Category Archives: Athletics

11.27.11
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It’s gouging season

Hello everyone, I hope you’re having a splendid Thanksgiving weekend.

I have another CBA article coming tomorrow. For now, there’s an item in the Merc’s Internal Affairs column today. Apparently, AT&T is holding out on their land for a a whopping $150 per square foot, or $6.5 million per acre. That’s roughly the market price in 2005, when the ballpark process started in earnest and the real estate market was still bubblicious.

Real estate professionals familiar with the industrial area chuckled heartily, saying that the AT&T land is worth closer to $25 to $35 a square foot.

AT&T and the other holdout landowner have every right to ask for as much as possible. It’s fair business for them, and there will be some displacement that needs to be addressed. The threat of eminent domain, coupled with MLB’s blessing, should bring the price down since those two factors will reduce the landowners’ leverage. As I’ve written before, the most likely outcome will be that the Wolff/Fisher group will make one offer once they get MLB’s approval and let the chips fall where they may. If the landowners want to get as much as possible they’ll want to avoid the possibility of eminent domain, since there’s always a chance a judge will give a minimal land valuation. Legal fees will only make the whole ordeal more wasteful. That said, the holdouts may have a threshold that they’re not willing to drop below, so it could very well go into eminent domain proceedings. There is no given at this point. We’ll just have to see how it plays out.

11.22.11
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Big market, low budget

In February I wrote about a potential revenue sharing rollback in the new MLB collective bargaining agreement. While today’s joint announcement didn’t produce a percentage rollback (or contraction for that matter), there is a sort of rollback coming for revenue sharing. And the way it’s constructed, it’s targeted at one team in particular – the Oakland Athletics. Here’s the relevant text (courtesy of The Biz of Baseball):

IV.. REVENUE SHARING

a. The net transfer value of the Revenue Sharing Plan will be the same as the current plan. Net transfer amounts will continue to grow with revenue and changes in disparity.

b. The fifteen Clubs in the largest markets will be disqualified from receiving revenue sharing by 2016. The revenue sharing funds that would have been distributed to the disqualified Clubs will be refunded to the payor Clubs, except that payor Clubs that have exceeded the CBT threshold two or more consecutive times will forfeit some or all of their refund.

c. The Commissioner’s Discretionary Fund will increase from $10 to $15 million per year.

Again, no percentage rollback (A). It’s item B that has enormous implications for big market teams. The revised revenue sharing system effectively shuts the big market teams out of the program by the end of the CBA, gradually losing 25% of any revenue sharing receipt annually until 2016 when it’s eliminated entirely. The Bay Area is the #4 media market and is #6 in population, so neither Bay Area team would be eligible for revenue sharing in the future. Sounds like a deadline and a decision for the A’s, right?

Not so fast. SI is reporting that a provision in the new CBA allows the A’s continue on revenue sharing past 2016 if there is no resolution. So what does this all mean?

The A’s are in a unique and unenviable position among the 30 MLB franchises. They are both a big market team and a low budget team. In the long run, they can’t be both. No other big market team operates on revenue sharing, year after year. When Lew Wolff and I talked two years ago, I mentioned that the A’s were the only two team market where one franchise pays into revenue sharing while the other receives it. He replied that he hadn’t heard the Giants-A’s dynamic phrased in such a manner. I joked that he could take that up to the league office if he wanted at no charge.

MLB appears to be taking the steps to ensure that the A’s are positioned to become a full-fledged big market team. Getting a stadium deal in place is only the first step. Vastly improved media and sponsorship deals are just as important. That doesn’t mean the A’s will reach the Red Sox or even the Giants in terms of revenue, but if they can achieve the medium revenue levels of the Nationals or White Sox, they’d be considered self-sufficient. Both Wolff and Billy Beane are aware of this.

One explanation for the provision may be that the A’s might not be able to open a new ballpark in San Jose until after 2016, though there has been no indication that this is the case. If Wolff isn’t given the go-ahead to move to San Jose, there’s no telling what will happen down the road. It should set up the A’s for a sale at some point. The problem with this is that we know that an Oakland-based buyer with knowledge of the area’s low revenue generation would have to buy the team at a discount, whereas other buyers looking to move the team elsewhere would be willing to pay full price. Hopefully it never gets to that point. MLB is not going to approve Oakland’s continued stay on welfare. They’ll move the team out of the area instead.

11.21.11
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Summing it up (with Slusser update)

Mark Purdy takes all of the stuff we’ve learned over the past couple of weeks and neatly summarizes it, with a few more tidbits thrown in for good measure.

  • The January owners meetings will by January 11-12.
  • Lew Wolff says that he has not been any discussions about selling the team.
  • San Jose Mayor Chuck Reed craps all over Oakland’s plans (such as they are).

I get the feeling that a lot of San Jose boosters are very excited this holiday season. Their gift will have to wait until after the New Year.

Updated 11/22 1:30 AM – Susan Slusser also adds to the story, describing Wolff’s trip to Scottsdale to meet with Selig two weeks ago. This time, Billy Beane was reportedly on board. Here’s the sure-to-be-controversial bit:

Oakland lost money last season for the first time this century, with an expected shortfall of several million dollars, according to Beane. The team is consistently a recipient of $20 million or more in revenue sharing, and Oakland’s attendance actually went up in 2011, but the payroll also went up $15 million, from $52 million to $67 million.

In past years, when the A’s were clearly out of contention close to the non-waiver trade deadline, the team’s modus operandi was often to sell off players. Part of the reasoning was to get young players (probably with little-to-no service time), part of it was to dump salary. 2011 was different in that despite the team was mired near the cellar for much of the second half, yet Beane and David Forst did not sell off Josh Willingham, Coco Crisp, or any of the starting staff. The only notable trades were of Brad Ziegler and Mark Ellis, and in Ellis’s situation the A’s actually sent the Rockies a little cash to make the deal work. While it would make sense to hold onto Willingham if they weren’t receiving anything they wanted in trade, if they held on they’d potentially get a first round or sandwich pick as compensation when some other team signed Willingham.

By not trading any of the veteran free-agent-to-be outfielders (Willingham, Crisp, Matsui), the A’s kept $3-6 million on the payroll. That’s probably the difference between breaking even and losing money in 2011, if Beane is to be believed. Keep in mind how this works from an accounting standpoint: unlike moneymaking teams who get virtually all of their revenues either in advance or throughout the course of the season, the A’s revenue sharing check only comes in December, well after the season is over. They and the other have-not teams don’t consider the revenue sharing receipt as part of their P&L because it’s not there when it can make a big impact. (No, the check is not going to impress Scott Boras if Beane calls about Prince Fielder.) On the other hand, it has a short-term turbo-boost effect on teams that recently opened or are about to open new ballparks, since those teams can get both the receipt for the past season and higher projected revenues for the first season in the new park.

Did Beane and Wolff hold onto to the outfielders in order to prove a point to Selig and MLB? That the M.O. of the past decade(s) was untenable in the long run, while bucking the trend doesn’t work in the short term? Surely they must have realized that Type B compensation was going away – it was talked about throughout the season – so why keep David DeJesus? It wouldn’t surprise me in the least if this was planned, given the current spending freeze until a resolution to the stadium problem is found. It reminds me of that silly fake-to-third-throw/fake-to-first play. It’s plainly obvious what’s happening and it elicits a chorus of boos. Once in a while it actually works.

11.21.11
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Tony LaRussa is a reasonable man

The Chronicle’s John Shea caught up with retired skipper Tony LaRussa a few weeks after the afterglow of winning yet another World Series. TLR said this about the A’s future:

Q: Your A’s teams often packed the Coliseum. What’s your take on A’s ownership’s desire to move to San Jose?

A: “The A’s should stay in the Bay Area with a legitimate shot to compete economically, and there are some real doubts it can happen in Oakland. The Giants got the (territorial) rights (to San Jose in the early ’90s) because (former A’s owner) Walter Haas just said ‘here.’ There was no reason other than to be real nice and fair and give them to the Giants. I don’t know what the grounds would be for the Giants to say it’s ours and not the A’s.”

Couldn’t have said it better myself. TLR clearly knows of what he speaks. He and his family have maintained their East Bay home all this time and run ARF out of Walnut Creek, so he’s still very much plugged into the Bay Area.

Later in the interview, TLR talks about having a role with one of the Bay Area teams, though he thinks there may not be room for him in either organization. There’s always room for TLR as an advisor, if I have anything to say about it.

11.21.11
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Is Moneyball a major reason for the delay?

As of this writing, the film adaptation of Moneyball has accrued $72.6 million in domestic box office revenues through nine weeks (plus $7+ million internationally). Though its run is winding down, Moneyball is still playing on over 400 screens in the United States and is on a highly staggered release schedule. Even now there are articles about Moneyball, Billy Beane and Michael Lewis, especially because the UK release is this week. The DVD release date is January 10.

The Steven Soderbergh-helmed Moneyball project was set to start filming in 2009, so if you tack on the normal one year of production and post-production work, the movie would’ve come out in Fall 2010. By now you probably know that the film’s studio, Sony Pictures, disliked Soderbergh’s documentary take on the story and shelved it just before principal photography was to begin. Fortunately, Brad Pitt pushed the project through and out of development hell. The film resurfaced with Bennett Miller at the helm, Pitt has a shot at an Oscar, and the rest is enjoyably revisionist history.

Prior to the film’s premiere, when Billy Beane was interviewed everywhere about the film adaptation of Moneyball, I noticed something different about the way he was answering questions. There was a palpable sense of relief in his tone. He most assuredly enjoyed being feted once again for being the great iconoclastic general manager, and it seemed he bristled less at the notion. It’s that sense of relief that got my attention, and now we may be starting to see why.

The A’s and Rays weren’t on the recent owners meetings agenda, as attention was focused on the CBA, the sale of the Astros to Jim Crane, and the plight of the Dodgers. Before the meetings started, word spread that the A’s situation wouldn’t be addressed until January, when the next owners meetings are scheduled. By mid-December, Moneyball should be off the domestic screens completely as moviegoers will be looking at blockbusters, Christmas movies, and the rush of Oscar nominees. Moneyball will be – for the public at least – out of sight, out of mind. Like the film’s stablemate, The Social Network, there could be a short Oscar-related re-release early in 2012, but there’s no guarantee of that.

That makes mid-January a pretty good time for an announcement to be made regarding a move to San Jose. It’s a brief respite after the hectic holidays and the big news of the hot stove period, and before spring training and the Oscars at the end of February. I’ve thought for some time that it was very important from a public relations standpoint not to time such a decision too early, as it could pull the rug out from Oakland and the movie. Even at this fairly late stage, the A’s plight is mostly ignored by mainstream press and most of America. The premiere and the initial run were the best exposure the City of Oakland has gotten in a long time, so an epilogue of the team shuttling off to San Jose would seem rather incongruous. Now the movie has made its money, so that cow has been sufficiently milked by the studio and MLB. The international markets who haven’t gotten the release yet are so far removed from the situation that they probably care little for the film’s environs.

Moreover, there’s a parallel story to this situation, and it relates to Billy Beane, the man. I’ve thought for some time now that even though Lew and Keith Wolff are working the ballpark deal, it’s Beane who is the linchpin to franchise being in San Jose, or rather, the Valley. The Wolffs and John Fisher are from old school, old money backgrounds, whereas Beane is the hip, now-legendary iconoclast. As we who live and work here know, the Valley loves its iconoclasts. For the A’s to attract and retain a lot of fast-moving tech companies as customers, it’s important for the A’s to maintain an image. For all intents and purposes, that image right now is Beane. Beane’s image has an intangibility that, unlike any currently playing ballplayers, is not terribly dependent on pure performance. It could even be argued that Beane is somewhat immune to appraisals of performance, as long as the ownership group is in lockstep with him.

If Cisco Field doesn’t come to fruition, what incentive is there for Beane to stay? Peter Gammons put it out there. The team would be put up for sale and would seem to be on its way out of the Bay Area. For Beane, the challenge isn’t just getting an extra $20-50 million to put into payroll. The A’s are simply incapable of being run as most other teams are, with full control over their revenues and environments. You have to think Beane wants that opportunity every bit as much as the extra payroll. Then he can shuttle back-and-forth along Coleman Avenue between Cisco Field and the Earthquakes Stadium, indulging both of his sporting passions.

Many have and will continue to argue that Beane’s role is overstated and his performance overrated. Regardless, he remains in high standing by the baseball literati and the business community. For now that’s what counts the most. It’ll help sell Cisco Field to everyone from SVLG’s C-levels to the average voter in San Jose who will be renting the DVD from Netflix or a Redbox next spring. Without Billy Beane, not only is there no Cisco Field, there probably is no Athletics franchise in the long run. At least not anywhere around here.

11.20.11
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Gammons gets provocative

Saw this come over the wire from Peter Gammons while watching the football afternoon wind down:

Combine this with Ken Rosenthal’s report from yesterday and I come to one conclusion: The A’s situation may finally be showing some signs of movement, but it is still very much in flux.

11.19.11
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Rosenthal has scoop on San Jose (Updated with analysis)

Read Fox Sports baseball writer Ken Rosenthal’s new article on A’s-to-San Jose move developments, then check back here for analysis and discussion.

The big stuff from Rosenthal:

  • MLB wants a larger seating capacity than 32,000. FWIW, last year I explained how the A’s could get up to either 36,000 or 38,000 by simply adding four rows to one or both seating levels.
  • Selig supposedly warned Wolff that $180 million precluded a move to the South Bay. First, take a look at the chart of recent franchise sales I posted last May. Then consider two takeaways from this: 1) Wolff may have to pay compensation to enter Santa Clara County even if he disagrees with it, 2) An Oakland or East Bay-based A’s automatically has a depressed value, as was speculated when Steve Schott lacked interest in Uptown. How does MLB reconcile those two problems, which are clearly related?
  • The usual back-and-forth between Wolff and critics, and the Giants’ continued intransigence.
  • MLB could explore the Montreal option and buy the club and resell when they get a stadium deal and a buyer for the team. Of course, that only hastened the Expos’ departure from Montreal. Also, MLB has to know by now that $500 million for an Oakland ballpark with the economic and political climate in California is going to be more than a little difficult. It goes back to bullet point #2 above: if MLB and prospective owners know that Oakland and the East Bay are limited in terms of revenue generation, what is the financial incentive to build there? How does that help the franchise or MLB for that matter?
  • There’s a claim that the Giants would have to hit 3.2 million in attendance in order to “break even” with a projected $130 million payroll in 2012. That’s a curious point, and one I’d ascribe to a talking point from someone in the Giants, until I looked at the numbers. This past season, the Giants hit a $114 million payroll figure on $230 million in revenue (49.5%). Historically, the Giants have been at around 52-53% of revenue over the course of the last CBA, though in 2008 they hit 56%. That’s probably their upper limit, and $130 million in payroll would speak to that unless they got some new revenue stream out of nowhere. Or unless someone took some dead weight contracts off their hands.

All of the things I’ve been hearing leading up to the owners meetings is that some sort of resolution is due as soon as January. Rosenthal’s article certainly supports this, and actually gives a tiny amount of credence to the idea that Selig is being thorough. (Imagine that?) The path to resolution, as described by Rosenthal, is not the easiest to negotiate.

That’s a lot to take in for a lazy Saturday afternoon. I’ll be off to a birthday party soon, so my contributions to the comments thread may be limited the rest of the day. I’ll still check in every so often, so behave yourselves.

Added 4:20 PM – The Merc’s Scott Herhold picks apart the San Jose ballpark land deal, calls critics “short-sighted”.

11.13.11
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Weekend Merc items about A’s, 49ers + Gas pipeline info

Nothing new on the A’s front, whether it’s the Merc’s Internal Affairs folks reading something into the oft-linked column by the NY Daily News’ Bill Madden, or a throwaway, unattributable line by Gary Radnich. When IA reached out to Lew Wolff, he told them he has not gotten any approval to move the franchise to San Jose, definitive or tacit.

Over in Santa Clara, the City Council is set to approve $10 million for what it terms pre-construction work: site clearing, movement of utilities, etc. Since there is nothing but pavement at the site this shouldn’t be a big deal. Whatever controversy was stirred up about the stadium site’s proximity to a branch of the Hetch Hetchy pipeline has rightly disappeared. A PG&E gas transmission pipeline also runs through the Great America theme park proper, not the stadium site, so there should be no problem there. While the $10 million is a decent amount of money, it’s a drop in the bucket compared to the total cost of the new stadium, which has not yet been fully financed and still has many questions about the Stadium Authority’s ability to get that funding (as long as the stadium remains a one-horse town). The detail in the article seems to belie the 49ers’ suggestions that they could open the stadium by the 2014 season. To understand what it would take, let’s plot how everything would have to work:

  • The article notes that the pre-construction phase will take five months starting in January.
  • Sometime in that five months, funding sources for at least the initial major phases of construction would have to be lined up.
  • Groundbreaking (not the “soft” form discussed in the article) would have to occur no later than May-July to make a September 2014 opening. This allows for minimal slack in the schedule.
  • Unlike the A’s plan for Cisco Field having limited finished or air-conditioned space, the 49ers stadium is expected to have a large amount of finished space because of its role as an extension of the Santa Clara Convention Center. That should make the project take a little longer to complete, though it shouldn’t affect the ability of the 49ers to host games there.

That said, the project continues to advertise a 2015 opening.

Speaking of gas pipelines, the issue of pipeline safety has gotten much greater attention since the San Bruno disaster over a year ago. For my own edification, I took a look at where the gas pipelines run relative to current and proposed stadium sites.

  • Oakland Coliseum Complex: A small pipeline spur runs across the Nimitz to Oracle Arena. It’s likely that this was done specifically to service the complex’s gas needs.
  • Victory Court: Pipeline adjacent to land running along UPRR tracks. Another pipeline branch runs along Fallon Street and Victory Court. This makes sense for a company that extensively uses gas in its business like Peerless Coffee, not sure how it benefits other area businesses.
  • Candlestick Park: No pipeline in the immediate area.
  • AT&T Park: No pipeline in the immediate area.
  • HP Pavilion: No pipeline in the immediate area.
  • Diridon South: No pipeline in the immediate area.

It may seem like a minor detail, but the cost and time required to relocate a transmission pipeline is a big deal. As we have seen in the aftermath of the San Bruno tragedy, there’s no excuse for cutting corners.

11.11.11
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Don’t expect major news next week

Last week I suggested that the Dodgers’ situation would take the A’s off the agenda for next week’s owners’ meetings. The closer we get to the sessions, the more I suspect that this is correct. The one thing that might have allowed the A’s to be brought up next week would’ve been an early CBA announcement, but none has happened as of yet. So it’s A) CBA, B) Dodgers, C) Astros, plus whatever committee stuff is on the agenda. Unless a miracle happens, the A’s will not be up for discussion at all.

That’s bad news for many fans hoping that a resolution to the A’s situation would allow the front office to start building next season’s team in earnest. If Billy Beane and Lew Wolff hold fast to their “no spending while in limbo” stance, the December GM meetings will come and go with little movement. Of course, there’s no stopping Beane from making moves well after the GM meetings (the Swisher trade was in January 2008), and regardless of stadium/site news the team were not expected to be a player for any big free agents. Instead, they’ll make the usual arbitration deadline offers for guys like Coco Crisp and Josh Willingham, and scoop up whatever picks they can when those two are signed by other teams.

This week I’ve seen frequent references to a Bill Madden article at the NY Daily News from last weekend. Here’s Madden’s scoop:

Are the Oakland A’s finally about to know the way to San Jose?

According to baseball insiders, the reason A’s co-owner Lew Wolff, the L.A.-based real-estate developer and close personal Selig ally, is not going to be a bidder in the Frank McCourt Dodger auction (as had been frequently speculated) is because the commissioner has given him tacit assurance that his effort to move the A’s to a new stadium in San Jose is eventually going to be approved.

Once Selig completes his major accomplishment of ridding the game and liberating the Dodgers of McCourt – which hopefully will be before Opening Day – he can turn his attention to the A’s, who have been waiting more than two years for his relocation study committee to deliver its report on San Jose and the San Francisco Giants’ territorial rights there.

Again, Wolff wasn’t going to be caught up in the Dodgers’ bidding process because A) he’s fully committed to the San Jose project and the A’s, and B) the fact that the Dodgers will be sold through an auction means that the team will go to the highest bidder instead of a deal orchestrated by Bud Selig. Note that Madden doesn’t say when Wolff will be granted San Jose, only that it’ll happen after the Dodgers sale is wrapped up. The next logical time for a decision to be made would be the next owners’ meetings, which are usually in mid-January. With several major issues presumably off the table, the A’s plight could finally get the attention it deserves. It’s also possible that the Giants’ managing partner discussion will come up at that point, making the possibility of both coming into play simultaneously that much more acute. The Dodgers probably won’t come up again because with the number of parties expected to bid on the Dodgers, I doubt the prescreening process will be finished by then. It would make more sense for the owners to approve the ownership change in May, as they did with the Rangers last year.

Maybe I’ll be wrong on this. Everything I’m reading and hearing points to events moving in that oh-so-deliberate fashion for the green-and-gold heroes. The quick acceleration of the Dodgers situation – which I’m sad to admit is more important from a business standpoint for MLB – makes it absolutely imperative that Selig addresses them first.

11.09.11
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News for 11/09/11

Tomorrow morning I’ll be in SF to check out oral arguments for the State vs. Redevelopment case. If I can liveblog it, I will.

The regular media (SFGate, Merc, MLB.com, KGO) covered yesterday’s proceedings fairly well, though I’m surprised there wasn’t a bigger mention of the discussion about the referendum requirement. No matter, the San Jose City Council formalized the requirement by amending the motion just before passing it. Still, I don’t think this is the last of the referendum discussion.

There’s other news on the ballpark/stadium front:

  • The Royals may or may not have agreement in place to sell the naming rights to venerable Kauffman Stadium.
  • Rangers Ballpark in Arlington is undergoing $12 million in renovations, including a major revamp of the area behind centerfield. Changes will include relocation of the suboptimally located visitor’s bullpen, the addition of an indoor club and several concession stands.
  • The University of Washington’s Husky Stadium just started a massive $250 million renovation project. The track will be removed, the field dropped four feet, and more seats will be added close to the field, similar to the changes at the LA Memorial Coliseum. In addition, new locker room and training facilities will be added, as well as premium seating options. Like the $321 million Cal Memorial Stadium renovations, these will be largely dependent on donations for funding. The Huskies will play next season at CenturyLink Field (formerly Qwest Field).
  • The Populous architect overseeing the 2022 Qatar World Cup project believes that the venues will not need air conditioning. The goal is to make the venues carbon neutral, something that made the winning Qatar bid attractive. A company called Arup Associates has a demo of the technology in place at a 500-seat stadium, though you could naturally be skeptical about the ability of the tech to scale to a venue with 100 times the spectators.
  • The Sacramento Bee’s Marcos Breton wonders what the ongoing NBA lockout means for the local arena effort.
  • A report on NPR’s Morning Edition goes over the economic impact of the lockout.
  • A’s naming rights sponsor Cisco Systems (Nasdaq: CSCO) beat the Street today, which may signal an upswing for the networking giant. The stock was down during the regular session but up in after hours trading.

That’s all for now.