Monthly Archives: December 2013

12.08.13
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The Proposal

The last public statement Bud Selig made on the A’s-San Jose lawsuit was at the beginning of the World Series, when he held court for the assembled national media. The session included the obligatory question on the A’s situation, which included Selig’s reflection on the lawsuit because Judge Ronald Whyte had recently thrown out many of San Jose’s claims in the case. Here’s what MLB.com’s Paul Hagen wrote then:

A judge, ruling on a lawsuit filed by San Jose against Major League Baseball, recently upheld MLB’s right to determine when and where franchises may relocate, but left open the question of whether the city of San Jose may sue for damages. Selig said, however, that this doesn’t impact the timetable for a resolution.

“I wouldn’t say so. We were very pleased with the decision, obviously. But nothing has changed,” Selig said. “We’re working on details. Look, I know everybody says it’s taking so long. But the more our group has gotten into it, the more complex it is. If people really understood all the complexities, they would understand. But it’s a situation that needs to be dealt with.”

Selig was asked if the complexity was the San Francisco Giants’ claim that they have territorial rights to San Jose.

“The complexities are all the parties,” Selig replied.

A month earlier, Selig went on John Feinstein’s radio show to complain about the A’s and Rays’ stadium problems. At the time Selig referred to the state of the Coliseum.

“It’s a pit,” Selig said. “It reminds me of old County Stadium and Shea Stadium. We need to deal with that. I’ve had a committee working on it for two or three years, and there’s no question we’re going to have to solve that problem.”

But hasn’t the committee been working on it for a long time? What’s the hold-up?

“We have, John, but I’ll tell you it’s far more complex,” Selig said. “Look, you have one team that wants to move and the other team doesn’t want them to move, and it’s a very complicated situation. Before I leave, I’m satisfied we’ll work out something.”

Now let’s pivot to the most recent revelation of a letter “formally” rejecting the A’s proposal to San Jose. MLB didn’t release the letter with the recent court filing, so we’re left to guess as to what the letter truly contained. The filing characterizes the letter as a final decision on the A’s move request. Since the news broke, several reporters have gotten unnamed sources to characterize the letter as a rejection of the proposal as written, but not a rejection of San Jose. Selig’s statements above – made three and four months after the rejected proposal letter – don’t sound like any decision, final or not, has been made.

Since we know nothing about the proposal, we can only speculate on its terms. Some of the discussion on this blog has been about the need for a greater public contribution. That may be the case, but I suspect that MLB wouldn’t focus on stadium deal terms that far afield. There’s always the matter of negotiation with between the team and the city when it comes time to write a DDA. Instead, I’m certain that the issue boils down to the overarching issue at play: territorial rights and compensation.

From the start of the San Jose talk in 2009, the Giants have never publicly stated a price. Lew Wolff has joked that he’d prefer to pay the same amount the Giants paid for Santa Clara County in 1992, which was $0. Since then, Wolff has hinted that he’d be willing to pay compensation based on actual demonstrable losses suffered by the Giants, not a big lump sum payment. Given that the Giants sell out regularly, demonstrable losses could be difficult to prove. If anything, MLB wants a serious compromise between the two sides, and isn’t satisfied with Wolff’s definition of compensation. While Wolff may be loathe to pay anything to the nemesis Giants, ponying up something is probably the only way to get down to San Jose.

At the same time, the proposal has to work within other written (and unwritten) rules MLB has set forth. Consider these additional issues at stake:

  1. How much additional debt does the club have to take on to make the ballpark happen?
  2. If the land encumbrance issues at the Diridon site can’t be resolved, what backup sites are being considered?
  3. Does the proposal involve the A’s staying on revenue sharing for some period of time?
  4. Are the A’s sticking to the small, 32,000-seat concept, or will they move to 36,000 or higher?

While all of these are legitimate concerns, I still think that it all comes down to the compensation issue. In February, Bill Shaikin reported that MLB gave the A’s temporary guidelines in order for Selig and the owners to approve the move. If there were guidelines given to the A’s, then it’s up to Wolff and John Fisher to comply with those guidelines. Otherwise they’re just spinning their wheels. Shaikin wrote then that compensation was not “among the list of matters for the A’s to resolve.” Sure, as long as the A’s are in compliance. If they proposed a different form of compensation or different terms, suddenly that issue is front and center.

If MLB convinces Judge Whyte to grant a stay in the discovery phase of the lawsuit, we probably won’t find out the substance of that letter or proposal. That would be, to put it mildly, unfortunate.

12.07.13
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Lawsuit update: MLB says Selig rejected A’s-to-San Jose move a day before lawsuit was filed

Michael McCann’s Sports Law Blog, which has been keeping track of the legal maneuverings in the MLB-vs.-San Jose case, has uncovered a bit of a bombshell (hat tip Nathaniel Grow). From the most recent filing (defendant’s section):

In fact, MLB denied the Athletics’ relocation request on June 17, 2013, one day before this lawsuit was filed. On that date, Commissioner Selig formally notified the Athletics’ ownership that he was not satisfied with the club’s relocation proposal. The sole basis of Plaintiffs’ only claims that remain after the MTD Order—the purported failure of MLB to render a decision within the initial two-year term of the Option Agreement—is therefore meritless.

MLB is arguing that the land option agreement the A’s and San Jose entered into in late 2011 is invalid, making the case moot. To back up its claim, MLB cites this heretofore (and still) unseen letter, the ongoing Stand for San Jose-vs.-City of San Jose lawsuit, and the lack of a public vote. To be clear, that last part is because Commissioner Bud Selig discouraged a vote way back in 2010 (which to this day I consider a strategic error on San Jose’s part). MLB wants to keep the letter confidential and doesn’t want to show it unless the plaintiffs agree to confidentiality.

Of course, that’s the opposite of what San Jose wants, because they’re pushing for complete discovery. From their filing:

In fact, Defendants’ sections of this CMC Statement are filled with Assertions of fact. This Court should order immediate commencement of discovery so that these “facts” (and others) surrounding the Athletics proposed move to San Jose and their reasons for entering into (and then not exercising) the Option Agreement may be explored.

MLB is fighting hard to avoid any degree of discovery.

Timing is the issue here. MLB argues that Selig sent the letter 19 months after the option agreement was signed, and that 19 months was reasonable timing for a decision, even though MLB started formally addressing the ballpark issue and San Jose two years earlier. Did San Jose file the lawsuit upon receiving the letter, or did MLB send the letter preemptively, knowing that the lawsuit was coming? I knew the lawsuit was coming the week it was filed, and I figure MLB did too. Addtionally, what other communications could be brought up that could contradict the letter?

Grow notes:

It is of course possible, and perhaps even likely, that MLB would reconsider the move [to San Jose] in the future.

While we’re left to wildly speculate on everything, let’s consider the idea that MLB doesn’t like San Jose’s proposed contribution of land-and-infrastructure, and wants more than that to seal the deal. And understand that all the activity we’re seeing is happening because of the lawsuit. Everything should be understood within the context of the lawsuit. For better or worse, that’s where we are. I won’t be in town next Friday for the hearing, but I’m sure it’ll be juicy.

12.05.13
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Coliseum City page created

The other day Wendy Thurm asked me if there was a page of links and material related to Coliseum City that she could check out. There wasn’t, so I took some time to create one. The result is a curated, reverse chronologically-ordered list of posts, with a brief overview of the project. The link is simple enough:

There’s a new link in the sidebar as well, so you can reference it after this post disappears. Eventually I’ll do the same for other sites, but it will take awhile.

12.04.13
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Rays’ improvements will reduce Trop capacity to 31K

From the Can’t-say-they’re-not-trying department: The Tampa Bay Rays are embarking on a small project at their home, Tropicana Field. In an effort to give fans the same kind of wraparound concourse experience seen at many other new ballparks, the Rays will remove four rows of outfield seats and construct some catwalks to fully extend the lower concourse completely around the Trop.

When conceived in the late 80’s, the emphasis was on maximizing space inside the Dome. To accomplish that, access to the outfield seats was at a lower point than the regular lower concourse, so that there could be room for services underneath the seats. This has made the outfield area feel a little closed off. The Rays are making this change in hopes of attracting fans who will linger and walk around, as is done at other ballparks. The glassed-in restaurant in center field is also getting a makeover, making it part of the concourse. The Ray tank will not be affect by the project.

In doing this, the Rays will lower the Trop’s capacity to a mere 31,042, by far the smallest in the majors. They could remove some of the upper deck tarps that artificially limit capacity, but so far have not shown interest in doing so. The project is funded in part by the Rays and by an existing capital improvements fund. Maybe this will help bring in fans, maybe it won’t. It’s something, I guess.

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The Rangers are also spending $4 million on small improvements to Rangers Ballpark.

12.03.13
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The adult conversation, at last

It’s been awhile. Today’s unusual joint meeting of the Oakland City Council and the Alameda County Board of Supervisors was the first such joint session in several years. It’s also been more than a couple of years since I wrote a post titled The adult conversation, which implored Oakland (and Alameda County) to start talking about what it will truly take to keep the pro sports franchises in town, and what it might mean to lose one or more of them. After watching today’s proceedings, I can say that we’ve had our first session, one of many to come.

If you were an unabashed supporter of Coliseum City, things didn’t get off on the right foot as AlCo District 5 Supervisor and Board President Keith Carson demanded to know the state of the Coliseum’s outstanding debt. Oakland City Council President Pat Kernighan tried to reel the discussion back in, but Carson insisted, and eventually he got what he wanted – a plain telling of debt for both the stadium ($113,790,000) and arena ($90,290,000) by County Auditor Pat O’Connell, who also happens to be the JPA’s auditor. That’s $200 million combined for the complex, though that figure goes down every year thanks to a $20 million annual debt and operating subsidy paid by City and County. Carson emphasized that there will be no future project if debt isn’t addressed first. The debt may prove to be a structural problem, since whatever public borrowing has to be made for infrastructure or other uses will be on top of or consolidated with the existing debt. The City and County want the teams or the private development group, BayIG, to cover that debt as part of the plan. Incidentally, Carson’s district covers Berkeley, Albany, and much of Oakland.

The debt talk lingered for 10 minutes, then Kernighan got the discussion back on the rails. Assistant City Administrator Fred Blackwell gave an overview of the current situation, with the renewed leases for the Raiders and A’s, their desires, and the Warriors’ plans. Blackwell said that the funding gap for the Raiders stadium, which he called a “sunken cost,” was $400-500 million after the Raiders’ contribution. AlCo Supe Scott Haggerty cast doubt on the viability of the three venue configuration of Coliseum City, noting that so far only the Raiders have been willing to listen. Haggerty suggested that the most effort should be put towards the Raiders’ venue because of that reality, and that the A’s, who don’t even have a set date for their Phase III ballpark, could easily show that information to MLB and say, “we’re not even on the radar.” CM Desley Brooks, a previous JPA Board member, expressed doubt in a different way, citing the need for multi-use venues instead of single-sport venues. Brooks was also concerned that the project wouldn’t pencil out, asking for a pro forma for that configuration (and others, presumably).

Next up in the presentation were two members of Oakland’s Office of Neighborhood Investment, Larry Gallegos and Gregory Hunter. Gallegos gave more detail about the project’s phases and master plan. Due to the photocopied quality of the images, I skipped over this slide initially. Upon closer inspection, something needs to be explained further.

View of Coliseum City development phases

View of Coliseum City development phases

The top image, Phase I, shows an outdoor football stadium, some ancillary development, and outlines for the “spine” of the project and the ballpark. The next image shows a dome on top of the stadium and the spine in place. Hold the phone – is the dome part of Phase II? There’s no other mention of a dome anywhere else in the presentation, nor was it brought up during today’s session. That dome, assuming that it is part of Phase II, is no trivial matter at $300 million to construct. Oakland Mayor Jean Quan has been pushing for a dome, and while the interest in holding conventions and other types of events is understandable, it seems like this rather important detail was merely snuck into the preso with no explanation whatsoever.

Discussion then centered on the phases and once again, the venue configuration. Blackwell admitted that if only the Raiders’ stadium were built, ancillary development potential may be limited as few examples of such a plan were found. The limited number of football game dates contributes to this problem. CM Rebecca Kaplan, a staunch supporter of Coliseum City, talked up the need for more density within the project as that’s where the payoff is. Of course, that brings to mind the question of whether Coliseum City is even feasible if it never goes past Phase I. In addition, how dependent is the project on Phases II and III to provide enough funding for everything? Those questions won’t be answered until the spring.

Mayor Quan repeated her usual hackneyed sports metaphor and pushed for more information. If that’s the case, why did this meeting occur because of a letter from Carson to the City of Oakland? Quan, who hastily made her remarks before heading to the airport, is supposed to be the champion of this project. Yet Kaplan is clearly the more informed, more passionate advocate. Someone desperately needs to grab this thing by the reins and control it, as it’s considerably late for all this confusion given the very tight timeline imposed on the City and County. CM Libby Schaaf was silent during the session, just hours after she filed papers to run against Quan for mayor in 2014.

Hunter talked about the goals and key elements of the project, one of which is the property transfer element. It’s unclear what that means. City has indicated in the past that it’s not willing to give away land, and may not even be interested in selling land. Unfortunately for them, the only valuable resource the JPA has at its disposal is land. Discussion of this topic was deferred to the DDA, though it will clearly become a hot topic before then.

Members of the public spoke, followed by questions and remarks by members of the City Council and Board of Supervisors. General bewilderment gave way to soapbox speeches. CM Larry Reid, already on the outs with the JPA, claimed that Quan took credit for his concept while calling Coliseum City “insane.” Supe and JPA board president Nate Miley asked if there had been an appraisal on land the JPA owns. Hunter said it wasn’t. Miley expressed frustration that developer BayIG hasn’t put down earnest money to kickstart some of these studies. Blackwell said that only recently the agreement was finalized in which BayIG (Colony Capital & HayaH Holdings) replaced Forest City as the investor group. Miley then dropped a mini bombshell when he asked if the City could buy out the County’s half of the JPA. Blackwell laughed it off, replying that the City didn’t have the resources to pull off such a move. Nevertheless, it’s quite telling that Miley could even suggest that the Coliseum is such an albatross that the County would be fine divesting its share. There’s also a situation in which the County could buy the City’s half. Judging from the across-the-board sentiments from the Supes, that seems even less likely.

Other notes:

  • District 2 Supe Richard Valle: “Gifting of public funds to any franchise is not part of my political framework.”
  • There was continued confusion over Howard Terminal. Blackwell mentioned that the Port of Oakland has to explore all possible maritime uses before moving to non-maritime uses like a ballpark. That would explain why a recent RFP for Howard Terminal makes no mention of a ballpark.
  • There was no discussion about how long the teams would be displaced or where they would play if Coliseum City came to fruition.
  • Blackwell mentioned that the market study, which is key to determining the project’s feasibility, would be delayed 30 days.
  • I tweeted that the football stadium deal could come by the end of the 2014 NFL season, but that seems like a long ways away considering the amount of work that has to be done.
  • Brooks got in a shot when she said that leverage had “walked out the door” when the new lease extensions were approved.

As the first substantive meeting of this kind for Coliseum City, it was bound to be at times painful and awkward, and it sure delivered. That’s part of the process and a welcome one, because there’s no way in hell this thing moves forward without much greater detail. Everyone on the dais was keenly aware of the political fallout that could occur with a bad deal. The Board of Supervisors felt that Oakland was leading and dragging them into the deal, which brought about Carson’s letter and this session. There was a general consensus that communication about the project has been poor. Right now there’s a lot of skepticism to go around, most of it healthy. Project proponents have every opportunity to whip up sentiment and numbers to back their claims of renaissance and jobs. As long as the numbers are there, Coliseum City has a fighting chance. If it doesn’t pencil out, that information and the new short-term leases will conspire to make MLB’s and NFL’s decisions easy. And they’ll make today’s recriminations look like a civil dinner party.