Another Prop Has Occupied My Time

Is everyone clutching their pearls tightly?

Oakland’s City Council has a non-binding vote scheduled for July 20 on the Howard Terminal project. If the majority of the council votes Yes, the project continues, including the tangled negotiations for community benefits, transportation, and mitigation for the Port stakeholders. HT proponents, who are mostly a ragtag bunch of volunteers at this point, are pushing the pro message.

But what happens if Howard Terminal gets voted down?

That’s a subject that hasn’t been broached much by local or national media. Honestly, who wants to spend much time gazing beyond the edge of a cliff? Given A’s ownership’s recent Vegas trip, Sin City would appear the be in the lead as a candidate for relocation. A’s President Dave Kaval even nixed a planned trip to Portland, desiring to explore Vegas further.

So Vegas is the ace in hand, while Portland is the ace in the hole. Except they’re not. They’re both bluffs at this point. Kaval’s trip to Vegas was exploratory in nature, with no definitive sites or organized funding instruments at hand. Kaval tweeted from a Golden Knights playoff game, which created blowback from fans. There were meetings with Las Vegas Mayor Carolyn Goodman, representatives from Henderson (where the Raiders training facility is located), and Summerlin (where the A’s AAA affiliate Aviators play). The three options provided are far from ideal. Let’s break them down.

Mayor Goodman wants to redevelop the old Cashman Field/Cashman Center complex to include a domed stadium just as her husband did. As the site is within city limits and not in unincorporated Clark County like the Strip, that makes sense. However, going north past Downtown (Old Las Vegas), past a freeway, and to the Cashman site, is its own cliff in a sense. I visited Cashman a few years ago, before the stadium was converted for soccer use, and well, it’s the same dump the A’s played in 25 years ago while the Coliseum was refurbished for the Raiders, except that it has aged. The concept for now is to level both the ballpark and the small convention space next door and build a domed stadium on the spot. Kaval weighed in with the Las Vegas Review Journal on the subject, including one foul tasting nugget:

Domed stadium? Say it ain’t so, Dave.

Henderson doesn’t have a specific site to offer up to the A’s yet. Summerlin’s plan would presumably be to build the dome over the curiously named Las Vegas Ballpark. Both Henderson and Summerlin are 10 miles from the Strip, in nicer neighborhoods than Cashman. As I considered the options, the A’s and MLB’s likely strategy became clearer to me. It all comes down to Vegas’s previous successes with the NHL (Golden Knights) and NHL (Raiders). Though we haven’t heard about it, I wouldn’t be surprised to see the recently vacated Sam Boyd Stadium enter the picture. It’s also 10 miles away (east) of the Strip.

If MLB considers Vegas a small market from a population and TV audience size perspective, any relocation or expansion-to-Vegas strategy will have to include a plan to capture as many tourist fans as possible. In the past that was somewhat controversial for the potential competition between pro sports and other forms of entertainment, but now, it’s all fair game and can be somewhat synergistic depending on whatever events are happening during baseball season. That makes the location of the ballpark key, as a 30-minute ride away from the Strip is not conducive to capturing much of that tourist base.

Last year, Caesars put the off-Strip Rio Hotel and Casino up for sale. There were rumors that the site would make a good landing spot for a MLB team, with space for a domed stadium and a mega-development. Alas, a real estate firm gobbled up the property and is rebranding it a Hyatt Regency among other things. Given how the stakes for teams were raised by Commissioner Rob Manfred recently, it’s worth asking whether The Strip or an off-Strip site is the only location in Southern Nevada that makes sense. If we’re going by the standard of placing a ballpark in the middle of a downtown or central business district, Henderson and Summerlin don’t make the cut the same way Fremont or anywhere on the I-680 corridor wouldn’t work in the East Bay. Never mind that the ballparks for the Braves and Rangers violate the “downtown” standard.

Beyond Las Vegas’s stalking horse status, let’s consider next steps. For Vegas to work for three-quarters of baseball owners to approve a move, there needs to be a clear economic advantage in moving a team there. Southern Nevada had the benefit of a Stanley Cup Finals-bound team in its inaugural year, truly an enviable feat. There’s plenty of earned goodwill to keep attendance strong there for years to come, plus the Golden Knights get the spoils of being the pioneer in the market. Despite the pandemic-marred 2020 regular season, Raiders attendance should be strong thanks to its large migratory fanbase. MLB is different in that so much of a team’s revenue is generated locally from ticket/suite sales and local television rights.

Sportico reports that the A’s pulled in $220 million in revenue for the 2019 season, the last full regular season on record. 2019 also happened to be the last year the A’s received a revenue sharing receipt (25% share), which showed when the team stripped costs to the bone in 2020 by laying off front office employees, minor leaguers, even scouts. The teams in the middle of the revenue pack, Minnesota and Milwaukee, had figures of $289 million and $286 million in 2019. That makes the gulf between the A’s and other small market teams that opened new ballparks recently around $70 million, inclusive of all media and sponsorship deals but without revenue sharing thanks to the A’s big market status. If the A’s move to a smaller market, they will immediately become a revenue sharing recipient simply because they won’t be able to compete with the big markets. Despite the top-heavy big-market focus of MLB franchises, baseball realizes that it needs all 30 teams to compete at least once in a while. If Tampa Bay moves to Montreal or a Southern city there won’t be a revenue sharing change.

The A’s remain a unique case because of its place as the economically inferior team in a two-team market. The traditional markets, New York, Chicago, and Los Angeles, don’t have strange revenue carveouts or oddly gerrymandered territories. The A’s are a sort of enclave (think Piedmont or Newark) within Northern California, which is dominated by the Giants. The O’s and Nats’ relationship is defined mostly by the O’s owning the sports network that broadcasts both teams.

Howard Terminal or Bust” is effectively the admission that the A’s can no longer function as a big market team under the current operating situation. They must move to a newer (albeit not bigger) stadium where they can maximize revenue. The A’s are only starting to rebuild their radio presence after a controversial online effort. The A’s TV revenue is in the middle of the pack among MLB teams, which is fine for now and helps to stabilize the franchise. Altogether, the A’s exploration of other markets is ostensibly the search for a replacement level market. If the A’s can get that extra $70 million annually through Howard Terminal, the team can stay in the East Bay. If they can’t get that $70 million, they might as well find out if that money can come elsewhere. Personally, I think they’re going to find out that’s a much tougher task than it seems. Local TV revenue is transforming thanks to streaming threatening to make many RSNs obsolete. Radio is a wounded animal, a necessary annoyance. Ballparks are getting smaller while trying to cater a more exclusive clientele. If the A’s and Oakland are going to prove they can hang with the big boys, Howard Terminal is the way to do it.

That’s what they want you to believe, anyway. I’ll have more to say on that later.

P.S. – Henderson, NV, was in MLB’s sights two years ago, when the Arizona Diamondbacks used a trip to Henderson to help pressure Maricopa County to help fund improvements to Chase Field. A ticket tax was approved earlier this month, though the team is being coy about whether they’ll use it. Henderson played its role well that time.

P.P.S. – The City of Oakland is urging the Alameda County Board of Supervisors to fork over a matching share of funds from the EIFDs (Enhanced Infrastructure Financing Districts) proposed for the Howard Terminal project. One of the EIFDs is for the 55-acres of Howard Terminal. The other is for a large swath of Jack London Square and the surrounding neighborhood, which got me thinking:

I thought Alameda County wanted out of the pro sports business?

6 thoughts on “Another Prop Has Occupied My Time

  1. ML,

    Once again an excellent post.

    1. Howard Terminal: My gut instinct is that the Oakland City Council will have a slim majority that votes yes.

    2. Las Vegas: While the A’s would prefer to build at Howard Terminal, Las Vegas (LV) seems to be the back up plan. I am guessing LV would work as follows:
    1. Mixed used project (office, apartments, hotel and casino?)
    2. Semi-domed stadium similar to the Fremont Experience in Downtown LV.
    3. City, county, or state of Nevada agrees to purchase the monorail from the Las Vegas Convention and Visitors Bureau and extend coverage south to McCarren International Airport and north end to the downtown ballpark development. The LV monorail has been a disaster. It the city, county, or state takes control, they can apply for federal infrastructure/transportation funds. LV was turned down when they applied for federal funding for a downtown extension in 2004. However, with the current administration and new LV monorail ownership, it might not hurt to try again.

    3. Coliseum: It would be in the city of Oakland/County of Alameda’s best interest to create a coliseum assessment district to retain the A’s. However, if the A’s will not build the ballpark at the Coliseum the politicians will not agree to using Coliseum assessment funds to finance the HT ballpark project.

    Could the A’s be convinced to build the ballpark at the Coliseum if they could also develop the Howard Terminal Project (office, retail, and residential) without the ballpark? I am thinking probably not. The A’s see synergy between the ballpark, office, retail, and residential components.

    If the A’s don’t build at the Coliseum, I am hoping the Oakland Coliseum development would include a convention and exposition center. That way the events now hosted at the Cow Palace/Alameda County Fair grounds could be moved to the Coliseum. (Turn the Cow Palace and Alameda County Fair grounds into housing.)

  2. You know, the A’s COULD function as a big market team here in the Bay…if MLB simply allowed them to “relocate” to $an Jo$e!!! Google may have claimed the original ballpark site at Diridon South, but there’s still an opportunity to incorporate a ballpark at Market Park/Berryessa BART or the now underutilized Cisco properties in North $J/along light-rail. $#@! the Giants!! But I digress..

    IF Vega$ is under serious consideration, I’d like to see a ballpark at either 1) the 13-14 acre truck parking lot adjacent to The Rio soon-to-be Hyatt Regency or 2) behind Bally’s/Planet Hollywood on those huge undeveloped lots sandwiched between Harmon and Flamingo; easy access to LV monorail/Strip and enough space for ancillary development.

    If the Pittsburgh PA metro can accommodate NFL, NHL and MLB, then so can the Vega$ metro, in my opinion.

  3. BTW, if I’m Alameda County, I’m telling the City of Oakland to respectfully…kiss my @..!! No way if I’m a voter/taxpayer in Fremont or Hayward that I want my hard earned cash going towards a Oakland HT fantasy.

  4. I learned a bit more about why the Coliseum is not liked, as Dan Gygax says the bosses don’t think of it as glamorous. All I want is easy access and a good game, glamor is low down on my list.

  5. Thanks ML, I know LV is a long shot especially since they already have the other two teams, probably Portland as well when you consider the willingness to use public funds in eather place at the moment.

    However, I never considered the revanue shearing component of it, if the A’s could get that 70 million a year back by moving to either place it may be worth it to them.

  6. ML,
    Regarding your Twitter feed story on Nevada STAR bonds; while these bonds can’t be used to pay for a brick and mortar stadium, could they be used to finance the ancillary development of a hypothetical venue? I could see the A’s privately financing the actual ballpark (like what they’re proposing at HT), while the STAR bonds finance the residential, retail, hotel(s), and infrastructure surrounding it.

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