Do not be surprised when teams withhold rent as part of lease talks

The Merc reports that the 49ers have withheld more than $5 million in rent from the City of Santa Clara.

Yawn.

The team is due a rent “reset” that could eventually lower its annual payments from $24.5 million, a figure that includes operating costs. The 49ers like to claim that it’s the highest rent in pro sports, though most leases don’t include operating costs, usually an eight-figure item on their own. Even with those costs removed, it’s still a pretty high rent payment. That doesn’t mean anyone should be sympathetic to the Yorks. Forbes had the team’s revenue and operating income for the 2014 season at $427 million and $123.7 million, respectively.

levis_stadium-36-view_midfield

The 49ers believe the rent on this place is “too damn high”

That said, the system, and the very nature of these lease agreements puts teams in a negotiating advantage from jump. If a lease is about to expire, or if there’s a clause that allows for renegotiation, chances are the team is going to take advantage of it. Let history be a guide.

  • A year ago the Raiders withheld rent as they talked 2015 lease with the Coliseum JPA. The lease ended up being for only one year.
  • The A’s famously had a lengthy brouhaha with the GPA over shorted parking revenue that eventually spilled over into lease talks. After Oakland played hardball with the A’s, then-MLB commissioner Bud Selig pulled the move threat card and Oakland backed down.
  • During the Chris Cohan era, the JPA sued the Warriors three times over breach of contract, ending in settlement.
  • The Giants owned the AT&T Park structure, so their lease with SF was for land, a nominal fee. That didn’t stop the Giants from arguing over property taxes, eventually going to court over the matter.

All of that happened since the turn of the millennium.

In a more charitable world, teams and their incredibly wealthy owners would hold to their contracts, instead not even waiting for the ink to dry. That’s not the world we live in. So we can grouse more about certain owners we disdain as opposed to others we hold in higher regard. It doesn’t matter. This is how teams operate. Since these facilities have such huge mortgages and most of them are publicly owned, it’s the municipalities that get the worst of it. Exactly what can the cities do, anyway? Evict the teams? Cities can and should fight for what they can, but remember that in the end, they’re not supposed to be the winners. The teams are. The deck is stacked against the public.

26 thoughts on “Do not be surprised when teams withhold rent as part of lease talks

  1. Is anyone really surprised by this? In the case of the A’s they are looking for free land in downtown Oakland(expensive but cheaper than the clean up costs for Howard Terminal) or San Jose. I guarantee that they will start complaining about property taxes just like the Giants. And remember that the A’s will not build anything unless it will generate a Net increase in revenue(a guarantee?). As for the Raiders, Davis has no money so he will be a tenant somewhere(except LA- NFL will block him until Mom dies).

  2. Rent or tax disputes for every major pro sports team in the Bay Area except the Sharks.

  3. Revelations this week make it clear: Nothing is happening for the Raiders in Oakland. Will the city be pressured into spending money it doesn’t have on a stadium? Doesn’t look like it.

    • You are correct sir, either San Diego or Inglewood are very likely the new destination for the Raiders. Recall the NFL is practically endorsing a Raiders to San Diego move (they discussed waiving a relocation fee for that scenario, and added the Raiders could apply their $100 mil. NFL gift towards funding a new San Diego Raiders stadium)

      The Raiders possible move to LA also appears legit (that is if Kroenke would want that) Kroenke would likely prefer sharing the Rams stadium (if that’s what he really wants to do) with the Chargers rather than the Raiders, The Raiders enjoy a larger LA fanbase than the Chargers do.

      • @ duffer : tell me why SD would build a new stadium for the raiders if the Chargers can’t get it done ?

        Stan The Man will not allow the raiders to move into his palace. He will offer up very tough terms that even a desperate Davis won’t accept.

      • @danieldaniel: A: The Chargers owner specifically wants an expensive, stadium/convention center combo built at San Diego’s downtown, while Davis appears to be ok with any new stadium, even a low budget facility – and is evidently not concerned about its location as much as Spanos is.

        B: Davis is willing to invest $600 mil. towards a new stadium, while Spanos (the Chargers owner) is willing to spend only half of that ($300 -$350 mil. approximately) One would believe that San Diego officials would have an easier time cutting a stadium deal with Davis rather than with Spanos.

        Concerning Inglewood, Kroenke evidently is willing to take on a partner ownership for that stadium. It would be interesting to know the details about that though.

      • >Stan The Man will not allow the raiders to move into
        >his palace. He will offer up very tough terms that
        >even a desperate Davis won’t accept.

        Rent at Inglewood for a tenant team was set at the meetings in January:

        $1/year

  4. The Raiders have to look at the long shots of Vegas and San Antonio or the sure thing of Levi’s. They may be directed by the NFL to go to Levi’s no matter how much they hate it.

    • I agree! Since it’s looking more and more certain that Oakland will not spend one dime on a new stadium for the Raiders, the Raiders will have no choice but to follow the dictates of the NFL. The NFL will likely coerce the Raiders to either share Levi’s Stadium with the 49ers, or to stay at the Coliseum as is. The NFL seems to prefer that the Bay Area market remain as a two team market. The NFL also seems to want for the southern California region to have only two teams as well. The NFL plan seems to be for the Chargers to either remain in San Diego in a new stadium, or for he Chargers to be sharing the new Inglewood stadium with the Rams. Two NFL teams for northern Califoria and two teams for southern California.

      • @llpec: The NFL would prefer that teams stay put, and don’t relocate. Unlike Manfred with MLB, however ( who is virtually directing the A’s to build in Oakland), the NFL has made few, if any remarks that they are supporting the Raiders remaining in Oakland. In fact, the NFL has practically endorsed a Raiders move to San Diego – if that market opens up, and has been disappointed with Oakland officials efforts to keep the Raiders in Oakland

        Unfortunately, the Raiders chances of remaining in Oakland appear dim. Davis is giving a very good offer (paying 67% of the cost of a $900 mil. stadium, Oakland is required to finance only $300 mil. – and can’t even afford that?). Many municipalities would jump at the chance of hosting an NFL franchise for only a $300 mil. investment. If Oakland city official’s won’t – many other cities seeking an NFL franchise will. It’s surprising that SF and San Jose city officials aren’t making a bid for the Raiders (either SJ or SF could likely fund $300 mil. by only raising hotel, airport, and car rental taxes and avoid taxing residents)

  5. @ duffer : well, they are still short of 400mils. The final cost is 1B probably more. How will SD or the raiders come up with the extra mils ? The math does not change whether the raiders build in Oakland or SD. Davis can finance the whole package in Oakland but he is not willing to put his shares on the table. Plus the NFL will not let him move to SD anyway. I am sure the raiders relo request to SD will be rejected.

    Clearly the Chargers did not like the terms or they would not have gone back to SD again. Regardless of the rent cost, being a minority tenant is not fun.

  6. The raiders are not the draw ppl think they are. They can’t even sell out that tiny O.o place. The so called raiders nation is loud but small and they don’t seem to want to buy PSL or pay for tickets.

    There are 3 dominant teams in the bay, 49ers, G’s and Warriors. The A’s is next then raiders and Sharks. I would bet the Sharks are bigger draw if they win the cup.

    If Davis wants to stay in Oakland, he has to do it himself. It is likely that Vegas or San Antone will ask for a big chunk of the team before they build anything for the raiders. Nothing is free in this country.

    • The problem with “Raiders Nation” is, well, it’s spread across the nation. I once met a huge Raiders fan in East Stroudsburg, PA. You can guess how many tickets he bought for Raiders home games.

  7. Off-topic: The Mercury News has a big MLB preview, for home subscribers only, with an article, “The Aging Game,” on dwindling interest in baseball, especially by kids. The average of MLB TV viewers: 55. Yikes. Franchise values keep going up but how long can that go on if interest is dropping? The

      • For entertainment purposes MLB actually matches up ok when compared to other sports besides football (which is way more entertaining than any other sport) Also, unlike other sports – including the NFL – going to an MLB game is more entertaining than viewing it on television.

  8. Best sport to listen to on the radio: Baseball
    Best sport to watch on television: American football
    Best sport to watch live at arena/stadium: Ice hockey (especially playoff hockey!)

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