For me, when the Forbes MLB valuations are published every March, it’s like Christmas nine months early. Forbes goes to the trouble of sleuthing around baseball even as team financials are meant to be heavily safeguarded. It provides this blog and others with that last bit of off-the-field news just before the season starts in earnest. Thanks to Mike Ozanian and Kurt Badenhausen for putting the 2013 edition and previous editions together (full list).
As expected, the combination of the Dodgers ($2.1 billion) and Padres ($600 million) sales plus new TV contracts on the horizon pushed franchise values up. Way up. No team has a valuation lower than $450 million. Credit also goes to MLB Advanced Media, whose expanding product line includes MLB.tv, the At Bat apps for phones and tablets, and Tickets.com. Forbes estimates that if it were public, MLB AM could be worth $6 billion on its own. Slow, deliberate baseball is not the kind of enterprise one thinks of when looking for examples of startup culture, yet the success of MLB AM is undeniable and felt in every owner’s pocketbook every year.
These new valuations result in an aggregate $3.5 billion rise over last year. The A’s, who were last in 2012 with a $321 million valuation, are now 28th with a $468 million valuation. That’s a whopping 45.8% gain, all without negotiating any lucrative new media deals or the benefit of new ballpark revenues. $468 million is reflective of the new national TV deals that MLB will receive starting with the 2014 season. Even with the increase, the A’s are $160 million below the media franchise value and $276 million below the average valuation. For reference, the big market Giants got a $143 million boost and moved from 9th to 7th place. As we observed last year, the bubble is real. Thanks to baseball’s solid, diverse revenues, the bubble is also not going to burst anytime soon.
Debt that the A’s are carrying appears to be unchanged at around $90 million. This is no surprise because haven’t signed any big contracts since Yoenis Cespedes. By staying put, the debt-to-value ratio has gone down from 28% to 19%. That’s important because if Lew Wolff is going to build a new stadium in the next several years, it’s best to keep debt relatively low and operating income high so that they can borrow big for a ballpark. The downside of that conservative approach is that much of the A’s young talent could be out the door sooner rather than later, as we’ve seen frequently over the years.
Forbes also explained a little of their methodology this go-around.
Our team valuations are enterprise values (equity plus debt) and are calculated using multiples of revenue. Thus while teams value MLBAM and BELP on their balance sheets on a “cost basis,” which understates their true value, we incorporate market value estimates for those assets. Two more significant ways our accounting differs from the P&L statements of many teams: we include revenue teams keep from concerts, soccer games and other events at their ballparks; and we deduct from revenue stadium debt payments that are paid with stadium revenue. In short, our team values are meant to reflect what a buyer would be willing to pay in an arms-length transaction and our operating income measures are meant to indicate how much cash is generated.
Basically, Forbes is making the distinction that their numbers are reflective of how each team is run as a business, as opposed to P&Ls reported to baseball which may be products of arrangements designed to hide or minimize secondary revenue sources and expenses. While commissioner Bud Selig and the owners will downplay or write off Forbes’ figures, we can feel a little more confident in their soundness based on what they’ve dug up and the new industry information that has come in over the last two years.
Wait, what’s that BELP thing? BELP stands for Baseball Endowment Limited Partners, a sort of internal baseball hedge fund. It was started when the owners collected the franchise fee for the Washington Nationals into another partnership called Baseball Expos Limited Partners. The owners and Selig decided to reinvest that $500 million instead of distributing it to each ownership group. The strategy has literally paid dividends for the owners, because once money from BELP I was rolled over into BELP II, baseball started getting major profits from the fund. BELP was first exposed a few years ago when Deadspin received leaked financials from several teams, but the kinds of investments BELP chose to venture into were kept under wraps. In the past, I’ve put BELP in the category of “Other” when accounting for Central Revenue. I’ll probably break it out going forward, though that will be based entirely on estimates since BELP isn’t public.
The main article ends with a few notes on the A’s, which is somewhat unusual. It’s pointed out that the A’s got another fat revenue sharing check of over $30 million, and an attendance boost coinciding with the team’s division crown. Local revenues continue to lag, so revenue sharing and central revenues are (more than) keeping the team afloat. That’s a double-edged sword, as it gives critics of Wolff and John Fisher ammo to say the team is again being “cheap” with regards to how it runs the team. Now that payroll is taking up less than 40% of revenues, it’s worth asking if the team is saving money – perhaps for a ballpark. If the marginal cost per win in terms of talent is difficult to justify (see: $11 million/year for Kyle Lohse), filling the piggy bank for a ballpark wouldn’t be a bad way to go.
Of course, there’s another side to the revenue-payroll debate. With all of the money that’s coming in, Wolff, Fisher, and the other partners would have to be absolutely nuts to sell the team. They’ll only get more money next year, which they can invest in one of their cornerstone players. The windfall also makes it even more difficult for interested East Bay parties such as Don Knauss to get the team. Last year, as the Dodgers and Padres sales happened, I predicted that the A’s value would hit at least $500 million. They haven’t that number yet, but they’re almost guaranteed to hit it in 2014. So again, that puts the cost to keep the A’s in Oakland at $1 billion: $500 million for the team + $500 million for the ballpark. Good luck with that.
Has Knauss ever personally expressed any desire to buy the team? Or to match Cisco’s naming rights deal? All we’ve ever heard from him was re-suggesting the already-rejected, unfeasible Howard Terminal site and paying for a new Oakland ballpark with PSLs, a plan that is guaranteed to fail…Look at the 28th and 30th-ranked teams on Forbes list: MLB’s problem-child franchises that can’t get new stadiums.
“For reference, the big market Giants got a $143 million boost ” – the Giants are in the same “market as the A’s” so that “big market” label is misleading. I think that should read “big revenue” instead.
“an attendance boost coinciding with the team’s division crown” – this is also false, because year over year average attendance was basically the same, and would of probably went south if the A’s didn’t make the playoffs.
“….are now 28th with a $468 million valuation. That’s a whopping 45.8% gain….got another fat revenue sharing check of over $30 million ” I can hear the Oakland pundits crying about this already, arguing that LW/JF should be philanthropists like Haas and take a big loss. What they fail to mentions is that the welfare checks are going to end for the A’s in 2016 so they need to save for a move to a new stadium (anywhere). They don’t generate the type of revenue the Gnats do (in the same market again) in TV, attendance, or otherwise. You don’t buy shiny new luxury cars when you’re living in a ghetto apartment. You save until you can afford to own your own home!
I thought the A’s revenue-sharing checks continue indefinitely as long as they are stuck in that empty football stadium?
I think the A’s remain off the list of major market teams who have to contribute to revenue-sharing — until they get a new ballpark.
btw, any luck on finding that S4SJ motion to augment the admin record?
The current CBA runs from 2012 – 2016. In Art. XXIV, sec. A.15 (p. 125) it imposes an escalating percentage (rising 25% each year) of deducted revenue-sharing credit on the top 15 teams. In 2016, the top 15 will receive nothing, with more going to the bottom 15. (The system is unbelievably complex.) The Giants and A’s are tied for 7th on that top 15 list, based on the size of their shared market, I guess, except that, in Attach. 26 to the CBA, the A’s obligations are replaced with the phrase “exempt until new stadium.” In other words, as soon as the A’s open a new stadium they become what’s known as a “payor” club in the scheme. As I’ve noted before, Wolff/Fisher must be eyeing that coming liability carefully as they wrangle over the value of the Santa Clara County territory.
Anon’s right regarding the supposed “big market” Giants. Does that make the Mets, White Sox, and Angels small market? BTW, all the franchises in the two-team markets seem to be doing alright value-wise SHARING their territories. Damnit MLB/Selig! Hurry up and $&@%# free San Jose! (Needed to get that off my chest RM..)
As they wrangle over the value of the Santa Clara County territory? There you go again suit, suggesting that the A’s will get exhorted by the Giants to gain access to San Jose. Your team is doing great revenue and value-wise, cash hand over fist, WS trophies, beautiful ballpark…what more do you $&@#% want?!
Again, the Yankees, Cubs, and Dodgers are all doing fine SHARING their territories with other teams; no need for stupid, insane gerrymandering and extortion-like compensation!
Coming liability? I’m sure Wolff/Fisher will take that Giants-type “liability” any day over staying in concrete decrepitude..
Again, I don’t want a damn thing. I’m interested in what the owners want, trying to figure it out. Do the numbers. I think the A’s netted more revenue last year than did the Giants. If the tables turn and the A’s not only lose revenue sharing income but instead have to start paying it out — you think the new stadium’s a sure bet?
@xootsuit – The clerk I spoke to re: S4SJ was still catching up. I may wait until we get closer to the hearing date.
@Anon – MLB considers the entire Bay Area a big market.
The Giants are paying it out (as well as many other teams) and they’re doing just fine. No reason the A’s can’t do the same. Perhaps the A’s have been on revenue sharing for so long, playing in a dump of a football stadium, that you just can’t envision them being on nearly the same page as your beloved Giants (?).
If the giants and A’s are equal in terms of market size doesn’t that equate to a shared market v 7 counties to 2?
The Forbes figures are questionable. For the sake of argument, if Wolff were to sell the A’s – one would think he could receive at least $700 mil. for the club.(Even the lowly NBA Kings are going to be sold at $540 mil. or more)Sports franchises are selling at a premium lately. Those Forbes figures sound arbitrary and questionable.
@duffer – There’s no telling what the market will bear once it gets into a competitive bidding situation. Forbes is simply trying to establish a fair market value based on basic accounting principles. It’s a seller’s market for sure. The exclusivity of owning a sports franchise is an extra value unto itself.
True, even so ML – the Forbes 2011 valution of the Dodgers was $800 mil. – and the team sold for $2.2 bil.? Also, Forbes valued the Kings at $300 mil. on 12-20-12 and the team will be undoubtedly sold at a much higher sum than that.
@duffer – I think the best way to look at the Forbes valuations is to consider them a baseline value, a minimum that the team is worth. If the team is a winner? Premium. In a big market? Premium. In one of the Big 3 sports? Also a premium. No one saw the Dodgers’ $2.1B sale coming. Once the hedge funds started getting involved, all bets were off.
With the A’s valued at an inflated $468 million and soon to be valued even more with the new national MLB television contract, I seriously doubt there will be any prospective buyers of the A’s willing to come anywhere close to paying market value for the team at its current venue. The best bet for Wolff/Fisher is to wait it out until MLB gives approval for the A’s to move to San Jose.
Damn straight! It’s gonna happen!
I wish lew Wolff could reconsider Howard terminal fellas …. Ithink it could be a big money maker and get the A’s off rev. Sharing…this san Jose thing takin long don’t u think?
Who pays for the expensive remediations needed for Howard Terminal’s massive environmental and railroad obstruction problems? The owners, right? Wolff has looked at Howard Terminal and said it cannot be developed for a ballpark. We haven’t heard MLB’s blue ribbon committee contradict him after 4 years of looking at Oakland. Of course, there are those from the “John Fisher is rich” contingent who feel the A’s owners should be like Wally Haas and just spend spend spend without regard to losing lots of money.
Of the four markets that share with two teams; NY,LA,Chicago, and the SF Bay Area, the teams with the largest value disparity within the same market are the Giants and A’s. It is no coincidence that the Bay Area market is the only shared market with two separate territories claimed by their respective teams. Compounding the problem is the unequal separation of territorial exclusivity based on population, corporate wealth, and household income levels. The value disparity between the Giants and A’s stand out like a sore thumb.
MLB was so desperate to keep the Giants from going to Tampa that it made huge concessions (giving the Giants Santa Clara County even though they never moved there) that are haunting it today. Now, the A’s are stuck in their tiny territory where they can’t get a new ballpark, while the Giants lock them out of a nearby solution. Selig is too terrified to fix the problem.
@llpec — the Bay Area’s an anomaly, but the transformation of Silicon Valley is mainly to blame. Neither team cared about Santa Clara County (or owned ballpark rights there) until 1990, when Lurie prematurely tried to move the Giants to the south bay. As it is, both teams are free to engage the entire Bay Area market — they just can’t build ball parks in each other’s “territory.” The idea that the Giants have some sort of unfair advantage because they “own” the excclusive right to build a ballpark in Santa Cruz and Monterey Counties is misguided. The A’s have every right to advertise and to sell tickets to fans who live in those counties.
When the A’s moved west in 68, they didn’t want to share the Bay Area. They wanted their own “territory” in the East Bay. They got it. Contrast NY and LA territories — both the Angels and the Mets originally wanted to share the terrtitories of the teams already there. So shared territory got established in those places. The Bay Area anomaly is just historical accident. Now, given the growth all around the Bay Area, it’s time to figure out a way to turn it into shared territory. Presumably that’s what the BRC is doing. I wouldn’t jump to any conclusions about who’s really being unreasonable in those discussions. Could be either the A’s or the Giants or both.
xoot, while I don’t disagree with that. If a team is shoehorned into a specific territory that they can’t move out of (while remaining in that overall market) that should be reflective of where they stand within that market. Yes, they can advertise and deal outside of their territory, but by not being able to fully utilize the full region for the purposes of locating their team they’re at a revenue generating disadvantage. Should they only count their territory for these purposes? Probably not. But should that be ignored in the calculation? Probably not.
well, Santa Clara County is the issue. It’s big enough now to support a park and building a park there will impact marketing for the other team in the overall territory. The Giants may not lose fans down there, but new fans would tend to look A’s-ward. And some of the local corporate money will do the same, probably right away. So the focus on the value of the Santa Clara piece of the market makes sense. Railing about “6 counties vs. 2” doesn’t. My point is that we do not know who is being unreasonable about how much SF deserves for what it has developed since 1990. (I know, I know, many A’s fans think the Giants should just give it up gratis. Reasonable business persons might disagree.) I have to admit that simply by delaying the A’s move for so long, mlb already has given the Giants some value.
@duffer @ML re: valuation [apologies for boring bean counting block of text ahead]
Having gone through the exercise of valuing a pro sports team personally, I can expand on the correct point ML made (that this is strictly an accounting based valuation, and second- the “actual” value of what somebody would pay can be wildly different from the accounting value). There are two main factors that typically play into this, to different degrees, depending on the situation.
1) Estimating the terminal value of the organization goes beyond accounting- in any valuation, you typically project 10-20 years of cash flows, and then have a terminal value, which represents what the entity is worth in perpetuity thereafter. To assess this, you’d have to look into your crystal ball and ask such questions as “what is the future of baseball, or pro sports, or of media, or of the city of Oakland”. As you can imagine, people’s answers to these questions can vary greatly.
2) Valuing the “Brand” of the target, beyond what you think it’s worth in terms of items that show up in your balance sheet (important because some parts of the brand do show up in the balance sheet)- In a valuation summary, this usually shows up as a line item called “Goodwill” or something like that. As ML noted about exclusivity, you can think about owning a sports team in very similar ways to owning a famous work of art: there is value in simply saying you own it, and people will pay for that.
Those aside, there can also be big differences in the accounting value across buyers: what is the buyer’s cost of debt? What synergies does the buyer bring to the table (e.g. own a media company)? In the case of Sac group vs. Seattle group: how much is getting subsidized by the taxpayer?
In summary, as a reply to duffer’s post about the valuation being questionable: sure, you can say that. I wouldn’t use this valuation to perfectly estimate what somebody would pay for the A’s. But the broader point is that everybody’s valuation is different, so having an apples to apples method from one source (Forbes) to compare organizations is still interesting.
And those new fans who reside in northern Alameda County and CoCo County will look Giants-ward with the A’s in San Jose. Same could be said for those corporations in the aforementioned counties. In the end it all evens out, as it should. FYI, as long as the Giants keep winning and putting a solid product on the field, they should have no problem garnering corporate support from the ENTIRE Bay Area, Santa Clara County included. As the great Tiger Woods would say, “Winning takes care of everything.”
Here is a good article about MLBAM.
Xoot, the location of a stadium is dismissed by you in an effort to say the Bay Area really isn’t different than other two team markets. Bull! You are painting half a picture then declaring the picture done. Again, bull! The location of the stadium is an important cog to revenue success. And the A’s, unlike other areas, are being barred from their best stadium offer, the location that will put them in the heart of the big corporate money, a prime downtown location. But hey, they can build in Fremont or in a nonviable Oakland location. I guess this makes the bay area same-same…..
Well i would hope, if Lew/Fisher did change their mind.. then part of the agreement would be Oakland to pay (however they can, or find somebody that will) for infrustructure in and out the Howard Terminal area… in other words Oakland does the light lifting and Lew does the heavy…. so yea too bad pjk.. and you better hope San jose gets the ok next year… or i dont want to hear it…
TW — you’ve misunderstood me. I said it’s all about Santa Clara County now. The right to build a park in Santa Cruz is irrelevant. The right to build one in (and to exclude others from) Santa Clara County is the only issue. I happen to believe that negotiations really have been going on since the BRC convened so long ago. My question is who’s really causing the delay? I can see profit reasons, some evinced in the Forbes article ML wrote about for example, why Wolff/Fisher may not really be in such a hurry to move into a new stadium anywhere. But ultimately what’s holding up the San Jose move remains a mysterey.
Xoot, it wouldn’t terribly surprise me if the A’s have and continue to use the delay as a means to continue to save up money for the move. If they’re taking in 30 million a year through revenue sharing they (and MLB) are going to need to be absolutely certain that they can make up that amount and more through a new stadium. Anything less and they’ll be wasting everyone’s time. And without being able to look at the real numbers, for all we know the conservative estimates may not balance out yet.
Fair enough Xoot. I read your original post and came away with the impression that the Bay Area is absolutely no different than the other 4 two team markets (something I disagree with). However, as is the world of internet forum posting-replying, signals get crossed.
On the point of the hold up for San Jose, IMHO it is the Giants, plain and simple. I’d bet the mortgage payment. Who gets any tangible benefit from a delay or denial for the move to SJ? (1) The Giants and (2)the city of Oakland. Since Oakland’s benefit is likely of very little concern to a group of businessmen (a.k.a. The Lodge), there is only one suspect who has a clear benefit in delaying/halting the move to SJ. And while I cannot blame the Giants for making moves that are in their best interest (and have said so in multiple previous posts), some of their actions have been pretty low brow (for instance: SFSFGiants a.k.a S4SJ).
What I question/wonder about is why ‘The Lodge’ has not put the brakes on the Giants when a move to SJ is obviously a gain for them. I could see them being hesitant at first but since a world war was won faster than this decision being made for SJ, it is perplexing they haven’t decided by now.
I’ve mentioned this before, but when all is said and done, we’ll probably see that San Jose had a lot to do with the delay: ballpark land not fully acquired, uncertainty over RDA rollbacks (we have that answer now), the city dangling a ballpark referendum (when one probably won’t be needed) before anything can happen, Wolff’s ability to finance the project (and generate revenue). Its been nearly two years since Selig declared the A’s issue on the “frontburner.” Its been almost one year since Baer suggested compromise in the media. The delay since IMHO has been San .Jose’s doing, not the Giants or MLB’s.
Unlike the Giants and A’s, the MLB teams that share the three other markets all want for the other team to do well on and off the field. In reality, it behooves each team in a shared market to hope that the other team is also bringing positive baseball interest and excitement to the market. For example, I’m sure that the Yankees are not too pleased that the Mets have been an embarrassment operating in recent years as if they are a small market team. In actuality, this puts a greater burden on the Yankees to maintain a high level of baseball excitement and positive headlines in the Greater New York Area media market. In fact, despite the Mets poor play in recent years, they still get a great amount of coverage by the New York media. As far as the Bay Area media is concerned, the Giants far and away get the most coverage as compared to that of the A’s. IMO, the Giants, behind the scenes, to everything in their power to encourage this disparity.
@llpec — The Giants work harder at PR and spend more on it than do the A’s. A lot more. Take a look at these two webpages. Compare the FO staff the Giants have under the headings “Communications,” “Revenue,” and “Marketing” with the skeleton crew the A’s have working under “Sales and Marketing.”
The Giants big machine generally hums along in the background, packing the stadium every day even as the price of tickets spike. Occassionally it becomes obvious — as in the laugable late voting push for the AS game last year. The Giants SS, Crawford, who was struggling to get his OPS to .600, came fairly close to making the AS team. That surge of votes didn’t come from teenage kids playing with their laptops. The inept FO of the A’s, meanwhile, couldn’t even turn tarp removal for the PS to their advantage. Wolff/Fisher have the money to compete; they just don’t want to spend it, even on FO staff.
Sorry. Here are the two webpages.
@ XS – You associate #’s with success, especially organizationally?! Does that mean that small startups and companies are much less effective than huge corporate entities that are usually gridlocked on politics and infighting? When you stick to rationale, logical statements you make sense, but in this case, your sipping of the Krukow Koolaid comes out loud and clear. BTW> Please note the A’s were nationally recognized for their marketing efforts on print, social media, and TV (http://oakland.athletics.mlb.com/news/article.jsp?ymd=20120207&content_id=26603862&vkey=pr_oak&c_id=oak) and that you see quite a number of the billboards in the south bay (while I never see any for the Gnats).
@xootsuit – The Giants’ spending isn’t limited to marketing and advertising efforts. According to a report by the Sunlight Foundation, the various partners in Giants ownership spent $1,566,494 in the last election cycle, including $200,000 from Charles Johnson to Karl Rove’s American Crossroads.
A’s owners spent a total of $5,000, a single donation going to MLB’s PAC.
Just goes to show that spending doesn’t always yield results.
Frisco’s baseball team is owned by a Karl Rove fan. Wow.
spending on PR/marketing may not portend success, but not spending probably ensures lack of success.
@xootsuit, I was referring to the disparity in the local media coverage between the Giants and A’s. Obviously, the Giants have more availability of funds for marketing and PR.
Apparently, it’s OK for the Giants owners to make Big Big $$$ while A’s owners are expected to run their franchise as a money-losing charity. The next time I see a news article bashing the Giants for their outrageous ticket prices compared to the A’s family-friendly prices ($160 for behind-the-dugout in Frisco vs. about 25% of that for an A’s game) will be the first time.
Charles Johnson is not one of my favorite people. Neither is Lew Wolff, however. Nor the Fisher heir. But the Karl Rove connection? Now you’ve really crossed a line into absurdity. Johnson is one of the richest people involved in mlb, without his 25% stake in the Giants factored in. So I really don’t see a connection between the Giants success and the Rovian support. Sorry.
I think the Giants PR machine helps ensure that the team gets the lion’s share of local media coverage. Again, I contrast the always SRO ballpark hype in SF with the tarp fiasco in Oakland. If the A’s invested more in PR, they’d get better press and draw bigger crowds.
@xootsuit – You made the wrong inference. What I was saying is that people throw money around at a lot of things and it often doesn’t work out. If the A’s take a Moneyball, efficiency-based approach to the roster, I would expect something similar of the business side. In both cases, that can and will be polarizing. The Giants have historically been the opposite in terms of approaches for player development and business/marketing.
Lew Wolff gets bashed for a lot. He doesn’t deserve a lot of it. It comes from uninformed (intentionally uninformed, willfully uninformed) people. But one area that the, as the figure head of the organization, deserves criticism is in how the team markets the product. Also, how they engage the media.
re: If the A’s invested more in PR, they’d get better press and draw bigger crowds.
…it’s ALWAYS the A’s fault that the fans don’t show up, despite rock-bottom ticket prices, great giveaways and, of course, a winning team. We’re not supposed to ever entertain the notion that maybe Oakland is just not a great place for Major League Baseball.
re: how the team markets the product.
…Um, not sure what more the A’s are supposed to do besides send Cespides door-to-door to great people. Do the A’s have good TV ad campaigns? Check. Great uni’s and a great logo? Check. Newspaper ad campaigns? Check. Great giveaways? Check. Cheap tickets? Check. But like I just said, we’re not supposed to entertain the notion that the A’s have done everything they can and the people just don’t show. It HAS to be the A’s owners own fault. FWIW, last week, I met some diehard Giants fans who tried to get me to be a Giants fan (Something that will never ever ever happen.) Where do these people live? Right smack in the A’s existing two-county territory, of course.
FWIW, I remember debating with somebody who tried to make the point that Charlie Finley poorly marketed the team when the A’s were winning the World Series (hence the lousy attendance despite the titles). Um, I was a kid in New Jersey at the time and I knew all about the Oakland A’s. But we’re supposed to believe the team was anonymous and under the radar in its own backyard.
@pjk – Let me know when Cespedes is supposed to be in Petaluma. I’ll keep Hunter home from school that day so he can give him a high-five.
I have heard more Earthquakes and Giants commercials on the A’s flagship, than Oakland ads. The A’s are woefully inept at marketing and wooing the media.
Maybe the A’s don’t need to market on their own flagship station because the listeners already know about the team. Why spend big $$ to preach to the converted? And why “woo the media’ which already has decided Fischer and Wolff should spend money that isn’t there building a ballpark on some already-rejected site in Oakland? The A’s want to come to San Jose and the East Bay and Frisco media are under no circumstances ever going to accept that. I suppose they’ll be forced to go, kicking and screaming, to Cisco Field, when it opens, so they can write about how the A’s “belong in Oakland.”
How much are the A’s support to send on marketing? Suppose they spend $5 million a year, but it only will net them $1 million in additional revenue, a net loss of $4 million. At some point the amount of money you spend on marketing will hit a max value add. Do people the team exists? Yes. Do they know you can get tickets for them? Yes. What more do you want?
It’s been shown time and time again in A’s history that the best marketing is actual team wins/losses. This was clearly evident last year with the same marketing throughout the year, the (bandwagon) fans finally showed up at the end when they were on the verge of the playoffs. I don’t know about you guys, but i rather have them spend more money on players and development then marketing.
“If the approach one is taking doesn’t work, keep doing it exactly the same way” – said no one ever.
I understand the argument. Working with the press sucks. Tickets are cheap.
But those are the realities. The first thing I’d do is get Lew Wolff away from any reporter and let Billy Beane do ALL the talking.
There’s only so much promotion can do when the product sucks. Like it or not, the stadium is a big piece of the product. No matter who’s wearing the respective jerseys, the Giants have a huge advantage in the product department due solely to the stadium. Their’s is a huge draw. Ours is a massive hurdle people have to overcome if they want to go to a game. Let’s not fool ourselves into believing they are more successful financially because their ad campaigns are better or their PR people are geniuses.
OT, but somewhat related to this whole issue of marketing, but has anyone noticed this whole “A’s Spirit Week” that the city of Oakland is putting on next week? The official A’s Twitter just tweeted this out a few minutes ago:
And some more links…
Now granted, I’m sure many here will be quick to shoot this down as another PR stunt by Oakland pols, and you would probably be right in saying so. But it is interesting to see a bit more involvement from the A’s organization this time around as opposed to other “Oakland Loves Its Sports Teams” rallies in the past. How this figures into the team’s marketing and outreach strategy is up to your own interpretation…
“With all of the money that’s coming in, Wolff, Fisher, and the other partners would have to be absolutely nuts to sell the team.”
sad, but true. we won’t get other (better) owners as long it is so profitable — both yearly profits due to rev-sharing and increasing team value — to keep putting out an inferior product (low payroll, shitty venue).
“They’ll only get more money next year, which they can invest in one of their cornerstone players. “
these owners? don’t bet on it!
Been out of the loop for awhile, so still playing catch-up here; forgive me if this point has already been made in the thread, but…
If we’re really looking at the possibility that current ownership is “saving money for a ballpark” over spending money on players, etc., and making it crystal clear that a new stadium will have absolutely nothing to do with Oakland… can anyone feign surprise that Oakland fans aren’t linking up to pad Wolff & Co’s “savings account” for this new stadium? It baffles me why anyone would think Wolff would expect anyone Oakland to buy season tickets, just so he can increase his debt/earnings ratio to afford his SJ ballpark.
Oh and one last thing, @ML: I don’t think anyone expected the team to be worth less than $500M, and we all know a stadium is going to cost at least that much, if not more. So your closing point “wishing luck” to those who want the team to stay in Oakland didn’t really seem necessary, on multiple fronts. Its a good thing Wolff will “never” put the team up for sale, so we can go on assuming there’s nobody left in the world with the money to buy a MLB team or the interest in the potential revenue a MLB franchise provides.
Meanwhile, its fascinating to see the “whales” come out of the woodwork to buy a team that had a an Operating Income of under $3M in Sacramento, once the team was actually put up for sale. But, thats the NBA and Sacramento, so it makes sense… nobody would want to touch an MLB franchise in the Bay Area with a 10′ pole.
@JH510 – Oh, there were plenty of people in Oakland begging Wolff and John Fisher to sell for a “reasonable” price, because they’ll have made enough money. It’s still their strategy to hope that happens. Well, if that’s their strategy, they’ll have to deal with market rates.
As for Sacramento, you realize that if KJ wasn’t there the Kings would already have their bags packed for Seattle, right? KJ orchestrated bringing in the whales, has inside hookups with the NBA, and the political will to see this through. Does Jean Quan have any of that? I think the answer is self-evident.
@JH510 – Fans choose their reasons to support and not support the team. If they really think that “padding the stadium fund” is a motivation for not showing up, they should understand that their not going makes little material difference – maybe $2-3 million per year. The annual revenue sharing check is worth almost as much as the A’s stadium revenue. Unless the A’s revenue problem can be addressed in a meaningful way, these protests are little more than noise.
@ML: to your first point, I don’t think anyone is realistically expecting to lowball Wolff & Fisher if/when they put the team up for sale, people in a position to buy a MLB team know how the system works. That’s not the issue. The issue is, simply vowing to never sell them makes it easy to argue that no other viable ownership group exists. I guess I disagree with you when I think those groups are out there.
And I agree with you that Quan hasn’t shown herself to be the caliber of KJ on this issue yet. But I also know she’s not the one buying the team. At the press conference last year, Don Knauss was the one who went on record saying he had a group ready to purchase as soon as Wolff decides to sell.
@ML: and to your point about attendance, I think you hit on a key issue, especially for those of us in Oakland. You say we choose to “support the team” in different ways. None of us who want the A’s to stay in Oakland don’t support the team. Frankly, thats the entire point. We support the team, the Oakland A’s, and we support the city they play in. What we don’t support is the current ownership group and how they’ve managed this team, combined with its lack of progress towards a new stadium.
And I’m totally in agreement that choosing to show up or not show up to games in person may may little material difference in Wolff’s ledger. But, if you can call low attendance in the perspective of “protest” nothing more than noise, why do some so strongly use it as a basis for the team not being viable? Either the fans matter, and their not showing up means something one way or another, or we stop pretending that an empty coliseum actually means something substantive in this discussion, and move on to more important points.
@ML – There are a lot of people who want/think that Wolff will sell for cheap, or that Fisher will get rid of Wolff, or that Selig will intervene on Oakland’s behalf. A lot of them read this site. I’m trying to disabuse them of those notions. They aren’t productive.
Re: attendance, there are trends and there are blips. Protests are a blip. Nearly 50 years of sub-par attendance? That’s a trend. Honestly, what’s going to cause more people not to show up, the team sucking or owners? And if the owners are bad when the team is bad and the owners are still bad when the team is good, when are they gonna get a fair shake? Prices don’t seem to matter much to fans.
KJ’s experience shows that it’s possible to build momentum for one’s cause even if ownership isn’t cooperative. Even if Quan doesn’t have all of the resources KJ does, there’s nothing stopping her from providing effort.
Why do I keep pounding the drum that it’ll be difficult to make it work in Oakland? Because historically, a large private investment in a stadium has proven to be a drag (or at least an excuse) for many teams. Corporate presence in the East Bay – especially Oakland – is demonstrably weak. And the rumblings that there are doubts that San Jose can work even though it is a veritable goldmine are huge factors. These things can’t be ignored, yet Oakland partisans routinely do it. Oakland accuses A’s ownership of playing games? They may want to look in the mirror.
If the BRC announced tomorrow that the A’s could move to SJ immediately, how would that effect the current value of the team?
@Fickledave – Probably. Recent gains have been on the back of national revenues. A San Jose boost would be a critical local boost.
@ML: I’m not sure what Oakland “partisan” means in your mind; I’ve never once said I don’t think San Jose can work, I just disagree with you that I actually think Oakland can also. But I know that ship has sailed for you, so no point in beating this horse further. Its great when the team wins games, and last year proved “it can be done in Oakland.” But the bottom line is, the current owners of the A’s have not made any progress over the last five years in increasing the long-term sustainability of the franchise, period. You can scream San Jose until you’re blue in the face, but the fact is, as of March 2013 nothing has changed. As an A’s fan, that, to me, is frustrating.
@Fickledave: you bring up a fascinating question. So if value goes up if San Jose is greenlit, then value would stay the same or likely go down if the team is blocked from SJ, thus being “stuck” in Oakland, I assume? The whole point is the team isn’t viable in Oakland, so Wolff would want to sell if he couldn’t move to San Jose, right?
@ML: one last question, in all seriousness: can you knock out a bullet list of what you see as the top 3-5 issues making the team not viable in Oakland? From your last post, it sounds like you see the corporate backing as #1, is that right? After that, where do issues like site feasibility and attendance fall? And others I’m missing?
Honestly I’m trying to assess the clear line of thinking of those who see SJ as the only option. I.e., say, hypothetically, we go back in time and the Uptown location was selected and approved by the city, etc.; does that not make a difference, in that you’d still see lack of corporate presence as a deal-breaker?
Just asking because I know the general ideas in support of Oakland, but I keep getting mixed signals from SJ partisans about whether its the lack of corporations in Oakland/East Bay, or the lack of fans, or just the lack of a site to build. ML, you seem the best suited to give me a straight clear answer.
@JH510 – I’ve written about Oakland umpteen times in the last six months and you still don’t understand the reasoning? This is why writing about this stuff can be so frustrating. People don’t want to read what doesn’t fit their own narrative.
Still, I’ll humor you. Here are the top five reasons why I think Oakland will struggle to make a ballpark deal work – and they have nothing to do with A’s ownership.
1. Corporate strength is severely deficient in Oakland, though better in the greater East Bay. It used to be that the A’s org could depend on good money from SF business interests. That has evaporated with China Basin and the Giants’ success. Now the A’s are a 2nd tier product to SF companies, which hurts a ton.
2. The Giants have made as many inroads capturing East Bay fans as they had in previous decades getting South Bay fans, thanks to better accessibility and a better park. People can talk about how strong the South Bay is for the Giants. They also need to acknowledge how weakened the East Bay is for the A’s. Some of that is the fault of Schott/Hofmann and Wolff/Fisher.
3. The political situation is just sad and pathetic. Quan’s M.O. has been to disappear when the times get tough. Reid and Brooks are up for censure if not outright prosecution. And it’ll be up to the next mayor to make the big stadium deal happen because of the time required, regardless of site. For now that appears to be solely Quan, since no one else besides Joe Tuman wants the mayor’s job.
4. No one wants to talk about it, but if the A’s and Raiders both wanted to build in Oakland, they would be competing for scarce resources, whether it’s limited amounts of public financing or other public help. The A’s and Raiders both know this. Oakland keeps perpetuating this high-minded concept of Coliseum City when the reality is that for the 30 years the two teams have occupied the Coliseum complex together, they’ve both done best when they aren’t co-tenants. In the 70’s the two teams were constantly competing for revenues and preferred status in Oakland, a rivalry that restarted (in a more civil manner) when the Raiders came back to Oakland. The sooner that people in Oakland acknowledge this problem, the sooner they can address it.
5. Redevelopment is dead. It impacts Coliseum City and probably all other sites. To base a new stadium plan on pre-redevelopment thinking is foolish and lack foresight. Oakland has to be even more creative than before to be successful.
I could rattle off a few more if you like. Will it get through? That’s for you to decide.
@ML: thanks. The list of 1-5 was great, very useful to try and understand the perspective you’re coming from on these issues. Honestly I wanted to get a bit of clarity on this train of thought we were discussing, really didn’t want you to have to “humor me” to discuss it, but glad you did anyway.
Not really sure what “get through” is referring to, but we all know this is your blog, your take. Obviously most of your readers on here agree with you, and more power to you, keep on doing your thing. But I just wanted more clarity on the pro-SJ argument, thats all, wasn’t expecting you to convince me of anything. I’ll keep an eye out for stadium news here and elsewhere, and wish you the best in your attempts to “get through” to people, however frustrating it might be.
See you all tomorrow night!
@ML – If I recall correctly, didn’t you have a sort of “FAQ” link with this kind of info on the site way back when? I think it would be useful to have a primer to help get newcomers to the blog up to speed without having them plow through eight years worth of articles and content (though granted, I agree with you that there will still be those who will only read what they want to read). I understand your frustration in having to repeat yourself ad nauseum, but I think JH510 asked an honest question with sincere curiosity here (maybe that’s not enough to excuse ignorance, but hey, just my two cents).
Anyways, just a humble suggestion… still very grateful for all the work you’ve put into the blog, ML.
@JL – There was a FAQ, but it covered more of the basic facts on the ground. A question like the one posed by JH510 is something that would be covered in numerous posts at different times. At some point I’ll try to update the FAQ, which is hopelessly obsolete at the moment. That’s why it’s not linked. FWIW, the difficulty in putting together a FAQ was part of the motivation in creating the book archive in a digest format.
re: For now that appears to be solely Quan, since no one else besides Joe Tuman wants the mayor’s job.
If people recall from the last mayoral election, Joe Tuman was on record saying he wouldn’t bend over backward to keep the A’s in Oakland if he were mayor. I wouldn’t expect that to change if he makes another run in 2014. If the low prospects for Oakland mayoral candidates hold true, then any pro-Oaklanders out there who think someone other than Quan can get a stadium deal done better not get their hopes up…
Which reminds me, I need to get around to sending in that $10 donation… 😉
Here is a good illustration, JH510, of why Lew Wolff now appears to correct about the difficulties of doing business with Oakland city officials – Compare the Sacto situation to Oakland and the A’s. Balmer, an extremely wealthy individual, purchases the Kings with the intent of moving the team to Seattle. Instead of whining or panicking, Sacramento city officials quickly organized and found a new owners group which will keep the Kings in Sacto, and also plans for a new arena. Sacramento city officials did all this in only two months – Oakland has had 18 years to find a solution to keep the A’s and has no concrete plans for either a new ballpark or a new owners group. – Sacramento has accomplished both in only two months.
didn’t Wolff say that the payroll wouldn’t go up at a theoretical stadium in the south bay? Something about Billy Beane likes working with low numbers??
@ JH510 – “last year proved “it can be done in Oakland.””? How so, that fans showed up at the last second when the team was winning? I was there throughout the year even late in the season when hardly a peep showed up during their playoff push. Also, if you haven’t noticed, the delta between 2011 and 2012 is a measely 1000 average. Sorry, but that doesn’t prove anything besides the fact that fans seem to come regardless because it’s the cheapest ticket in MLB.
re: Oakland has had 18 years to find a solution to keep the A’s and has no concrete plans for either a new ballpark or a new owners group. – Sacramento has accomplished both in only two months.
…Most likely because potential investors have looked at Oakland’s offer (city provides slab of land at site already rejected by MLB, owners pay for 100% of the ballpark and take 100% percent of the risks. Owners also probably have to pay for any environmental remedies at the selected site)and realize like Wolff/Fischer that it’s simply not a worthwhile investment.
A new A’s ballpark at the Coleseum parking lot would be feasible – with no enviromental cleanup expenses.
Wolff says the ballpark has to be in a downtown – not in a parking lot. And we already know the corporate environment in Oakland is not strong enough to sustain a privately built ballpark.