@fassetthound Not everything is a leverage play. Sometimes it doesn’t pencil out and you walk away.
— newballpark (@newballpark) January 26, 2017
The Raiders unceremoniously filed for relocation to Las Vegas last week, a move as predictable as expecting the sun to rise tomorrow. Raiders owner Mark Davis has stayed steadfast in his opinions of Sin City since last year’s Carson stadium plan was rejected. Many questions still exist regarding the plan regarding the financing, potential attendance, and whether the franchise will actually make significantly more money there as opposed to Oakland. While I remain skeptical about the Raiders’ prospects in Vegas, I’ve come around to thinking that ultimately it won’t matter. If the Raiders move, they’ll get a massive subsidy from Clark County. If they come up short, they’ll somehow finagle their way to get another subsidy on top of that. The team can always cook the books in some way to make it look like they’re losing money even if they aren’t, which would start the cycle of getting more public money all over again.
Oakland and Alameda County limited their contributions to cheap land and subsidized infrastructure, and naturally, the NFL is not impressed by this. Yet the NFL has given the city/county several years to come up with some sort of plan that fits within the NFL’s typical stadium-building business model. At this point it’s simply unreasonable to expect the two sides to come to an agreement that is mutually satisfactory, let alone beneficial, within the next two months. While this isn’t a zero-sum game, there is always a winner, and it’s usually the NFL. When the public statements boil down to Oakland saying it has a plan and the NFL saying Oakland doesn’t, there isn’t much common ground.
Should Davis get the necessary 24 owner votes to move, he still plans to play out the next two lease option years at the Coliseum while the Vegas stadium starts construction (which may not happen until 2018). The lease allows for this, a huge mistake on the part of the City/County. Two lame duck years may be propped up by a more competitive Raiders team. They will suffer severe backlash from long-time Oakland Raiders fans. How much? Well, it won’t help that for the first time in twelve years, the Raiders are raising season ticket prices.
Surely, some fans who are location-agnostic will continue to come to games. The Raiders have good information on this so they have to be preparing for the worst. Though honestly, I have no idea what to expect. I’ve had many fans tell they’ll never go again, some who’ve said they’ll appreciate the time they have left with the Raiders, some who won’t go because of the ticket price hikes, and others who’ll continue their traditions of tailgating only or watching on TV. Dean Spanos chose to have the Chargers play in a stadium that currently seats only 27,000 (at least it’s in Carson, right Dean?), smaller than capacities for some two dozen FBS programs (out of 128). The Raiders could face hundreds of weekly references on Empty Seats Galore. It’s a sad way to go out, and probably not what the NFL intended. That rant, and the NFL’s mismanagement of the LA situation, deserves a much longer treatise at a later date.
The A’s have stayed largely quiet on this, other than a bit of shade thrown the Raiders’ direction last year. They just want the NFL to get on with it, though they won’t say that publicly. Yes, the search for the best site in Oakland remains ongoing. Then there’s this.
— newballpark (@newballpark) January 19, 2017
Sometimes it’s best to simply not saying until it’s time to do so.
I realize that the last post was 1,200+ words long, so at lunch today I tried to come up with a more succinct version. So here it is. Pardon my French.
A long day and night of talking and grandstanding is over. Alameda County’s Board of Supervisors approved the Ronnie Lott-Fortress Investment Group stadium deal framework around lunchtime. It’s a term sheet, so it has some basic details worked out, but not some extremely important ones, such as the approval of the Raiders and owner Mark Davis. Oakland’s City Council approved the same term sheet late Tuesday night. For what it’s worth, the AlCo BoS vote was 3-1-1. City Council voted 7-0-1. The voted and the completion of the term sheet were needed this week in time for the NFL’s owners meetings, which are taking place in Irving, TX. Updates on stadium plans for the Raiders and Chargers are expected.
I figured I should set the table for my readers and followers, so I tweeted the following shortly after the Council vote:
There may be other votes, including an extension of the ENA if the Raiders are resistant to the proposal, or it changes in major or fundamental ways. As for the cryptic acronyms, drop them in the search box at the top right of this page. Then read.
Let’s take a look at how this framework works.
Lott-Fortress estimate the stadium’s cost to be $1.3 billion for a 55,000 open-air NFL-compliant stadium. The capacity is lower than the average NFL venue by design; it’s what Mark Davis requested. Fans seem to be comfortable with the capacity as well, as that’s nearly the same capacity as the Coliseum’s football configurations over the last several seasons. Curiously, there haven’t been many questions about how the cost ballooned from $700 million to $1.3 billion in a matter of a few years. Some of that can be explained by the new estimate’s inclusion of infrastructure spending, an item often omitted due to it being a table stakes requirement for cities to cover. Oakland and Alameda County are also throwing in the land via lease or sale. The land has an appraised value of $150 million. Combine that with the $200 million in infrastructure and the total public contribution is projected to be $350 million.
City and County are both touting the claim that the $2oo million in bonds that will have to be issued to cover the infrastructure piece won’t affect either party’s general fund. That’s possible because half of the infrastructure will be paid by taxes backing an EIFD (Enhanced Infrastructure Financing District) bond issue, the rest backed by private bonds. This is essentially the new, limited form of redevelopment that Governor Jerry Brown supported after he dismantled legacy redevelopment agencies in 2011. Restrictions include the inability to use the funds for anything other than actual infrastructure (roads, utilities), so cities can’t raise funds directly for stadium construction. Raised money is also restricted from affecting the general fund, though it’s unclear what would happen if an EIFD defaults on its bonds. It will take some education by pols to explain to constituents how Oakland will be kept safe, especially given the debacle that was Mount Davis.
$81 million in debt remains on the stadium, draining city and county coffers every year. Another $100 million remains on Oracle Arena, which will need to be paid off even if/when the Warriors leave for San Francisco. City/County have not factored the debt into the term sheet, so they will continue to pay for it now and into the future. City has been negotiating assuming the debt from the County for years. The Lott-Fortress proposal shifted that a bit, so that the County remains half-ownership of the land but assumes no other risk.
Paying the debt off early would allow Oakland to demolish the existing Coliseum, which sits on a key, central portion of the Coliseum complex.
I don’t know nearly enough about Fortress to comment on them, so I’ll refrain from doing that here. Lott and Fortress say they don’t need an ownership stake to be successful. I can’t see how they can get any kind of good return on a $400 million investment from mostly ancillary revenues. There are no charity cases in the NFL.
Does this move the needle for the league? Not according to stadium/relocation veep Eric Grubman, who threw a bucket of cold water on the proceedings today. Grubman even called the Lott-Fortress proposal a ‘carbon copy’ of last year’s failed Coliseum City plan, which was widely ridiculed in league circles.
Why would Grubman and owners think this way? Because, as I noted previously, what Oakland is offering is table stakes. They aren’t pledging any money towards the construction. They (nor Lott-Fortress) have convinced the Raiders to sign on, though that’s because Davis is committed to Las Vegas, at least until the relocation vote next January or March. Vegas aside, the NFL usually requires a much larger investment from interested cities. The limited risk and exposure that Oakland and Alameda touted in the term sheet is actually a negative for the NFL, whose position is that interested cities prove their worthiness by spending (How else would cities get into such bad stadium deals?). Pro football has kept Oakland in the game in hopes of the City showing the NFL more love. The combination of Oakland’s intransigence and Davis’s recalcitrance makes for a proposal that Grubman characterizes as not a deal at all.
If, as expected, the NFL laughs off the proposal, what will Oakland do next? Will Mayor Libby Schaaf bite the bullet and walk away from the table, or will she rally for Oakland to put together an improved plan that actually includes more public money? At least two Council members (Annie Campbell Washington and Abel Guillen) mentioned that they had many calls and emails asking them to oppose the deal. That sentiment will only grow if more public money is put on the line and the claims of insulation from the general fund become invalid. Vegas has plenty of issues of its own surrounding funding and the potential for Sheldon Adelson to become involved. Deal terms are stronger there thanks to a pledge of $750 million from Clark County.
The Oakland and San Diego questions are not just tests for the incumbent cities. They’re also tests of the NFL itself. In the league insatiable thirst for revenue, it has demanded king’s ransoms from communities. How much is it willing to upset existing fanbases in Roger Goodell’s never ending quest for the almighty dollar? How much does the NFL value regular fans? If history is any guide, it doesn’t look good for them.
P.S. – The funniest and most surprising moment of the proceedings came during the County Board meeting, when noted Raiders ‘superfan’ Dr. Death spoke during the public comments period. After his plea for support, Supervisor Keith Carson asked Death if he was singling Carson out as a ‘No’ vote and spreading rumors. Death didn’t deny this, and Carson blew up at him, yelling that Death didn’t attempt to call Carson’s office and only assumed Carson was a No. Death left, his manhood squashed. He was right, though, Carson did provide the one No vote. Carson later apologized, perhaps after Death left to return to his home in the Sacramento area. If only I had video of the moment…
P.P.S. – There were no new renderings presented.
P.P.P.S. – From SBJ’s Daniel Kaplan:
Updated to include poll:
What is the right price for Oakland/Alameda County Coliseum complex, including venues, land, & debt?
— newballpark (@newballpark) September 21, 2016
BANG’s David DeBolt reports tonight that the investment group led by Ronnie Lott and Egbert Perry offered to buy the Coliseum complex for $167.3 million. The offer comes during the 90-day MOU between the City of Oakland and the investment group. They would get the Coliseum stadium, arena, the surrounding parking lots, and additional adjacent properties bought by Oakland over the past several years.
The $167.3 million offer would also retire debt on the Coliseum. There’s still $113 million of debt left at Mount Davis after 2016, making the remainder for the land worth $43 million. Or is it? The arena’s debt after the Warriors leave is still very much in dispute. That figure could be upwards of $88 million even if the Warriors stay through 2019 as they announced earlier in the summer. Lott-Perry’s first pitch looks like a serious lowball, especially if they have to factor in the arena’s debt.
Perhaps this is why we got another update late:
Update: City Hall sources say they aren’t considering this proposal https://t.co/TuKwsvpzct
— David DeBolt (@daviddebolt) September 21, 2016
Chances are that the two parties are not exactly close on the sale price, an issue Perry encountered in Phoenix. In that case Maricopa County is looking to sell Chase Field, not so much because of debt (which has been retired), but because of $187 million of deferred maintenance due for the venue. The maintenance costs and revenue generating potential combined to suppress the ballpark’s appraised value, $40-50 million in 2010. That could rise with a reappraisal, though there are no guarantees. Either way, it’s somewhat absurd to think that a large, modern MLB facility could be worth less than the average project cost of a AAA ballpark, such as the one planned for San Antonio.
The City has no reason to sign anything right away since their own property appraisal hasn’t yet been released. They’ll be guided by that document to counter Lott-Perry. Lott-Perry will be under pressure to minimize this particular cost as much as possible, since every dollar spent on land means another dollar that isn’t spent to bridge the gap on the new Raiders stadium, $300-400 million and rising with every day.
NFL relocation heavy Eric Grubman visited Oakland on Sunday and Monday to see how things were progressing. For now there’s little to report. By the end of the MOU period it will be imperative for Oakland to show something substantive that represents all parties, including the so far non-participatory football franchise. As for the A’s, they are under no pressure to make any deals right away, somewhat to the chagrin of MLB commissioner Rob Manfred. At the very least, the process is moving forward.
Turner Field and Chase Field opened for baseball in 1997 and 1998, respectively. Turner Field was a gift to Atlanta courtesy of the 1996 Summer Olympics, whereas Chase Field was a domed stadium borne of necessity in order to host the expansion team in the searing Sonoran Desert summer. Both are in the 15-20 year-old range, putting squarely in a sort of venue midlife crisis.
The Braves are leaving Turner for the richer suburbs in Cobb County. Turner will be renovated again and reborn as a football stadium for Georgia State University’s growing program. Georgia State had been playing its home games at the far-too-large Georgia Dome. They’ll play one more season there. Come Fall 2017, they’ll play in the reconfigured (and soon-to-be-renamed?) Turner, where much of the baseball grandstand will remain intact. The seats in right field will be ripped out, replaced by a new smaller grandstand that will run parallel to the sideline. Georgia State bought both the stadium and the surrounding parking lots for $30 million, all of which will be transformed into additional athletic facilities, dormitories, and academic buildings. GSU’s main campus is in downtown Atlanta, a similar distance between San Jose State’s main campus and its south campus, where Spartan Stadium and other outdoor facilities are located. Final capacity of the redone stadium will be around 30,000, 33% smaller than Turner’s baseball capacity and less than half of the Olympic stadium configuration.
Speaking of 30,000, that could be the new capacity of Chase Field, if an investment group that wants to buy and renovate the ballpark has its way. A partnership headed by Integral Group wants to modernize Chase and develop a few blocks of unrealized potential between the ballpark and Talking Stick Resort Arena down the street. Plans were approved for redevelopment of that area outside the ballpark in 2008, squashed by the recession. Integral is notable for being one of the partners in Ronnie Lott’s plans for the Coliseum which will include at the very least a new Raiders stadium. There are also plans (or at least space) for a ballpark should the A’s have any interest, though it’s unclear how that would pencil out.
To push the Chase concept further, Maricopa County is looking to sell Chase Field for at least $60 million, depending on appraised value. That value could include those additional blocks along Jackson St. Phoenix is undergoing a resurgence which started in earnest around 2013, thanks to numerous tech companies opening campuses near Tempe and Scottsdale, along with gentrification of some of the older neighborhoods in Phoenix. The County’s motivation isn’t primarily to spur development. They’ve been in quite a battle with Dbacks ownership over who’s responsible for $65-137 million in improvements to the stadium. They already rejected the lower figure, meant to cover peripheral items like scoreboards, suite refurbishment, and cosmetics. Major projects such as reimagining the upper deck and outfield concourse are well down the road.
If I were looking to rework Chase, I’d look entirely at the block containing the stadium. There are 3-4 acres of additional space outside the walls that isn’t properly used. The photo above shows what it looks like with the roof closed. Gigantic ads that double as windows (when the weather cooperates) dominate the view. When the roof is open for games, the place transforms into an almost fully outdoor park. It’s not as complete a transformation as Safeco Field or Minute Maid Park, but it’s close.
Limitations imposed by the building’s design and the need for an air-conditioning environment prevent a full opening of the outfield. The contents could be rebuilt to great effect. A gym exists in center behind the batter’s eye, with parking dedicated to it. All of that should be scrapped and rebuilt as a children’s play area and a midway with rides and a carousel. The current children’s area is in the upper deck left field corner, notable only for having the stadium organ located there as well.
The main plaza on the west side where most of the gates are is also wasted space. It deserves a revamp with restaurants and bars that are open more than on game days. There should also be a way to directly connect the buildings in the plaza to the ballpark so that the whole area can be navigated outside the stadium.
Then there’s that 30,000 figure. That doesn’t happen without knocking down most of the upper deck. Like US Cellular Field, that should help to make the place look less cavernous. Once that’s done they’ll have to put something behind the seats to fill that space. They don’t need more suites or amenities up there. Tacky looking signage? Curtains a la an arena? A second partial roof inside the original roof? It’s a tough task to make Chase Field look intimate.
While the Phoenix market’s economy has rebounded, downtown near the sports venues is still not a hotspot despite the numerous venues (ballpark, arena, convention center, theater, ASU’s downtown campus, museums). It’s largely event-driven, with more interesting restaurants and bars on the other side of downtown. It goes to show that no matter how much money and resources is thrown at a neighborhood it doesn’t always translate into a lively district.
Fortunately for everyone involved, the ballpark is debt-free and has been for years. Same goes for the arena. Like Oakland, Phoenix and Maricopa County find itself trying to please two teams looking for new venues at the same time. There’s no inherent competition between the teams for sites or land, but they will be pushing for resources. In the past Maricopa County financed numerous sports facilities using a car rental tax, which has now been deemed unconstitutional. A similar tax just for the City of Phoenix is also being challenged. Phoenix owns Talking Stick Resort Arena. And finally, the Dbacks have the option to veto any purchase of the stadium by a third party. The Dbacks previously discussed buying the park from Maricopa County, which seemed like that most natural route at the time. Let the team make the investments since they’ll get all of the proceeds. The process may end up with such a deal happening since the Dbacks are the linchpin to everything. That doesn’t mean it’ll be easy. The Dbacks could attempt to leave Chase Field completely in search of a location outside downtown Phoenix, but without the aforementioned tax revenue streams a move threat doesn’t have legs. There’s a really good shell at Chase that could be fixed up into a fairly intimate ballpark for far less than the cost of a new ballpark.
In the 2014 A’s Coliseum lease, the process for the A’s to vacate in compliance with a new Raiders stadium project was quite clear. Here’s how the stadium project was defined:
‘Raiders Construction Plan’ means a bona fide plan for construction of a new football stadium for the Oakland Raiders on current Complex property, adjacent to the current Complex property, or otherwise located sufficiently near to the Stadium such that it will materially impact Licensee’s operations, which bona fide plan must include, as pertains to such stadium project, a fully executed development agreement with a third-party developer and the Licensor for development of a new Raiders stadium, supported by a non-refundable deposit from the developer and received by the Licensor of at least Twenty Ten Million Dollars ($10,000,000.00).
And the terms for the A’s to leave:
Licensor may terminate this License upon written notice of intent to terminate to Licensee, such termination to take effect sixty (60) days after the conclusion of the second (2d) Baseball Season that commences after such notice. (By way of example, if Licensor provides Licensee with such termination notice on June 15, 2016, this License will terminate sixty (60) days after the conclusion of the 2018 Baseball Season.)
Basically, the Coliseum Authority has to give the A’s at least two full MLB seasons notice, so that they can plan for their next home. To build a stadium, the Raiders and their chosen developer partner would also have to provide a real plan, not just a couple drawings and some empty promises for studies. The point is to ensure that the Raiders and the developer are committed to the project, instead of wavering while pushing harder for alternatives outside the market (Las Vegas, Los Angeles, etc.).
That’s it. The A’s don’t have any rights or right-of-refusal to develop the Coliseum land, to dispose of the Coliseum debt, or anything else besides playing baseball games at the Coliseum. It is not up to the A’s to determine what land the Raiders can or should use. If the Raiders want to submit a plan to develop the entire complex, part of the complex, or even tear down and rebuild the Coliseum only, nothing is stopping them, especially their co-tenants the A’s. Anyone who say otherwise is lying.
‘Today’s San Francisco Chronicle contains inaccurate information I need to clarify. On May 23, I proactively contacted NFL Commissioner Roger Goodell to update him generally on what we’ve felt have been productive conversations with Raiders’ negotiator Larry MacNeil.’
‘Having learned from what I believe was a past mistake of awarding an exclusive negotiating agreement to a developer not approved by the Raiders, I wanted to assure the Commissioner of my commitment to keeping the Raiders and NFL at the center of our efforts.’
‘I did express to the Commissioner my interest in continuing discussions with the Ronnie Lott/Rodney Peete group and asked how the Commissioner would view my taking more meetings with them.’
‘The Commissioner encouraged me to explore all avenues for partnership that might result in a successful project for Oakland, the Raiders and the NFL, assuming we not give away any rights without clear Raiders’ support. That is my intention in resuming discussions with them.’
‘I continue to believe the Raiders can develop a new stadium in Oakland that is responsible to the team, its fans, the NFL and the taxpayers of Oakland. Oakland has worked hard to contribute the entitlements, development opportunities and infrastructure funding to our shared vision of a stadium-centered development at the Oakland Coliseum. I’m committed to continuing to work hard to realize this vision.’
Smart move by Schaaf not only to get ahead of the story, but to also control the messaging. This statement doesn’t waver from any previous public statements made by Schaaf since the demise of Coliseum City. Certainly there are other talks happening in private. The City and County still haven’t finished the the buyout plan for the Mt. Davis debt. She knocked down the characterizations in the M&R piece, instead positioning the talks as part of an ongoing process instead of a chess match.
A Raiders stadium is not going to proceed on a ridiculously fast track as we’ve seen in Cobb County for the Braves or in Vegas for the UNLV-Raiders stadium. There are too many details, too much complexity. That’s why the whole Raiders are stuck because of the A’s lease reeks of an exercise in blame assignment. It’s going to take a while. The process of untangling all of the agreements and leases while minimizing impact on current tenants will be messy. Besides, Davis doesn’t have the coin to accelerate a project the way the Yorks did in Santa Clara. Maybe, just maybe, that’s a good thing. We have seen what happens when a project is improperly rushed.