Category Archives: Editorial

03.08.12
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Giants revisionist history

One thing that I don’t think can be argued is that over the last 15 years or so, at least since Peter Magowan took control of the Giants franchise, the Giants have had a better PR machine going than the A’s. When the A’s hired former Giants PR head Bob Rose, it was a tacit acknowledgement of that superior effort. The Giants’ needling of the A’s in their Wednesday press release was a great example of their skill.

Except they missed a few facts.

Here’s a chunk of the release:

The Giants territorial rights were not granted “subject to” moving to Santa Clara County. Indeed, the A’s fail to mention that MLB’s 1990 territorial rights designation has been explicitly re-affirmed by Major League Baseball on four separate occasions.

If you read that quickly, you might think it’s a simple, cut-and-dried scenario. In reality, the two sentences aren’t related at all. The Giants actually argued that Santa Clara County was not granted “subject to” a move. It wasn’t? Why was it granted, then? The Giants didn’t go into any explanation for what occurred (bullet points would’ve been helpful). The facts are these:

Bob Lurie asked Wally Haas for permission to take Santa Clara County in 1990. If the Giants feel that’s a myth and desire to dispel that myth, they should explain how they got Santa Clara County in 1990. As far as everyone knows, this is how it happened (via the Chronicle’s John Shea):

As Wally Haas [III] tells the story, the A’s were approached by Giants exec Corey Busch requesting exclusive rights to the area before the Giants’ proposed ballparks in Santa Clara and San Jose.

The A’s said OK, and the transfer became official when baseball owners granted approval.

That was it.

“We shared the territorial rights up to that point, the Giants and the A’s,” Haas said on the set of “Chronicle Live” on Thursday. “They asked if we would cede those rights to them so they could go through the referendum, and we felt that was fine.”

It takes some temerity to deny long-held history and not even provide an alternative. Quick chronology:

  • 1987 – San Francisco Proposition W fails at the ballot box. Bob Lurie throws the door open to building outside of San Francisco.
  • 1989 – Lurie works with San Francisco Mayor Art Agnos and Spectacor on a ballpark at China Basin (Proposition P). That effort fizzled in the wake of Loma Prieta.
  • 1990 – Lurie looks south to Santa Clara, where a ballpark could be built north of Great America. He asks Haas for permission and is granted county. The Santa Clara County (unincorporated)/San Jose/Mountain View/Los Altos/Milpitas/Santa Clara (city) utility tax goes down to defeat.
  • 1992 – Lurie turns his attention to San Jose, where Mayor Susan Hammer worked on a ballpark plan at 237/Zanker. The San Jose-only utility tax lost, and with it the hopes of having the Giants in the South Bay.
  • 1992 – Lurie comes to an agreement to sell the Giants to an investment group in St. Petersburg, where a domed stadium was built on spec.
  • 1993 – Walter Shorenstein and Larry Baer rally SF civic leaders in an effort to rescue the Giants. Peter Magowan, the head of Safeway, is brought in to be the managing partner. The price of the franchise is $95 or $100 million, depending on who you ask. The price is considered a discount in exchange for keeping the team in the Bay Area, as the Tampa Bay bid was higher. Magowan would go on to sign free agent Barry Bonds, and resign his Safeway post to focus full time on the Giants.
  • 1995 – Magowan and Baer craft another China Basin ballpark plan, partnering with Mayor Frank Jordan and later his successor, Willie Brown. In the meantime, Haas sells the A’s to Steve Schott and Ken Hofmann for $85 million, with some $10-15 million of incurred debt discounting the price as well as another “hometown discount” to keep the team local.
  • 1996 – Proposition B, the Giants’ privately financed stadium plan, wins by a landslide.

This goes back to a question I posed when the Bill Madden article came out last weekend. Read it carefully, look back at the chronology, and think about it.

If Bob Lurie had not gone after the South Bay, he wouldn’t have been granted the rights by Wally Haas. After Lurie struck out in SF for the last time and threatened to move to Tampa Bay, Magowan/Shorenstein swooped in to save the Giants. Would Magowan have asked for rights to the South Bay in 1993-96 in order to finance AT&T Park, knowing that he wasn’t actually going to build there but rather in downtown SF?

The Giants maintain that because territorial rights were confirmed with subsequent CBA/Constitution ratifications, Santa Clara County should remain theirs in perpetuity. The problem with that argument is that until recently, no other team has formally pushed for a move to Santa Clara County. Sure, Schott had talks with Santa Clara in 2001, but those went nowhere fast and no serious prep work (EIR, feasibility study) was done. What is there to defend if no one is asking? Now the A’s are challenging those rights, and both teams are getting a little hot under the collar.

Finally, the Giants argue that because of the way the Bay Area was gerrymandered, the Wolff/Fisher 2005 purchase price of $172 or $180 million (depending on who you ask) is not reflective of the A’s having control over Santa Clara County. There is no comparable recent Giants sale price to compare it to, so we have nothing to go on there. The Giants’ 2011 franchise value, $563 million, has multiple components including the value of their ballpark and media empire, neither of which the A’s have. That makes it difficult to isolate what the true value of Santa Clara County is, at least when it comes to locating a stadium there. The Giants have also added and swapped partners in the intervening years more than 70’s Marin County couples at a key party, which makes it even more difficult to understand the value of any specific component or any particular stake.

One comparison you can make is the purchase prices of the two teams when Magowan and Schott entered the fray. To reiterate, Magowan’s bid for the Giants was $100 million in 1993. Schott’s bid for the A’s was $85 million in 1995. If we adjust the 1993 figure for inflation and ignore the downturn caused by the 1994 strike, a 1995 valuation is $105 million, a $20 million difference between the Giants and A’s. That’s probably the best comparison to make because it’s pre-AT&T Park and pre-media empire. Adjust that $20 million gap for inflation and the result is $30 million, which is what Roger Noll has argued territorial rights to the South Bay are worth. To some that may seem low and not reflective of baseball’s impressive post-strike growth. At 5% compound interest, the 2012 value is $45 million. At 10% it’s $101 million.

In any case, there is a value associated with an A’s move to the South Bay. It’s been the Selig panel’s charge to determine that value and the feasibility of the move. Maybe the Giants would be irreparably harmed if the A’s went to San Jose. I don’t believe they would, but I don’t have the information available to appraise the situation properly. The teams are busy spitting out press releases and statements. What I want is real figures. I want the presentation that the panel made to the MLB Executive Committee two months ago. Without that, we’re left with an incomplete picture and a lot of spin. Knowing that’s highly unlikely that I’ll ever see that presentation, I realize that my request is futile. I’m still putting it out there, hoping that at some point, we’ll all be better educated about all of this.

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P.S. – I’ve also written about the price of T-rights in these posts: The Payoff, The Neukom Doctrine, A Territorial Rights Primer

02.01.12
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Nothing from nothing

First, a hat tip to two great legends who left the world much too soon.

If you haven’t done it already, read Nina Thorsen’s KQED interview with the Trib’s Oakland reporter Angela Woodall. Then read Ray Ratto quick opinion piece at CSN Bay Area.

Then sit back and consider what happened. If you’re struggling to come up with anything to describe it, you’re not alone. Because nothing actually happened. No forward progress, all spin, posturing, and gesticulation. Oakland fakes like it’s doing something, then shrugs its shoulders when nothing happens. MLB says nothing and does roughly the same. San Jose tries to do something and is blocked by MLB and the Giants.

I’m going to follow the Coliseum City project because it’s my duty. As long as the City of Oakland and Alameda County make plans for it to any degree, it’s worth covering. I don’t think it has legs. I’ll explain why:

  • Unless there’s a public financing component, a Coliseum ballpark will have a very difficult time paying for itself.
  • MLB wanted a downtown, waterfront site for an A’s ballpark. The Coliseum fits neither criteria.
  • The “City” part of Coliseum City will require its own large public investment. It is by design its own redevelopment district. Oakland will try to leverage existing and future TOD (transit oriented development) grants to help developers, but it’s a pittance compared to the overal cost (<5%). For instance, a 4-star, 800-room, full service hotel would cost $160 million to build, based on a $200k per room construction cost. That leaves out the other retail and commercial development costs. How much of that will the city/county have to subsidize to lure a developer?
  • The Raiders appear to be entirely site-agnostic in their search for a new stadium.
  • The chance that the NFL will award two $150 million G-4 loans to the Bay Area teams instead of spreading the love around to LA, Buffalo, and Minnesota is slim at best.
  • The Warriors are going to play Oakland and San Francisco off each other to get the best possible deal.

With so much uncertainty and so many variables, who is going to take the lead and make that heavy first investment? Private developers won’t do it unless the teams are committed first as the anchors. Teams won’t do it unless they can get something to help them pay for their new venues or give them revenue down the line. That’s the very least they should get considering the amount of construction upheaval that the project would create. The city and county can only act as facilitators. They don’t have the money to shoulder much of the development cost.

Ratto indicates that Oakland is actually playing for the Warriors and Raiders at this point, with the A’s practically out the door. That’s pretty much what I’ve been saying for years. Sadly, Oakland would be best served trying to make the best play possible for only one of its tenants. Otherwise, it might half-ass the efforts for both. Based on what we’ve seen coming out of Oakland so far, it’s quite good at half-assing. Or in the A’s case, no-assing.

01.13.12
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How the environmental process hurts design

On the northwest corner of West Santa Clara Street and North San Pedro Street in downtown San Jose, Baseball San Jose put up a series of Cisco Field renderings, many of which you’ve already seen. The renderings are blown up to poster size, which allows people to study them for details that may not be readily apparent when viewing small versions in a browser.

Cisco Field as it hugs Autumn Parkway

The aerial view above may be my favorite simply because it fully displays the one distinctive architectural element of the ballpark, the “colonnade” along Autumn Parkway. Maybe the colonnade was designed to integrate the ballpark with the rest of the neighborhood. Thing is, there is no semblance of a neighborhood along this block of Autumn, which is populated by nondescript office buildings and an auto parts store-turned-marijuana dispensary. It’s possible that the colonnade was not borne of some desire to create a snaking, thin colonnade structure. It may have been the product of designing to reduce the visual impact of the stadium. Light will be able to go right through the structure from inside the stadium to the street (and vice-versa), which should in theory make the structure less imposing from the outside. That, coupled with the lower profile of a smaller, double-deck seating bowl, makes Cisco Field the least imposing ballpark since Fenway Park.

As I studied the renderings for the umpteenth time, I couldn’t help but wonder if the CEQA process, which governs all environmental review in the state, artificially constrained the design. When 360 architecture was commissioned to design the ballpark by A’s ownership, they were already dealing with a number of major constraints:

  • An irregularly shaped lot, which could limit the ballpark’s size and field dimensions
  • FAA restrictions on building height
  • Uniform code and standards on setbacks (for sidewalks and such)
  • Budget limitations
  • A desire by civic leaders for a large entry plaza, preferably in the outfield

That’s a lot to design around and come up with something cohesive, which to 360’s credit they’ve done an amazing job conceiving. I still wonder if something more distinctive is possible. In my interview with Lew Wolff, he intimated that the design, which is largely coming from John Fisher, could be moreso. My untrained eye and lack of imagination can’t see where the change can happen other than some façade treatments and cladding, which has given many of the HOK/Populous brick ballparks their faux monolithic look. I think 360 and the A’s can do better.

A place like San Jose, with its many short buildings dating from the 50’s forward, is architecturally drab. Sink Combs Dethlefs was only partly successful in evoking trains via HP Pavilion’s steel siding. The way light shimmers off the panels is beautiful at night and in twilight, during the day it looks a uniformly dull gray. In downtown there are very few truly interesting buildings, except for some built largely with public money such as the Rep, Tech Museum, and Children’s Discovery Museum. Even the latter two were tamed after recently deceased Mexican architect Ricardo Legorreta ran into a brick wall regarding the lively color palette he wanted to use for those buildings. As hearing after hearing, committee after committee waters down vision into a muddled mess, what citizens are left with is something more utilitarian in feel than imaginative. That’s a shame because it only furthers the perception that San Jose is a sleepy, uninspiring place.

If you’re looking for something more imposing at Cisco Field, a brick façade covers the walls behind the seating bowl. It matches well with the long Plant 51 building on the other side of the railroad tracks. Plant 51 was formerly a Del Monte cannery which has been repurposed into lofts and condos.

Pre-existing Plant 51 brick exterior with additional levels in a recessed, modern treatment. Caltrain is on the other side of the wall to the left.

You might think that in the above picture, the upper two levels were photoshopped onto the lower levels. It’s every bit real, and done to reduce the impact of the modern additions compared to the historic original building. The whole lacks unity and despite the intent, does little to preserve the integrity of the building. For me, it actually makes the building weaker.

Panoramic view towards downtown from a townhouse in Cahill Park. Cisco Field's brick façade would fill right half.

With redevelopment dead and its powers significantly curtailed, there are now fewer chances to create bold architecture other than in the private sector. I’m not asking for a Bird’s Nest here, the proportions and size of the stadium won’t allow for that. There is room for something bold and beautiful at Diridon. Aspirational should be achievable. If bold is good enough for the Fishers’ SFMOMA expansion, it’s good enough for Cisco Field.

01.04.12
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Just another way for the big boys to make money

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The NFL is poised to start getting nearly $5 billion per year from TV deals with ESPN, NBC, CBS, and Fox. Time Warner Cable is considering simply buying the Dodgers for $1+ billion instead of paying $4 billion over 20 years for the team’s TV rights. The newly vertically integrated NBC/Comcast will stream the Super Bowl on the web for free next month. And today, as part of a decade-long Disney/ABC/ESPN rights renewal deal, Comcast is going to have the various Disney-owned networks “to be streamed live on the Web behind a wall, accessible only to cable subscribers.”

It’s a new strategy that’s at once beneficial and detrimental to consumers. Terms of the Comcast-Disney deal weren’t disclosed, but you can bet that if you’re a Comcast subscriber, your Digital Basic subscription fee is sure to rise. Of course, this is the first large deal in which all live network programming was available on TV and the web simultaneously. Until now, a handful of networks have been experimenting with the dual-delivery model, including the ESPN3 “network” and CNN’s simulcast. As far as programming goes, Comcast is usually out ahead of other cable providers, so expect Time Warner and Cablevision to follow suit, then smaller companies like Charter and Cox. DirecTV has been beefing up its digital bonafides by adding 12 streaming channels to its iPad app.

There was speculation towards the end of 2011 that going into the CBA negotiations, Bud Selig was going to deal with archaic problem of TV market exclusivity. That did not come to pass, and with Selig motioning as if he will exit stage left sooner rather than later, it’ll take a more forward-thinking commish to make that change a reality. Blackout rules are here to stay for now.

Any thought that the internet would quickly democratize delivery of sports for the fan has been extinguished. The way the carriers are paying hundreds of millions or billions for sports properties – and exclusivity in many cases – it’s terrible for the consumer. The providers are overpaying to keep their subscribers from leaving, and in many cases it’s working. Okay, I’m glad that Comcast is going to provide all of this streaming stuff. But I’m also an NFL Sunday Ticket subscriber, which means that I’m wedded to DirecTV. I also like DirecTV’s digital forays. I’m not going to subscribe to two television providers. I would love to have all of this stuff available to me through one provider, and that’s not happening. It might be that I’ll be able to get the streaming ABC/ESPN because I have Comcast Internet, but I don’t expect that to last.

Who is this good for? The rich guy. Someone wealthy enough to want to consume all of this content in every way imaginable may not bat an eyelash at paying $300 or more per month just for TV. I’d like to think that this is just a bubble that will burst sometime soon. I can’t. The cable providers may have been behind the times, but they’ve delayed just long enough to figure out new business models. Want a streaming-only option? Sure, but you’ll pay a lot for it to make up for their “lost ad revenue.”

The winner, no matter how much the cable providers and networks want to sell it, is not the guy behind the remote control. It’s the guy high up in a board room somewhere, figuring out the quarterly dividend checks.

12.30.11
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Will reason win out?

In light of the big redevelopment news, it might be easy to forget that there was plenty of other news from earlier in the week. Susan Slusser’s article featuring Peter Magowan had a poll attached. Normally I don’t bother with polls (notice how there haven’t been any on this site for a long time). In this case the poll had over 2,000 respondents, plus the question and responses were well-phrased, so I’ve been following the results (it’s still up if you haven’t voted).

Results as of 12/30, approximately 11:00 AM

The three camps are pretty well delineated: the pragmatists/realists, the Giants-only crowd, and Oakland holdouts. At this point, the pragmatists hold a sizable lead over everyone else, albeit a plurality, not a majority. The holdouts are in the Quan position, though there’s no instant runoff here. And the SF-only voters simply need to have some sense knocked into them because they’re greedy dickheads.

Sure, there are a lot of people in the leading group who are not actually pragmatic, they’re really pro-San Jose. Many are longtime A’s fans, many are not. I can tell you that most of the people I correspond with are silent majority types – they are overly vocal or passionate about either San Jose or Oakland. They just want this whole ordeal sorted out so they can get back to cheering on the green and gold. The real danger is in losing a large percentage of these fans to apathy or disgust. At Mayor Quan’s press conference, Doug Boxer told me that among the parties working to move or keep the team, there is no one with clean hands, which is absolutely correct. It’s all this out-in-the-open maneuvering – done by A’s ownership, Giants ownership, and the cities – that is chipping away at the fanbase.

Do the owners of either team care? Obviously not, as ends justify means here for whomever wins. The cities? Sure, insofar as they’re buddying up with business and civic leaders, not so much citizens. I’ve mentioned before that the Athletics-Oakland saga is akin to a divorce, so it was going to get messy. Signs are pointing to some kind of resolution soon. After that, the big issue will be dealing with the mess all of this has created. It may take an entire generation to wash the stink out of this.

I don’t have children, but a lot of the regulars here have multiple kids that they’re raising as A’s fans. I want there to be an A’s in the Bay Area for those kids as much as for myself. That’s why I keep doing this. Compared to everything else that’s happening in the world it’s beyond trivial, I know. The A’s are still a big part of the community, and of my life. Hopefully 2012 will mark an end to the politics, one way or another. Here’s to hope. Catch you next year.

12.29.11
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Taking stock as the post-redevelopment era begins

It’s never too early to declare winners and losers that were made as a result of today’s earthshattering news.

First the losers:

  • Backers of the Victory Court site. The site was heavily dependent on tax increment (redevelopment funds) to buy the land and pay for improvements. Now that’s out of the question.
  • The City of Oakland. Strategically, it chose to sit back and wait for the originally passed “pay-to-play” ransom plan, which was scuttled today. Now they not only have no way to do redevelopment, they’re stuck trying to figure out how to fill in major holes that have just opened in the City’s budget that were filled by a large redevelopment operating budget.
  • San Jose Redevelopment Agency. As far as old school redevelopment goes, the City is now handcuffed with no way to raise funds. Of course, the City had already been choking the life out of SJRA by finishing several projects, laying off staff, and not taking on new projects. One word: prescient.
  • Affordable housing advocates. Not directly related to stadium building, but it’s a big point of emphasis for redevelopment backers. And consider this: any large mixed-use plan including residential development in any major city in California would require an affordable housing component. Who’s gonna subsidize that now? Already, San Diego is looking for a legislative means to bring back a scaled down version of redevelopment with a focus on affordable housing.
  • Oakland Raiders. Any options the Raiders may have been considering elsewhere in Bay Area (aside from the Coliseum and Santa Clara) have to be considered nonstarters at this point.
  • Redevelopment agency employees. Many agencies had planned for the “pay-to-play” scenario. This is armageddon. Good luck to them.
  • Anyone with a downtown gentrification initiative. Those projects are now for the birds.

The winners:

  • Lew Wolff and Baseball San Jose. If Wolff and his people were secretly rooting for redevelopment to wither and die, they certainly weren’t showing it. But the decision today has such wide ranging, powerful effects on municipalities throughout the state, that’s it’s easy to envision Lew Wolff sitting in his office, thinking, Okay, that narrows the field. With the MLB panel’s report distributed prior to today’s news, they probably laid out several scenarios, and the owners have to be aware by now the ramifications – if not by the panel’s report, then by the news reports. And that plays right into Wolff’s plans. If there was ever a tipping point event for a decision on San Jose, this is it.
  • San Jose Mayor Chuck Reed. It was Reed who oversaw the winding down of SJRA and the creation of SJDDA (SJ Diridon Development Authority) to sidestep the state raid. There may be a legal challenge against SJDDA, but where will it come from? The State doesn’t have the resources to start going after dozens, if not hundreds of redevelopment agencies. Santa Clara County might, but it seems the County got what it wanted by having redevelopment eliminated. Everything else is a matter of negotiation. As noted before: prescient.
  • San Francisco 49ers and Santa Clara. They got their tasks done before the end of the year. Now it’s a matter of selling suites and seat licenses, plus getting the Raiders on board.
  • Your local municipality’s General Fund and local schools. While the State will get a portion of the newly realized tax increment, part of it will be returned to cities, counties, and school districts. For cities with very large redevelopment areas such as San Jose and Oakland, this could actually mean a windfall of sorts, or at least a way to shore up their budgets. How much will it help? That’s for the bean counters to figure out.
  • Governor Jerry Brown. The beautiful irony of this situation is that Jerry Brown used redevelopment in Oakland as a stepping stone to get him back in power in Sacramento. Now he’s killed redevelopment. That’s an experienced politician.

Too early to tell:

  • San Francisco Giants. The death of redevelopment may tip MLB in the A’s favor. Then again, it may not. One thing to consider: the Giants overtures towards the Warriors about getting an arena in Mission Bay may be negatively affected by the ruling.
  • Backers of the Coliseum City plan. The Coliseum is part of a separate joint-powers agreement which allows the Coliseum Authority to raise money for its own projects. The track record isn’t great (Mt. Davis) but the power remains. Still, Coliseum City came about as part of a major planning and redevelopment initiative in and around the Coliseum and Airport. Now at least half of that project has been rendered irrelevant, which could have cascading effects on the Coliseum. On one hand, the Coliseum could be considered one of the only places with land where something could get done. On the other hand, the Coliseum is still pretty much limited to contributing site and infrastructure improvements, with little ability to contribute directly to any new facility or refurbishment. It’s also at the mercy of private developers to flesh out Coliseum City, which given the area, is definitely not a given.

It was hard enough getting something built in California with the state of the economy. Now, if you don’t at least have something already underway or an existing facility or land from which to base improvements, you may as well not show up. Redevelopment as an industry is over. Now bring on the new industry of “creatively” financing traditionally redevelopment-oriented projects.

12.12.11
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Ruh Roh

The future at the Coliseum boils down to this.

Two areas defined for the Coliseum redevelopment plan. Area 1 is called "Coliseum City". Dotted orange lines are borders, not solid blue lines (zoning).

area1-2

I’ve been reading the meat of the Oakland Coliseum Area Specific Plans RFP. It has some clearly outlined goals:

  • To maintain a world class sports and entertainment complex
  • To attract major technology or science employers to the campus across 880 from the Coliseum (a.k.a. Zhone)
  • Create jobs
  • Provide long-term benefits to the East Oakland community
  • Support the airport

During Friday’s press conference, Oakland Mayor Jean Quan revealed that six firms have submitted proposals based on the RFP. It wasn’t immediately clear if the bids were based on both areas (Coliseum City, Oakland Airport Business Park) or just one. Either way I’m interested in seeing what will happen. As I’ve written previously, the process is going to take some time to complete. This is not an environmental impact report. That, and EIRs for specific items if they are deemed large enough to require such studies, would come later. The scope is large, as it should be if it’s covering 750 acres. It includes an advisory that any consultants should plan for 25 project meetings with city staff, 8 community workshops, and 12 public meetings with the Planning Commission and City Council.

The interesting about the RFP is not that in the list of alternatives, it asks for one in which the A’s leave the Coliseum complex. In light of recent news about the Warriors being lured to SF and the possibility that the Raiders may join the 49ers in Santa Clara, what’s surprising is that there is no alternative that considers what would happen if all three tenant teams leave. At this admittedly early juncture, it seems a lot more likely that there will be only one or two teams left at the Coliseum in ten years than all three. It may be more likely that no teams will remain as opposed to the three.

In the City’s efforts to appease the Raiders, they’ve left huge openings for the Warriors and A’s to exploit if they wanted to leave. The Warriors have it good. The region is crazy for pro basketball as a product. The bar is astonishingly low for perceived success. Joe Lacob and Peter Guber (and Bob Piccinini, ahem) know that the Warrior fanbase will follow the team across the bay without batting an eyelash, and if some group of pro-Oakland fans chose to protest, they’d be easily replaced by fans in the West Bay. We’ve been chronicling the A’s efforts to stay and leave for over 6 1/2 years here, so I don’t need to rehash all of that. As for the Raiders, consider this: it was the NFL, not the 49ers, that put together much of the $850 million of financing for the Santa Clara stadium, including Goldman Sachs. Does anyone honestly think that the NFL and Goldman Sachs would do that if they weren’t going to lean heavily on the Raiders to play in Santa Clara, at least for a decade? The agreement drawn up with the City of Santa Clara supposedly has the team and the NFL on the hook for debt service, so it’s reasonable to think the Raiders will be nudged south. The NFL doesn’t give out it “G-3” loans to just anyone. It doesn’t want to do it twice in the Bay Area if it can help it, especially if another $150 million is in play for a stadium in either LA or San Diego.

A proactive, instead of reactive, government would at least explore the possibility of no teams at the Coliseum just to suss out the potential of the area post-pro sports. Pride and the lingering debt on the stadium and arena are pushing the City in a different direction that may not be very realistic. The challenges for Oakland in developing the Coliseum area are many:

  • Cost to build new stadia or significantly improve the arena have to be borne by the teams. At a half-billion for W’s or A’s and $1 billion for the Raiders, the cost gives an owner pause.
  • The likelihood for a big name employer to take the Zhone campus is slim. The City tried to pitch the campus as one of its two bids to lure the Lawrence Berkeley Labs second campus. That lost out to Brooklyn Basin Oak-to-Ninth, though LBL has delayed the announcement of the new campus location until next year.
  • With each tenant that leaves, that’s one less anchor to attract developers. Based on the number of games and usage, the Raiders should be the easiest one to let go of since they only play 10 games a year. A ballpark has 82 games, an arena 42+ and concerts and other events. That makes it doubly puzzling that they’d go so hard for the Raiders.

Let’s be clear about something. It makes sense for the City of Oakland to think about the future. They shouldn’t think with tunnel vision. The RFP mentions baseball twice, and specifically figures the Raiders in as part of the future. The City needs to work on all possibilities, not just the Raiders or a pie-in-the-sky Coliseum City development. No matter how Mayor Quan tries to spin the process in Oakland as “easy”, figuring out what to do the Coliseum 10, 20 years down the road is anything but. The plan needs to be comprehensive. As the process starts in earnest over the next year, I hope that Oakland residents start asking the tough questions. They deserve real answers. They’ll have their chance in the workshops and hearings.

12.11.11
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Restraint of trade

It can be easy to forget that for all of the work Angels owner Arte Moreno has done to boost his franchise, the team has never won a World Series under his stewardship. Moreno bought the Angels from Disney at the outset of the 2003 season, as Orange County was still in its championship hangover. Renovations to Angel Stadium were only five years old, and the future seemed limitless. In the nine seasons Moreno has been at the helm, the Angels have gone to the postseason five times and the LCS twice. Moreno courted a PR disaster and was the butt of jokes when the team was renamed, but he emerged from that relatively unscathed as he curried favor with fans by dropping ticket and concession prices. Now Moreno has built up a huge amount of community goodwill and is cashing in two ways: by getting a new TV deal and signing Albert Pujols and C.J. Wilson. These moves are clearly designed to win that elusive World Series and perhaps to also gain parity with (if not surpass) the Dodgers. It’s a bold gambit that could pay off huge.

The Los Angeles market is defined as Los Angeles, Orange, and Ventura counties. All told, the combined population of the three counties is nearly 14 million. LA TV rights also extend up into Central California and east into the Inland Empire (Riverside/San Bernardino), adding another 5-6 million residents. Like the Chicago and New York markets, Los Angeles is shared. The Bay Area, through a series of procedural mistakes, is gerrymandered by county, five to two in favor of the Giants. Recently there has been some speculation that when the Wolff-Fisher group bought the A’s for $180 million in 2005, that price was a discount reflective of only having two East Bay counties, and certainly didn’t include Santa Clara County. It’s practically impossible to verify this kind of extremely inside baseball information. What we have to go on are the sale prices of the various franchises at different points in time. The last major sale of the Giants (to the Magowan-Burns group) occurred in 1993, for $100 million. The A’s were sold by Wally Haas to the Schott-Hofmann group in 1995 for $95 million. Back then franchises didn’t appreciate at the rate they have been over the last decade. The prices look pretty even, thus making it difficult to pin down what premium for the majority of the Bay Area actually exists.

Wolff-Fisher paid roughly the same amount for the A’s that Moreno did for the Angels two years prior. However, only a year after Moreno bought the Angels from Disney, Fox sold the Dodgers to Frank McCourt for $430 million. That figure included Dodger Stadium and its surrounding real estate so it’s an entirely fair comparison, but it’s clear that some premium was baked into the price by virtue of the Dodgers brand and presence in Southern California.

Franchise sales over the last decade

Good luck trying to find some consistency in the above table. The Brewers were sold to Mark Attanasio at the same time Wolff bought the A’s. Milwaukee is a smaller market than the Bay Area (or even the East Bay) but it has a new ballpark, which makes a big difference. The Marlins were worth less than the A’s and were subject to the same stadium issues. The Nats’ price was essentially a franchise expansion fee, done solely to get the best return for the other 29 owners and MLB as possible. As you would expect, the sale price was grossly inflated. The Rays sold for more than the A’s (and Angels) a year prior, also with poor stadium prospects in a worse market than Miami.

Given the history of franchise sales, it’s hard to argue what a proper premium would have been for the A’s in 2005 had the Bay Area been shared instead of split. $20 million? $40 million? Forbes had the Giants’ valuation at $381 million. At least a third of that could have been wrapped up in AT&T Park, some other amount related to being the team with the more established and historically larger fanbase.

With a renovated ballpark and a rejuvenated fanbase in his pocket, Moreno did what any good marketing wonk would do – shore up weak areas such as actively selling throughout the entire LA Basin and radio contracts. The freshly inked TV deal is another major step towards achieving parity with the Dodgers, a World Series win will be a crowning achievement. Wolff and Fisher, who bought the A’s for a similar amount two years later, have taken numerous backwards steps such as tarping and the constant trading of young talent. They’ve also worked on attaining better radio and TV deals and have been successful doing so. Unlike the Angels, the A’s are severely restricted in terms of where they can build a stadium, and it has done nothing but put the team in a corner while the Giants continue to enjoy near complete hegemony over the Bay Area. If the price for the A’s did not include Santa Clara County or a shared Bay Area, they are surely paying for it now with the worse economy, more difficult climate to build, and the roadblocks the Giants continue to put up to delay or stop the A’s. The team is going to take several years to repair the damage caused by all of this. If it doesn’t start soon, it may never happen.

12.09.11
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Meaningless CBA comparison

I had been working on a long post comparing the pros and cons of the various new collective bargaining agreements, but after yesterday’s events involving the Los Angeles Angels of Anaheim and the New Orleans Hornets/Los Angeles Lakers, I realized that it’s pointless. Take a look at the chart below, and comment away if you feel like it.

12.06.11
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Why San Jose is NOT Miami

The Securities and Exchange Commission is investigating the Miami Marlins ballpark deal (better late than never?). Now Field of Schemes has dug into the matter further, revealing that the investigation may be much broader than a look into how bonds were secured and pay-to-play. In fact, a mention of last year’s Deadspin exposé of have-not teams may end up being a convenient piece of evidence in the suit. It’s the gift that keeps on giving.

Now, there are some who will try to conflate what was done in Miami with what could happen with the A’s in San Jose. That would be terribly unfair. Not only has the City been clear about the land deal terms, it has at every milestone reinforced the notion that the final stadium deal will be approved (or not) by a public referendum. City has also published what its negotiating principles are, as shown in the resolution passed in September 2010.

WHEREAS, the Council desires to reaffirm the following previously-approved Negotiating Principles that will guide the City’s efforts in bringing a Major League Baseball stadium to San Jose:

1. No new taxes are imposed to fund ballpark-related expenditures.

2. The City must determine that the ballpark development will generate a significant economic benefit to the City and have a positive impact on City General Fund revenues.

3. No public funds shall be spent to finance or reimburse any costs associated with construction of the ballpark or construction of any on-site infrastructure or improvements needed for the ballpark.

4. No public funds of any kind are spent to finance or reimburse any ballpark operational or maintenance costs related to activities conducted by or under the authority of the baseball team that uses the ballpark either at the ballpark or in the streets surrounding the ballpark.

5. No public funds shall be spent to finance or reimburse the cost of any traffic control, street cleanup, emergency or security services within the ballpark site or within the streets surrounding the ballpark that are related to activities at the ballpark conducted by or under the authority of the baseball team.

6. If the property is leased for a ballpark, the baseball team must be willing, at the end of the term of the lease, either to purchase the property at fair market value or to do one of the following things at the City’s option and at no cost to the City or the Redevelopment Agency:

a. Transfer ownership of the improvements to the City or Redevelopment Agency; or
b. Demolish the improvements and clear the site to make way for other development.

7. The entity that builds or operates the ballpark must be willing, if the City deems it appropriate, to make the ballpark available to the City during baseball’s offseason for up to 10 days per year for community-related events, at no rental charge to the City.

8. The name of the baseball team must include San Jose.

Has anything changed? Nope. The important thing is that City realizes that and remains steadfast, and that Lew Wolff knows it. He’s been espousing a privately financed stadium since he assumed ownership. If he were to change his stance now or anytime in the near future, you know what will happen? He and Mayor Reed will lose whatever public support they had. It’s that simple. I like to think that in California, we’ve learned over the last decade not to be taken when it comes to stadium deals. Cisco Field will, eventually, be a test and a testament of that experience and wisdom. I believe we’ll do it right and set an example for the rest of the country and the next generation of city leaders and team owners to follow.