I’ve done my initial run through of the EIR (except for the traffic data) and have taken lots of notes along the way. Over the next few weeks, I’ll write up specific subjects, the first being the most germane to what we normally talk about, the ballpark at Coliseum City. Before I dive into that, I wanted to touch on something in the language of the EIR that had me curious, and frankly a little baffled.
From Project Description, page 3-34:
NFL Stadium and Multi‐purpose Event Center
…The Oakland‐Alameda County Coliseum Authority would control the use of the Stadium through a management agreement with a professional management association (currently AEG). The Stadium would be leased to the Oakland Raiders, a National Football League (NFL) franchise, for playing home games during the NFL pre‐season, regular season, and post‐season and for other NFL related events.
The Ballpark is expected to be developed by the Oakland A’s professional sports franchise on land owned by the City of Oakland and Alameda County. Like the Stadium, the Oakland‐Alameda County Coliseum Authority would control the use of the Ballpark through a management agreement with a professional management association.
The Ballpark would be leased to the Oakland A’s for playing its 81 home games during the MLB regular season6 and potential post‐season games,7 and for other MLB events.
The new Arena would be leased to the Golden State Warriors, a National Basketball Association (NBA) franchise, for playing home games during the NBA pre‐season, regular season, and post‐season.
Notice the common theme? All three venues would be owned by the City/County/JPA and leased to the teams. Since this is merely the Project Description of an EIR and not a DDA (Disposition and Development Agreement), it’s not exactly iron-clad. It’s a little strange that the City would continue to want to own and operate these venues, when it has shown frequently over the last 20 years that it’s not all that good at managing venues.
Currently, the structure is set up so that the JPA owns the venues and the land. They collect rents and other revenues and pay for expenses (except for the A’s gameday ops). The JPA is not a “professional management” group, so they hire another company to do that such as AEG or SMG previously. The various agreements with the teams have caused City and County to hemorrhage red ink, whether we’re talking about the ongoing subsidy for the Raiders, the Coliseum’s debt service, or the cloudy nature of the Arena’s debt once the Warriors leave for SF. It’s this difficulty and mismanagement that has caused Alameda County’s Board of Supervisors to be a lot less sanguine about Coliseum City’s prospects than Oakland. Supervisor Keith Carson has been upfront about wanting to get out of the stadium management game.
Now we’re looking at the JPA (or a successor public agency) absorbing billions of additional debt liabilities. Start with at least a half-billion that would cover the infrastructure costs at Coliseum City, plus the $120 million of remaining debt at the existing Coliseum. Add to that $1 billion for the football stadium, $600 million for the ballpark, and probably $700 million for the arena. That amounts to around $3 billion in debt load. Naturally, when dealing with such enormous figures, some questions will arise such as:
- How would that debt be structured?
- How would City and County taxpayers be protected from shortfalls or defaults, they way they weren’t with Mt. Davis and the redone Arena?
- How would the JPA balance out the lease agreements so that no one team benefited more than the others? (This plagued the JPA in the past)
If the City is willing to cover infrastructure costs and pay off the remaining stadium debt, should it also have to go the extra mile to finance these venues? That’s S.O.P. for the NFL (see Santa Clara), but it doesn’t have to be that way. The City & County could say, Look, we’re giving you enough help to get this started, you take it the rest of the way. And the biggest reason to have the JPA do the financing is to provide availability to tax-free bonds. The franchises don’t need that kind of help.
That’s not to say that all publicly-financed stadium deals are terrible. Some of them work out well, like SAP Center and Chase Field. However, the risk the City & County would have to take on is more than a bit much. There are actually multiple privately-financed venues completed over the last 15-20 years: AT&T Park, Gillette Stadium, Staples Center, American Airlines Center. They are also among the most successful venues in their respective sports.
At some point some within Oakland is gonna have to playing hardball and stop giving everything away. If not, maybe they should find new negotiators.
P.S. – Notice how, because all the talks with the Raiders are behind closed doors, there’s little hubbub about them? Contrast that with the very public lease extension talks with the A’s, which only grew more rancorous as they became more public – even though they were over a deal that cost less than $30 million total. No, it makes much more sense to keep quiet on a deal that is worth 100 times as much, right?