How to negotiate a ballpark deal without giving away the farm

If you haven’t heard, the City of San Jose finalized a five-year lease extension with the San Jose Giants this week. Talks were somewhat contentious for several months, as it was Giants ownership (San Francisco Giants) that spearheaded the Stand For San Jose-vs.-City of San Jose lawsuit two years ago. The relationship was so sour that the SJ Giants had to remove themselves from the lawsuit in order to repair the relationship with the City. The Giants, usually at the tops of the California League in attendance, had things pretty good with a favorable lease and a vast array of corporate sponsors to choose from.

In fact, it wasn’t that long ago that the Giants took the City for granted. In 2007 they even played the old stadium ransom game, threatening to leave if they didn’t get as much as $8 million to renovate Municipal Stadium. City let the San Jose Arena Authority manage the situation, so renovations on an annual basis were kept reasonable, a little over $1 million from that point until now.

So when the time came for the two sides to talk, you can imagine how uninterested the City was with the Giants’ sales pitch. The S4SJ lawsuit involved the Giants’ law firm, Pillsbury, and from what I heard, City was happy to let the Giants twist in the wind a little. Eventually cooler heads prevailed, resulting in the five year extension through 2018.

The lease remains dirt cheap at about $25,000 per year. In addition, the City is for the first time granting the sale of naming rights to Muni. Money from any naming rights deal will go into a capital improvements fund. The important takeaway is that the City is no longer responsible for general upkeep at Muni, nor will it be pushed into funding other improvements at Muni as the Giants had previously requested. In a related move, a deal to share parking with Sharks Ice next door was also reached.

With the coffers running low to fund ongoing facilities improvements, City has used naming rights successfully to take care of various small projects. Most recently, the venerable Civic Auditorium received a name change to the awkward sounding City National Civic, after City National Bank. And of course, there’s also SAP Center, which changed from HP Pavilion in a rather quick manner after the CEOs of HP and SAP talked it over. City National Civic’s deal is worth $240,000 a year, within the range of single-A ballpark naming rights deals. It remains to be seen if Muni will fetch more because of the Giants’ name and the size of the market or less because Muni’s elderly condition. In either case, there should be a number of local sponsors who should be expected to bid, Adobe and Orchard Supply Hardware to name two.

Or, if the parent SF Giants wanted to get really snarky about it, they could rename it Giants Stadium. Talk about planting a flag. The Sharks took over the naming rights to their practice facility from Logitech, and have been expanding that brand ever since with rinks in Fremont and uptown Oakland.

45 thoughts on “How to negotiate a ballpark deal without giving away the farm

  1. I stand by my idea that none of this occurs if the Big Giants are adamant on playing continued hardball with SJ re A’s. If that was the case, SJ most likely would rinse its hands of Single A ball and tell the Lil Giants “don’t let the door hit you on the way out!” A’s will eventually be allowed SJ and Single A Giants will be allowed to stay as well.

  2. RM,
    If the Big Giants have an ownership stake in the Lil Giants, won’t the Single A club always be attached to the S4SJ lawsuit?

  3. Tony, the city needs money just the Oakland does. They made the deal to keep that stadium filled, used, and making the city money. It likely has zip to do with the SF Giants or their stance.

    The one thing that does strike me though, the Giants tried to strong arm the city while threatening to leave, a threat because they know they can’t be replaced, in part at least because their owners are blocking the A’s from moving there. Seems like another violation of the AT. Probably legal regardless of the exemption, but still crooked as hell.

  4. San Jose should have asked for compensation for the lawsuit.

    A down payment that could have been used to some effect to attract the A’s.

  5. @Dmoas,
    I would agree with your first paragraph if the lease was $1-3 million per year and Muni was packing 15-20,000 fans per game. But we’re talking $25,000 per year for the lease and roughly 4,000 fans per game. It’s Single A ball! For a city of 1 million residents, very small in the grand scheme of things. IMHO don’t think the city of SJ would have missed them one bit.

  6. As long as there’s still a beer batter

  7. ML has a brilliant plan about what to do with the lil’ gnats – send them packing. The A’s could temporarily expand Railey Field to MLB capacity – move there until the new A’s ballpark gets built. Then boot the small gnats out of San Jose and move the Rivercats here temporarily.

    It’s puzzling why San Jose city officials are so accommodating towards the giants and their mini club – since the giants are costing the San Jose economy an extra $130 mil. annually, 800 more jobs also, and millions more annual tax revune because the giants mgt. is blocking the A’s move to SJ. Furthermore, the gnats mgt. has been suing the city of San Jose with their bogust group “Stand for San Jose” – and using the mini-gnats as the front group for the lawsuit – San Jose city officials should boot the little gnats out of town and quit being so accomodating to the giants mgt.

  8. “It’s puzzling why San Jose city officials are so accommodating towards the giants and their mini club –”

    @duffer, I too cannot understand or explain it, unless things are going on behind the scenes that involve the bigger picture. Hopefully, we will get that answer in the not too distant future.

  9. @llpec – those economic figures don’t even include the additional $500 mil. that building the ballpark would contribute – it’s very odd explaining what the situation is with San Jose, the giants and the SJ gnats.

  10. @duffer and llpec,
    Totally agree with both of your ideas. Hence what I wrote in my first comment.

  11. @Tony D – Neither Giants club are associated with the lawsuit. There’s technically arms-length distance.

    Anyone asking why SJ doesn’t screw the lil Giants, the answer is simple: Most fans are unaware of the ownership situation and don’t care. All they would see is SJ being petty. Bad PR. But good to let the club get nervous. Now City appears magnanimous.

  12. Really, trying to read anything more into this beyond SJ attempting to make some money off their facility is about as stretching it as reading media snippets of a possible ownership group seeking to buy the A’s and build at HT. Actually, it’s probably more so.

  13. @dmoas: SJ always has the option of booting the giant’s affiliate out, and moving another affiliate (preferrably an A’s team) instead. Because their behavior, the giants mgt. does not deserve any breaks from San Jose – and should not receieve any either.

    Agree about the HT proposal though, that deal would cost a new theoretical A’s owner at least $1.6 bil. and up – likely close to $2 bil. The Niners franchise and Levi’s stadium combined are approximately worth that. That sum could also buy 3 NHL or NBA teams, and a new arena to support them.

  14. Duffer there are only a handful of available teams. And each has their own leases. Banking on being able to draw another team in is foolish. Could they, sure. It’s not out of the realm of possibility. Taking the leap from this deal to “ZOMG this means the Giants have loosened their grip on SJ, it’s a sign for sure” is delusional at best.

  15. @dmoas,
    We’ll just have to agree to disagree. For all intent purposes, the San Jose Giants ARE the San Francisco Giants (through ownership stake). That is all I’ll say about this for now…

  16. OT: BTW, The euphoria over Oakland’s announcement last week and “momentum” appears to be dying out, yet again. Ahh yes, slowly getting back to reality around here…

  17. @Nathan – I always forget about the beer batter until I attend a game and hear it announced. Then it’s Christmas in July.

  18. @ Tony D. Euphoria?, really tony, one commenter for sure, other then that not really, the news last week was met, with the same mix of fillings all other news has been, weather it be Oakland, San Jose, or hopfuly not Portland.

  19. @Lakeshore,
    Point taken. Yes, one commenter for sure, plus Oakland pols and some from the East Bay media. My apologies Lakeshore if I sometimes come off as “anti-Oakland,” but really I’m venting my anger at those who speak a lot of nonsense and support San Jose remaining a hostage of the SF Giants (for their own selfish reasoning). You Lakeshore are a true Oakland supporter who also remains grounded in reality. If the A’s were to remain in Oakland I will gladly tip my hat to you. The others? No way in hell!

  20. Ahh come on Tony, lighten up buddy. Here’s a little Matier and Ross to go with your pancake and eggs:

    “Wolff is expected to meet soon with Tom Barrack Jr., executive of Colony Capital, a Southern California real estate company involved in the giant Coliseum City project that would include new stadiums for the A’s and Raiders, retail space and housing.”

    And my personal favorite . . .

    According to East Bay sources, Wolff sent a letter to Coliseum officials Dec. 10 saying he wanted “a better understanding” of the land that the city and Alameda County controls around the stadium-arena complex.

    Coffee? Room for Cream?

    http://www.sfgate.com/bayarea/matier-ross/article/Santa-s-firefighter-helpers-may-finally-have-5085778.php?cmpid=twitter

  21. @Ivan–yup–might want to wait to pop the champagne…two developers trying to build 2 stadiums totaling $1.5B with money from the rest of the development and pay off the existing $120M+ of Coli debt–going to take alot more than some development rights in a less than desirable area of Oakland

  22. @GoA’s

    I don’t drink champagne for breakfast. What you are describing is a scenario reserved for dinner.

    Stay thirsty my friends.

  23. @Lakeshore,

    “Ivan” is Exhibit A of what I’m talking about. FWIW Ivan, “Matier and Ross,” “East Bay sources” and Rayburn’s fine commentary on this site. Enough said; have a great day and enjoy your meals…

  24. one other thing to keep in mind–to have any leverage in the on-going negotiations on TR you need a competing alternative–gints dont want the A’s in San Jose or Oakland–recall it was the gints that made sure Piccinni and group didn’t get the A’s–once a “truly viable” option appears in Oakland negotiations on TR will most likely take on a different flavor. My prediction on outcome here–TR right issue will be resolved and the Bay Area will be a 2 team shared market–no different than any of the other 2 team markets—where the ballpark is built–all depends on what city gives the best deal–

  25. @GoA’s,
    Just for the fun of it: if you compare Wolff/Hunter Storm’s iStar development to what’s proposed at the Coli, you’d probably get $40-50 million for one (in “Fantasy Land” two) stadiums (based on the $10 million amount alloted for the Quakes SSS from iStar). So if a new Raiders stadium costs $800 (?) million and a ballpark costs $500 million, BY GOLLY you’re only short now by $1.25 BILLION with that whopping $40-50 million! In a depressed area with minimal corporate support and pathetic local leaders? Gee, where does Wolff sign up! As always, lot’s of fun..

  26. @Tony D. point taken, soory man I just hate, to much of the SJ vs Oakland stuff.I realize we have to do that, a little when looking at each site (Dirdon, CC, HT), which I am sure most of us are cool with. It just seems at times, some of us get a little personal. I am sure you fill the same, and as you know, we have always been cool.

  27. @ Tony D. Yeah man I am right with you, of all the groupspersons I am mad at, its the San Francisco Giants hands down, any reasonable person should know it can work better in SJ, but can be done (well) in Oakland, and its same that if it cant be done in Oakland, it may mean, our team could be gone.

  28. sorry: “its a shame”

  29. This summary from the updated Diridon Station Area Plan highlights the two issues with the A’s to SJ move very clearly:

    “The city of San José is currently working to attract the Oakland
    A’s to a new purpose built state-of-the-art ballpark in San José,
    and is waiting for a decision by the Major League Baseball (MLB)
    on whether this territorial change is permissible and whether the
    Oakland A’s are able to agree on a set of terms and conditions for
    their relocation to San José.”

    http://www.sanjoseca.gov/DocumentCenter/View/25145

    So, we know (from the now infamous confidential letter) that the MLB rejected the current (as of June 2013) terms of the move. They have not decided on the first issue though (whether a change in T-rights is permissible). One would think that the two issues are intertwined, but it would be much easier for the A’s to negotiate terms if MLB would make a decision whether they can move at all (at least guarantee that they will put it to a vote if minimum reqs. are met).

  30. @idkk I agree with you. The letter in June 2013, was good news in that it did not give TR’s, as the reason the A’s could not move to SJ. It made me fill as though it was more about the (any), deal the A’s outlined with SJ, and if they could work it out with SJ, it would be all good, but when you think about, the fact that the A’s would have to pay the SF Giants, say 250 mil, and then they have to pay for land (at Dirdon), and the ballpark, and all this will be looked at as debt loaded on the A’s, from the view of MLB, then it is about the TR’s. It would help if the site at Dirdon was biger and Lew could build more retail and condos on it, but its not, and he has had to chage the number of seats (I think it was 32-38 K) If all of this was not enough, you have some in MLB, that may not be happy about Lew paying for the park, on his own dime and these same people want SJ to pay somthing, which may add a public vote, to the mix, in the end its sure you can build in SJ, but the SF Giants are making it so hard to do, that Oakland may be the only place they can build, and if that cant be done, without MLB support (staying on as potental revanue receiver), then I dont see how the A’s stay in the Bay Area

  31. If MLB is insistent that the A’s stay in Oakland, then MLB should be prepared to open up its checkbook to make sure it happens: Help pay for the ballpark, keep the A’s on permanent revenue-sharing (and increase it, actually). If this gets down to Wolff telling Oakland it needs to kick in $300 million, we know Oakland doesn’t have it…I still think this is about MLB viewing its teams as valuable commodities to go to the highest bidder. Which is rules out San Jose’s “here’s a slab of land you can build on and we won’t help you pay for the ballpark.” Washington DC had to pony up big $$ to get the Expos and Cobb County GA is doing the same for the Braves. MLB does not want San Jose getting the team as a virtual gift. But San Jose is not going to pay because it doesn’t have the money to offer. The lawsuit is looking like San Jose’s best bet.

  32. The one misnomer about the Diridon site is that people look at the ballpark site and assume there isn’t more development opportunity. In fact, the Diridon Station area (EIR was recently completed) when fully built out will be as large or larger in some areas as what is projected at CC (hotel rooms, residential, retail and commercial/office). The difference is who owns the parcels; yet we have no idea what transactions may be taking place behind the scenes to lock up some of these peices of land beyond the Diridon ballpark site.

  33. @pjk–considering mlb gave away SCCo for free to the gints and completely disadvantaged the A’s in the process it would seem to me that they need to figure out how mlb pays for TR–not necessarily the A’s. I still think the solution will be to resolve TR and then let the A’s determine where within their shared territory it makes financial sense to build a ballpark. This would take care of the SJ lawsuit, eliminate welfare for the A’s, as well as let the A’s make a financial decision that benefits their club-

  34. I’s insane that Selig brings in his buddy Wolff to get a ballpark done for the A’s. Wolff then finds MLB has critically disadvantaged the A’s and advantaged the Giants. Now, MLB wants the A’s to “compensate” the Giants, who are already incredibly advantaged over the A’s. Maybe Wolff should just sign a 50-year lease extension for the Coliseum and be done with it.

  35. @idkk,
    They’re intertwined. Wolff adheres to the guidelines/conditions set forth by MLB re relocation to SJ and those rights are GONE.

  36. It’s obvious that MLB is hindering San Jose from getting the A’s by discouraging San Jose from accomplishing some of the necessary prerequisite side issues. Case in point: Advising San Jose officials from not putting a ballpark referendum on the ballot for the San Jose electorate to vote on.

  37. I received an email reminding me that the celebration of Festivus has begun, the holiday featuring a tall aluminum pole in a bucket of hard concrete. If I recall correctly, celebrants take turns grasping the pole and complaining about those who disappointed them the most during the preceding year. Rarely do you see unanimity of aim at a single target–i.e., folie à plusieurs. Happy Festivus.

  38. GoA’s Thanks, I did not know (think about it that way) that about the Dirdon site, perhaps that would offset some of the A’s debt, if they can get SJ

  39. @pjk I here you, this could turn into the highest bider, and that would be bad news, for us

  40. @xoot I would have to say, you are correct about that, my friend. The good news is I like you, and all the good Giants fans, most of which (that I have talked to), are ok with the A’s being in SJ

  41. Bill Shaikin of the LA Times said in February 201 Lew Wolff got guidelines from MLB for a San Jose move and TR or payment to the Giants was not an issue. We all thought this was a rumor until….

    MLB in the current lawsuit San Jose filed stated they sent Wolff a letter instructing him the San Jose move was being denied. But this was months after the lawsuit was already filed and it was brought forward well after the fact of San Jose suing….This makes zero sense, MLB sent this letter to Wolff long before June 2013 according to Shaikin.

    Now if it is true a “letter” of some sort has been sent to Wolff then why has Wolff not responded to it meeting MLB’s demands for a San Jose move? Wolff has had plenty of time to respond to it since at least June 2013, perhaps since February 2013.

    That is the big elephant in the room we are all missing.

    With that being said, it seems to be by deductive logic Wolff saw the guidelines and they must have been unreasonable and impossible to attain. It goes beyond expanding the ballpark to 38k seats, which would be the easy part or even T-Rights for that matter.

    No new renderings of a larger ballpark have surfaced or anything of the nature.

    Its obvious Selig has asked Wolff for something that is “impossible” hence why Wolff gave behind closed doors the blessing for the SJ lawsuit.

    Keep in minds guys, SJ wanted to sue 2 years back but refused to because of Wolff. The only way they would proceed with this is if Wolff gave the green light….even off the record.

    Wolff knows the lawsuit is the only way, that or Selig leaving office and he is going to play both hands as what if Selig decides to stay all of a sudden? His contract offer is still on the table from the other owners who love his sorry ass.

  42. Well, well, well…Matier/Ross and “East Bay sources” full of $hit! Imagine that. Enjoy whatever you’re eating later Ivan…

  43. Matier & Ross did it again – tried to make something up that was utterly untrue – professional journalists in the same category with Glenn “Bad Toupee” Dickey…nice going guys, keep up the good work.

  44. Matier and Ross are dim wits (on par with the other giants homer journalists such as Tim Kawakami, Dickey, Ratto, etc.) They first suggested that the A’s would move out of the bay area if higher courts don’t decide in SJ’s favor. (That’s why Wolff is meeting with CC officials about the A’s building a ballpark there, Wolff knows that the A’s are better off in Oakland than Portland, Vegas, Sac, etc)

    Also, Matier and Ross are always suggesting that the MLB ATE is rock solid and won’t be overturned – to suggest that is very foolish and bad journalism. Selig is likely not very pleased with the judge ruling in favor of the state torts portion of the SJ vs MLB lawsuit. Now Selig is also probably not at all comfortable that the 9th circuit court will be reviewing the MLB ATE portion of the case.

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