Manfred sets the bar for MLB expansion (and relocation)

During a Sportico forum held yesterday, MLB commissioner said that future expansion fees could reach $2.2 Billion. $2.2 Billion also happens to be the average of franchises in 2021, so the figure serves as a starting point for future discussions. For now, MLB is not opening the gates to bidders.

As the Bay Area currently has two MLB franchises and isn’t looking to add more, expansion doesn’t seem like a relevant topic. However, if you look at it in terms of setting a market price for moving a franchise (*cough*A’s*cough), it quickly gains relevance. By setting the price at $2.2 Billion, Manfred is effectively saying MLB franchises are premium properties that don’t merit shortcuts, whether we’re talking about ballparks or media deals.

Sportico ranked the A’s as 25th out of the 30 MLB teams at $1.3 Billion. Over at Forbes, the ranking was 26th while the valuation was $1.125 Billion. The A’s lost $40 million in revenue during MLB’s pandemic-truncated 2020 season. Some uncertainty awaits thanks to the upcoming CBA expiration and negotiations. The good thing for the A’s is that their unique phaseout of revenue sharing apparently hasn’t affected their valuation at all, so even if revenue sharing doesn’t come back the asset should remain strong, if not the team’s operating revenue. Either valuation is roughly 5X a normal revenue year, higher than it used to be but not out of line considering how many different types of assets appear overinflated these days.

If you’re in Portland, Charlotte, Las Vegas, or even Montreal, the bar is set. You have to put together an ownership group that has $2.2 Billion, plus access to more to run the team. You also have to have a ballpark deal in place. Gone are the days when you could try to entice a team to play at a multi-purpose stadium for a few years while you hammer out a bespoke ballpark palace. Oh no, that won’t do anymore. Manfred – and probably the entire Lodge – wants new teams to hit the ground running. Remember that the last relocated team, the Expos-Nats, were actually contracted by MLB, then expanded. The Nationals played in venerable RFK Stadium for several years while the District worked out a new ballpark deal at Navy Yard. A true team relocation hasn’t occurred since the second version of the Washington Senators became the Texas Rangers in 1972.

Expansion occurred in the 90’s with the new teams taking advantage of existing multi-purpose stadia in Miami and Denver. Purpose-built domed ballparks were built in St. Petersburg and Phoenix to varying degrees of success. The markets being considered for expansion won’t have to worry about extreme weather situations like in the Sun Belt, but they will have to come ready to impress customers. Sad to say that an expanded AAA ballpark, no matter how nice, won’t cut it. If you look at the AAA ballparks built in Vegas, Nashville, and Charlotte, they’re not designed to add 25,000 seats, and even if they did it wouldn’t be optimal.

Las Vegas Ballpark: A very nice AAA ballpark

You might be thinking that perhaps one of those cities could lure the A’s or Rays away for cheaper than a $2.2 Billion expansion fee. You might be right. However, the same rules apply. A prospective city/county/state will need a stadium deal in place, preferably to open when the franchise begins play. Plus MLB will set a price for relocation, which is completely unknown at this point. It wouldn’t surprise me at all if MLB set a relocation fee of $1 Billion, to keep other team valuations high and to prevent those pesky shortcuts. So if you want a baseball team and you aren’t in an established MLB city you have to follow three easy steps:

  • Have new stadium deal in place, up to $1 Billion in construction cost
  • Buy A’s or Rays with intention to move for going market rate ($1.2 Billion)
  • Pay $1 Billion relocation fee to MLB to buy their approval

Easy peasy, right? After all that, you’ll be lucky to have a franchise worth $3 Billion. You’ll have a ton of debt. On the bright side, you’ll be in an extremely elite club and you’ll have parked your money in a fairly safe place before interest rates rise. Good luck!

Now That’s A Statement

From Carroll Fife, Oakland District 3 (West Oakland including Howard Terminal) Council Member:

On the eve of the EIR comment period deadline, that’s a doozy. The thread is worth following to get a taste of the constituencies at work.

In addition at Oaklandside, Dan Moore mostly succeeds at summing up the coming battle for the future of Oakland through the lens of the Howard Terminal project. It’s a worthwhile read.

Carry on.

Why not ask for the moon? You might get it.

Over the last two years, I had routinely criticized the A’s for not talking about the total cost of the Howard Terminal project. At some point they would have to let loose, but I didn’t expect it to be in a tweetstorm. Well, the cat’s out of the bag now. There’s no going back.

Motivation for this move may have been a need to garner public support as the EIR comment period was ending. Maybe it was as simple as the A’s wanting to capitalize on the wave the team on the field is riding at the moment. Regardless, we’re here now, so I wanted to take a moment to get some perspective. The Chronicle’s Roland Li helped me get that perspective when he tweeted this:

Inspired, I assembled a table comparing big stadium projects over the last several years plus Apple Park. I hope it gives you the same sense of perspective that it gave me.

Venues by construction cost

The easiest thing to do is to get gobsmacked by the numbers, the scale of the project. It took me an hour to gather myself. I had to take a walk. The thing is, I saw it coming. When the project was unveiled in 2018/2019 I started adding the ballpark to the housing towers, then the office component, the retail aspect, and the performing arts center. I figured we’d hit $6 Billion. I was halfway there, at least.

As I mentioned in the last post, the $12 BILLION project cost figure is at the bottom of the 29th page of a 30-page document. It’s not on the opening pitch slide. Talk about burying the lede!

When you look at this from a historical context, burying that extremely important info at the bottom of the last text page makes more sense. During the redevelopment era (60’s-00’s), it was easy to get a certain part of a given city’s citizenry to buy into urban renewal plans, no matter how grandiose. Rebuilding downtowns was the key to urbanism and reversing the epidemic of white flight, which wasn’t entirely white when you think about it. After the last non-premium malls emptied out and the recent sports venue construction boom waned, it became less fashionable to talk about big dollars being doled out to benefit sports team owners and big developers. Redevelopment in California died a decade ago, though it keeps trying to be reborn. Thanks to project-targeted legislation, there are plans for at least two infrastructure financing districts to pay for the roads, bike lanes, sidewalks, and bridge(s) near Howard Terminal.

Oakland Mayor Libby Schaaf’s office knows public skepticism about these kinds of projects all too well. Tonight, her office released a statement in response to the A’s letter:

Tepid? Lukewarm? It’s not the ride-or-die spirit A’s ownership and many A’s fans are hoping for. For now the news cycle will be dominated by the sticker shock of the proposal. Soon it will be back to the EIR as written comments are published. Eventually they’ll converge into a full debate. And I wouldn’t be surprised if Schaaf and the City Council, worried about too heartily supporting or opposing the project, left it to a referendum. That’s the most Californian outcome I could conceive. It’s practically destiny.

A’s release Howard Terminal development term sheet, urge summer Council vote

A’s President Dave Kaval unleashed a tweetstorm earlier today, urging a vote on the Howard Terminal project before the City’s usual summer recess in August.

Accompanying Kaval’s plea letter is a 30-page term sheet providing additional details on the development.

When I saw the top line arguments for the project, I opined that that the A’s once again chose not to disclose full project costs. I was disabused of that notion, finding the information I wanted on page 29 of the term sheet.

Exhibit - Financial Plan on Page 29 of term sheet

Naturally, there are numerous ways to react to this development. If you’re a project supporter, you could rejoice in the A’s proposing to invest $12 BILLION in Oakland’s economy, including community benefits and infrastructure. If you’re an opponent, you’re likely to rail against billionaire developers and gentrification. I’m just glad we’re getting more information, even if it’s not at the desired pace.

Over the next three months, will there be enough answers/responses to questions from Wednesday’s Planning Commission hearing, plus other responses to written comments on the EIR, to act on the project proposal? Recommence the debate, and bring on the economists.

The Adult Conversation: Oakland Planning Commission 4/21 Edition

I have thoughts.

So did Ron Leuty of the SF Business Times.

After the A’s played a doubleheader on Tuesday, some of us had our own doubleheader on Wednesday with the getaway day game leading into Oakland’s Planning Commission hearing, in which Howard Terminal was the key agenda item.

The comment period was initially supposed to last 45 days after the release on the Draft EIR in February, but community groups lobbied for deadline to be extended twice. The deadline is now Tuesday, April 27, at 4 PM. Get your comments in now while you can.

Howard Terminal Draft EIR Comment Deadline: 4/27/2021 at 4 PM

I watched the hearing on Zoom as the ballgame extended into extra innings.

Mostly, I wanted to get the temperature of the public as commenters chimed in. Naturally, hearings like this tend to have a certain bias towards people with grievances, that’s the nature of the game. However, I was surprised at how few supporters for the project were present. To be fair, supporters are at a distinct disadvantage in forums like this. They aren’t armed with all of the plans the developers and city are working on. Because of that, a lot of what they can offer is hope and platitudes. As an A’s fan you know how well hope works as a strategy. Then again, sometimes it does.

I tweeted out some observations from the open comment period. I did not get all of the commenters’ names. Otherwise, enjoy.

(I may have transcribed that wrong, “bike shop” may have been “bus stop”)

On the last point, I’m not clear on whether the Draft EIR can be recirculated. Perhaps it’s possible if the City feels enough pressure. Apparently the comment deadline won’t be extended further. Will there be yet another legal challenge?

The grade separation problem won’t be solved by placing a single pedestrian bridge at Clay Street and fences along The Embarcadero. The whole area is geared towards dispersing fans from numerous exits onto different streets heading north and east. Vehicular traffic remains an unresolved issue.

All told, there were five comments in support of the project, dozens more against. After a while I stopped logging them until I heard something unique in the arguments. The comments ran the gamut, touching on transportation worries, affordable housing concerns, even general planning. If the A’s want to garner better public support in forums like this, they have to do better than to merely trot out the usual suspects with the regular #BiggerThanBaseball talking points. The opponents have their talking points as well. For the supporters it’s akin to taking a knife to a gunfight.

I’ll do a quick ranking of topics based on what I heard in terms of perceived importance:

  1. Rail safety, specifically grade separation
  2. Affordable housing
  3. Need to recirculate EIR or extend comment period
  4. Support of the project as long as the issues can be worked out
  5. Distrust of the DTSC and property owners/developers
  6. Port businesses pulling out of Oakland entirely if a ballpark is built at HT

After the open comment period ended, the individual commissioners spoke. Clark Manus, who is Vice-Chair and an architect, ended the proceeding with a telling note:

As I mentioned in March, Transportation is the most important chapter. If they can’t crack that nut, there’s no deal. It’s that simple. As there’s an active rail line right outside Howard Terminal, it’s not realistic to expect major changes to the rails itself, whether you’re talking about running them in a cut (submerged) or on a viaduct (elevated). If the trains run in the street, the area becomes ripe for dangerous pedestrian/train interactions.

Howard Terminal supporters, if you want this thing to happen you’re gonna have to do more than be dismissive of the critics or attack them for being plants or astroturfers. They’re coming strong with their arguments. You need to have a response. The project is in search of real practical solutions. That’s the hard truth.

Howard Terminal EIR: Significant and Unavoidable

Here’s a tip for reading the 2,000+ pages of the Howard Terminal Draft EIR: Do a search for the term significant and read every paragraph that contains that word. It should give you most of the answers you need and reduce the amount of background info you would have to weed through.

Should you make that search, you would find that significant comes up 44 times in the Transportation and Circulation chapter (4.15) alone. That’s just one chapter, though as I intimated previously, it’s perhaps the most important one.

Normally when a big project like this is a released, there’s also a big splashy presentation of a potential solution to help mitigate whatever negative impacts are found. For Howard Terminal, that reveal was a gondola similar to what you might find in a ski resort. Though a gondola actually exists at the Oakland Zoo, its purpose compared to what’s being considered for the A’s is markedly different. At the Zoo, the gondola is way to move visitors quickly around the zoo grounds without disturbing the habitat beneath them. For Howard Terminal the gondola would fly over the decidedly urban jungle of city streets and a busy freeway, a habitat that openly invites visitor participation. Over at The Athletic, Steve Berman and Alex Coffey briefly examine the gondola with UC Berkeley’s Ethan Elkind. In the EIR, the gondola is on the CEQA procedural back burner (Chapter 5: Project Variants) because it would require its own land acquisitions and thus make it worthy of its own separate project analysis. That’s a bit of a cop out for something that was pitched as a sort of magic bullet. The reality is that it’s not, and the measures the A’s are proposing amount to chipping away at the last mile problem at HT.

Without a magic bullet, what’s a key solution? Quad gates. QUAD GATES??? For now, yes. Absent a vehicular bridge that would take Market Street car traffic – including emergency vehicles – over the heavily used UPRR line, the A’s propose to install automated quad gates, a beefed up version of what you typically see at a railroad crossing. The chief advantage of quad gates is that it should minimize opportunities for cars to try to get around the gates, which should in turn minimize chances for cars to get stuck on the tracks. Also in the proposal is fencing along the Embarcadero, much like the fencing available outside the existing Jack London Square Amtrak station.

Quad gates at railroad crossings are one of the mitigation steps (image from CAHSR)

In studying these mitigation steps, the EIR looks at traffic counts and interactions along the Embarcadero. While a handful of accidents are documented, it’s remains surprising how the A’s chose to focus their mitigation measures. You see, mitigation usually involves building infrastructure (very expensive) to avoid those interactions or creating barriers (not as expensive or effective) to prevent them, often both in tandem as needed. The A’s are choosing to go heavily with the latter by effectively creating a 1/2-mile bubble around Howard Terminal to exclude vehicular (and some pedestrian/bicycle) traffic. Cars in the area during events would be mostly limited to players and team officials, residents, and office workers of the new development. Gameday event traffic would be prevented from entering this bubble, especially A’s fans hunting for nearby parking or TNCs like Uber and Lyft. This is all done in an effort to appease Union Pacific and satisfy Federal Railroad Administration requirements.

Dotted oval represents car-exclusionary* bubble

A similar strategy was employed by the City of San Jose when the Diridon ballpark EIR was written with one major difference, the presence of an expanded transit hub that would include Caltrain, VTA light rail, and eventually, BART. Of course, that’s now water under the bridge and Google, not the A’s, is taking the arrows for the current project there.

Will the strategy withstand scrutiny? It might, but it will have to get more concrete if it’s going to pass muster. The 45-day comment period, which started when the Draft EIR was released, opened the window to what will assuredly be a lengthy negotiation between stakeholders. Speaking of some of those stakeholders:

So far the private interests at the Port and the A’s are negotiating by lawsuits against the state acting as proxy battles instead of trying to hammer out working agreements. Perhaps if UPRR, Schnitzer Steel, and the trucking companies see their lawsuits going nowhere fast they will more quickly come to the table, which is an outcome that the A’s would love. However, I suspect that the piecemeal mitigation measures are not going to be satisfactory for the Port interests, and that will come out in the comments and lawsuits to follow.

What will they be fighting over? Some of the conclusions in the report declare that impacts are significant and unavoidable. They mostly center around the rail crossing on the Embarcadero. There is a plan for a pedestrian/bicycle bridge at Jefferson or MLK that would connect the ballpark and development to the transportation hub. Beyond that, all crossings in the immediate area will be done at grade. As we’ve discussed previously, that invites danger.

Are these issues showstoppers? As usual, it depends on who you ask.

In the next installment, we’ll cover the transportation hub, its projected efficacy, and the methodology of this EIR.

Eye Candy: New Howard Terminal Renderings

The Transportation-oriented post will come later this week. I assure you, you won’t be disappointed (by the post, at least).

For now, I’m afraid we have to feed the beast. You see friends, when a team releases renderings or the rare instances when a city releases an EIR, there’s always a surge of new info. Included in that dump are always new renderings. So let’s take a quick look at these and see what’s changed.

The first look is the one that’s probably getting the most attention. Unlike the previous renderings, the two-sided centerfield scoreboard is now gone, placed under the roof in the left field corner and apparently expanded. The roof slopes down from both left (long) and right (short) to a plaza in right field, which should allow for the installation of a normal batter’s eye instead of the “garage door” vision in center. Most of the other stadium details are the same. The transformation effectively takes the roof deck and rotates it 30 degrees clockwise while the second and field levels remain intact. As this is 40-55 acres we’re talking about, the park dimensions should remain fairly normal and shouldn’t be hemmed in by lot constraints. The club/press box area behind the plate stays where it is, creating an asymmetry when viewed from inside the bowl.

New view from the opening in right (not center) field

I imagine that some of the feedback was from fans who didn’t want to be sequestered in the upper deck if they had a low-cost ticket or pass. Moving the plaza to right field provides a new viewing area with a mild amount of terracing made necessary by dealing with sea level rise. It’s a good compromise, though the idea of a bustling area running from centerfield to Jack London Square is no longer a given thanks to the modified fan traffic flow. Naturally, there aren’t many seats in right field anymore. It’s unclear where the RF bleacher crew would be relocated. Keep in mind that this ballpark will have 15-20,000 fewer seats than the Coliseum, so relocations are inevitable.

Overhead view gives a better look at the scoreboard

I can’t tell what those smaller disc-shaped things are on the roof deck. Concession stands? Cabanas?

While RF is reduced, LF is expanded. Will lower LF be a premium section as seen in most new ballparks? Or a traditional general admission bleacher-type section? Perhaps RF is the bone thrown to the cheap seat fans: Yes, you can sit or stand here with your flags, but you will be further away from the action. Cost of doing business, sorry.

There’s still a bunch of high-rise buildings behind (to the west) of the stadium. The A’s remain committed to creating a buffer between that residential/commercial district and Schnitzer Steel, which recently went through its own drama. I still think of a hypothetical sales pitch in one of the high rises:

SALES GUY: So you’d like to check out one of our units?

PROSPECTIVE BUYER/TENANT: Yes, one with a view of the ballpark.

SG: Oh, sorry, those were all reserved in the first phase. Would you like to look at a unit on the other side facing west? It has great views of Alameda and San Francisco

PB/T: Doesn’t that face the scrap metal recycling facility?

SG: It sure does. Just pick a unit high up and don’t look down from the balcony. But if you do, there’s a nice grove of trees to act as a buffer.

PB/T: A buffer from what?

SG: Oh, nothing.

PB/T: Where do I sign?

Lush roof deck conceived by James Corner Field Operations

Do you know of luxury housing that’s a deep fly ball away from a recycling plant? Because I would love to know about it.

There’s more to discuss in the coming days. Besides transportation, I’ll cover the façade, the theater component, and site cleanup.

Until then, watch Brodie Brazil’s “tour” of the renderings.

Howard Terminal EIR Preview

TRANSPORTATION

That’s it. That’s my focus to start. Transportation will make or break this project. I’m referring to bridging the gap between the Howard Terminal site and BART. I’m also referring to the truck and train traffic adjacent to the site. Both have to be addressed in equal measure.

My favorite of the original renderings suggests a bustling metropolis with nary a mention of the industrial neighborhood immediately to the west

The scope of issues addressed by the CEQA has expanded over the years, so there will be other items to pick through. I’ll look at the summary first, then dive in to specific areas as I see fit. While I mentioned the importance of transportation, the methodology is not expected to use the same eye-glazing traffic count charts you may have seen in the past. You can thank technology for that.

For a more fulsome preview, read The Athletic’s write-up by Alex Coffey and Steve Berman. Good stuff in there.

My one lingering question heading into the Draft EIR reading: What exactly caused the project to qualify for streamlining now as opposed to a year ago or in 2019? (Please don’t say COVID, because this was in play well before COVID struck.) Maybe we’ll get that explanation shortly. To those who are as eager as I am to read through the report and appendices, happy spelunking!

Judge’s ruling provides glimmer of hope for Howard Terminal

Yesterday, the Merc’s A’s beat scribe Shayna Rubin reported on some important legal news: Judge Noel Wise of Alameda County Superior Court threw out the case levied by a coalition of shipping and trucking interests and Schnitzer Steel against the Howard Terminal project. Judge Wise opined:

“…It would be a perverse outcome if the Howard Terminal Project could not advance pursuant to a valid and operable statute because that statute includes a reference to the potential application of the guidelines for another statute that is no longer in effect.”

The judge hinted she might rule in this direction towards last month, and the ruling follows suit. Judge Wise effectively said that because Howard Terminal was passed under the auspices of AB 734, it was not subject to the deadline specified by AB 900, which expired at the end of 2019. Not meeting the deadline was the crux of the lawsuit.

So, full steam ahead, then? Not so fast.

The first step will be the release of the oft-delayed and long overdue EIR Draft, hopefully in the next few weeks. The point of AB 734 was to allow for fast tracking of the CEQA process, allowing approved projects to settle legal challenges in no more than 270 days. That period would be concurrent with the actual EIR approval process, which legally should take 45-60 days but in large project reality never does. Both the A’s and opponents are getting ready to file responses to the Draft, which will be long and likely tedious, albeit necessary.

A’s President Dave Kaval admitted that the A’s timeline for the project has slipped:

“How far it slipped, I can’t answer that. I don’t know yet. It depends on if the city can even get this to a vote this year. It depends on the other priorities the city council might have.”

It also depends on how the numbers work out for the A’s. The pandemic took the wind out of the economy in multiple ways. There’s a lot of uncertainty moving forward about how the commercial real estate aspects of the Howard Terminal plan pencil out. Who’s not hurting? The shipping industry, which has been going gangbusters since the pandemic unleashed this perverse economic transformation.

If their interest is in the status quo, it’s in the best interest of the shipping industry to use that entire 270 days. It’s my sincere hope that they don’t. I would rather all the parties hash out a working agreement like all businesses, government, and community groups can and do. Can the Port of Oakland force the opponents to the table? Or will the opponents continue to lawyer up and let the chips fall where they may?

Not to be lost in this is a $4.1 million settlement worked out last week by California’s DTSC (Department of Toxic Substances Control) and Schnitzer Steel. Schnitzer has been the proxy for the shipping interests all this time, though it was caught up in its own legal wrangling over the numerous fires that spewed toxic black smoke around West and Downtown Oakland. The settlement has a few knock-on effects. Does the settlement and the prescribed remedies help or shield Schnitzer in the A’s lawsuit against the DTSC? That might be for yet another court to decide. Do the A’s try to partner with Schnitzer to enhance the remedies? To me that would seem like the best case scenario, though it would also require an acknowledgment that both can co-exist as neighbors.

The A’s filed their initial development application for Howard Terminal in November 2018, after six months of lobbying and legislation paved the way for it. Kaval is right in that the City Council shouldn’t be expected to vote on this project in 2021 with far more pressing issues on the table. It would be nice to see, however.

New timeline (8/1)
A revision is in order

Unlike early 2019, when there was an all-out PR and media assault to sell the project, there won’t be quite the same effort in early 2021. Any momentum for Howard Terminal has to be built up again over time with a more clear-eyed vision (and less confusion over the details). I know Kaval has the stomach for that battle.

Does John Fisher? 🧐

P.S. – In an addendum to Rubin’s original story, the port interests are – guess what? – lawyering up. See you in Appellate Court.

P.P.S. – Kaval celebrates Governor Newsom’s certification of the project streamlining, which is not the same as certifying the full EIR (that comes later).