolff/Fisher 2005 purchase price of $172 or $180 million (depending on who you ask) is not reflective of the A’s having control over Santa Clara County. There is no comparable recent Giants sale price to compare it to, so we have nothing to go on there. The Giants’ 2011 franchise value, $563 million, has multiple components including the value of their ballpark and media empire, neither of which the A’s have. That makes it difficult to isolate what the true value of Santa Clara County is, at least when it comes to locating a stadium there. The Giants have also added and swapped partners in the intervening years more than 70’s Marin County couples at a key party, which makes it even more difficult to understand the value of any specific component or any particular stake.

One comparison you can make is the purchase prices of the two teams when Magowan and Schott entered the fray. To reiterate, Magowan’s bid for the Giants was $100 million in 1993. Schott’s bid for the A’s was $85 million in 1995. If we adjust the 1993 figure for inflation and ignore the downturn caused by the 1994 strike, a 1995 valuation is $105 million, a $20 million difference between the Giants and A’s. That’s probably the best comparison to make because it’s pre-AT&T Park and pre-media empire. Adjust that $20 million gap for inflation and the result is $30 million, which is what Roger Noll has argued territorial rights to the South Bay are worth. To some that may seem low and not reflective of baseball’s impressive post-strike growth. At 5% compound interest, the 2012 value is $45 million. At 10% it’s $101 million.

In any case, there is a value associated with an A’s move to the South Bay. It’s been the Selig panel’s charge to determine that value and the feasibility of the move. Maybe the Giants would be irreparably harmed if the A’s went to San Jose. I don’t believe they would, but I don’t have the information available to appraise the situation properly. The teams are busy spitting out press releases and statements. What I want is real figures. I want the presentation that the panel made to the MLB Executive Committee two months ago. Without that, we’re left with an incomplete picture and a lot of spin. Knowing that’s highly unlikely that I’ll ever see that presentation, I realize that my request is futile. I’m still putting it out there, hoping that at some point, we’ll all be better educated about all of this.

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P.S. – I’ve also written about the price of T-rights in these posts: The Payoff, The Neukom Doctrine, A Territorial Rights Primer

03.08.12
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San Jose Councilman Sam Liccardo talks nuclear option

An updated version of Mark Purdy’s column from earlier today has an interesting quote from San Jose Council Member Sam Liccardo. Liccardo, whose District 3 includes downtown San Jose and borders the ballpark parcels, is a staunchly pro-A’s-to-San Jose.

Meanwhile, officials in San Jose said Wednesday they remain planted firmly in wait-and-see mode. However, Councilman Sam Liccardo, who represents the downtown area, for the first time raised the possibility of governmentally addressing MLB’s unique antitrust exemption, which permits the league to control franchise movement in ways other pro leagues cannot legally do.

Liccardo said that if the antitrust exemption comes to be viewed as an impediment to free-market competition and economic progress, perhaps it should be challenged.

“The Giants should have nothing to fear to see the A’s compete for fans in San Jose,” Liccardo said. “May the best team win. That’s the American way.”

I’ve written in the past that an actual legal challenge to the Giants’ territorial rights wasn’t in the cards because of the cost of making such a move and the City’s constant fiscal difficulties. On Tuesday, the San Jose City Council passed a controversial motion to put pension reform on the June ballot. Earlier today, I saw what appeared to be public employees picketing along West San Fernando and Almaden Blvd. There’s a new twist to the story, in that the City may run a surplus for the coming fiscal year. Even though the surplus may be a result of major cutbacks, it’s still easier to make legal moves in that environment than it would for a city running eight-figure deficits on an annual basis. It’s far too soon to tell whether or not to take Liccardo’s threat seriously. The way MLB jealously guards and protects its antitrust exemption, it could easily dig in for a protracted battle. Then again, it may run screaming from a fight and push the Giants to accept a payoff if that threat proves a little too real. There’s only one way to find out, I suppose…