Oakland’s Port settlement gamble: Short-term pain, long-term gain

The Port of Oakland’s board ended today’s session without a decision on the SSA settlement, pushing the matter to a special session next Tuesday. Thankfully, the Port also released the upcoming meeting agenda, which includes summary of the settlement terms this afternoon, allowing the public to review the settlement.

At no point in the document do the words “Athletics”, “stadium”, or “ballpark” show up. While anyone following recent news could divine Oakland’s purpose for Howard Terminal, no pro sports (or any other development) are associated with it. For now. Instead there’s a pretty level-headed analysis of the pro’s and con’s of settling SSA’s lawsuits against the Port, repurposing Howard Terminal for non-revenue uses, and the broader effects on overall Port operations.

As part of the settlement, SSA would cease operations at Howard Terminal on behalf of Matson, and would move down the harbor to Berths 60-63, where they’d take over for Eagle Marine Services (who chose SSA to succeed them). SSA, which was complaining about higher fees compared to competitors, would starting running the new terminal under the same fee structure as EMS. In exchange for the lower costs, SSA has agreed to drop its lawsuit against the Port.

If Howard Terminal is vacated, the Port assumes that it will lose $10 million per year in revenue, minus any offsetting revenues gained by SSA’s consolidation and costs associated with the lawsuits (I pointed this out last year).

While the settlement is driven by Port’s desire to get rid of the lawsuits while consolidating facilities, the ballpark push looms in the background. There’s no amount of ballpark activity that can pump $10 million per year into the City/Port, but that’s a moot issue since there’s no way a ballpark would be ready anytime in the next four years. The big gamble is what happens to Howard Terminal if MLB doesn’t like the site, or if MLB approves the A’s move to San Jose? What to do with land that has to be regularly monitored that has limited use?

Assuming that the settlement is approved as expected on Tuesday, the City is showing that it’s making an effort towards providing a proper ballpark site away from the Coliseum. That may be just as well, since former Coliseum JPA board member and current Oakland City Councilman Larry Reid said this towards the end of City budget discussions tonight:

Ah, but will Oakland and Alameda County spend many, many more dimes to get Howard Terminal spiffed up?

50 thoughts on “Oakland’s Port settlement gamble: Short-term pain, long-term gain

  1. I extend the hand of peace to those who want the A’s to remain in Oakland. I will support a new A’s ballpark in Oakland (be it HT or at the coliseum) if we could all support my hometown being freed from the Giants territorial restriction. If in the end MLB chooses Oakland (HT) as the long term home of the A’s I want it to be because Oakland delivered a kick-ass land and financing plan for the A’s and SJ couldn’t deliver…not because we were banned from trying. If we are free and we fall flat on our face, I could live happily ever after taking Amtrak CC from Diridon to JLS to watch the OAKLAND A’s play ball. Peace..

  2. Ok,
    I thought I would post this here ML.
    I did some estimating of putting piles and a platform on Howard Terminal. This would then accept a ballpark ontop of it. The purpose is to allow minor penetration of the hazardous material.
    Based on a 15 acre ballpark, the very low end of putting a platform up is $90 million.
    The high end is $125million. This is based on general engineering assumptions. I made those assumptions based on experience. Iam a liscenced civil engineer, and I do this analysis for a living.

    The other option is to clean the entire site by removing the material.
    This would require to know how deep the hazardous material goes, and the type of haz material. Based on some assumptions, cleaning the site may be more expensive. For every ft you go in depth you are looking at probably close to $6million. Therefore, on the low end of removing 10ft and putting back clean material, and still needing piles, the cost is $100 million. Every additional foot of removal is $6 million dollars. Needless to say the cost rises rapildly.
    In summary, it is one expensive site to build on.

    If you are interested in my numbers I could provide some details.

  3. I’m curious to hear if Oakland/AC has an ace up their sleeve. I’m wondering why they would even consider dropping that kinda bread on prepping a site for a ballpark no one is interested in building.

  4. That’s like buying a wedding dress and the closest man in your life is a clerk of the local Blockbuster Video that closed down last year.

  5. Is MLB supposed to select a high-cost, very risky site where it will be difficult to pay for the stadium, anyway, just to keep the A’s in Oakland and have them continue on revenue-sharing for decades?

  6. The significance of timing had to do with August owners meeting. One more attempt by Oakland to say we really do have a site. Remember- LW is a developer- he knows costs and options for contamination and it doesn’t make economic sense. MLB knows this also- but no one is going to tell Oakland to stop playing the game- all of this is meaningless- its up to the forts or MLB/gints to come to a settlement or compromise. Diridon next to HT is a slam dunk for economic reasons. Good article today in wall street journal about this situation and the economic value of SV.

  7. Forgetting about the A’s for a moment. It makes a bit of sense for them to bite the bullet and clean it up now. No one’s champing at the bit right now to use that site. They’re trying to build up that section of the city. If they sink the cost to clean it up now, taking a long view of not trying to do it overnight. By the time their done, if there’s heavy growth in the area, say ten years from now, suddenly they have very prime real estate that they can then sell for a major profit, cleaned and ready for a developer to use. If they sit on it and do nothing, they’re going to lose a ton of value on it given it’s very limited appeal and the cost of having to deal with it. In a sense, it’s like flipping a house.

  8. PJK, the A’s would not be on revenue sharing at Howard Terminal. The second they leave the Coliseum the revenue sharing gravy train ends under the current CBA regardless of their destination in the Bay Area.

  9. I also believe that the HT site is being used by Oakland officials to keep their city in play, especially as San Jose is finally putting pressure on MLB to allow the A’s to move to their city. Except for the territorial rights issue and the land acquisition issues, the San Jose site is viewed as by far the easiest and best site for a successful A’s ballpark operation. On the other hand, the HT site, even if available, has too many extensive problematic issues to be resolved before the first shovel can get into the ground. I view HT as a pipe dream for those who refuse to give up on Oakland to stay as the home of the A’s. I did believe that Victory Court was the best site in Oakland for an A’s ballpark. However, it was viewed as too costly to build a ballpark at that location. From what information we now know about the costs to build at HT, the Victory Court site would have been a relative bargain. With Oakland’s best location out of the way, all points lead to San Jose.

  10. I wish Townsend had asked Knauss when the last time he personally spoke with MLB’s committee was.
    There are several ways to read this move, in the pattern of Oakland’s efforts it fits right in to the reactionary, half cocked approach with everything else. Show a front of “we got this” and then try and make it so.
    On the other hand, if there has been recent communication with the panel, maybe it is something they are interested in.
    Then again, recent contact with MLB about a lease extension at the Coliseum could also be just because MLB understood that without a lease extension they were going to have a big shit burger on their hands. And recent contact on the lease negotiation doesn’t speak to the “site control” requirement, which has been sitting in front of Oakland officials for 4 years…
    It’s all just such a bunch of bullshit.

  11. @Tony D
    Is this a trick??? 😦

    The least expensive ballpark that can be built in our territory is right nxt to the coliseum….A Raider Only Coliseum, Warriors “now buzzin” Oracle Arena and a new ballpark for the A’s add shopping center, movies, apartments whatever in between and BBAAMM!!! you have your Coliseum City project….Oakland knows this can be a great vision that can save the teams and city…we just need some help from A’s management…I see the light….

  12. Back in the 60s, the Coliseum was build as a multi-purpose stadium on the cheapest land they could use. It’s worked out great, hasn’t it, standforcoliseumcity?

  13. Well it did work out pretty well for 50 years.

  14. Not really Tim. It’s only worked for a handful of years. Remember the Mausoleum days of the late 70’s and early 80’s? Remember the Raiders moving away because the Coliseum was a dump then coming back and not being able to sell enough PSL’s to have made the trip back worth it? Remember the Seals moving away because no one came to games at the Coliseum? The Coliseum has actually been a pretty solid failure over the majority of its lifetime.

  15. The Coliseum has seen six championships, had constant sellouts for the Raiders before they left, drew more fans for than the other local multi-purpose stadium for baseball, and was usually voted one of the best venues to play baseball in the late 80’s early 90’s by major MLB centered publications. The Raiders also left because of a lack of luxury boxes, something most stadiums didn’t have at the time. Post Mt. Davis it’s a different story, but I would say everyone’s favorite toilet bowl had been quite successful.

  16. The current CBA expires in 2016. If the A’s were to stay in Oakland I would think whoever the owner is would demand revenue sharing eligibility for the A’s to be restored in the next CBA. Seemed to me that the “no revenue sharing” hook was in preparation for a move to SJ. If the team assumes more risk by staying in Oakland you have to be eligible for revenue sharing as a fallback. Otherwise someone else is going to have to chip in for a significant portion of the ballpark.

  17. Yes, if staying in Oakland means a more expensive ballpark + fewer dollars to pay for it, then continued revenue-sharing, more revenue-sharing, actually, is a must.

    • That would permanently enshrine Oakland as the small market team right next to a big market. The Giants win.

  18. It got the city of Oakland 3 major pro teams for 40+ years, with Oakland being the smallest city in that category for most of that time I imagine. It’s served its purpose admirably well.

  19. make that “admirably” or “reasonably well” – I don’t think “admirably well” works

  20. @eb:
    That’s crazy talk. Are you really citing some 30-year-old bullsh^t poll from some MLB publication directed towards 10-year-olds as evidence of the Oakland Coliseum’s success? Its tennants were begging to get out of their leases before the Coliseum even celebrated its 10th birthday.

  21. @Briggs Al Davis was hardly begging to get out in 1976. You can view the various praises for the Coliseum atmosphere during the Haas ownerships however you like. I am merely pointing out that for a good stretch, writers and players alike viewed the place as the best place to play in the MLB.
    -six titles
    – constant sellouts for the Raiders pre move
    – drew better than the local competition (Candlestick)
    – held legendary, classic games and concerts that are still fondly remembered
    – gave Oakland the chance to have three teams for 40+ years (as Tim mentioned)
    Look, there have been severe low points as well, but the place has been a mixture of success AND failure, like most stadiums of its design.

  22. And if San Jose is not freed? Do you still support the team?
    I’ll support the A’s in San Jose, period. No matter how they get there and who owns the franchise.

    This has been going on way too long. Selig has the power to pull the trigger for San Jose but won’t do it. Even I admit San Jose is clearly the best location for tha A’s. But, it hasn’t happened..WHY?

    Some day the whole story will come out. Until then, I say the A’s aren’t going to San Jose…sorry

    • @Georob – I’ve been on record many times. I’ll support them fully whether they’re in Oakland, San Jose, Fremont, anywhere in the Bay Area. Doesn’t matter who owns the team (well, except perhaps MLB).

      What I have a problem with is another team actively stifling the A’s. That’s where I’m coming from.

      Plus you have to look at the long road. If the A’s are enshrined as the East Bay small market team and they can’t get a stadium deal done, whatever it may entail, that’s Exhibit A in MLB’s case to eventually move or contract them, remote as that sounds. They can say that the Bay Area can’t support two teams even as they willfully rigged it to benefit only one.

  23. With the current lease negotiations, Oakland definitely has the A’s full and undivided attention. I’m just puzzled over Clorox’s intentions. What do they get out of it? Naming rights on a sporting venue? I can’t accept that. Also, Clorox isn’t like a Levi’s or AT&T who has to play the “cool” game with ever-fickle consumers jumping between competing brands.

  24. 1. @ML “That would permanently enshrine Oakland as the small market team right next to a big market. The Giants win.” If the A’s can retain the ability for revenue sharing, and play in a big market at the same time, I would say the Oakland A’s win, well short of not getting SJ anyway.

  25. re: What I have a problem with is another team actively stifling the A’s.

    …Yes. All while MLB does nothing to stop it. Just “study” it for years and years and years.

  26. re: titles at the Coliseum complex

    The number of championships is irrelevant to the quality of a market or facility. And, of course, three of the four A’s ownership groups have wanted out of Oakland, and the fourth, the Haas family, sold to stop the flow of red ink.

  27. @ML My comment was under the assumption that the A’s would get assurances, from MLB, guaranteed franchise vale, sliding scale for revenue sharing, and some other perks for staying in Oakland. “We will pay you, since we will not allow you to pay the Giants for the TR rights.” I am an Oakland supporter, but I would like to think I was a reasonable one, yes I want them in Oakland, but I would support them in my Oakland jersey, sitting right there in SJ. I guess what I am saying it can work in the-O and work well, if it’s done correctly, and yes I do believe It could work even better in SJ., and as for the Giants it is obvious to me that the Giants don’t want the A’s in SJ., Oakland, or anywhere in the Bay Area, and I really hate them for that.

    • @Lakeshore/Neil – If what you’re suggesting were the only chance to keep the team local, I’d have no choice but to accept it.

      What you are suggesting doesn’t really help the A’s much. As long as this valuation bubble continues, Wolff/Fisher have no reason to accept a franchise value payoff (Peter Angelos accepted his before the bubble started), especially if they’re not selling the team. Revenue sharing is nice, but remember that the purpose of the revenue sharing check isn’t to pay stadium debt service, it’s to pay for draft picks and player development costs. Now, if MLB offered guaranteed revenue every year it might be a different story. Angelos supposedly wanted that from The Lodge and didn’t get it. The real question to ask is, Is The Lodge willing to indefinitely subsidize baseball in Oakland? Given some of the remarks by other owners, my guess is no.

  28. The source of many disagreements here is our varying reasons for supporting the A’s. Personally, I love watching “The Little Engine That Could.” They satisfy that part of me that affirms “with some good decision making and luck, you can achieve more than anyone else thought you could.” The flip side is the team has to be broke for my fantasy of them to stay intact. But that’s entertainment. Every drama needs a good antagonist and that’s the San Francisco Giants. Of course I’d like to see the A’s win more WS Championships and be swimming in money,but you lose the inspirational element. Everyone loves the “Little Engine that Could.” No one really cares have that Little Engine’s plight once “could” became “did.”

    Everyone loves “The Little Engine that Could.” No one is interested in “The Little Engine that Did.”

  29. Updates on the other Coliseum complex tenant from Kawakami

    Tim Kawakami ‏@timkawakami 1h
    …I asked Joe Lacob if it was realistic GSWs would have the SF arena built at Piers 30-32 by 2017. “It’ll be a challenge,” Lacob said.
    …Lacob said all focus remains on SF arena by 2017, but said staying in Oakland for a few extra years is another option.
    …Interestingly (to me at least), Lacob said Pier 50 site near AT&T Park is NOT an option. Would listen to SFGs about building on Lot A.
    …Lacob remains pointed to Piers 30-32 site but there will be other options–and other necessities–until they know they can build it there.

  30. @ML I understand there has been talk of loaning Oakland money, perhaps 250 mil, and there is infrastructure cost as will, and I know MLB has not done this before, but it’s something they may be willing to do, as part of a settlement with the A’s, because they should not expect them to pay for a park in Oakland on their own. Hay it’s not perfect, it’s not even the most optimal of situations, I am only saying it can work in Oakland, and a with good marketing, and the East Bay business community behind it, it can work on a level that some, of us may be surprised by. There are only two franchises that have real stadium issues, the A’s and Tampa MLB is going to have to get creative if they want the A’s to say in Oakland, they probable would prefer SJ., or another market outside the Bay, but there really is not one, half of the Bay is better than San Anton, or Portland.

    • @Lakeshore/Neil – I have a hard time believing MLB will fork over a $250 million loan to any one club, especially one that could have trouble paying it back or pays it back through revenue sharing receipts. The league’s credit facility isn’t like the NFL’s, it isn’t very large and it’s really meant for short-term debt. If it happens, great I guess. Wolff’s telling MLB that he’s bringing a lot of equity (cash) to the table. Cash in San Jose or debt in Oakland?

      @TW – Oakland is peddling both sites as “equally” viable for the A’s without getting into specifics. The Raiders are the only negotiating team in Coliseum City. There is room for a ballpark there the way the site plan is put together, but how the timing of it would all work, especially with the necessary demolition of the original Coliseum at some point, is a mystery.

  31. I’m not following Oakland’s plans too closely so I, admittedly, could have this wrong. However, I’m confused about HT. Is or is not the Oakland Pols’ plan for their sports teams CC? Didn’t the mayor make a big pitch to the press and to the leagues about CC only a few months ago? So if HT is their pitch, is CC now dead….at least for the A’s? Doesn’t this come across as musical stadium locations?
    What about the Raiders who, at least publicly, have shown a willingness to stay in Oakland? If HT is suitable for a football stadium, why not pitch a waterfront stadium for the Raiders and outdo the Niners new stadium? How about the Warriors and keeping them in Oakland with a nice new waterfront arena? I guess I don’t understand why this, as being pitched, prime piece of waterfront land is the baseball plan? It might seem to a cynic that the best spot is being “pitched” for baseball because it is the only team currently being forced to stay in Oakland. Yet, arguably, a Warriors stadium there is probably the best fit given a reading of some facts.

  32. FYI: georob – Once SJ’s lawsuit receives standing, Selig and MLB will fold like a cheap suit, and the A’s will move to San Jose. Selig has no desire lose the MLB ATE (especially if MLB is required to defend the giants owner’s silly arguments in a courtroom)

    The worn-out opinion “I’ll say the A’s aren’t moving to San Jose” is only wishful thinking by A’s fans who don’t want the team moving to SJ (and naively believe the giants mgt. are some type of heroes because they are blocking the A’s)- or greedy gnats fans.

  33. @ML Sorry I meant MLB could loan the City of Oakland 250 mil, not the A’s, I know it has not been done, but again like I was saying MLB is going to have to get creative if they would like to hold the A’s hostage. You have to find creative ways to still tax money (-:

    • @Lakeshore/Neil – That’s a creative idea, I’ll give you that. I wonder what arbitrarily high, credit-card-like interest rate MLB would charge Oakland for the privilege of keeping the A’s in town? 15% 20%

  34. What would be the debt service on this stadium loan from MLB? Isn’t Oakland already on the hook for $17 million a year for Mount Davis? How about Oakland pays $500,000 a year for the next 500 years, interest-free, to pay off the loan?… At what point does MLB formally decide it just can’t make the numbers compute in Oakland? Or does it already know this and can’t say it?

  35. @aaron,
    Trick? I’m just a public employee from San Jose who wants to see MLB in my town. I have no power whatsoever to be playing tricks. What I stated in my post stands; peace.
    I’ve been a fan since I was a teen; what does that tell you Sherlock? I’d be pissed if SJ wasn’t freed, but I wouldn’t dare take my anger out on my team. And yes, Selig does have the power to free San Jose but wont; why? I’ve said the possible reasons before and I’ll say them again:
    No lease extension at Coli
    San Jose not controlling all the land at Diridon
    San Jose insisting on a public referendum when one might not be necessary
    perhaps financing concerns with Cisco Field and Wolff shouldering all the costs
    a logjam with the A’s and Giants negotiations over SCCO.
    Yes, when this is over it’ll be very interesting on why this damn drama took so long to close out..

  36. BTW,
    Never liked the SJ lawsuit against MLB. SJ would have been better suited acquiring ALL the Diridon plot and clearing it for future construction. Also stating there would be no public referendum (due to private financing scheme) would have been better as well. But SJ pols are in constant contact with Wolff, so I’m going to trust that they know what the hell they’re doing with the nuclear option..

  37. Giving oak town a $250M loan at any interest rate plays right into the hand of SJ’s lawsuit. Imagine prohibiting a team from moving into a shared territory while simultaneously given a city something that has never been extended before- doubt MLB is that dumb but you never know- either way a loan still needs to be repaid just like mt. Davis still has many years until it is repaid

  38. There may be some legal issues, Tony D., if San Jose does not take a referendum vote about the ballpark. Knowing the giants, with their phony “Stand for San Jose” group – may attempt to raise legal problems about the ballpark if all the bases aren’t touched by San Jose or the A’s.

  39. The whole “MLB gives money to help pay for a stadium” is pure fan fabrication. Quite frankly, I seriously doubt MLB has any interest in a city that they’d have to give money to, even as a loan. They’re much more likely to hold onto the team like the Expos until another city that has money throws it at them. That may take years, but I think they’ve adequately proven that they’re quite patient. If they say officially say no to SJ, then they’ll move forward on trying to sell to any city (including Oakland) willing to spend a substantial amount of money to take them. Keep in mind, a no to SJ is NOT a “you have to build” in Oakland.

  40. Tony D says “Never liked the SJ lawsuit against MLB. SJ would have been better suited acquiring ALL the Diridon plot and clearing it for future construction.”
    I see the logic of your stance. It’s usually better to make a deal with a warm handshake instead of a cold shove. And I will say this, when MLB asked SJ to delay their vote, it seemed to me the SJ-MLB relationship was decent. It also seemed to me that asking a city to simply postpone a vote signaled things were looking, at least, not bad for SJ (I assume MLB would not care one way or another about a vote in SJ if SJ was off the table). Yet the recent public invite by Reed to speak with BS, and BS rebuffing him in such a perfunctory way signaled something different. It was a mild slap to the public face of the leader of SJ. I don’t see why a conference call with Reed would have caused anything negative for MLB (I assume no legal issues were at hand for BS to chat with Reed) while a rebuff probably would add a bit of fuel to the fire in SJ.

    So, ultimately, I think SJ putting that same vote back in motion is the move I would like for SJ (unless their lawyers say it is bad for their legal case). I think land acquisition is the easier step….one that many feel like is not too massive a hurdle. Further, the time is optimum for trying to move forward with and pass a Measure. This is due to the ‘us versus them’, near unanimity among the Pols in SJ. So, again, unless their lawyers say a vote is not good for their legal case, and assuming the previously planned vote’s deal is still a deal that is on the table (is there something to vote on?), the vote is the item I’d like to see them move forward on AND win. It’s the item that I think would place the most fuel in the BS/Lodge fire…..

  41. ML writes “Oakland is peddling both sites as “equally” viable for the A’s without getting into specifics”.
    Thanks for the response ML. My two cents is a two (vague) site strategy is a losing one. If I read the situation correctly, these days not many are taking Oakland seriously on their “plans” or their public comments. And assuming my read of that is correct (which, admittedly, it may not be), Oakland appears to be better served taking a site, presumably CC, laying down a few proverbial tracks, and trying to gain some credibility – try to show the decision makers they do have some substance, they can be relied on to make things happen.
    Where a multi (vague) site push may make sense is if Oakland’s plan is to make anything just barely believable enough to keep the A’s out of SJ. Then at that point figure out a site on the fly and under more optimum terms for Oakland. If that is their plan and every egg they have is in the ‘TR being upheld’ basket, I don’t like where this ending appears to be going, not for A’s fans and not for the ‘Oakland only’ folks.

  42. pjk, not according to MLB. They were quite clear that new ballpark means no revenue sharing for the A’s. Oakland or San Jose. The Coliseum is the only thing still keeping the A’s labeled “small market”. If Oakland can’t work without revenue sharing then it’s just another reason Oakland is a non-starter for Wolff, because there IS no revenue sharing in Oakland after the Coliseum. The A’s would be classified as a big market team.

  43. @duffer,
    The Quakes SSS didn’t require a public referendum because it is being privately financed. If a similar deal is structured for Cisco Field, then a ballpark referendum would ALSO not be necessary. See SJ Muni Code for details on public funds and venues seating over 5k.

  44. I think the deal is that if the land is sold to Wolff for market value, they don’t need a referendum. If it’s lower than market, then they would be giving part of it to a private business, and it would need to go to a vote.

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