Blackwell could become Coliseum City consultant, JPA to vote on lease extension 6/20

Fred Blackwell may end up having his cake and eating it too. Weeks after shocking the City of Oakland with his announcement that he would take the CEO position at the San Francisco Foundation, the Trib reports that Blackwell may end up taking a consulting position to oversee the Coliseum City project. It’s not clear if Blackwell negotiated his availability with SFF or if the JPA will even approve the side gig. Regardless, Blackwell would be valuable to have with the project, even if he isn’t necessarily a decision maker. Then again, considering he’s pulling down $344k per year with SFF and was paid pretty well as Oakland City Administrator, perhaps he should take the gig on a volunteer basis. What better way to show your commitment, eh Fred?

In the same article, JPA board member and Oakland City Councilman Larry Reid continued his Debbie Downer attitude about Coliseum City, especially the developer/investor group BayIG.

As far as the project is concerned, Reid said progress is hard to find. The city still hasn’t been able to sign an exclusive negotiating agreement with their new development team because of a payment dispute with a former development partner.

It’ll take $100k to jettison Forest City. This should not be that difficult. The lack of progress comes in the form of the lack of commitment (the notorious “letter of interest” from the Raiders) and some deliverables, which have slipped on occasion. Still, they’ll continue to plow ahead. What choice do they have?

Then there’s this:

The first question that most will ask after this is, Is there an escape clause? Chances are that there is, beyond the fifth year. That’s what Lew Wolff wants. Mayor Quan and others on the City Council have preferred no out clause, and could vote down the extension after the JPA approves, but can you imagine how bad that would look? Especially with the mayoral race now in gear? Better to compromise and kick the can down the road than to cause yet another scene. And if there is no escape clause, I imagine that MLB wouldn’t approve it (they have to review and approve all team stadium leases). Given the state of the Coliseum, the league would want to retain flexibility for the A’s. That wouldn’t come with a 10-year, no-escape lease.

Lew Wolff has been steadfast in his stance that no future stadium talks can occur with a lease first. That’s the opposite of what Mark Davis is seeking, a stadium deal before the next lease for the Raiders. Davis said in April that a 10-year lease would make it tough for the Raiders to build at the Coliseum. Things might be a little easier if there’s an out clause, since the A’s could simply vacate when it comes time to start construction on a Coliseum replacement, whether it’s on the current Coliseum footprint or elsewhere in the complex. The current plan calls for the Coliseum to remain in use while two stadia go up alongside it. Beyond the obvious questions about parking availability, there’s still a major concern about making the financials work out. There are whispers that BayIG may not foot the bill, not so much because they can’t afford it but because the funding gap is so huge that it cuts heavily into their profit projections. And that may be the case with just one stadium, never mind the replacement ballpark. I expect the one year deadline to get pushed out by six months because of all the details and complexity. Will Davis hang in there? He already considers this stage the 11th hour.

46 thoughts on “Blackwell could become Coliseum City consultant, JPA to vote on lease extension 6/20

  1. Assuming the story is correct, and the lease is signed, the ball now shifts to Mark Davis’s court. Will he remain, will he go to Santa Clara, will he go to LA, or will he sell? If I was him, I would be looking real hard at how much the Sterling’s got for the Clippers. Think about this: The OTHER team in LA, in a shared Arena with a long-term lease, and the team owner was forced out, yet they got $2b for them, that is how valuable LA is. I know there will be some who think the price was crazy, but the point is all they needed was one person to pay it and he did. The question is, how much would an NFL Franchise be worth in LA (even if they had to play a few years in the LA Coliseum or the Rose Bowl)? We may be finding out sooner rather than later.

  2. I think some of the Clippers situation was Steve Ballmer really really wanting an NBA team and being willing to dramatically overpay to get them and leave all other bidders in the dust.

  3. The Raiders, in LA, are worth A LOT more than the Raiders in Oakland. That’s not really disputable. The question is, does Mark Davis care? We don’t really know.

  4. Only reason why the Clippers sold for 2B is because their TV rights are due after the 2015-2016 season. At that point Ballmer will start to make his money back and build the valuation to 2B over 5-6 years.

    Had the Clippers had a TV deal the team would have sold closer to 1.0B-1.5B or so since their market is so huge (The entire southland including SD).

    The NFL is different because all teams share a centralized TV deal so market size does not matter in their case. You cannot compare the Clippers to the Raiders because of this.

    The Raiders value went a up a little bit but not a whole lot after the Clippers deal.

    The new A’s lease will for sure have out clauses and give the A’s the right to leave if a new ballpark is done in Oak or SJ. Also Wolff will not commit to staying in Oakland outside of the lease parameters.

    Wolff has been adamant about these two points from the beginning and Kaplan must of negotiated on this premise or nothing would have happened.

    Do not be surprised if the Oakland City Council votes this down as Wolff is not changing his stance on leaving Oakland for San Jose.

    I bet the Council narrowly approves it; this allows the A’s to upgrade the scoreboard and a few other things for the next 5 years or so.

    By end of 2014 we will know the result of both SJ cases vs. MLB (Federal and State) and know who the new commissioner is.

  5. The Oakland City Council would be ill advised to turn the lease down. There seems to be a window of opportunity here in terms of the A’s and the City actually being able to talk to each other like adults and come to an agreement on a new stadium. Wolff has brought much of this on himself with his message about wanting to leave Oakland, but the City must put that behind them and do what it takes to enable a new ball park and forget the verbal warfare. It may feel great to tell the A’s no lease deal without a commitment to stay in Oakland, but in truth this gets us nowhere. If JQ thinks such a stance would get her re-elected she is a fool.

    As for the Raiders, there is plenty of room to build two stadia on the Coliseum site, and if Davis can’t give the A’s and JPA the flexibility to sign a lease with the A’s for the Coli and build a new ball park somewhere on the site that would still give the Raiders a spot for their stadium, then he can feel free to take them back to LA.

  6. @sid

    “By end of 2014 we will know the result of both SJ cases vs. MLB (Federal and State) and know who the new commissioner is.”

    Regardless of how the case is decided, it will most likely be appealed to a higher court by the losing side; I assume the next appeal will be to the U.S. Supreme Court. All of us will have more information, but a “definitive” decision on this case is at least a year away.

    And yes, I agree, by the end of this calendar year or NFL season, I expect the Raiders to make a decision as to where they will be playing in 2015.

    As to the new Commissioner….On a national radio sports talk show….I keep hearing Larry Bare’s name come up….if that happened it would be a disaster for the A’s.

  7. That’ll look just great with MLB, if the A’s negotiate a 10-year extension and the city turns it down. Talk about helping Lew make the case for San Jose…

  8. @Alex They were discussing the Commissioner on The Game when some guy called up and suggested Baer. And Damon Bruce was stupid enough to agree that he’d be a good choice! I agree with you that he would be a disaster for the A’s. What is mind-boggling is that a radio host on the A’s flagship station couldn’t see that and actually thought Baer would be good as the next Commissioner!

  9. Damon Bruce, like most talk radio personalities, is big on opinion and short of logic. It’s an industry of blowhards.

  10. Sid, market size always matters. Otherwise, the Bills would be worth as much as the Cowboys. That’s ridiculous.

  11. For Mark Davis, Hamlet’s “To be on not to be, that is the question” really fits here, and that “To Be” concern is, do I think the Raiders might be still stuck partnered up with the A’s in the Coliseum in the Year 2020 (a particularly nasty concept to consider when you know the 49ers will be making an “Outrageous Fortune” in Santa Clara)? If no, then I stay, if yes, then its sell, try to move temporarily to Santa Clara, or head to LA. Unless it has been a smokescreen all along, and the plan has been to move (Davis playing (“Good Cop” to sell tickets), I think in the end, after the Election and lots of thought, Pro and Con, that decision will involve moving.

  12. @Alex- If San Jose’s appeal is upheld there will be a full blown trial starting with discovery. MLB will not be able to appeal at that point.

    They will have to settle or fight the case in open court. Piazza In 1993 suggests MLB will settle if it comes to that point. The A’s could be approved by end of 2014 to SJ if the appeal is upheld.

    @Jeffrey- I’m referring to TV money in the NFL. Market size means nothing when it comes to TV revenue as every team gets an equal piece of the pie.

    Of course buffalo is worth less than Dallas. That wasn’t the point I was trying to make.

  13. sid, your point is off base. regardless of the logic behind it. A team In LA will be worth much more than a team in Oakland. That’s not poppycock.

  14. The Stan Kroenke (Rams owner) 60 acre land purchase shouldn’t be overlooked. The Rams should be considered the front runner as the next LA NFL team. Would Kroenke even share a Rams stadium with another NFL team? If Kroenke builds a new NFL Rams-only stadium, the talk of the Raiders, San Diego, Jacksonville, etc. move to Los Angeles might be a mute point.

  15. Despite the fact that the NFL shares equally their national based broadcast TV revenues, the corporate base within each NFL team’s market can significantly impact the total value of each particular team. The Buffalo Bills can fill their stadium to 80,000 capacity to all their home games, yet without significant corporate support for luxury and sky box suites, the Bills are limited in generating full stadium revenues. This issue also applies to the Raiders with their predominant East Bay fan base.

  16. I think Davis would still use the lease as an excuse to leave, even if it had an escape clause. Why? Because I think he doesn’t want to or can’t do a Coliseum stadium on their own. He’s either going to LA with a portion of a stadium paid for by a new owner or tag-teaming with Kroenke. It won’t be Farmer’s Field, looks like LA City Council is moving on a rehab of the Convention Center.

  17. Related to that Press Democrat article that was tweeted:

    There has never been a clearer sign to MLB about the unlikeliness about the A’s stay at the Coliseum site in any capacity.

  18. @Jeffrey- I am referring to TV money nothing more. I am not arguing a team in LA is worth less than in Oakland. You missed my point completely.

    I am stating TV revenue for the Raiders would be the same in Oakland or LA.

    This is a fact and not “poppycock”.

    So when you see the Clippers sale you cannot say the Raiders would be worth double the value in LA. The Clippers sale was overinflated because their TV rights are up in two years.

    NFL teams have equal share in TV therefore it is a different dynamic.

    That is my point, of course a team would be worth more in LA than Oakland.

    But unless a new stadium is in the pipeline in LA the Raiders nor anyone else would be behooved to move there as playing in the Rose Bowl would be far worse than the Coliseum….this is regardless of franchise value.

  19. @Jeffrey Please explain in more detail your conviction that an NFL team in LA would be worth “much” more than an NFL team in Oakland. On the surface “bigger is better” in terms of market size would seem an obvious differentiator in terms of market value, but in the context of the NFL’s specific economic system it seems far less of a factor.

    The vast majority of revenue in the NFL is shared (e.g. national TV revenue, merchandise revenue, most gate revenue). The main revenue stream that is not shared is suite and premium seat revenue. Theoretically this would provide large markets an advantage.

    However, there are only 8 regular season home games per NFL season. This means no matter how robust a team’s premium seat sales, that revenue is never going to represent as big a percentage of revenue as it would for an MLB, NBA or even NHL stream. It also means even a smaller market can perform well, especially in an area with a strong corporate base (and “area” for this purpose can include a much larger distance due to the mostly-on-Sundays, event nature of the games).

    Dallas vs. Buffalo is not a fair comparison. First of all, the Cowboys seem to be somewhat of an outlier. It’s not entirely clear why their revenue is so much higher than other teams (even those in much larger markets), but so far as I can tell it’s a combination of a state of the art stadium and a ridiculously generous naming rights deal that probably trades on that stadium and the unique national following the Cowboys have. Buffalo, on the other hand, suffers from an outdated stadium in the 50th largest metro area.

    But LA is not Dallas and the Bay Area is not Buffalo. While LA has population and money, it doesn’t have a football crazy population like Dallas; rather, it has a history of fickle sports fans and tepid support for the NFL. The Bay Area on the other hand is one of the richest corporate markets in the U.S.

    Granted Oakland is not optimally located to tap into that base, and I’ve pointed out many times the Raiders’ historically weak premium seat sales. I continue to believe this is a probable deal breaker for a privately financed baseball stadium in Oakland, where you’d need to drag people up through weekday rush hour traffic for over 40 games per season. However, the NFL is a different animal, and I do think with the draw of a new state of the art stadium the Raiders could perform adequately in this area. (Green Bay is an example of this).

    Would an LA team generate more premium seat revenue? Quite possibly, though given the history I wouldn’t say that’s a certainty. But the incremental additional revenue LA might provide doesn’t seem likely to translate to “much” higher franchise revenue. If it did, a team would have moved to LA sometime in the last 20 years instead of building stadium after stadium in much smaller markets.

  20. Let’s put it this way: In the NFL, a much bigger factor than market size is the willingness of a market to pony up public money to build the stadium. In that respect, LA is no better than Oakland.

  21. @bartleby: The difference being that there is an obviously underlying will for corporate support in LA, while in Oakland there is none. The public side may be a wash (although I’d still say there is a better chance at public money in LA than in Oakland).

  22. @SMB Where are you seeing “obviously underlying will” for corporate support in LA? I’d say that’s pretty speculative, especially considering LA’s historically tepid support for the NFL.

    While past premium seat sales for the Raiders have been weak, it’s premature to conclude corporate support for the Raiders would be “none” in a new stadium. The current stadium is a dump, pretty much the opposite of what you’d want to attract corporate clients. I wouldn’t underestimate the effect a true state-of-the-art stadium could have on this market.

    Also, the Raiders overbuilt the number of suites at the Coli. Cut that number in half and you’ll create some scarcity demand and upward pricing pressure.

    There’s plenty of corporate money in the Bay Area for the Raiders to target. Yes, Oakland isn’t in the center of Silicon Valley. However, unlike for the A’s (who need to convince premium seat customers to fight two hours of traffic to get to games), a Sunday NFL game in Oakland is a pretty easy 40 minute drive from the Peninsula, less from SF. LA is big, but it sprawls. It is very likely there are more premium seat customers within a 45 minute drive of Oakland than there would be in LA.

    I’m not saying an NFL team in LA might not be worth more than in Oakland. I am saying it’s not a sure thing, and the difference would be incremental.

  23. Anyone else find it odd that Wolff would sign a lease that allows the city to kick the A’s out with 2 yrs notice? Seems to me that leaves the A’s right where they were last fall with the city essentially in control based on the whims of the Raiders. I mean other than it potentially being Wolff purposely painting the A’s into a corner from which only MLB can extricate them I don’t see the advantage to what they’re doing.

  24. @Dan “Anyone else find it odd that Wolff would sign a lease that allows the city to kick the A’s out with 2 yrs notice?”

    – Two years notice is better than living year to year
    – The City’s right to terminate is tied to the Raiders getting a stadium deal on the site, which the A’s may view as unlikely. Barring that contingency, they’ve assured themselves ten years to work through their own stadium issues without having to deal with a lot of political grandstanding every time their lease comes up for renewal
    – Even if the Raiders are able to pull off a stadium deal for the Coli site it will probably take them a while to finalize it, so for practical purposes the two year notice is actually longer
    – The A’s undoubtedly required an out clause of their own, making it harder to resist a similar demand by the City
    – The A’s don’t really have a lot of other great options for a place to play pending a new stadium, reducing their leverage

  25. @ bartleby
    Good pints, I was thinking along those lines myself. If the Raiders ever get something worked out it could take another year and a half or two, at that point the A’s would have up to two years after that.
    We would be talking anywhere between 3-5 years before the A’s would have to leave, and that’s if the Raiders get there crap together, which is debatable, so it makes plenty of sense on Wolff’s part.

  26. Sorry: Good points.

  27. If in the worst case scenario for the A’s that they would have to vacate the Coliseum, at least the A’s will have at least two years time to get their temporary ballpark in operation. This will allow for the A’s to make contingency plans if the Raiders do eventually get their Coliseum City stadium deal done. Also, I’m almost certain that the A’s will be allowed to terminate their lease, If and when a new A’s ballpark is completed. I’m certain that this new lease extension will not stipulate any geographical restrictions as to where the new A’s ballpark would have to be located.

  28. @ llpec
    I hear what you’re saying; there is no way Oakland made geographical demands on the A’s, on top of that I would imagine Oakland will be depending on MLB (SF Giants), to do that.

  29. The lease appears to be everything Wolff could want. The only people getting backed into a corner are the (alleged) financial backers of Coliseum City. With a new A’s lease the JPA has taken the cheapest and easiest options for the Raiders off the table. We now know a new Raiders stadium not inside the current footprint will be a billion dollars. A billion and a half if they insist on 65k+ seats. We also know the necessary infrastructure to make that happen will be in the neighborhood of half a billion. Add in surrounding development, which is 100% necessary, plus cost overruns, that now puts a price-tag of keeping just the Raiders in Oakland at around $2 billion.

    Hell will probably freeze over before Wolff works with BayIG, so if they want to be in on any Coliseum area development they’re going to have to strike a deal with the Raiders and probably do so in the next year. If not, Wolff can then begin the process of negotiating a sweetheart land deal, cutting the legs out from underneath the Raiders, BayIG and the JRDV.

    Nothing in Wolff’s interview with Bloomberg suggested to me that San Jose still isn’t the runaway first option. Of course it is. But this deal makes it very tough to keep the Raiders financially. And if San Jose doesn’t work out, it puts Wolff in a very good position to negotiate for, dare I say it, his PLAN B – the entire 150 acre Coliseum site. I just hope that if BayIG turns out to be the posers a lot of people like me think they are, the political powers have the balls to tell them to piss off when it comes to developing the western side of the freeway.

    Also, the 1st half of this article does a good job of explaining the history of the Cowboys finances: http://www.forbes.com/sites/aliciajessop/2013/11/29/jerry-jones-1995-risk-allows-the-dallas-cowboys-to-become-leaders-in-the-growing-womens-sports-apparel-market/

  30. @bartleby: the fact that there were two major groups with stadium proposals for the Los Angeles area

    That’s more than one source of financially-baked will in the LA area, even if neither specific plan played out or ever does.

  31. @muppet151

    Thanks for linking that Cowboys article. It does support my suspicion that the Cowboys are an outlier, buoyed by their unique brand and, apparently, some kind of special exemption from the league’s prohibition on independent team merchandising.

    If anything the Cowboys are a counterexample to the proposition that large markets drive significantly higher franchise values. They sit in the eighth largest metro, yet (according to Forbes) have nearly double the revenue of either New York team, with 3x as many people and a much larger corporate base.

  32. @SMG The fact there were two groups working on stadium deals and only one (not zero) in Oakland seems only loosely related, if at all, to the proposition that an NFL team in LA would drive significantly greater revenue/franchise value than one in Oakland.

    AEG’s interest is driven largely by the unique opportunity LA Live presents for synergy with other AEG investments and a convention center business. Roski’s interest may be simply a perceived opportunity in a sizable market that currently sits vacant (and happens to be his home) rather than any comparative analysis of the revenue potential of LA vs. Oakland. (In other words, if the Bay Area sat vacant and LA had two teams, you might have more groups trying to build a stadium in Oakland.) Or it may simply be that he wants to join the club of NFL owners and offering a stadium deal may be his ticket in.

    Keep in mind that billionaire sports owners (or would be sports owners) often act out of civic pride or just desire to acquire a shiny toy rather than purely economic reasons. Ballmer’s $2 billion offer for the Clippers, the Sonics move to OKC, the fact there’s an NFL team in Jacksonville and the fact Houston was able to outbid LA for an NFL expansion team are all examples of this. So the fact there are two groups pursuing LA, each with their own agenda, doesn’t really establish that the LA market would drive massively greater revenue within the small categories of NFL revenue that aren’t shared than Oakland would.

    Still no one on this thread has offered a convincing explanation of why LA would offer “much” bigger revenue/franchise value than Oakland. The difference would seem to be incremental at best.

  33. Houston did not really “outbid” LA for an NFL expansion. I believe the expansion franchise actually was offered to LA. When the NFL approached LA about paying for a stadium, LA told the league to go pound sand. Houston put up 43% of the cost for a stadium.

  34. @pjk From the government side, putting together a more attractive financial package (including 43% of a stadium vs. 0% of stadium) sure sounds like outbidding to me. In addition, the Houston ownership group outbid the leading Los Angeles ownership group for the franchise expansion fee $700 million to $540 million. See http://en.wikipedia.org/wiki/History_of_the_Houston_Texans

  35. Wolff (when commenting about the A’s new 10 year lease) mentioned that San Jose and Oakland are on equal footing.

  36. That’s good news. I don’t care which one wins. As long as one of them does.

  37. @pjk: keyword: feasibility program(s): Wolff needs an updated version from San Jose (Oakland, to this point, still has not provided one for the A’s) Wolff also reiterated that the A’s will own the property at the CC site (if Wolff builds there)and will not be leasing from Colony Capital – and also completely ruled out the HT site as unfeasible.

  38. The talking points from the Oakland-only crowd has been that everyone needs to come together and work things out. The talking points from the politicos has been that they aren’t the ones who need to make any tough decisions.

    (I’m stealing someone else’s line here. If you said it first, thanks!)

    But it does appear that Mark Davis and Lew Wolff are on the same page. It’s the page that says Oakland needs to choose between the two teams.

  39. @ muppet151

    It does appear that Mark Davis, Lew Wolff and the city of Oakland are all on the same page. It’s the page that says neither Oakland, the Raiders,or the A’s want to make a choice. IMHO.

  40. As a matter of fact are we even sure Oakland has a choice between one team, let alone two?

  41. @LSN – It doesn’t work that way. I’m sure the Raiders would love to tell the A’s to bug off. They’d happily make that decision if it was in their power. It’s not.

    Conversely, Oakland and Alameda county have the ability to begin discussing selling the Coliseum land to Lew Wolff whenever they want. Nothing needs to be official, it can all be contingent. BayIG never signed an ENA, so they can have those discussions right now. They should as it might get get some possible movement on the financing end for the Raiders. But that’s on them. The teams would love to have this issue put to bed.

  42. @ mmuppet151

    It doesn’t work that way? Not quite sure what you meant, my only point is that Oakland is not the only one that has to make a choice.

  43. @ muppet151
    I respect what your saying, but it seems to me that the Raiders, A’s, and Oakland are all waiting for someone other then themselves to make a choice. The problem with that of course, is you are only making choices after someone other then you have made them, sometimes that can work out, I would guess most times it does not.

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