The A’s are NOT an obstacle to the Raiders

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.).

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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, Oakland Mayor Libby Schaaf took steps to correct a report by Matier and Ross from the weekend. Here’s her statement:

‘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.

Raiders ink 1-year lease with options, hire former 49ers CFO MacNeil

The Raiders agreed in principle to a one-year lease at the Coliseum, with the potential for extensions in 2017 and 2018. Specific terms were not revealed at today’s press conference, but the main reveals are that the Raiders will pay more in rent than they had in the most recent lease, and that Larry MacNeil, former 49ers CFO, was hired to work with the City/County/JPA on a new stadium deal. Davis touted MacNeil’s experience in developing Levi’s Stadium.

Towards the end of the press conference, Davis challenged A’s ownership to “commit to Oakland”:

Right now there’s 120 acres. There’s parking, there’s an arena. We like the gameday experience of tailgating on that parking lot. We don’t want to give that up. Now, there’s two teams that play in that Coliseum. One’s the Oakland A’s, one’s the Oakland Raiders. People have not listened when I said I do not mind if there are two stadiums on that site. The A’s stadium would take about 12 acres, the Raiders’ stadium would take about 15-17 acres. That’s fine with me, but I do not want to give up the parking.

If, in fact, the A’s do want to stay in the Coliseum site, they need to commit A.S.A.P. so that we can go ahead and design and take down the Coliseum, provide all the infrastructure necessary to build two new stadiums in Oakland, and two teams will then come back in and play in two new stadiums. What I do not want to do is build a football stadium in the corner of the parking lot while the Coliseum is still standing, and then once we have a brand new stadium we begin to tear down – or build a new baseball stadium – and then tear down the Coliseum, disrupting the ingress, egress, and parking, tailgating experience for Raider fans on gameday. What it’s going to take is for the A’s to make a commitment to Oakland and tell the people what they want to do.”

You mean something like this, Mark?

Two new venues on a slightly larger footprint than the original

Two new venues on a slightly larger footprint than the original

The A’s response did not waver from their ongoing evaluation process:

Let’s, for a moment, follow Davis’s argument all the way through to its hypothetical end. He is right that he’s been consistent about this. For nearly two years he has wanted the Coliseum torn down immediately, to be replaced by either a football stadium on the original footprint, or two venues next to each other. As you can see from my drawing above, it can be done while taking up only slightly more land than the original Coliseum did. There would even be some advantages in that a grand plaza could be built between the two stadia, leading to the arena.

But is it realistic? Let’s consider how this would progress. Assuming that Lew Wolff and John Fisher could be convinced to go along with this plan, the Coliseum would be torn down and the site graded shortly after the end of the Raiders’ 2017 season – let’s call it a year from now, February 2017. From that point new infrastructure would have to be put in place, followed by actual construction. If they started by the summer, the A’s couldn’t move into their new home until the 2020 season because of a very compressed schedule for an early 2019 opening. The Raiders could potentially open in 2019, but consider that 2019 is the projected opening for the Rams’ stadium in Inglewood – and that site is ready to go, demo already completed. For all intents and purposes, both the Raiders and A’s would be out of Oakland for three years – the A’s probably to AT&T Park, the Raiders to Levi’s or somewhere else. Throughout all of this, Davis would have final say on any development on the 120-acre Coliseum site.

Is there anything in Davis’s history or actions that makes anyone believe Davis is the person to make this happen? He has no experience in development or in the kinds of complex legal and business arrangement requires. His sudden ability to rattle off catchphrases like “opportunity cost” like he just rolled out of a basic microeconomics class isn’t impressing anyone. MacNeil is a good hire, but his presence alone isn’t going to convince investors to subsidize a stadium. And Davis’s desire to stick with ingress/egress/parking as his most important issues in Oakland is downright bizarre. Preserving parking has some nobility to it and is a good way to pander to Raiders fans, especially when compared to the mess that is Levi’s Stadium parking. That argument can’t possibly impress the other 31 owners, who have demonstrated repeatedly that they want deals that improve revenue for teams and for the league as a whole. Parking is worth maybe $4 million a year in revenue. Davis has somehow neglected to talk about revenue as a rationale as every other owner seeking a new stadium has done. Raiders ticket prices will be frozen again for 2016, keeping prices and local revenues essentially flat for the several years since he took the reins. And Mt. Davis will remained tarped to boot. If the Raiders’ revenue position is going to improve, the Raiders will have to charge much higher prices at the new stadium, and in the intervening years they’ll have to test out those higher prices on fans at the Coliseum, the same way the Warriors are doing now in preparation for their new arena. Without a major revenue boost, there isn’t even a business case for building a new stadium, even a small one. The $500 million (+$100 million gift) Davis frequently talks about comes from stadium revenues. If he can’t hit the targets in those loan programs he’ll have hell to pay from the other teams’ owners and his own investment group, in large part because he’ll end up bleeding his golden goose (the NFL’s TV contracts) to pay everything off. And we still don’t know how the $300 million funding gap would be filled.

Historically, none of the old multipurpose stadia have been redeveloped in the manner Davis is suggesting. There generally was a sequence with one tenant staying in the old building while another was built next door, then the old one was demolished and replaced. That was a successful model in Pittsburgh, Cincinnati, and Philadelphia. While the Bay Area has the luxury of high quality venues that could host the two Oakland teams in a pinch, you’re also allowing them to take both feet out the door for three years. Either team (or both) could back out of any stadium deal at any time (really, please try to force a team to build a stadium when the city is providing no money for it). The only leverage Oakland has is that the Coliseum still exists and remains functional, allowing MLB and the NFL to maintain its inertia regarding both teams. Without the Coliseum, Oakland is practically a non-entity for pro sports. I’m not sure if the politicians gathered around Davis at the presser believe in Davis’s vision. The presser certainly wasn’t the venue to argue against Davis. The theme of the event was unity, even though all they were talking about was a short lease extension. Well, unless we start to see hard numbers and actual advantages for the A’s and Raiders besides preserving parking, we’re a long way from actual unity.

P.S. – Davis is trying to play some sort of PR game by claiming that the Raiders are “hamstrung” by the A’s lease. That’s only true if the only way to build a stadium is to do it Davis’s way. Otherwise the A’s lease can be terminated with two years’ notice. That’s it. It’s not unreasonable for the A’s to ask for some time to get their affairs in order. Unless you’re Tommy Boy, I guess.

Raiders – Coliseum JPA Press Conference today at 3

I assume this is about a short-term lease extension, not a new stadium deal, but stranger things have happened. Press release:

Oakland-Alameda County

Coliseum Authority

 

For Immediate Release
February 11, 2015

News Conference

Oakland Alameda County Coliseum Joint Powers Authority (JPA) to Make Important Announcement on the Future of the Oakland Raiders

3pm, Thursday, February 11, 2016 in the Oracle Arena Club

Oakland, CA – Selected members of the Joint Powers Authority and the Executive Director of the JPA will meet the media to discuss developments with the Oakland Raiders and the team’s 2016 football season (and beyond).

Media are invited to attend.
This is neither a public event nor an official meeting of the JPA

Who:             JPA Chair and Oakland City Councilmember Larry Reid

Oakland Raiders Owner Mark Davis

JPA Vice-chair and Alameda County Supervisor Nate Miley

JPA member Alameda County Supervisor Scott Haggerty

JPA Executive Director, Scott McKibben

What:            Announcement of important development

When:           3pm, Thursday, 11 February, 2016

Where:          Oracle Arena, Arena Club, Entryway adjacent to ticket booth

Rams win LA, Chargers and Raiders in limbo, reactions

At the very least, you have to give it to the NFL owners for being decisive. They wanted a team in LA. They wanted a team with strong (rich) ownership in LA. They got it. Everything else is unresolved. Here are the big takeaways from today’s LA-centric owners meetings:

  • Earlier in the afternoon, the LA Committee voted 5-1 in favor of the Carson proposal.
  • After a few hours, an initial full ownership vote favored Inglewood over Carson 20-12, not enough votes to win outright
  • After some additional horse trading, the owners held a final vote before 8 PM local time (Central). The outcome was 30-2 in favor of the Rams moving to LA in 2016 with the Inglewood stadium being their future permanent home starting in 2019. The Chargers can also move to LA. The Raiders withdrew from consideration for LA.
  • The Chargers were given first dibs at being the Rams’ tenant in Inglewood. They could also choose to stay in San Diego with an extra $100 million (aside from G-4 loans, I’m assuming) towards a local stadium.
  • The Raiders will also get an extra $100 million to use in Oakland. In a post-vote press conference, Commissioner Roger Goodell said, “We want to incentivize the community to get the stadium the Raiders need. That’s what the $100 million is for.”
  • Chargers have 1 year to decide on moving to LA. If at any point they balk, the Raiders will have 1 year from that point to decide on whether to move to LA.
  • Nothing precludes either the Raiders or Chargers from considering other markets. What is not clear is whether either team will get any sort of discount or waiver from a relocation fee for other non-LA markets.

Reactions, first from the Raiders:

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Chargers owner Dean Spanos:

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Oakland Mayor Libby Schaaf:

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The Coliseum JPA:

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San Diego Mayor Kevin Faulconer:

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The winners here are Stan Kroenke, since he clearly won the deal, and to a lesser extent the NFL, because it got a team back in the #2 media market and a future LA Super Bowl home, along with a new headquarters for the NFL Network.

The Raiders and Chargers are both serve in heaven, rule in hell positions. Either they figure out how to get additional public money from their respective cities, or they agree to be tenants in LA. They could also look at San Antonio or St. Louis, but that’s for another day. The $100 million the NFL pledged to the Raiders is far short of the $400-500 million funding gap. The new money could help in San Diego, where the plan is more fleshed out, though it’s too early to call that until the Chargers’ stadium vote goes through in July.

Most importantly, both teams and the NFL have lost LA as a reliable, utterly predictable stalking horse. St. Louis and San Antonio don’t inspire the kind of fear that Los Angeles does. Neither Spanos nor Davis talked much about their current cities. Davis evaded questions about San Diego and San Antonio after the presser, summing up his options in clumsily grand fashion.

“America, the world is a possibility for the Raider Nation.”

The Inglewood Compromise

“Inglewood Compromise” sounds more like a Cold War era weapons treaty than a pact between football teams, yet the latter is what we’re facing. Now that it’s clear that Cowboys owner Jerry Jones has pushed for such a concept and that it may be gaining momentum, it’s time to start thinking about what it could mean for the teams at the center of the debate, and of course, our beloved Oakland Athletics.

Of the two Los Angeles stadium plans, Stan Kroenke’s vision at Hollywood Park (next to the Forum in Inglewood) is furthest along. Most of the land there has been cleared, including the area set aside for stadium construction. The same can’t be said for the land in Carson, which needs a final round of remediation before any construction can begin there. Inglewood is encountering some resistance in the form of FAA objections over the height of the stadium and the materials used for it, but these issues can be mitigated. Besides, other stadia have been built beneath airport landing approaches before, including SAP Center and Levi’s Stadium.

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While the NFL is pushing for 50/50 partnerships regardless of site, it’s clear that Kroenke would run the show in Inglewood whereas Dean Spanos would do the same in Carson. That goes for stadium design to some level of revenue control. If Mark Davis could find a way in he’d be happy with the arrangement, if only because his team’s revenue-generating capacity would be so much more than the abysmal figures he’s been pulling down in Oakland. The thinking is that under the Inglewood Compromise, Kroenke would provide concessions that Spanos needs to ditch the Carson plan, whatever that entails.

That would leave Davis as the odd man out, locked out of the LA market perhaps forever. The Raiders would be stuck with Bay Area, namely Oakland, as its best local hope for a new stadium. Oakland has been largely consistent in saying it would provide no public money, though it has gone a little softer in opening the doors for infrastructure financing.

Assuming the Inglewood Compromise moves forward and crystallizes, the options the NFL could provide to the Raiders could come in a number of forms, even taken separately or together.

  1. The simplest option would be an extension of current talks between the Raiders and Oakland. At the moment there remains a $400-500 million funding gap on a $900 million stadium that would be the smallest in the league while not having the amenities or cachet necessary to host a Super Bowl. Raider fans are holding out hope that some of the potential $1.1 Billion in relocation fees paid by the Rams and Chargers could be rerouted to Oakland. Given that Roger Goodell shot down a similar idea floated by St. Louis stadium principals, it seems unlikely at this stage or Oakland. Goodell also dismissed the initial framework of Oakland’s proposal for the Raiders, calling it insufficient. More fleshed out proposals from St. Louis and San Diego were also considered insufficient as well. If it wanted, the NFL could create a new funding mechanism outside the existing G-4 loan program to help bridge the gap. However, I suspect that the NFL won’t consider loosening the purse strings unless the City of Oakland at least matches that extra money. By that I don’t mean land rights or sales, since land is considered table stakes for any stadium deal. I mean cold hard cash. So if Davis comes up with $200 million and the NFL matches it, the league could provide another $100 million or more but only if Oakland also matches that piece, $100+ million. Without that, I can’t see how the NFL could take Oakland’s overtures seriously.
  2. When the 49ers’ stadium project in Santa Clara started to come to fruition, the NFL tried to lean on Davis to partner up to allow for two teams at what would eventually be named Levi’s Stadium. Davis considered Santa Clara too far from Oakland so the talks never went anywhere. The NFL left Davis to work with Oakland, and we all know how that worked out. With a reset in talks coming for those two, the NFL could introduce Santa Clara again as a short term or long term play. The NFL remains concerned about revenue for the Raiders. Levi’s would be the most direct way to provide a boost. If Davis is more concerned about the atmosphere and experience in Oakland, then talks would prove fruitless again. But with the league bringing in those relocation fees, it could take $100 million, build out the second home team locker room in Levi’s, and provide enough money to make the stadium more Raiders-friendly through new flexible signage and other elements. Previously there was talk that the Raiders would be a mere tenant with the 49ers getting most of the revenue including for Raiders games. The NFL could grant a partial renovation G-4 loan to the Raiders for the renovations, making them more of a partner for the stadium. The NFL could also lean on the 49ers to provide more revenue to the Raiders, since the 49ers wouldn’t be on the hook for the renovation project. The 49ers had sought a minimum 10-year lease term to make the second team scenario work financially. If the NFL and the Raiders are footing the bill that’s no longer an issue. The Raiders could stay for a 5-10 year lease, with the ability to leave if an Oakland stadium opens during that time frame. Or the Raiders could find out over time that the arrangement actually works the best for them and forgo an Oakland stadium completely, as the Jets eventually did after they moved to New Jersey.
  3. Then there are the other relocation alternatives. San Antonio continues to be the city that tries to get noticed in all of this. That all seems in vain, though who knows what could happen when LA shakes out? Davis has friends in San Antonio, and he could use them to either bargain a stadium deal out of Oakland or to move to the Alamo City in earnest. There has been talk that St. Louis could try to attract the Raiders after being spurned by the Rams, but the NFL seems unwilling to accept their proposal regardless of which team the city tries to attract.

After trying to piece through all of that, Davis may decide that the status quo is the best plan at least for the short term. He could go back to Alameda to consider what he’ll truly need to commit to get a stadium deal done, and whether it’s worth it. As a man who has never built anything significant on his own, it has to be at the very least a somewhat appealing (and comforting) option. As I noted in the previous post, Davis hasn’t burned all his bridges yet as his counterparts Kroenke and Spanos have.

Poor, Poor Mark Davis

Judging from various media reports, Mark Davis is about to be rejected by the NFL in his LA pursuit, leaving him as the loser while the Rams and Chargers work out details of a shared stadium in Inglewood. I have no sense of the validity of that story, but there is something interesting about the process that came out of an article in the Orange County Register yesterday. To wit:

While Kroenke is adamant about moving and Spanos has accepted the fact that a move to Los Angeles is essential for the Chargers’ financial health, Davis has hurt himself with some NFL owners by wavering between Carson and publicly stating he wants to stay in Oakland. In particular, Davis undermined his argument for relocation during an emotional appearance at an October town hall meeting in Oakland set up by the NFL.

All three owners have pitched LA to their peers, with Kroenke and Spanos the most strident about not staying. But if I’m reading this correctly, Davis is actually getting punished for showing even the slightest amount of loyalty to Oakland. Kroenke may win in part by deploying a scorched earth campaign in which the Rams pump up San Diego and Oakland by claiming that Oakland will surpass San Francisco in gross domestic product in 10-15 years.

Maybe Davis simply hasn’t made a good enough case for his team compared to Kroenke and Spanos. It’s possible that Davis’s strategy, to play second banana to either team’s project while stating he was a full partner in Carson, was a foolish gambit. Apparently the owners feel that’s wishy washy. In the end Oakland may get to keep the Raiders after all, though there’s plenty of uncertainty still remaining about that.

The lesson? If you’re going to succeed in this game you have to be cutthroat. Empathy is a sign of weakness. That’s the NFL, folks.

Setting Terms: A Commitment to Exodus

Okay, there was real news about the Raiders and Oakland today, not rumors, so I feel compelled to write about it. I’m over the soap opera news cycle of the last year, looking forward to January, when something LA might (not) be resolved to the NFL’s satisfaction.

As St. Louis and San Diego provided stadium financing plans pledging $350-400 million in public funds for their respective stadia, Oakland officials offered a mere five-page letter promising no public money for construction, hoping that the NFL’s respect of legacy and history would help keep the Raiders in the East Bay. The NFL’s reaction was that the letter was expected, while Mark Davis expressed befuddled disappointment.

At this point, you have to think that based on the efforts City of Oakland and Mark Davis, few people within the NFL believe that any new stadium is going to happen in Oakland. The City has no will to do it, and Davis has spent far more time and effort on Carson than Oakland. The NFL will have to gauge the owner’s interest in resolving the Raiders’ situation against resolving the dilemma in Oakland. Of course, many within the league previously preferred to have the Raiders share Levi’s Stadium with the 49ers, the same way the Giants and Jets share MetLife Stadium. Even with Davis continually dismissing the idea, the concept remains a viable backup plan should nothing continue to happen at the Coliseum.

But again, my beat isn’t the Raiders except in how the Raiders’ plans might affect the A’s. From today we got a big list of deal terms the City is willing to make in the pursuit of the Raiders’ new stadium. Whether or not the Raiders stay, regardless of the Coliseum’s future as the home of the A’s, the numbers are effectively setting the bar for future stadium deals for either team. What is Oakland willing to provide? Let’s take a look at the “concepts” presented to the Raiders.

  1. 69 total acres in and around the Coliseum, including the “South 60” consisting of the B & C parking lots, plus the Malibu and HomeBase parcels. Also included are 9 acres of publicly owned land near Coliseum BART could be used for a hotel or other commercial development adjacent to an expanded BART station and transit hub. The Raiders and a partner developer would receive development rights based on the Coliseum City rezoning effort.
  2.  $90 million in infrastructure, to be designed and approved by the City of Oakland.
  3. No public money towards construction of the $900 million, 55,000-seat stadium. The Raiders would be responsible for all stadium construction costs, including overruns.
  4. At least 8,000 surface parking spots with minimal ancillary development.
  5. Raiders would own the stadium, City and/or County would own the land underneath. That would set up recurring ground lease and possessory interest tax (PIT) payments.
  6. Raiders would take in all stadium revenues while assuming all operating costs.
  7. City’s promised defeasance of the outstanding Coliseum debt (worth $100+ million now, goes down over time).
  8. Construction to start in 2017, stadium opening in 2019.

Per the A’s current lease at the Coliseum, if they are to be evicted because of new stadium construction for the Raiders, the Coliseum JPA has to give the A’s at least two full seasons at the Coliseum while they figure out where to play next. The lease terms also call for the A’s to be compensated for the scoreboards and for lost revenue associated with new football stadium construction.

If we’re to assume that the A’s should get a similarly valued deal to the Raiders in order to stay in Oakland, the deal would be worth $200 million straight away because of the debt and infrastructure costs, plus the value of any development rights wherever the A’s end up, whether that’s at the Howard Terminal, Uptown somewhere, or the Coliseum. That’s the price Oakland will have to pay, and MLB will be happy to press Oakland hard on that. The A’s are expected to build their ballpark entirely with their own money, so it should in theory be a pretty clean deal with no intrusions or complications created by new, single-purpose quasi-governmental agencies like stadium authorities.

Just to be clear, that’s $200 million in value, not cash. The A’s would never see that money except in terms of the completed infrastructure. It could be that certain sites have such high infrastructure costs that they could approach $200 million on their own. New parking garages, the community benefits agreements and PITs Mayor Libby Schaaf mentioned during tonight’s press conference – they’re all worth something. Will Oakland show as much restraint for the A’s as they have displayed with the Raiders? I imagine they would, though it’s far too early to speculate. For the time being, let’s continue to watch how the NFL-LA business shakes out, and see where the Raiders end up as a result.