Libby Schaaf has crossed the Rubicon.
In further explaining her plans for the Raiders stadium (h/t SFGate/Rachel Swan), the mayor started talking about money. Schaaf explained that “she is now feeling the pressure of (NFL) deadlines,” a sign that Oakland is succumbing to the NFL’s tactics, even though she didn’t provide specifics in the NFL presentation on Wednesday. It’s unfortunate that Schaaf had to go there, but if Oakland is to genuinely provide more than the table stakes offer it was giving previously, it has little choice.
What money, you ask? Yes, there is whatever is expected in terms of infrastructure, land, and debt, but Schaaf also talked about instruments that could be used to finance construction of the stadium.
Namely, that means lease revenue bonds. What are lease revenue bonds? Here’s how the State Controller’s office defines them:
LRBs are a form of long-term borrowing the State uses to finance public improvements, including state office buildings, state universities, prisons, and food and agricultural facilities. Like a GO bond, an LRB is, in effect, an IOU. Unlike GO bonds, however, LRBs are not backed by the full faith and credit of the State, and may be authorized by law without voter approval.
While sports facilities aren’t mentioned in the examples above, they are the kinds of projects that LRBs can fund. In fact, both the Coliseum and the Arena were financed using lease revenue bonds, so the instrument isn’t new. If not structured properly, LRBs can present the same risk as the first Mt. Davis project.
GO bonds are also referenced. GO stands for general obligation, the same kinds of bonds used to fund civic projects via pledged taxes. That may be where Schaaf isn’t considering what she’s suggesting as a form of public financing, since it probably won’t incur new taxes on citizens. Instead there will probably be a number of use fees such as ticket taxes, concessions and parking fees, plus the property tax increment generated by redeveloping the project. Is that not public financing by another name? To me, yes. To others, maybe not. While it might not involve new sales taxes or new property tax assessments, the project will get plenty of other benefits: reduced or eliminated property taxes, lower borrowing costs, and reduced liability.
Schaaf also described how the Mt. Davis payoff would work: the County would buy the debt out via a lump sum payment (the County has money), while the City would pay the County back over time, perhaps using a similar payment schedule to what it pays now. That would mean that Oakland would pay on average $7-8 million a year to Alameda County, instead of bondholders. At the same time, Oakland would have to buy out Alameda County’s share of the land. I expect that it would happen via some sort of land swap since that wouldn’t require upfront cash on Oakland’s part. If no satisfactory swap arrangement can be made, then tack some money onto the annual payment City has to make to County. Then Oakland could make its money back by selling some of the Coliseum land, though that too has its issues. Neither the Raiders nor A’s have expressed any interest in seeing a great deal of development go up next door to the Coliseum as they want to preserve parking. Neighborhood groups decrying gentrification came out in force during the Coliseum City process to protest sales of public land to private developers for what will largely be market rate housing and tech offices. Those factors helped sink Coliseum City. Why would should it be different this time? Because Libby Schaaf is behind it and not Jean Quan?
Lastly, Schaaf indicated that a a successful Coliseum project for the Raiders might help push the A’s towards downtown. Considering that Wolff has HOK working on plans at the Coliseum, he’s probably not pleased by this. I mean, it’s written into the A’s lease:
43. CONTINUED STADIUM DISCUSSIONS
Licensee and Licensor (or Licensor’s designee) shall continue to engage in good faith discussions concerning the development of a new baseball stadium for use by the Licensee that would be a permanent home for the Oakland Athletics, provided that such discussions shall solely focus on the development of a new baseball stadium that would be located on land within or immediately adjacent to current Complex property. If agreement is reached on development of such a stadium, the Parties will renegotiate any terms of this License Agreement that may need to be modified or eliminated in order to facilitate the construction of the new stadium. The Parties’ discussions concerning a possible new stadium will continue during the Term until Licensee communicates to Licensor that Licensee has made a decision on a permanent baseball stadium at another location or until Licensor provides Licensee notice of early termination (as provided in Paragraph 7.2.2.) in connection with a Raiders Construction Plan.
Should Schaaf actually convince the Raiders to stay, the A’s escape clause could be triggered thanks to negative impacts on the A’s operations. And with the amount of assistance the mayor is getting ready to give the Raiders and the NFL, it’s reasonable to expect the A’s (more likely MLB) to ask for a similar amount of assistance. Howard Terminal or any other site near downtown is going to be incredibly expensive to acquire and/or prep, not to mention new infrastructure that will be required there. If that kind of assistance isn’t pledged, well, that’s how teams start gearing up to leave, isn’t that right Mark Davis?
newballpark.org 
Double check your facts:
The facts are in the post. I did make distinctions about lease revenue bonds. Just because Zennie is crying about being misrepresented doesn’t mean he’s right. There’s always risk. It’s up to Schaaf to make a *good* deal for everyone, not just the Raiders.
ha ha ha ha… “get your facts straight” and a Zennie video. So awesome.
If they can tie the bonds to the Raiders lease as apse to strictly attaching them to ticket sales or PSL’s (only), that would put more of the burden on the team and the league without putting taxpayers at as much risk. Davis may reluctantly go for that if he truly wants to stay in Oakland as much as he has claimed since his father’s death, but I can’t see a league that extorts hundreds of millions of taxpayer money being vary happy.
“If they can tie the bonds to the Raiders lease as apse to strictly attaching them to ticket sales or PSL’s (only), that would put more of the burden on the team and the league without putting taxpayers at as much risk.”
That is my understanding of what she is proposing. I don’t believe for a second she’s considering a deal where the taxpayers are on the hook for speculative revenue streams that might or might not materialize.
Not sure that’s really appealing to the NFL, though. But good for her for trying and for making it clear who she represents.
This might push the A’s downtown, alright. To downtown San Jose. If Oakland chooses the Raiders over the A’s, something is going to have to be done.
The big question here is, will the city issue bonds backed by city taxpayers? If the stadium revenues aren’t enough to pay off the bonds (like in 1995) are taxpayers on the hook? Then Schaaf has totally backed off her pledge to not use public funds. Does anyone see the Raiders guaranteeing these bonds? If Oakland backs off this pledge for the Raiders, then yes, it’s time to open up the treasury for the A’s, too. How about just $1 billion for the A’s and Raiders, from a struggling city with $2 billion in unfunded pension liabilities?
“The big question here is, will the city issue bonds backed by city taxpayers?”
That seems to be what she is talking about, yes. But that doesn’t mean it’s a risky deal for taxpayers. In its simplest form, the deal I understand she was suggesting would look something like this (with totally made up numbers for sake of example):
City issues bonds for [$200 million], secured by Raider ground lease payments of [$20 million per year] to run for a period of [number of years needed to pay off the bond]. The bonds are not backed by the Raiders directly. The lease payments however are, just as the Raiders back their obligations under any other contract the Raiders sign.
In this scenario, the City bears risk, yes, but it it small. The lease payments are backed by the assets of the Raiders, so if the Raiders don’t pay the City could pursue whatever assets the Raiders have. It is almost impossible to imagine the Raiders will ever be worth less than $200 million, so the City’s risk of low for the same reason the risk of a first mortgage on a home with only 20% LTV is low.
The main benefit to the Raiders in this scenario compared to just financing the whole thing on their own are the City’s lower cost of borrowing and maybe some tax advantage. Is this enough to get them interested? That’s a totally different question. But as Zennie says, if the deal is structured properly this need not be a bad or risky deal for taxpayers.
“If the stadium revenues aren’t enough to pay off the bonds (like in 1995) are taxpayers on the hook?”
If structured as I outlined above, no, because the Raiders payment obligation is fixed and not revenue dependent. I don’t believe for a second Schaaf is going to propose anything that would be dependent on speculative or even variable revenue streams.
“Then Schaaf has totally backed off her pledge to not use public funds.”
I’ll distinguish between public funding and public financing. Is this a form of public financing? Yes. But what people really care about is the following:
1. Will my taxes go up to pay for this?
2. Will my tax money be diverted from other more worthy purposes to pay for this?
3. Are we giving (as opposed to loaning) money to a professional sports team?
4. Is there risk #1, #2 or #3 won’t hold true if the deal underperforms badly enough?
As Zennie says, if the deal is structured properly the answer to #1, #2 and #3 would be no and the risk of number #4 would be very low. This could be a good deal for the taxpayers. It may or may not be interesting to the Raiders.
Exactly,
The key here is does the Raiders rent payments of 20M-30M or whatever # Schaaf gets them to agree to cover the debt service on the 400M in bonds per year?
That is the key, if it does then move the debt to the JPA because it is tax sheltered and the Raiders would pay it off each year with a fixed rate.
The Raiders could keep all revenues from the new stadium and be very happy.
Let’s see if Schaaf can pull it off…
“Now if you ask about the current 22M a year debt for Mt. Davis, that is a sunk cost and the JPA has to eat it. Nothing you can do there.”
I think in her pitch to the NFL Mayor Schaaf has acknowledged this reality. That is another significant step toward making a deal more realistic.
Correct me if I’m wrong, but my understanding of LRB is that in it’s purest form posses very little risk to the issuing municipality or it’s taxpayers. Generally speaking the bond is backed not by the municipality, but by the revenue received from the lessee, or in this case, the Raiders. Of course every deal is different, and as ML points out, the deal needs to be structured in such a way which would limit the City of Oakland’s exposure.
Raider-backed bonds? Does anyone think that’s going to happen NFL wants the cities to take the risks. Not the franchises. What we’ll probably see is – the Raiders will propose paying their share via income from concessions, stadium sponsorships, suite leases, parking, other stadium revenue. Oakland in turn will propose paying its share via income from concessions, stadium sponsorships, suite leases, parking, other stadium revenue. Does all this add up? Didn’t think so.
Look for the Chronicle and KNBR to spin the story in favor of the Raiders leaving for LA. Why? Because their handlers and major advertisers (the Giants) know that if the Raiders leave, the A’s will be stuck in Oakland, and most importantly not SJ. Also, that would get rid of those pesky and upcoming Raiders and leave the entire Bay Area to the Niners. Don’t look for an unbiased reporting on this story from the SF media!
@ “Raider-backed bonds?”
They wouldn’t be Raider backed bonds. It would be a Raider backed lease, just as every lease is backed by the team that signs it. The question is if the financial terms of the lease that would be needed to make this work would be attractive to the Raiders.
Anyone have any idea when LW will present his proposal? I would like to hear his comments about a downtown site. Supposedly he and Schaaf have a decent relationship so I doubt her comments would be as uprise to him. Hoping that he will not just remain in the shadows until a decision is made by the NFL regarding the Raiders.
My guess would be in time for Fan Fest. But I have absolutely no information with which to base this on other than intuition, and a guess that they’ll wait for the NFL/LA saga to play out, as Wolff has said he doesn’t want to be seen as forcing the Raiders out.
Thought I had seen ML and Jeffrey indicate that he would go,public in November- agree that LW doesn’t want to be viewed as the one who co tributes to the Raiders leaving-
For me, that was just a guess. Don’t know if ML has any inside info.
All that said, after reading Matthew Artz piece today, I don’t think that we will see anything from the A’s anytime soon anymore.
If they are looking around the East Bay, and clearly they are, who the Hell knows when we see anything… Maybe JLS West comes back! I loved that site more than any of the 4 that were introduced three mayors ago… Holy crap, Oakland is on their THIRD MAYOR since that all happened.
My personal preference has never been about a particular city, it’s been about having the team in something in a downtown, or a reasonable facsimile. If that takes another 5 years, so be it. I’ll still be at the Coliseum with my wife and daughters 10 times a year and with friends/other family 10 other times 🙂
No inside info. I said I would expect it to happen anywhere from November through FanFest in January, if it happened at all.
“GO bonds are also referenced. GO stands for general obligation, the same kinds of bonds used to fund civic projects via pledged taxes. That may be where Schaaf isn’t considering what she’s suggesting as a form of public financing, since it probably won’t incur new taxes on citizens.”
No new taxes on citizens is important, and probably tops their list of concerns.
“Instead there will probably be a number of use fees such as ticket taxes, concessions and parking fees, plus the property tax increment generated by redeveloping the project.”
It is a big leap to assume that’s where the revenue she is proposing to secure the bonds is coming from. From all I’ve read, my assumption is she’s proposing to use fixed lease payments from the Raiders to secure any such bonds. She’s not politically foolish enough to propose a deal that even LOOKS like 1995.
“Is that not public financing by another name? To me, yes. To others, maybe not.”
It clearly is public financing, but that shouldn’t be conflated with the type of “public funding” (for want of a better term) that people really care about. By “public funding,” I mean financing that breaks one of the following rules
1. Raises taxes (especially general purpose taxes);
2. Diverts tax money from other more worthy purposes;
3. Gifts (as opposed to loans money to a professional sports team;
4. Has significant risk that #1, #2 or #3 might not hold true if the deal underperforms badly enough.
As Zennie says, if the deal is structured properly the answer to this questions could be no and could be a good deal for the taxpayers.
“While it might not involve new sales taxes or new property tax assessments, the project will get plenty of other benefits: reduced or eliminated property taxes, lower borrowing costs, and reduced liability.”
Will these be good enough for the Raiders? That’s the $400 million question.
@pjk…”Oakland in turn will propose paying its share via income from concessions, stadium sponsorships, suite leases, parking, other stadium revenue.”
Not sure what you mean here. Again, the service of the debt is paid for by the lessee, not the municipality. Should the Raiders default, the City of Oakland would not be on the hook.
Why would the Raiders go for such an arrangement? It may very well be their only option.
According to an article by CSN Bay Area reporter Joe Stieglich, Oakland mayor Libby Schaaf said that the City is trying to get the A’s interested in a ballpark at a site in downtown Oakland (http://www.csnbayarea.com/athletics/mayor-schaaf-sparks-idea-stadium-downtown-oakland) Assuming that she is NOT thinking of Howard Terminal or the I-980 stadium proposal, where in downtown Oakland can a major league baseball stadium be built and how far would it be from a BART station? I would LOVE to see a ballpark built in downtown Oakland, but I’ve been led to believe that there are no ideal sites left. Again, where in downtown Oakland could a baseball stadium be built? Any locals willing to hazard a guess?
@ Matt
The thing is she gives no indication in the article, of where in downtown she felt a new A’s ballpark could be located?
Aside from that, Wolff hasn’t been thrilled with any of the potential downtown sites that we know of. I would be surprised if there were any downtown sites he would want to build on, but then again I am not sure he really wants to, or is even willing to build at the coliseum either.
“The thing is she gives no indication in the article, of where in downtown she felt a new A’s ballpark could be located? …”
Right! The article I cited also has a video with Mayor Schaaf speaking with Jim Kozimor of CSN Bay Area and in the interview, she also mentions the possibility of building a baseball stadium in downtown Oakland. Unfortunately, Mr. Kozimor neglected to ask her where downtown she had in mind. Meanwhile, on the Twitterfeed, Matthew Artz has just recently stated that the A’s have begun looking at sites in the East Bay other than the Coliseum site. This is starting to get interesting!
Parcels can be put together Downtown, but at what cost? Modified Coliseum North with the Stadium (A’s or Raiders) on 66th Ave. Directly across from Current North Lot should be doable at minimal land aqusition cost plus lots of development potential and access to the current parking lots.
@Oakland Dave – Please keep in mind that it is Mayor Schaaf who is proposing and presumably talking to the A’s about moving from their current location to downtown. What you are suggesting may make more sense, but I’m not the one who makes the call for Oakland. If you truly feel you’re suggestion is a good one, then I strongly encourage you to send it to Mayor Schaaf’s office. Personally, I’m at a point where I want this whole thing to end, just as long as the A’s are within reasonable traveling distance from my home in Davis so I can go see them live every now and again.
I have a hard time believing anyone is interested in building at Howard Terminal, but I also don’t really think of that as downtown Oakland. That said, there is a cool little bar not far already, so who the Hell knows.
After reading M Artz article I feel like we are right back where we were in 1995. Oakland prioritizing Raiders and A’s trying to find a stalking horse and get some attention from Oakland by saying they are looking everywhere to find a site. The only hopeful thing I saw in Schaaf’s statement was she recognizes that the city will have to provide development rights for properties outside of the Coli to get something done. Something tells me we have another 15 years before anything real happens-
@ GoA’s
In this case Oakland is prioritizing the Raiders, because Wolff’s “wait out the Raiders”, strategy. Love it, Like it, hate it, leave it, that’s the way Wolff payed it. He had every opportunity to jump in front of the Raiders, but it wasn’t his priority.
As I have often said Oakland will make a priority of whomever decides they want to dill with them, right now that’s the Raiders, perhaps because of the situation in LA, perhaps because Wolff chose to wait, but the fact is that’s his strategy, is it a good one? Is it a bad one? I don’t know, only time will tell, but it’s what he chose to do.
Oakland prioritizing the Raiders, as much on Oakland as it is on Lew Wolff… (This time around)
The Raiders have said “we wang to stay” but have done next to nothing about it. It’s not Wolff’s wait out the Raiders strategy, it’s the NFL’s relocation timeline that is driving the activity.
Once that shakes out, we will see where the chips lay.
@ Jeffrey
I would guess the NFL timeline, or the Rams owner being so aggressive toward LA has more to do with it then Lew Wolff’s wait Davis out stagey, but are you suggesting that Wolff has not employed the strategy of waiting Davis out?
Not at all, I’d agree. The current “strategy” is wait out the NFL. Though, the Matthew Artz article has me believing that strategy is shifting and MLB/A’s are realizing that waiting out the Raiders situation could take longer than this offseason.
But that’s been the problem with the A’s stadium conundrum for a looooong time. It’s always about somebody waiting out somebody else. 10 years later, it is still true.
Davis is already making statements:
“There is no clear-cut person to negotiate with (city or county) and the A’s 10-year lease “hangs over everything “
The A’s ten year lease is easy to work around if Davis truly wants to stay.
I love it; Davis is like “we don’t want to get in the A’s way”, Wolff is like “we don’t want to get in the Raiders way”
Hilarious, you take Oakland, no, you take Oakland, no it’s really better suited for you. Meanwhile the one team that has both money, and can move wherever they want the Golden State (I mean San Francisco), Warriors are like, Oakland is great it’s the future. Just not where our future home is going to be….
Nice article the other day where Joe Lacob has all sorts of ideas on keeping the Raiders and A’s in Oakland. The only team he doesn’t want to keep there is his own. He wants the A’s in Howard Terminal; how about a 20,000-seat basketball arena there instead, Joe?
Spot on, Lew =🐍
Looks like Chuck Reed may be right. He said the following after the supreme court decision against San Jose “Now we wait for Oakland to strike out again, and we’ll still be here.”
This time I would not blame Wolff one bit for looking elsewhere.
Did you blame him in the first place?
I was bitter about Fremont, after the sudden exit I didn’t what Mr Wolff was thinking. Thought he wasting time. Turns out my fears were realized. He wasted a huge amount of time and potential. Now I wouldn’t blame him.
I certainly didn’t. I don’t blame him now. Of all the people in this whole situation, it’s odd to realize he’s been the only one actually telling the truth through most of it. Odd because, you know… bed sheets spray painted “Lew Lied” being a rallying cry and all.
I believe he has been trying to get something done anywhere in the Bay Area since before he took over the team. Oakland, Fremont, San Jose, wherever. I hope it’s over sometime soon, but I’m not optimistic.
http://www.bizjournals.com/sanfrancisco/blog/2015/11/oakland-raiders-coliseum-uber-suites-advertising.html
Yet another surprise – Schaaf is now leading towards the Raiders (just when most observers of the situation believed she was favoring the A’s instead?) Hopefully Oakland officials and Davis can reach some type of agreement. Now, what will Manfred do? His plan is to keep the A’s in Oakland appear in jeopardy. Both Wolff and Manfred have commented that there are other east bay options for the A’s besides Oakland – now is the time to start exploring them.
But where? Fremont near the new BART station would be ideal but the NIMBYs there are not going to allow it. I don’t see the team turning up in Dublin or any other suburban East Bay city, either.
If the A’s are forced to vacate the Coliseum site, MLB will have no other realistic alternative but to say the hell with the Giants. At that point, MLB will most likely give approval for the A’s to move to their new ballpark site of their first, best and only choice, and that is by Diridon Station in San Jose.
Wolff doesn’t appear to be 100% on board building a new stadium at the Coliseum site anyhow, so the A’s looking into other possible east bay sites is plausible.
Does any one know how many the sites from the 2002 HOK study are still plausible?
uptown-brown’s 10k downtown plan killed it along with lukewarm interests coming from the a’s side back in the early 2000s.
howard terminal-way too expensive to go along with other negatives that’s been talked about though visually always the best site.
fremont-tried and failed.
pleasanton-jpa rejected it and very unlikely to have been seriously even considered.
laney college-not happening though great site with lake merritt and oakland hills view.
oak to 9th-brooklyn basis project scheduled to be built.
coliseum-imp only chance to keep the team in the “east bay”.
Schaaf is trying to do what the 49ers did except she does not have a owner willing to get the 400M himself.
Jed York got 850M in loans from the banks then transferred them to the Stadium Authority created by SC because it is tax sheltered.
In turn the 49ers pay 30M a year in rent and any shortfall on debt service.
Example: If debt service is 40M then the 49ers pay 30M in rent plus 10M to cover the shortfall.
But the SA keeps any excess, so if debt service is 20M, they 49ers pay 30M in rent and the SA keeps 10M and pockets the difference.
York told the banks he had the revenue streams to cover it and low and behold he shattered those expectations. SA and the 49ers are loving life right now.
Schaaf is trying to do something similar except with revenue bonds since this is a public agency. If the Raiders are willing to pay 20M-25M a year in rent. The debt service on a 400M revenue bond will easily be covered.
Schaaf can have the JPA hold the debt so it is tax sheltered and protects Oakland.
400M is far less than 850M and in reality the Raiders are covering it with rent payments anyways. It is a good deal all the way around and very creative.
To bartleby’s point the NFL is so popular there is no way the Raiders would not be able to cover this year over year for 30 years.
Now if you ask about the current 22M a year debt for Mt. Davis, that is a sunk cost and the JPA has to eat it. Nothing you can do there.
But this new 400M in debt being covered by Raiders lease payments wouldn’t add anything more to the current situation.
At least this way the team stays in Oakland so the 22M a year debt on the current Mt. Davis situation is being paid for with a team still there.
“To bartleby’s point the NFL is so popular there is no way the Raiders would not be able to cover this year over year for 30 years.”
The Raiders presumably still have to service the debt on the $500 million or whatever that’s coming from the Raiders/NFL; I doubt that money is coming as cash. So potentially they’d be servicing debt on most or all of the cost of the stadium (less whatever they can get from naming rights, PSLs, etc.).
However, in terms of protecting the city, Oakland just has to worry about whether the value of the team as a whole is worth more than the amount of public bonds it issues. If the Raiders ever defaulted on their lease obligations, Oakland would have recourse to the assets of the team. So if Oakland issued as much as $400 million in public bonds, the question would be “How likely is it that the Raiders will ever be worth less than $400 million?” The answer is, “Extremely remote, and likely to get increasingly more remote with every passing year.”
@bartleby/Sid –
You’re missing the scenario that will likely occur in the future. If somehow the Raiders AND the NFL accept such terms, 5-10 years down the road there will be an occasion where Davis or his partner/successor cries poor and starts to ask for concessions. Either revenue is short or the team can’t remain competitive. As much as citizens might want Oakland to put its foot down, it will most certainly grant concessions. Which means it will, in fact, eat some of that cost. It happened in Cincy, Indy, it’ll happen in Oakland. That’s the pact you make trying to keep three pro sports teams in town.
@ML- Your missing what Zennie A stated “it is all about the deal we make”.
Cincy was just a badly negotiated deal. Cincy did not even negotiate rent payments for the Reds or Bengals originally and neither did not even pay rent until 2010!
Good lord how ridiculous is that?
Way to negotiate Hamilton County…..idiots
Indy same thing. In both cases the County/City did not negotiate a proper “deal”,
What Bartelby, Zennie and I are saying is if Schaaf can negotiate the deal with the right parameters it protects the taxpayers.
Zennie pointed out Houston how the bonds defaulted and the bond holders tried holding the County/City hostage and failed.
If Schaaf can structure the deal like this she may have something:
-Oakland floats 400M in bonds
-Tells bondholders she has agreement from Raiders for a 30 year fixed lease term at 25M per year or 750M over 30 years.
-Raiders pay for any cost overruns during construction (a la 49ers)
-Raiders to pay any overage on debt service year to year (a la 49ers)
-JPA holds debt in tax sheltered vehicle
-All debt is at a fixed rate
If Schaaf can pull this off I see no issues here. If the Raiders are responsible for debt service overage year to year then how is Oakland liable for anything?
This is the type of deal we are referring to, a privately financed Oakland stadium can be done.
Raiders made 40M in profit last year with the worst stadium in the league. That # can jump to 80M-90M easily so the rent payments and covering debt service would be nothing.
The 49ers made 127M last year after only making 24.8M in 2013 and 10.2M in 2012 their last 2 years in Candlestick.
Let’s see if Schaaf can do this….I am eager to find out
Sid, you’re missing _my_ point. It almost doesn’t matter what the deal terms are. The Raiders will ask, and they will get relief, because when the time comes they will be the squeakiest wheel and they will get the grease.
I’m amazed, but not surprised, that you would be so optimistic about this. Just because this deal might not be disastrous doesn’t mean it won’t be onerous. The NFL is not in the business of being nice to cities. When the time comes to negotiate, they will be more experienced, better lawyered, and will ultimately have more leverage than Oakland. There are two reasons why Santa Clara worked and Oakland has to be cautious: Goldman Sachs underwrote the stadium from jump, and did so based on the tech industry’s proximity and excitement.
You guys are talking about “Raiders taking on cost overruns” like it’s some trivial thing. It could be $100-200 million! Everything you’re describing is if this and if that. Stop for a minute and look at this from the perspective of bad and worst case scenarios before you start endorsing it. Otherwise you’re just repeating the same mistakes.
@ML “You’re missing the scenario that will likely occur in the future. If somehow the Raiders AND the NFL accept such terms, 5-10 years down the road there will be an occasion where Davis or his partner/successor cries poor and starts to ask for concessions. Either revenue is short or the team can’t remain competitive. As much as citizens might want Oakland to put its foot down, it will most certainly grant concessions. Which means it will, in fact, eat some of that cost.”
Your theory is, after having stood firm and refused to provide a direct stadium subsidy at the outset of a new deal, at a time when the Raiders can freely move, have other options on the horizon, and have all the leverage, Oakland will suddenly start gifting public funds at a later point in time when the Raiders have no leverage? I’m sorry, I’m just not seeing it.
“It happened in Cincy, Indy, it’ll happen in Oakland.”
The politics in Cincy and Indy are VASTLY different than the politics in Oakland. As evidenced by the sweetheart terms those cities gave their teams at the outset of those deals (which the Raiders won’t get).
“That’s the pact you make trying to keep three pro sports teams in town.”
They’re not really trying to keep three pro sports teams at this point. In any event, we’re talking about a timeframe where the immediate future of all three teams is likely set. If the deal is structured as I’ve described, Oakland will hold all the cards and will be able to just say no to any demand for concessions.
Here’s a list of the rents paid by NFL teams, courtesy of the city of San Diego:
Click to access nflstadiumrents.pdf
Only the Niners pay anywhere near the $25 million you’re proposing for rent. $2.5 million/game is probably half the Raiders current box office take. It seems foolhardy to try to project Niners-type numbers for a Raiders/Oakland solution; there isn’t the pent-up demand for premium seating (or regular seating either.)
There’s 40,000+ seats for every Raiders game selling for $95 or less, none of them in upper reaches of Mt. Davis. There are zero seats for regular season 49ers games under $85, with many having Mt. Davis-like views. Where is any evidence at all that Raiders fans would go along with PSLs and huge ticket price increases?
I don’t see where this passes the risk assessment test for those parties involved.
@tarantella70 You make some excellent points, and I don’t necessarily disagree with your overall conclusion. However, I do think there is cause for a little bit more optimism than you expressed. To your points:
“Only the Niners pay anywhere near the $25 million you’re proposing for rent”
True, but this is partially a factor of the timing of when the various stadia was built. It’s also partially a factor of the willingness of the relevant host city to provide a subsidy that keeps those payments low. The Raiders certainly won’t like to pay anywhere near $25 million a year if they can avoid it, but how much they want to pay and how much they’re able to pay are two different things.
Recent reports are saying the NFL is looking for a $500 or 600 million fee to go to LA. I question whether that’s a real thing, but if it is it’s going to make a $25 million a year lease payment in Oakland look a lot more tolerable.
“$2.5 million/game is probably half the Raiders current box office take.”
Assuming that’s true, so what? Most of the money comes from TV and merchandising revenue. Also, in a new stadium prices (and therefore box office take) will certainly go up.
“It seems foolhardy to try to project Niners-type numbers for a Raiders/Oakland solution; there isn’t the pent-up demand for premium seating (or regular seating either.)”
You don’t necessarily have to project Niners-type numbers to have something like this pencil out. For one thing, the stadium the Raiders are asking for would be a lot less expensive than Levi’s. As far as premium seating goes, I’ve pointed out many times that the Raiders premium seating sales has historically been weak. At the same time, Oakland’s economic resurgence and the Niners move south both create some opportunity and cause for optimism in this regard. The Raiders have sold out the club level for every game so far this year, something that historically has not been the case.
“There’s 40,000+ seats for every Raiders game selling for $95 or less, none of them in upper reaches of Mt. Davis. There are zero seats for regular season 49ers games under $85, with many having Mt. Davis-like views. Where is any evidence at all that Raiders fans would go along with PSLs and huge ticket price increases?”
A fair point, and I don’t think the Raiders would be able to support the prices the Niners do. Nevertheless, a new stadium would support higher pricing than exists now. There are a lot of fans who were kids in 1995 and haven’t previously invested in PSLs. And with the Niners move south, Oakland is suddenly the most convenient option for premium seats for an NFL game.
“I don’t see where this passes the risk assessment test for those parties involved.”
It may not. But I no longer think it’s quite as impossible as I once would have.
@ML “Sid, you’re missing _my_ point. It almost doesn’t matter what the deal terms are.”
It matters very much what the deal terms are. There’s a reason why we don’t hear serious talk about the Jaquars or Rays moving any time soon. It’s because they are locked into rock solid leases that would be very expensive to get out of.
“The Raiders will ask, and they will get relief, because when the time comes they will be the squeakiest wheel and they will get the grease.”
You’re saying the Raiders are going to get a big public subsidy that Oakland isn’t obligated to provide just by whining? From the same Oakland that has steadfastly refused to provide the relatively small-potatoes stadium maintenance they are contractually obligated for? Again, I’m just not seeing it.
“When the time comes to negotiate, they will be more experienced, better lawyered, and will ultimately have more leverage than Oakland.”
“Better lawyered” makes a much bigger difference in litigation than it does in contract negotiation. In litigation it’s a big advantage to be able to throw lots of bodies running down every possible issue and filing lots of motions to overwhelm your opponent. For a contract negotiation, a handful of decent lawyers can get the job done. Writing a lease that says the lessee is obligated for the full term is pretty basic. And it’s questionable whether the Raiders are necessarily “better lawyered” anyway. People forget that the 1995 deal was kind of a disaster for the Raiders, too.
“You guys are talking about “Raiders taking on cost overruns” like it’s some trivial thing. It could be $100-200 million!”
Nobody’s said this is trivial; I’ve specifically said the biggest question is whether the Raiders will be interested in this.
“Everything you’re describing is if this and if that.”
Well of course: There is no proposal yet, so we can only deal in theoreticals. The point is that “public financing” is not synonymous with “direct public subsidy” and therefore that what Mayor Schaaf is contemplating could plausibly be executed with minimal risk to the taxpayers. Again, the bigger question is whether the Raiders will be interested.
“Stop for a minute and look at this from the perspective of bad and worst case scenarios before you start endorsing it.”
There’s nothing to endorse or oppose at this point. All I am saying is, Schaaf has proposed something that is well worth exploring.
So we’re placing faith in Schaaf that she will deliver a deal that the Raiders will agree to, even though neither they nor the NFL have shown any inkling they’ll approve it? Even though even the very basics of the what Oakland has revealed so far are at odds with Davis’ wants? Even though the NFL has already pooh-poohed deals with actual subsidies from both St Louis and San Diego?
I don’t have that faith, sorry. I’ve seen too much. Explore away though, it can’t hurt her. Not yet at least, as she hasn’t had to expend any political will yet. That time will come. Schaaf is trying to spin the notion of a subsidy in a city that stands to be stuck with the check twice.
And remember that what’s good for the goose (Raiders) is good for the gander (A’s).
BTW – here’s a recent example of a stadium that was built privately, then “had” to be bailed out. It happens.
“BTW – here’s a recent example of a stadium that was built privately, then “had” to be bailed out. It happens.”
The risk of an NHL team in a small, non-traditional market with a privately financed venue going bankrupt and the chance of an NFL team going bankrupt are orders of magnitude different.
@ML “So we’re placing faith in Schaaf that she will deliver a deal that the Raiders will agree to, even though neither they nor the NFL have shown any inkling they’ll approve it? Even though even the very basics of the what Oakland has revealed so far are at odds with Davis’ wants? Even though the NFL has already pooh-poohed deals with actual subsidies from both St Louis and San Diego? ”
In a word, no. That’s not what I’ve been saying. I’ve specifically said multiple times that it’s questionable whether the Raiders will go for this.
Then again, as Chris Rock says, a man is as faithful as his options. The deal Mayor Schaaf is working on may not be Davis’ first, second or third choice, but it doesn’t necessarily have to be. It just has to be viable, and then have those other choices fall through.
A long shot? Sure, but not impossible.
“I don’t have that faith, sorry. I’ve seen too much. Explore away though, it can’t hurt her. Not yet at least, as she hasn’t had to expend any political will yet. That time will come. Schaaf is trying to spin the notion of a subsidy in a city that stands to be stuck with the check twice.”
You keep conflating the concept of “public financing” with “public subsidy.” This is intellectually lazy. They are not the same, and the possible deal I’ve described would be very different risk-wise than the 1995 deal. A stadium financed in part through public bonds serviced by fixed lease payments backed by the full assets of an NFL team would be a very low risk deal for the taxpayers.
If (and it is a big if) Schaaf succeeds in getting the Raiders on board with something like this, it will be important for the taxpayers to analyze that deal based on its own specifics and own merits. You do those taxpayers a disservice when you say things like “all deals are the same” and “the taxpayers will get screwed no matter what.”
If that’s really how you feel, why are you writing a blog advocating for new stadia at all? There’s never going to be a deal where the taxpayers have absolutely zero skin in the game.
“And remember that what’s good for the goose (Raiders) is good for the gander (A’s).”
Great. I think the taxpayers of Oakland would be very fortunate to keep both teams on the terms I’ve described.
“You keep conflating the concept of ‘public financing’ with ‘public subsidy.’ This is intellectually lazy.”
Is it? Try to think of it from the average Oakland voter’s perspective. Coming off two bad stadium deals, do you think he/she cares about that distinction? If it takes you a minute to explain the difference, you may have already lost them, especially if they’re coming into discussion with an already jaundiced eye.
Not all deals are the same. But we’re talking about Oakland realpolitik here, that had a growing number of activists protesting Coliseum City with each successive meeting. Did you follow what happened in Santa Clara? How the details of the DDA were changed repeatedly and secretly? We’re not in the position to simply look at any stadium deal on its own merits. Past is prologue.
Here’s an exercise. Try to explain how the much-maligned Coliseum JPA will be dissolved and replaced by yet another quasi-governmental stadium authority that is set up to protect taxpayers yet is still run by Oakland. The resulting structure will look like this:
I’ll tell you what the first questions will be: Why is this necessary? Why can’t the Raiders/NFL borrow this money themselves?
The myth of ‘no public funding’ for new Raiders, Warriors projects by Ron Leuty, SF Business Times
@ML “Try to think of it from the average Oakland voter’s perspective. Coming off two bad stadium deals, do you think he/she cares about that distinction?”
They’re going to come at the issue from a position of skepticism due to the history, of course. But if they actually understand the distinction, yes, many will care. The poll results suggest a majority of Oakland residents want to keep the Raiders as long as it doesn’t draw resources away from other more pressing needs. So if they’re presented with a deal where the city loans the Raiders $400 million, to be paid back by a massive revenue stream that won’t exist if the Raiders leave, secured by the full $1.4 billion in Raiders assets, yes, I think there’s a decent chance the majority will support it. That is why I think you do them a disservice when you blur the distinction rather than promoting understanding of it.
“If it takes you a minute to explain the difference, you may have already lost them, especially if they’re coming into discussion with an already jaundiced eye.”
Ok, how’s this: “One is a gift, the other is a loan for which the city would only be at risk if an NFL team goes bankrupt. That team is worth about $1.4 billion and most of its revenue is assured by massive, national TV contracts even if that team itself is horribly mismanaged.”
There, less than a minute.
“Not all deals are the same. But we’re talking about Oakland realpolitik here, that had a growing number of activists protesting Coliseum City with each successive meeting. Did you follow what happened in Santa Clara? How the details of the DDA were changed repeatedly and secretly? We’re not in the position to simply look at any stadium deal on its own merits. Past is prologue.”
That’s just the wrong way to look at it. The voters of any city should look closely at the particulars and merits of any massive project in their city, whether it includes a sports venue or not. The fact Oakland voters are understandably gun shy may predispose them to gloss over those particulars, perhaps to their own detriment. You are in a position to help shed light on those particulars; I think you do readers a disservice if you spread FUD instead.
“I’ll tell you what the first questions will be: Why is this necessary? Why can’t the Raiders/NFL borrow this money themselves?”
The answer is fairly simple. The Raiders/NFL could borrow this money themselves, but they won’t because they have options (some of which involve gifts of money rather than loans). Having the city borrow this money on their behalf allows the city to share the benefit of its lower cost of borrowing (and thereby make a financial contribution to the project) without direct cost to itself. It is highly likely even this won’t be enough to get a deal done, but without at least offering something like this the team will certainly leave.
bartleby – You keep trying to convince me for some reason. I understand that a fair deal can be reached. I’m naturally skeptical that it can occur, but I have witnessed it – AT&T Park and Avaya Stadium are the best local examples, with the W’s arena to follow. Levi’s Stadium and SAP Center to a lesser degree. But I’m not the person to convince. Oakland and even Alameda County pols and constituents will decide on this. What you call FUD is me trying to help you understand what any stadium deal is up against. Oakland has turned into the most anti-corporate, anti-development community in California, yet corporate presence and development are the anchors of any stadium deal at the Coliseum. That all has to be reconciled if any stadium deal – including the A’s – is going to have any chance at success.
If/when the full details of a Raiders stadium are released, I will spend multiple posts over two weeks reviewing it. I’ll read the DDA. Then I will pass judgement. Until then I choose to take a skeptical stance. That’s not FUD. That’s caution.
@ML- Ron Luerty is a media guy with no understanding on sports business so quoting him does not make you look credible.
Also, you are using examples that are from a different time negotiated by “idiot municipalities”.
The Raiders have made according to Forbes 187.5M in Net Profit since 2006 in the NFL worst’s stadium. The 49ers made significantly less at Candlestick during the same time period.
What does this say? It says the Raiders can easily afford cost overruns on a new Oakland stadium.
As for Goldman Sachs underwriting the 49ers, even so the 49ers transferred the debt to the Stadium Authority so it is relative.
Meaning the SA could have just as easily borrowed the $$ themselves via revenue bonds the way Schaaf is trying to do now.
Yes the Raiders could just as easily borrow the $$ themselves and transfer it to the JPA. It is the same mechanism but done with bank loans not revenue bonds. You got to be able to see this…..
The key is in the contract the 49ers have agreed to pay 30M in rent and any debt service above 30M year to year with the SA pocketing the difference if debt service is below 30M.
You can take the key to the general fund and “throw it away”, that is how good business is done.
If Schaaf can get the Raiders to agree to similar deal for far less money (400M vs. 850M a la 49ers) she has a deal struck.
Bartelby is right, the Raiders will not lose value anytime soon as the NFL is that popular. In fact, the chances of the “Raiders crying poor” in 5-10 years is next to zero if they are making 40M a year in the current Coliseum with a shitty team.
In a new Coli that # will jump to 80M-90M per year in the market they are in. Imagine if they start winning?
Santa Clara got the best deal of all time for a NFL stadium ever pretty much and you cannot get yourself to accept it. The 35M redevelopment funds that were promised to the 49ers were dissolved when RDA was taken away from the state.
The 49ers forgave SC for this and covered it themselves upfront with SC promising to recover it some other way down the road. That is what you call a partnership and helping each other out.
The Raiders can do it this in Oakland if Schaaf can make this happen with revenue bonds and the Raiders agreeing to roughly 25M a year in rent x 30 years for 750M total.
That covers the debt service and protects the tax payers.
You cannot seem to fathom this is possible, start to fathom it
You could see your A’s playing in ATT Park soon.
Are you really playing the credibility game? You cited Zennie. Please.
The Raiders are profitable because they cut salary post-Al and have few operating costs. Is that $25 million a year going to cover operating costs or bonds? If it doesn’t cover ops who pays for it? That’s worth about $1 million per game. Spare me the back of the napkin math. Got a plan? I’ll give you the same opportunity I gave to Oakland-only ballpark backers: a post, unedited. Go ahead, let’s see you do it.