A’s ask for 5-year Coliseum lease extension (Updated to include Wolff’s letter)

At the end of the 2012 regular season, the Chronicle’s Matier and Ross wrote that the Coliseum Authority sent A’s owner Lew Wolff terms of a five year lease extension at the Coliseum. The purported catch was a $50 million exit fee should the A’s leave early for San Jose. Now the LA Times’ Bill Shaikin reports that Wolff has sent a letter to the Coliseum Authority (JPA) asking for – that’s right – a five year extension.

In a letter to the body that governs the Coliseum, A’s owner Lew Wolff agreed to keep the team in Oakland for at least five years “regardless of the outcome of our efforts to obtain a new facility in the City of San Jose.”

In the world of stadium negotiations, these are chess moves. It’s important to try to look multiple steps ahead. There are a lot of ways this could play out, though there is a complicating factor which I’ll get to in a bit.

First, as onerous as a $50 million early termination fee sounds, if Wolff is pushing back the opening date of Cisco Field to 2018 it’s not that big a deal, since Wolff won’t have any motivation to get it done early. On the surface, the JPA may be insistent on including the clause. Wolff may be just as determined to get it removed, simply because of the flexibility it provides. Why be encumbered by $50 million when you don’t have to be, and when historically that hasn’t been the case?

If there’s a threat, it comes in the form of something else Wolff alludes to.

“The A’s organization certainly prefers to remain in Oakland for the next five years rather than being forced into looking elsewhere for a temporary home venue. If possible, we should retain the 130 full-time jobs and the almost 800 union jobs that encompass a full baseball season, the fun of the A’s, and Major League Baseball in Oakland for five more years.

“I believe the A’s have a great deal to contribute to the area for the next five years, and even thereafter.”

“Being forced into looking elsewhere for a temporary home venue” is the threat. In August I wrote about the possibility of the A’s not being able to come to terms after 2013. It forces Commissioner Bud Selig’s hand. From the looks of things, MLB so far hasn’t been involved in lease discussions. This may force Selig to get involved directly, from negotiating the extension to figuring out a long term solution, which has been going on since Wolff joined the A’s in 2003.

Even if the parties (including MLB) only focus on the short-term, there is one other factor that comes into play: the Raiders. The Raiders have had more productive talks with the JPA regarding a lease extension, and something was supposed to be announced this fall, yet nothing has. The A’s currently pay higher rent than the Raiders, but the Raiders are obligated to share a small amount of in-stadium revenue annually, making their lease payment technically higher than their Coliseum-mates. Both the A’s and Raiders are keenly aware of each others’ desire to make whatever lease at the Coliseum as low as possible. Yet the JPA wants to rework the terms to help pay off more of the debt service and operating costs, which Bloomberg mentioned yesterday amount to a $17 million annual subsidy.

If the A’s are being asked to pay a $50 million exit fee, are the Raiders being asked to do the same? Are the terms on the table for both teams comparable, or do they favor one team over another? Neither owner wants to feel they’re being ripped off, and neither wants to feel locked in if it isn’t necessary. Strangely, the Raiders have more leverage than the A’s, since they could bolt for Santa Clara or even LA if things don’t work out. The A’s don’t have that luxury.

Just as the City of Oakland and Alameda County have to approve lease terms for Coliseum tenants, MLB has to at least informally green light any lease terms for the A’s. Selig will frown upon anything that looks like it’s trapping or penalizing the A’s, since a bad lease could negatively affect the A’s franchise value.

Maybe an A’s lease extension that’s agreeable for both them and the JPA will materialize quickly. Maybe not. If I’m reading the tea leaves on Wolff’s statement, though, he’s forcing the situation. And he’s doing it by not formally doing much at all.

Update 2:45 PMBANG got Wolff’s letter and posted it. I’ve copied the whole thing for your convenience:

December 21, 2012

To all concerned and interested:

I believe our organization has been and continues to be a positive member of the City of Oakland and Alameda County community.

Our policy regarding the JPA is to agree on the most mutually beneficial lease relationship to remain in the O.co Coliseum. To that end, we seek a lease extension that will allow us to remain here for the next five seasons. Our president, Mike Crowley, who has administrated our lease for the past 16 years, has full and complete authority to enter into a lease agreement that we hope will be beneficial to our fans, the City and County, and our organization.

Yes, we need a new baseball venue, and sadly, we have not found any path to one in the City of Oakland or in the City of Fremont. None of the three City of Oakland administrations that we have operated under has ever presented a realistic approach for a new ballpark to us. The lack of viable options here is not the fault of any public administration or private party, but rather is due to broader circumstances that impact the elements needed for a Major League Baseball venue.

Regardless of the outcome of our efforts to obtain a new facility in the City of San Jose, we would remain at our current venue for a minimum of five years. If an opportunity arises for the JPA to implement a new or renovated stadium for the Raiders or any other tenant, our lease would have a cancellation clause in favor of the JPA.

I stress that the A’s organization certainly prefers to remain in Oakland for the next five years rather than being forced into looking elsewhere for a temporary home venue. If possible, we should retain the 130 full-time jobs and the almost 800 union jobs that encompass a full baseball season, the fun of the A’s, and Major League Baseball in Oakland for five more years.

I believe the A’s have a great deal to contribute to the area for the next five years, and even thereafter. I further believe, and hope that having the benefit of a five year income stream and the jobs our organization brings in will be viewed as a benefit to the City and County. Simply, Mike Crowley needs an authorized party with whom he can negotiate and complete a new five year lease between the JPA and the A’s.

Thank you for any time and consideration you can afford this request.

Sincerely,

Lewis N. Wolff

LNW: sk

I have to reiterate that the JPA had sent the A’s lease terms before the end of the regular season, which Wolff obviously has not found acceptable, otherwise we’d have an announcement about a lease deal. The ball is now in Oakland/Alameda County’s court.

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