Category Archives: Giants

05.03.12
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The enemy of my enemy is my friend, Part Deux

Shortly after Commissioner Bud Selig convened his three-man panel to figure out what to do with the A’s, all sorts of political machinations started happening. That included then-Oakland City Attorney John Russo (now City Manager of Alameda) penning a lawsuit threat against the A’s. I wrote back then:

What recourse do the Giants have, then? They can try to go to bat for Oakland, even though they have no history of doing that previously. Even though, in moving to China Basin, they’ve actively siphoned East Bay fans away from the A’s. Even though they’ve held a regional hegemony for decades. It wouldn’t be hard to posture themselves as saviors of baseball in Oakland – no matter how strange that sounds – as it wouldn’t require much effort and could be done in a sort of stealth mode. It wouldn’t be difficult to get a few letters from prominent pols in order, so no problem there either. The best part is for the Giants is that it works. It paints Wolff as a villain and Oakland as a victim, despite the backstory’s greater complexity.

Eerie, no?

Now we have word from the Trib that Jean Quan has met with Giants ownership. That wouldn’t be the first time. Perhaps it’s completely altruistic, in that they’re instructing her on how to put together an AT&T Park-style stadium deal, the kind that Clorox CEO Don Knauss is pursuing. (Knauss also had a lengthy interview with KQED.) Then again, this is the same Giants ownership group that may have pulled a power play to kill the Piccinini-Dolich group’s chances to buy the A’s, because the Giants didn’t want an Oakland-based group owning the A’s:

More likely, Piccinini suspects the San Francisco Giants ownership had a hand in convincing Selig to make sure the deal never materialized, especially since Selig has called the A’s move from Kansas City to Oakland “a terrible mistake.”

“I can tell you there’s an executive with the Giants, who shall go unnamed,” Piccinini said. “I ran into him at a Warriors game. He said, ‘I hear you’re getting involved with the Padres. We want you in San Diego; we just didn’t want you here.’ “

Speaking of Piccinini, he’ll be available soon if he wants to deal with the struggle to be an owner again. Piccinini is part of the Moorad group who were teased the Padres, only to have the rug pulled out from under them. Moorad won’t be able go after another team, knowing that there are permanent veto votes against him within the Lodge. Much of the rest of the Central Valley base of the ownership group should be available, and they could pull in another frontman – Andy Dolich, perhaps?

If Piccinini’s right, the Giants don’t care for the A’s in Oakland or anywhere else in the Bay Area. That makes it frustrating to see Quan consult with the Giants. The Giants aren’t doing the City of Oakland any favors. Just because they may have a somewhat allied interest (keeping the A’s out of San Jose) doesn’t mean they are allied.

If Quan’s smart, she’ll ask for some of the SF sponsors that Oakland will need because as much as the East Bay wants to puff its chest out , the pickings are slim. The Chron 200 is an annual list of the Bay Area’s largest independent, publicly-traded companies by revenue. Generally these are companies with revenues over $100 million annually. Some private companies, like Bechtel, or subsidiaries, like Matson (Alexander & Baldwin), and nonprofits (Kaiser Permanente) are excluded. Distributed by region, San Francisco has 19 of 200, with 5 in Marin County and 26 in San Mateo County. Santa Clara County has 102, or 51% of the list. Oakland has 3 companies on the list, the East Bay in total has 38.

Chron 200 list by city/county-region

If you combine SF, San Mateo, and Marin Counties, you get 50 companies. That’s not significantly greater than the East Bay’s 38 – or 40 if we include Kaiser and Matson. Straight up it would appear that there’s enough corporate strength in the East Bay to make a privately financed, $500 million ballpark happen. But the Giants’ argument for years has been that they needed the South Bay to finance AT&T Park. If that’s true then there’s a logical incongruence at work. Either the South Bay was required and there’s no other way but to include them, or the South Bay wasn’t required and the strength of the West Bay is enough. So which is it?

Also, check out the imbalance of companies in the Giants’ designated territory and the A’s. The Giants have over 75% of the Chron 200. The A’s have less than 20%.

The secrecy of the mystery ownership bidder is also a bit baffling. Lew Wolff has said that no interested party has asked him directly about selling the team. Instead, whoever’s interested has chosen to use back channels to engage Wolff – once. What is the point of that? If the East Bay coalition’s goal is to first work with the current ownership group to develop a plan to keep the A’s in Oakland, why have they never directly called Wolff once? They’ve gone semi-public twice in the last several months to indicate there’s an ownership group in waiting. Seems to me it’s a lot harder to put together a press conference than to call Wolff or arrange a meeting. For whatever reason, they haven’t done the latter. In the last comments thread, a question was posed, “Why doesn’t Lew listen to what these guys have to say?” I think the answer is that they have to present something to the man first. They’ve presented a plan to MLB three years ago that went unanswered. If they want to work with Wolff, they might want to first try to, you know, work with Wolff instead of posturing. It’s somewhat embarrassing that Mayor Quan has probably spent more time talking the Giants brass than the A’s. If A’s ownership is the enemy, don’t pussyfoot around it or hedge. Declare it and get to work. Otherwise it’s just another exercise in scoring PR or political points. And the only real winner in the end is the Giants.

03.30.12
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News for 3/30/12

For the end of the week:

  • The NBA is stepping in to pay $3.25 million in predevelopment costs on the Sacramento ESC project after the Maloofs refused, saying that they shouldn’t have to pay since they’re tenants. It sure sounds like the Maloofs don’t see themselves as stakeholders in the arena, which is a bad sign. Everyone should be rowing in one direction. A group has organized to force the plan to a vote.
  • AEG’s downtown LA stadium plan seems to be stalled, as the company and the NFL can’t agree on terms for what AEG’s contribution and minority share should be. Now that the Dodgers ownership saga is ending, there are renewed calls for a stadium in Chavez Ravine, either to sit next to or replace Dodger Stadium.
  • The Giants unveiled several improvements to AT&T Park. The big changes are the new sponsor for the mezzanine club level, Virgin America, and the transformation of one of the field boxes down the first base line into the “Corona Beach Bar”, complete with sand. The narrow bridge on the promenade level next to the Fan Lot will finally be expanded. In addition, concession carts on the promenade level will be moved to the back walls, which will open up views of the field from the concourse.
  • Peter Guber, Warriors co-owner, may end up partnering with the Giants on an arena in SF, while the Giants compete with Guber’s Dodgers.
  • Rangers Ballpark will be serving a $26 hot dog this year. No, it is not made of unicorn meat.
  • Ray Ratto gives his thoughts on what the Dodgers sale might mean for the Giants and A’s.
  • The Atlantic compares two cities, Denver and Phoenix, and how building ballparks has impacted their respective downtowns. (thanks hecanfoos)
  • Defying convention, the Census Bureau lists the three most densely populated areas in the U.S. as #1 Los Angeles, #2 San Francisco/Oakland, and #3 San Jose. There are flaws in the methodology, in that #5 New York City includes all of the suburbs in New Jersey and Connecticut, but SF/OAK doesn’t include the 680 corridor or any of the North Bay besides parts of Marin County. History and trends have largely defined the specific urbanized areas the Census uses in its surveys.
  • Memphis Grizzlies owner Michael Heisley will not sell the team to Larry Ellison because of Ellison’s continued interest in moving the team to San Jose. From the article:

Heisley is asking $350 million for the Grizzlies and says he makes it clear with potential buyers that the team’s arena lease with the city and county is rigid. There are several clauses and financial penalties that make it a daunting task to move the Grizzlies before 2021.

  • The NY Post’s Peter Vecsey reports that David Stern was in SF “inspecting building plans and the site” for an arena across from AT&T Park. He also notes that Larry Ellison was not daunted by the cost to break the FedEx Forum lease, though that’s not exactly easy to prove or disprove.

More as it comes. Probably no new posts until Monday at the earliest unless big news breaks.

03.28.12
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The bubble effect

While my team was coming up short in bar trivia last night, news came over the wire that the group headed by Magic Johnson, Stan Kasten, and Peter Guber (yes, that Peter Guber) won the extremely competitive bidding for the Dodgers with a $2.15 billion offer. As recently as last week, the Dodgers were going to be sold for $1.4-1.6 billion, and New York hedge fund magnate Stephen Cohen seemed to have taken the lead thanks to having more cash in the bid compared to the Johnson-Kasten’s larger overall offer. The facts of the sale have been trickling out throughout the morning, and the details couldn’t have been more surprising.

  • The $2.15 billion bid is in two parts: $2 billion for the team and stadium, and $150 million for the parking lots through a joint venture with outgoing owner Frank McCourt.
  • Despite McCourt’s bankruptcy foibles, he’ll end up clearing around $1 billion in profit after dealing with creditors, including his ex-wife. In 2004, McCourt bought the Dodgers from Fox for $430 million, not putting up any cash to do so. Plus he gets the parking vig.
  • The bid appears to be ALL CASH. If so that’s incredibly impressive and has major implications down the road.
  • Johnson and Kasten had six private investment firms come in to bid for the right to claim the majority share. The winner was Guggenheim Partners, a Chicago/New York firm that manages $127 billion in assets. As part of the deal, the control person or managing partner will be Guggenheim CEO Mark Walter. The new entity that owns the team will be called Guggenheim Baseball Partners.
  • For now it appears that nothing will change day-to-day in the Dodger front office. That means that Ned Colletti stays put as GM, though Stan Kasten will slide in above him as President and Magic Johnson will probably have an Executive VP role, similar to the one he had with the Lakers. Keep in mind that while Kasten oversaw much of the Atlanta Braves’ successful run throughout the 90’s and early 00’s, he had John Schuerholz run the baseball side of the house.
  • There is potential in developing the parking lots, though everyone in the joint venture would have to sign off on any plans.

Local and national writers have run the gamut speculating what this new ownership group will do going forward. The first obvious step is to get some kind of new TV deal done, which McCourt tried to do under the gun but was blocked from doing by a bankruptcy court judge. The Dodgers could continue with Fox Sports for $200 million or start their own network. A Dodger network may be the best call, though ownership will most certainly run into some hard negotiations with Time Warner, LA’s predominant cable operator. Time Warner will operate the Lakers’ upcoming dual-channel, dual-language sports network, so there is built-in competition.

Ticket prices will also go up at some point, commensurate with rising payroll. For 2012 the active roster payroll is only $90 million, plus $11 million in deferments to Manny Ramirez and Andruw Jones. The Dodgers had been dropping ticket prices precipitously over the past year or two, allowing for a great amount of headroom for hikes when the time comes. That time may be next year, when the team has to make decisions on Andre Ethier and James Loney, while deciding what kind of extension to give Clayton Kershaw. Those three alone could translate to some $40 million per year in additional salaries. Even so, that only brings payroll to $130 million. The Dodgers could make one or two additional huge free agent splashes in the next 48 months, which is why the Giants have to be absolutely frightened.

From a macro perspective, every owner now has to be wondering what this clearly overpriced sale will mean for them. Sale prices have already been trending some 20% higher than Forbes valuations, so this only extends the bubble that’s been forming over the past five years. The bubble was created by great increases in media revenues, chiefly from new and often team-owned regional sports networks like YES and MASN. In response, several incumbent RSNs have overpaid to keep teams on their channels, such as the Fox Sports regionals in Dallas (Rangers) and Los Angeles (Angels). The table below shows franchise valuations and sale prices, in conjunction with relative values to generated revenue and the aggregate value of all franchises. Most franchises are in the 2.5-3 range. The Yankees sport a 4+ multiple, whereas the Dodgers nearly reach 9 – an artifact of how the Dodgers have been run lean while in bankruptcy. Have-not and small market teams have a multiple in the low 2 range.

Right-hand column shows franchise values as a function of revenue. If the Dodgers got a $200 million/year TV deal, their multiple would be in line with the Yankees'.

Higher valuations or potential sale prices doesn’t mean that there’s going to be a bunch of franchises for sale. For one, Commissioner Selig doesn’t want to have a “glut” of teams available since that will only decrease competition and deflate if not pop the bubble. We know that Padres and Orioles are  available, even if they’re not being actively shopped at the moment. Maybe that will change now, with both current owners looking for $500+ million paydays. MLB can also draw out the sales process to unbearable lengths (see: Astros, Padres) while it completes its “due diligence” on any buyer. And if higher sales prices are being propelled by new media deals, teams in small markets aren’t necessarily going to receive huge valuation bumps if their TV deals aren’t bumped in accordance.

The A’s could see something of a bump, but how much is very unclear. They’re locked into CSN California for at least another decade. Since the terms aren’t public, we don’t know if moving to San Jose would provide a bump, but I have to think that it does simply from the much larger, healthier pool of available advertisers in the South Bay. When prospective buyers look at the books, they’ll know this going in or find out soon enough. Wolff and John Fisher aren’t going bankrupt anytime soon, so if they wanted to sell they could hold out for as high an offer as they wanted. In any case, Selig would probably dissuade Lew Wolff from even considering a sale, stalling while he “figures out” a solution. On the flip side, the Giants could actually harden their stance on territorial rights, saying that it’s their only way to compete with a soon-to-be mega money Dodger franchise. At the very least, the news should force the Giants to make a commitment to Matt Cain, since the Dodgers would be well-positioned in six months to blow the Giants out of the water with an offer. To that I have to say, Welcome to the club, Giants. Enjoy your stay.

…

OT Note: The second game of the season vs. the Mariners will be shown live on MLB Network, as MLB has been so magnanimous as to lift its blackout. Oh thank you, capricious TV gods. /s

03.22.12
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Baer reaffirms T-rights claim

On a panel at the 2012 IMG World Congress of Sports, Giants CEO/President Larry Baer continued to flog the idea that the Giants own Santa Clara County. Via Sports Business Journal:

During a panel discussion, he cited a “territorial grant” that allows the Giants to market to Santa Clara County. Baer said the Giants franchise depends on revenue derived from there, with 35 to 45 percent of its market coming from San Mateo and Santa Clara counties.

I thought the number was 50%? Now it’s 35-45%. Two weeks ago it was 43% from Santa Clara County alone. No wonder we can’t keep these numbers straight. Baer can’t either.

Baer went on to cite how the Giants got it done with good ole’ sweat and gumption. He conveniently forgets one tiny little detail: When it comes to having billionaires ready to coalesce and save the franchise, Oakland is no San Francisco. The two groups that reportedly want to buy the A’s? Not from Oakland. Bob Piccinini? Not from Oakland. If the team is going to be saved in Oakland, someone will have to step up from Oakland. It’s one thing to talk about civic pride, another to have the means to act on it.

03.21.12
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Forbes has Giants twice as valuable as A’s

Forbes came out with their annual overview of The Business of Baseball, and if you’ve followed this site or other sports economics sites much you won’t be surprised by the results. The A’s, stuck in limbo, have the lowest valuation of any of the 30 MLB franchises at $321 million. The figure hasn’t quite caught up with Forbes’ pre-downturn, 2008 valuation of $323 million (which may have factored in a future in Fremont). Despite this, the number is up 5% over last year. Some other numbers and extrapolations:

  • The Yankees are worth the most at $1.85 billion, followed by the Dodgers at $1.4 billion (based on current franchise bids).
  • The Angels ($656 million) and Giants ($643 million) follow the Dodgers as most valuable on the West Coast.
  • Aggregate value of all franchises is $18.1 billion. The A’s account for only 1.77% of this total currently.
  • A’s revenue is estimated at $160 million, roughly in line with last year’s amount. This includes revenue sharing, if you’re asking. (I assume that Lew Wolff may quibble with the figure a bit.)
  • Player expenses for the A’s are listed at $81 million, slightly more than the 50% “salary cap” that we frequently discuss here.
  • The blurb on the A’s page questions what team president Michael Crowley does. Besides saying no, I wonder that myself sometimes.

A closer look at how the valuations for the Giants and A’s breaks down yields some additional insight.

Stadium and brand make up most of the difference

The big takeaway is that for the first time, the Giants are considered twice as valuable as the A’s. It’s reflective of the constraints the A’s are under, as well as the team’s lack of promotion within the market(s). To their credit, the A’s have a much more permanent media presence than they had in the last 20 years. It’s still a long climb out of the cellar. The team’s stadium value would probably be double in a sold out new ballpark, and the brand value could see a similar increase. Sport would see a drop due to less reliance on revenue sharing. Market’s a tougher question. Clearly, that number could double if the A’s were allowed to build in San Jose, but it should also go up appreciably if they built something new in Oakland. Some back-of-the-napkin math has me estimating the team’s value in a new ballpark in Oakland at $400 million, San Jose at $450 million.

 

03.09.12
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News for 3/9/12

Feels like we need this since the week has been dominated by the PR war.

  • The A’s announced today that they will have a private entrance for season ticket holders. The terms are that you’ll need the credential from your season ticket book along with your ticket to use the entrance. In addition, for any extra tickets you buy for a particular game, those holding the extra tickets won’t be able to use the entrance. It seems like this was done to reward STH during bobblehead and other high-demand giveaway games, though the FAQ emphasizes that distribution of giveaways will be proportional. The entrance will be next door to Ticket Services.
  • Jeff Moorad withdrew his application to become the “control person” of the Padres, leaving John Moores as the control person for the time being. The move is considered a procedural one, with the need to consummate a TV deal between the Padres and the new Fox Sports San Diego channel first. Moorad’s deal to acquire the team from Moores was constructed so that Moorad could stretch the timeline out to four years if necessary, though his intent was to acquire controlling interest sooner than that. MLB had raised concerns that Moorad might take a lot of the Fox money upfront and use it to buy out Moores or to pay down debt, instead of putting it into the franchise (the McCourt-Dodgers TV problem). It’s a smart move by MLB, because if the rumor had some merit it could’ve sapped some $10 milion per year in revenue from the team. Now the Padres are Exhibit A in how to pull off a sale that puts the team on the best financial footing. If anything, it looks like Moorad was putting the cart before the horse. And this article from the SD Union-Tribune sheds light on the group of owners set in opposition to Moorad. There’s a big difference between that and the supposed foment against T-rights changes that Lew Wolff faces.
  • In Miami, the 5,700+ parking spaces at the Marlins ballpark are proving to be a logistical nightmare, not like we didn’t see that coming. The suggestion: buy pre-paid parking or else you’re taking your chances finding a spot on someone’s lawn.
  • As he is wont to do, Peter Hartlaub went into the archives and found a concept for a huge, multipurpose stadium on what looks like Laney College. The year: 1960. 80,000 for football and 48,000 for baseball? Not without a lot of Astroturf.
  • MLS Commissioner Don Garber really wants a stadium and team somewhere in the five four boroughs of New York City. Sorry, Staten Island.
  • Bruce Jenkins has a few words about the A’s-Giants tete-a-tete. Surprisingly, he wants the Giants crushed and calls them bullies. Sounds good to me.
  • There’s a movement afoot to get rid of the television blackout once and for all.
  • Robert Gammon considers Coliseum City the last, best chance to retain Oakland’s teams. Sad then, that Oakland’s announcement was drowned out by the A’s-Giants drama. There was a press conference on Wednesday, though no representatives for the three teams showed up to provide support.
  • Tim Kawakami thinks Joe Lacob and Peter Guber should announce where they intend to settle by next year sometime. That might be a little premature. If the Giants were to build an arena in time for the 2017-18 NBA season, they wouldn’t have to break ground until summer 2015. That puts EIR and related prep work at the beginning of 2014. Even then, if there were some snags the Coliseum Authority isn’t going to say no to a year-to-year lease, since the debt service on Oracle Arena runs through 2027.
  • BTW – Yoenis Cespedes is expected to play his first MLB game ever on TV tomorrow against the Reds (CSNCA, Noon). Don’t miss it.

One more thing about the Giants’ press release: They implied that Wolff/Fisher got a no-San Jose discount when the A’s were purchased for $172 million in 2005. What then, do they say about Arte Moreno, who bought the Angels for $185 million in 2003? He didn’t have any territorial restrictions that called for a discount, and that was for a much larger market. Weak sauce Gigantes. Maybe if some of The Game’s and KNBR’s radio talent actually did some fact-checking they’d know this stuff.

Added 2:50 PM – The field is almost done!

03.08.12
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The difference between 1990 and 2012

Following along with the previous post, I wanted to point out how things progressed during the Lurie-Haas era, and compare that to the Magowan/Neukom/Baer-vs.-Wolff era.

Lurie-Haas:

  • In anticipation of a stadium referendum in Santa Clara County, Bob Lurie asks Wally Haas Jr. for consent to claim Santa Clara County.
  • Haas approves. Santa Clara County, which had not until that point belonged to either team, becomes part of the Giants’ domain.
  • 1990 – Santa Clara County measure goes down to defeat.
  • 1992 – San Jose votes down another utility tax plan to fund its own ballpark.

At no point did the Commissioner or League Presidents have to intervene or rule on behalf of either team.

Magowan/Neukom/Baer-vs.-Wolff:

  • The Giants have SF, San Mateo, Marin, Santa Cruz, Monterey, and Santa Clara Counties as their defined territory. The A’s have Alameda and Contra Costa Counties.
  • 2009 – After striking out in Fremont, Wolff looks to San Jose. Giants object. Commissioner Selig convenes three-man panel to study issue. A’s are not allowed to make an official stadium deal (including referendum) with San Jose until T-rights issue is resolved.
  • …wait through rest of 2009…
  • …wait through 2010…
  • …wait through 2011…
  • Giants astroturf group Stand for San Jose sues City of San Jose over preliminary land deal terms for ballpark.
  • 2012 – Commissioner Selig claims that issue is now on “front burner”.
  • …waiting…

Waiting.

P.S. – Tim Kawakami has called Billy Beane the designated grown-up in their chat today, while Ray Ratto’s analogy wins the day.

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.

.

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

03.08.12
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San Jose Councilman Sam Liccardo talks nuclear option

An updated version of Mark Purdy’s column from earlier today has an interesting quote from San Jose Council Member Sam Liccardo. Liccardo, whose District 3 includes downtown San Jose and borders the ballpark parcels, is a staunchly pro-A’s-to-San Jose.

Meanwhile, officials in San Jose said Wednesday they remain planted firmly in wait-and-see mode. However, Councilman Sam Liccardo, who represents the downtown area, for the first time raised the possibility of governmentally addressing MLB’s unique antitrust exemption, which permits the league to control franchise movement in ways other pro leagues cannot legally do.

Liccardo said that if the antitrust exemption comes to be viewed as an impediment to free-market competition and economic progress, perhaps it should be challenged.

“The Giants should have nothing to fear to see the A’s compete for fans in San Jose,” Liccardo said. “May the best team win. That’s the American way.”

I’ve written in the past that an actual legal challenge to the Giants’ territorial rights wasn’t in the cards because of the cost of making such a move and the City’s constant fiscal difficulties. On Tuesday, the San Jose City Council passed a controversial motion to put pension reform on the June ballot. Earlier today, I saw what appeared to be public employees picketing along West San Fernando and Almaden Blvd. There’s a new twist to the story, in that the City may run a surplus for the coming fiscal year. Even though the surplus may be a result of major cutbacks, it’s still easier to make legal moves in that environment than it would for a city running eight-figure deficits on an annual basis. It’s far too soon to tell whether or not to take Liccardo’s threat seriously. The way MLB jealously guards and protects its antitrust exemption, it could easily dig in for a protracted battle. Then again, it may run screaming from a fight and push the Giants to accept a payoff if that threat proves a little too real. There’s only one way to find out, I suppose…
03.05.12
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The last Bill Madden post

Listen to Bill Madden’s interview with The Drive. It’s far more substantial than the one with the KNBR morning zoo.

Bill Madden is not a pot-stirrer, or at least that’s not his reputation. On the Vecsey scale of sensationalism, he’s closer to George than to Peter.

Madden’s arguments are these:

  • From reading the Major League Constitution, the fact is that the Giants’ hold over the South Bay is ingrained. Per the document, any change would have to be via a 3/4 vote of the owners and could not occur via a Selig decree.
  • Changing T-rights would create a huge precedent, which Stuart Sternberg could use to move the Rays to New Jersey.
  • Bud Selig would like to broker an agreement but Madden doesn’t know how it could be done because Giant ownership feels it would be “committing suicide”.

Confronted by the A’s denial, Madden defiantly asked, “What did I get wrong?” Well, for starters, he got the history of the territorial rights arrangement wrong, though I figure he’d probably correct that if he had the chance. There is the question of how broad an action Selig can take. Madden says that Selig can’t. Lew Wolff’s position all this time has been that it is the commissioner’s decision to make. It’s not quite that simple, however.

Selig generally doesn’t operate by decree, so it’s something of a false argument. The only time in recent memory that he has “decreed” anything was the fateful decision to end the 2002 All Star Game in a tie. Everything other decision was the basis of him lobbying owners as a group to a specific decision or endgame. Yes, some kind of agreement has to be brokered, which Madden alluded to. No one’s breaking news there. How and for what $$$ have always been the sticking points, given the Giants’ and A’s positional gulf on the matter.

Madden even concedes this:

“… Or let Lew Wolff tell me how I’m wrong. I love Lew Wolff. He’s a great guy. My personally feeling is that I’d like to see the A’s in San Jose because I’d like to see them survive. San Jose is the second (sic) largest city in California and they ought to be able to have a baseball team. The fact of the matter is, for whatever reason, Wally Haas ceded those rights to Bob Lurie. And that was the reason Bob Lurie was able to sell the Giants for $100 million.”

San Jose is actually third largest, but I can see how a New York guy can get that wrong.

Eric Davis asks the proper question in the interview,

DAVIS: To your knowledge, have the A’s been denied San Jose or not?

MADDEN: No, I never said that. See, this is the problem. Everybody’s saying that Selig said has told the A’s that they aren’t going to San Jose. I DID NOT SAY THAT. The column does not say that… Is there anywhere in therewhere I said that Bud Selig’s gonna tell them they can’t go to San Jose? I’m saying that under these circumstances they’re not going to San Jose. But it’s not Selig that’s going to tell them that. These are the circumstances.

Bill Madden, you can thank your headline writer/editor/intern/monkey for having to go on the defensive on today. To his credit, he ends the interview with perhaps his most salient point:

I’m sure the commissioner’s not very happy with me on this story. Part of the reason being I’m sure he’s hoping he could broker a settlement between these two teams. Maybe he can. Right now I don’t see that happening.

After the Madden interview ended, Brandon Tierney and Eric Davis both came to the same conclusion: Madden’s connecting dots as opposed to reporting actual news. Is it nothing? Not at all. It’s properly giving attention to the elephant in the room, which is that the A’s and Giants are miles apart on what they think Santa Clara County is worth in terms of a settlement. It’s Selig’s job to broker that deal, and he reportedly won’t start brokering in earnest until the Giants’ astroturf group drops their lawsuit in San Jose. And let’s keep in mind that the way these settlements have gone in the past, there is a baseline: settling team pays half of $75 million “fee” to infringed team, league and other 28 owners pay the other half. Giants ownership know this and want no part of it. They’d just as soon pay the A’s to leave the Bay Area completely. Then again, there is the possibility that arbitration may be in order. Neither team is a stranger to the process. Shyam Das, get ready for Selig’s call on the batphone.