Category Archives: News

08.10.12
by

News for 8/10/12

We’re overdue for a news roundup. Now seems like a good time for one.

From BANG’s Joe Stiglich:

Last week’s visit to Oakland and San Jose by Bud Selig’s three-man panel foreshadowed this.

Update 1:04 PM – Stiglich has a writeup with quotes from Wolff, such as:

“It’s up to the commissioner’s office,” Wolff said. “… This is a process that unfortunately is taking longer than I hoped, but it’s a fair process.” 

Other news:

  • Janet Marie Smith, who oversaw the construction of Camden Yards and the renovation of Fenway Park, is moving out west to Los Angeles to take a similar role with the Dodgers. If her previous work is any indication, she will keep it classy all the way. [Dodgers press release]
  • NHL Commissioner Gary Bettman has set a deadline of September 15 to wrap up labor negotiations before the league imposes a lockout. The NHL and NHLPA are always playing catchup with the other leagues in terms of CBAs. They imposed a 57% player share in the last agreement as other leagues were dropping towards the 50% mark. Now the NHL wants to drop it to 46%. It’s going to be a long winter. [AP]
  • A developer is proposing a ballpark for the Tampa Bay Rays in the Gateway area of St. Petersburg, just over the bridge from Tampa. St. Pete’s stance has been to not allow the Rays to get out of their lease at Tropicana Field unless a new stadium were conceived in St. Pete, not Tampa. No financial details were available. [Tampa Tribune/Michael Sasso]
  • The 49ers and the City of Santa Clara settled a lawsuit with a County oversight board. $30 million in redevelopment money was at stake. In order to keep local school budgets balanced, the 49ers won’t get the $30 million for several years. Seems fair. [SJ Mercury News/Mike Rosenberg]
  • Get used to metal detectors at NFL games starting this season. [Oakland Raiders]
  • Speaking of the Raiders, they are using the league’s new 85% measure to determine sellouts this season. The way it works, a team has to sell out 85% of its non-premium seats by the usual deadline (normally Thursday for a Sunday game) in order for a game not to be subject to a blackout. The catch is that any tickets sold between the 85% and 100% marks are subject to higher revenue sharing. Teams like the Raiders and Bucs chose to use the new standard, the Bills and Jags went with the old standard, which required all non-premium seats to be sold by the deadline.
  • The City of Industry approved a deal to buy 600 acres within city limits for up to $26.7 million. The land is where the somewhat-forgotten Ed Roski/Majestic Realty stadium would be located. The parties still have to scramble to find a proper replacement for now-evaporated redevelopment funding. [Inland Valley Daily Bulletin/Ben Baeder]
  • MLB’s postseason schedule has been released (knock on wood). [Biz of Baseball/Maury Brown]

More if it comes.

08.07.12
by

Howard Terminal Revisited (Again)

Yes, we’ve been here before. I suppose it’s time to discuss Howard Terminal yet again.

In June I attended a weekday afternoon Rangers-A’s game, followed by a ferry trip from Oakland to South San Francisco. San Francisco Bay Ferry was using that week to launch the new service, which to that point had its southernmost terminal at AT&T Park. I noticed many people who, when they learned of the free promotional ferry ride, decided to take a quick cruise across the bay.

While I was waiting for the ferry, I walked around JLS and near Howard Terminal to take some updated pictures just in case.

howard_term-07-overhead

Overhead view of Howard Terminal, with power plant and ferry terminal included for comparison. (via Google Maps)

The best place for a ballpark may be the southeast corner, where the two cranes are located. The cranes can be and often are relocated. The area designated for auto processing is about 9 acres and is surrounded by the rest of Howard Terminal, a power plant, the Inner Harbor, and OFD property. The Trib’s Matthew Artz reported yesterday that tenant/operator SSA Marine (Matson) is suing to get out of the 25-year lease it signed only 7 years ago. Howard Terminal was chosen as a site for consolidated operations by SSA Marine. A planned multi-story auto processing/storage facility had to be scrapped amid NIMBY concerns and Howard Terminal only runs at 55% capacity thanks to market changes. Those may be the biggest factors in SSA Marine’s decision to file suit. The issue there is that while SSA Marine may ultimately want concessions on the lease, they may not necessarily want to leave or downsize their presence there. If the site I described as ideal were to be reused for a ballpark, SSA could only stage one large vessel at a time as opposed to two now. If SSA were to agree to relocate to elsewhere on Port property, it’s likely they’ll require a huge cut in lease terms while trying to maintain the kind of consolidation they were able to enjoy when they first inked the current deal. They’d also want to be able to expand if their container shipping business improves.

howard_term-13-water_edge

View of Howard Terminal from Ferry Terminal pier

If the City and the Port wanted to use all 50 acres of Howard Terminal, the solution is simple: tear up the lease and start the process on alternative development (planning, EIRs, infrastructure, identified projects). From looking at the Port’s budget documents, SSA Marine provides a substantial portion of the $10 million in revenue the Port derives from Inner Harbor maritime activities. That figure isn’t broken out by location or by company, so it’s hard to speculate further on SSA’s impact. Regardless, any disruption or change to SSA’s operations has to be considered an opportunity cost, since the Port would be foregoing that revenue stream to take on a ballpark lease and other commercial lease revenue. Currently, Inner Harbor provides nearly as much revenue as the entirety of Commercial revenue at the Port.

howard_term-05-train_power

Train passing the power plant along The Embarcadero. Part of Howard Terminal is behind the plant. Intersection is Martin Luther King, Jr. Way and The Embarcadero.

In the picture above, you’ll notice that along this stretch of The Embarcardero, only one side of the tracks is paved street. The near side is gravel. This continues to Jefferson and Clay Streets, where the Jack London Square streetscape as we know it begins. If a ballpark were to be placed at Howard Terminal, a great deal of new street and pedestrian infrastructure would have to be planned and constructed in order to safely accommodate the anticipated large crowds. That includes at least one pedestrian bridge leading from MLK, Brush, or Market. Additional acreage at Howard Terminal could be repurposed for parking, though that’s a double-edged sword. If a large amount of parking is built there, streets will have to be beefed up to accommodate traffic increases. There’s no obvious place north of Howard Terminal where parking could be built without the demolition of existing structures.

howard_term-10-ferry_landing

Ferry Terminal with Howard Terminal in background

East of Howard Terminal is a stark contrast. Jack London Square dominates and has a great variety of mixed uses. The waterfront building at 10 Clay Street is largely unused and could make a great A’s museum, as slo_town identified in June. Some negotiation would also have to be done with Oakland Fire Department because Station 2, where the Fire Boat is located, sits between HT and JLS.

10 Clay Street

10 Clay Street

Finally, there is the issue of the impact of the ballpark itself. Besides increased traffic and the distance from BART (3/4 mile to the 12th Street/Oakland City Center Station), the visual impact of a ballpark will be up for much debate. If the field is oriented to face downtown (away from the water), there’s a risk of a having a 500-foot-long, 10-12 story tall edifice bumping up against the water. If the field faces the water, the visual impact is much less since the ballpark will be “camouflaged” by the power plant, but the impact of lights on Alameda becomes greater. Either way it’s no slam dunk.

howard_term-14-boat_view

View from departing ferry

Still, when you look at the picture above, it’s easy to see why someone would advocate for Howard Terminal, challenges and all.

08.06.12
by

No stone left unturned

Two articles from Sunday (Chronicle: Matier and Ross, Mercury News: Bruce Newman/Sharon Noguchi) point to a special trip made to the Bay Area last week by Commissioner Bud Selig’s three-person committee. The committee, which has been studying the A’s stadium issue for more than 40 months, met with San Jose officials on Tuesday, followed by Oakland officials on Wednesday.

The M&R report indicates that Oakland’s bid is moving towards a potential deal at Howard Terminal, anchored by a $40 million sale of land there to help kick things off. Present were Clorox CEO Don Knauss and Signature Properties’ Mike Ghielmetti.

The $40 million part has me confused. To whom would Howard Terminal be sold? To the A’s or some ownership group? To other developers like Ghielmetti? For years, the minimal entry for any Oakland site had to be to take care of the land and any infrastructure at the very least. But if that responsibility has to be shouldered by whomever builds a ballpark, the price to build the venue will only get higher. Remember that at Howard Terminal, some amount of reconstruction of the site’s foundation will be required to make it safe and suitable for a ballpark and perhaps other surrounding commercial development. If the ballpark costs $500 million just in construction cost, and the land acquisition and site preparation costs $140 million, the final price tag is $640 million!

It would’ve been interesting to find out how much time Knauss & Co. spent presenting themselves as ballpark backers first before jumping to a different role as would-be owners. Assuming that they pay the full freight on a ballpark and a minimum $500 million for the A’s, they’d have to come up with $1.14 billion for the whole package. That’s a tall sum just to keep the A’s in Oakland, no matter how it’s sliced. A downtown site such as Howard Terminal was expected to be more expensive than the Coliseum because of the added complexity in pulling off the deal, but is that difference (at least $100 million) worth it? It’s hard to pass judgment on Howard Terminal until we know more specifics. Nevertheless, at this point the committee is probably of many of these details, and that will be important for MLB’s continued evaluation.

Last Tuesday’s meeting with San Jose seemed to be a more ho-hum affair, with the exception of the presence of Brad Ruskin, a very prominent lawyer who has at one time represented all of the major pro sports leagues other than Major League Baseball (he has also represented some MLB clubs). One of his specialties is antitrust law, and he is a trial lawyer, so his presence may be to show that he could represent MLB in an antitrust case if push comes to shove. Opposing Ruskin would presumably be Allen Ruby, who the A’s brought on board earlier in the year.

For his part, Lew Wolff continues to be defiant in the face of questions about selling the team. His angle is that, unlike much outdated criticism about his previous efforts to put together a ballpark deal in Oakland and Fremont, his plan is simply to build a ballpark. Ancillary development using surrounding land is becoming more increasingly difficult to pull off, yet that’s the formula being espoused by all of the Oakland bids: Howard Terminal, Coliseum City, and Victory Court. The committee has to be taking all of this into account.

Another factor is State Controller John Chiang’s review of the land transfers between San Jose’s defunct Redevelopment Agency and the son-of-redevelopment San Jose Diridon Development Agency. If the transfers are upheld, Santa Clara County has indicated that it won’t make any further challenges to the land deal so the ballpark could conceivably move forward. If the transfers are ruled improper, the land would go to the the redevelopment successor agency, which would subsequently auction off the land. The land would be sold to the highest bidder, who may be someone other than Wolff. Keep in mind that San Jose would still hold the final trump card as it was would have any final determination over what could be done with the land. As much as AT&T claims that its land is of paramount importance to its service delivery model, they’d have sold the land years ago if it could’ve been rezoned to medium-density residential as was considered a decade ago. In any case, Wolff seemed confident that he’d be able to get the land however Chiang’s office ruled. That ruling is due in the next couple of weeks.

The cynic in me looks at this trip with a simple explanation. Summer owners’ meetings are scheduled for next week, and while there will be more pressing matters on the agenda (Padres sale, national TV deals, Nats-O’s-MASN deal) it’s expected that there will be some sort of update on the A’s-Giants ongoing saga. What better way to look like you’re doing something than to have a couple of meetings right before the owners’ sessions? It seems unlikely that Selig will be able to render a decision or bring up a vote based on whatever new information was gathered based on the trip since it’s so fresh, so it’s just one more opportunity to kick the can down the road – at least until November. In the meantime, whatever’s happening to the A’s on the field can take precedence, and that’s not a bad thing at all.

08.03.12
by

Pick and choose your spots

The problem with having a 10-game homespan, like the one the A’s are on now, is that the casual fan has too many choices of games to attend. A fan might go to tonight’s game for the fireworks, with Dan Straily’s debut thrown in as a bonus. The same fan might go to one of two Wednesday day games to get $2 tickets in the warm sunshine. Or maybe a weekend game’s better because weekdays create scheduling conflicts, or because of the kid-oriented promotions on Saturday and Sunday.

It’s that range of choice that probably accounts somewhat for the somewhat disappointing turnout so far this homestand.

  • Monday: 12,564
  • Tuesday: 15,836
  • Wednesday: 18,161
  • Thursday: 10,823

Tonight’s attendance could surpass 30,000 because of fireworks night. Quantities of 2 or more tickets are tough to find except in some of the less desirable locations of each seating tier. There have been three Fireworks Fridays this season, and as you would expect, the attendance for all three has been much better than average.

  • Game 21 vs. Yankees: 33,559
  • Game 28 vs. Padres: 24,528
  • Game 38 vs. Red Sox (July 3): 35,067

Just from looking at crowds over the years, fireworks can bring out an extra 10,000 fans. It also helps that two of the games were scheduled against the beasts of the east, who can be counted upon to bring thousands of fans along with them. Funny that the A’s and Rays, teams with historically some of the worst turnout over the last decade, are the two teams most dependent on other team’s fans to bolster attendance. The Giants provide three guaranteed sellouts, with easily half the house dressed in orange and black. The Yankees are good for 10-12k per date, whereas the Red Sox are worth 7-8k. Add that up and it’s around 123,000 visiting fan attendees from just those three teams. That translates to 7% of overall home attendance during recent years.. The Giants get periodic invasions of Dodger fans, but those seats would sell regardless of the opponent.

Now Monte Poole’s Thursday column raises the “quandary” of fans who hate ownership so much as to not attend games against their better instinct of showing up to support the resurgent A’s. Everyone who goes or doesn’t go has every right to express their preference. But to eternally prosecute ownership, the front office, anyone involved with the team for every little decision (or non-decision) is seriously becoming tiresome. First it was that Lew Wolff, John Fisher, and Billy Beane have conspired to keep the fans away by intentionally fielding awful teams or by trading away talent. Now that the team has been hot, it’s either that ownership is seething that the wins work against their nefarious plan or the team’s success thoroughly discounts any arguments about the Oakland fanbase, or even more absurdly, the stadium. Look at the first four games of attendance and tell me that it’s working. Beane’s moves are being microexamined as well, with the lack of a deadline trade “proving” that the team is surrendering. Then there was this today, following the Kurt Suzuki trade:

Apparently the detractors are looking for any excuse to pile on. Can’t give credit, oh no. Poole himself can only rise to giving the backhanded compliment “making an effort”.

Right. It doesn’t matter that the team stacks one promotion on top of another to bring in fans. That it has a weekend dedicated to Moneyball and the Streak coming up. That inserting dynamic pricing deals on tickets for the last two homestands have done a bang-up job of bringing in fans (check the field and plaza levels for the on-sale sections for proof). I even got into a debate on Twitter with a fan who drove up to the Coli on Wednesday and was angry that the A’s ran out of $2 tickets – that were sold out days if not weeks in advance. Really? You can’t plan for that?

That points to the biggest problem that the A’s and the A’s fanbase face, and they face it together. Both ownership and the fans have taken the A’s – the team, the brand, the fact that it’s one of thirty MLB franchises – for granted. Even during the Moneyball era (1999-2006), the A’s had all of these same promotions and attendance was about 500k per year (6,000 per game) better. And no, the much larger Coli back then was nowhere close to selling out, except for those games where the visiting team’s fans took up the slack. The A’s can count on the 8-10k of season ticket holders to provide some revenue while at the same time showing Bud Selig that the hardcore fanbase is too small to be sustainable. For those on the fringe like me or casual fans, there’s always a plentiful supply of tickets so that during a six or ten-game homestand, we might be able to go once or twice and feel good about ourselves.

That’s not good enough. While ownership shrugs its shoulders, Oakland partisans and East Bay supporters thump their chests about how they’ll support the team “when it’s good, and ownership respects Oakland, the fanbase, and stadium” – and also keeps ticket prices low. You can’t have all of that and be taken seriously. This is Major League Baseball. It is the upper echelon of this great sport. Constantly, the whiners and whingers seems to be conveniently unaware of that fact. The average payroll is $100 million, a number the A’s would be hard-pressed to support at the current prices unless they hit 3 million fans. That’s how far behind we are compared to the rest of the league. And we, collectively, don’t care. It’s better to get a few shots in at the enemy.

I don’t know how the season’s gonna end. Maybe the A’s will make the postseason, maybe they won’t. Progress will be measured in part by the rise in season ticket sales. If subscriptions don’t grow it’ll tell me two things: that A’s ownership isn’t trying hard enough (hard to believe from the calls I’ve gotten from ticket services), and that the holdouts are hoisting themselves on their own petard. It would prove to me that both sides are fine with the status quo: low, non-major league prices, low season ticket rolls, and “disenfranchised” fans complaining yet again about being alienated. At some point, it comes down to how much you and I value this team as it’s currently formulated, the A’s legacy, and optimism about the future. It also matters how much we care about having a MLB franchise here. If that’s not enough, then well, the petard is waiting in the form of an empty Coliseum and no future ballpark. Though I’m sure there’ll be plenty of recriminations for that too.

07.26.12
by

You’ve got to be kidding me, Santa Clara

From the Department of Absurdity…

It appears that the only way to get a football stadium built in California is with some legislative help.

According to the LA Times, Senator Elaine Alquist (D-Santa Clara) is set to gut an existing education bill and replace it with language that would provide the 49ers stadium project with the $30 million in redevelopment funds that are currently in dispute. Apparently the City and team are nervous enough that they can’t wait for the hearing, which starts tomorrow in the Capitol.

As the article notes, both LA stadium projects used legislative muscle to make the process easier. I suppose the good news is that at least in Oakland, replacing one football stadium with another should make any stadium proposal go more smoothly, and without these procedural gymnastics.

07.25.12
by

AT&T Park to host World Baseball Classic finals, semis

The Giants’ AT&T Park has been named the host stadium the 2013 World Baseball Classic finals and semifinals. The tournament, which runs every four years like other “World Cup” style tourneys, was largely centered on Southern California in 2009. Then, the Dodgers hosted the finals while the elimination rounds were held in San Diego and Miami.

Shortly after the news came out, a couple of astute national writers made some half-serious tweets about the circumstances.

Hey, it wouldn’t surprise me if the WBC was part of whatever “settlement” the Giants received. Previously, no marquee round of the WBC had been held in an outdoor stadium north of SoCal, which along with Arizona and Florida has more baseball-hospitable weather in March than the Bay Area.

The Giants will get three games, and judging from the attendance at the 2009 Classic, all three should garner crowds of 40,000 or more. 40,000 fans X $50 per fan X 3 games = $6 million. That doesn’t include parking, broadcast rights, or the additional economic impact the series will have on San Francisco. If the award is part of Selig’s plan to compensate the Giants (MLB runs the tournament), it’s a good move that doesn’t cost baseball or the A’s anything.

As long as it doesn’t rain, of course.

07.25.12
by

Hacks don’t understand the competitive window

The Chronicle’s Scott Ostler is signing onto the claim that the A’s recent on-field success serves to foil Lew Wolff’s plans to move to San Jose. He’s not the first. The Trib’s Monte Poole and the Press Democrat’s Lowell Cohn have done the same since the All Star Break. The reasoning is that the way the A’s are playing, it proves with complete certainty that the A’s can, in fact, compete in Oakland.

Anyone who has read most Bay Area sports columnists over the years could see this dime store analysis coming. It’s more than ludicrous, it’s absolutely fallacious. Think about it. These writers are basing the viability of a franchise on 17 games. 17 games! Look, I’m the last person to rain on this parade and I’m loving every minute of this run, but to base any long-term decision-making on 17 games is the stupidest idea I’ve ever heard. The sample size is incredibly small. Over the next 1-4 years, it may prove to be the start of a trend. Then again, it could be a blip. If the A’s fade in August-September the same way the Mets and Indians are now, what does it mean for success in Oakland? Nothing, because there’s no real causality there.

If we’re going to look at any trends, it’s the team’s 40-24 (.625) record with Yoenis Cespedes in the lineup. The team was pretty bad in May, largely due to Cespedes not being in the lineup for lengthy stretches. It didn’t help that Josh Donaldson and Daric Barton were black holes regularly manning the corners, while Josh Reddick was left to carry the lineup in the Cuban defector’s absence. Now with better contributions from numerous fringe and platoon players plus continued health (knock on wood) for Cespedes, the A’s are doing just enough offensively to win games.

None of this is very related to the A’s long term success. Cespedes is locked up through 2015 unless Billy Beane flips him for prospects. Yet Beane is keenly aware of the organization’s continued inability to develop quality hitters, so unless rivals offer Billy the moon for either Cespedes or Reddick, the heart of the order isn’t going anywhere. Beyond that, there are questions about Cespedes’s durability. The Cuban baseball season is only 90 games long, and Yoenis has had little nicks already and a tight hamstring halfway through his rookie campaign. If Cespedes runs into a lengthy injury spell like what befell Joe Mauer and Justin Morneau in Minnesota, the A’s will be screwed moving forward unless certain hitters on the farm (Grant Green, the just-injured Michael Choice, other recent draftees) make miraculous Sean Doolittle or Dan Straily-style transformations into solid contributors.

We’ve talked a bit about the competitive window every have-not team faces. Refuse to acknowledge it at your peril. San Diego, Arizona, and Colorado all had brief, 1 or 2-year runs in the past few years. When injuries hit or players didn’t perform up to potential, all three teams sold off key players in order to rebuild for the next competitive window. The same just happened to the Miami Marlins, who nearly doubled their 2011 payroll in hopes of bringing in bigger crowds and revenue. With the team fighting to keep itself out of the NL East cellar, the Marlins are looking to sell off vital pieces. Already Hanley Ramirez has been traded to the Dodgers, and Josh Johnson may be the next one out of town. The aforementioned Twins had a bright future prior to the 2011 season, then Mauer was lost for half the season and Morneau struggled to recover from concussion symptoms. Now they have no choice but to rebuild, starting with a trades of Morneau and Francisco Liriano that many are anticipating in the future. Competitive windows for many mid- and small-market teams all were slammed shut in a hurry.

For the have-not teams, the competitive window means there’s little room for error, practically no room to absorb expensive mistake contracts. The Dodgers had plenty of flexibility to absorb Ramirez’s contract. The Yankees somehow got Seattle to pay for part of Ichiro’s contract even though the Pinstripers sent back a middling starter and a guy who had already been traded or cut six times in his short career. The A’s have a league-low $55 million payroll, which gives them the flexibility to pick up a one-year rental. It doesn’t give them the flexibility to start trading for guys with long, bad contracts, like Ramirez and Jimmy Rollins. Brett Anderson is due for some raises in the coming years. Reddick is sure to become a Super Two thanks to his breakout season – which will give him a hefty raise. He could very well be locked up through his arbitration years this offseason. Cespedes will be paid nearly $30 million over the next three years. Beane and David Forst will have to decide which young pitchers to keep and which ones to use as trade pieces. Kurt Suzuki already has a bad contract and he’s worth pennies on the dollar. By 2014, the A’s could easily be committed to spend $40-50 million on just 4-5 guys. It’ll help that new national TV money is on the way, but it doesn’t mean that fiscal responsibility will go out the window.

Sustaining the competitive window will depend greatly on picking the right guys to commit to (remember the Chavez-Tejada debate from a decade ago?) and those cornerstone guys staying healthy. If not, all bets are off. It won’t prove that the A’s should leave Oakland posthaste. What it would prove is that the A’s again are a big-market team that is forced to operate like a small-market team because of revenues from playing in Oakland. The current CBA calls for the A’s to get off revenue sharing by 2016 as long as the team stays in the Bay Area, however the stadium solution occurs. That’s language from on high saying that having the A’s in the Coliseum is not what MLB has in mind, no matter how good this run is or how many pies are thrown. The Lodge doesn’t care about 17 games. They care about the long view.

07.23.12
by

Not every idea is a good one

Over the weekend, the Santa Rosa Press Democrat’s sports columnist Lowell Cohn entertained a concept for privately-financed stadia at the Coliseum for both the A’s and Raiders. Put together by Sacramento developer Rick Tripp, the plan is neither new nor novel. In fact, we’ve heard it here several years ago, when the Lew Wolff trying to build a ballpark first north of the Coliseum and later in Fremont. The venue(s) would be paid for by a combination of surrounding area development entitlements and stadium revenues such as naming rights and concessions. During the housing bubble in 2005, it sounded like a decent plan since it wouldn’t have required a bond issue or  new taxes on Fremont’s or Oakland’s part. Of course, once that bubble burst, such a plan was no longer feasible.

Tripp revives that plan and adds a wrinkle in that “unconventional” sources such as real estate brokerage fees are also used. Tripp admits that he hasn’t lined up all of the necessary money, some of which could come from Middle East financiers. He has also pitched his plan unsuccessfully twice – first in San Diego for the Chargers, then in his hometown, Sacramento, for the Kings’ railyards arena. In both cases, his respective bids were rejected. No explanation is given as to why, but I have a few guesses as to why which I’ll get to in a minute.

Before that analysis, first let me turn your attention to a small article which also surfaced over the weekend. The Arizona Diamondbacks are pushing to have ownership of Chase Field changed from one public entity (Maricopa County) to another (City of Phoenix). The point? To allow the D-backs to exert more control over Chase Field’s revenue streams, which are currently somewhat split between the team and Maricopa County. The team pays $4 million per year in rent and maintenance costs, a decent amount compared to other leases throughout baseball. No new money is being raised by virtue of the D-backs’ proposal, and it might net the team a few more million per year. That’s enough to make the request worthwhile. It’s of utmost importance to team ownership that it gain control over as much of its local revenue stream as possible.

It’s in that light that if you read Tripp Development’s San Diego stadium proposal that you can see why it didn’t pass muster. The plan, which included a $900 million NFL stadium and a $400 million arena, would charge $15 million per year to the Chargers and $10 million per year to a relocated NBA team. Given the somewhat similar cost between a ballpark and an arena, let’s suppose that the A’s would lease a new ballpark from Tripp for $10-12 million a year. That’s three times as much as the D-backs, a team that is at best a mid-market franchise and is trying to scrape up every bit of revenue it can. Worse, the terms have the A’s (or Raiders) with precious little control of stadium revenue except for games. While it sounds nice that the A’s would get a “free stadium”, their inability to control revenue streams would leave them only marginally better than they are now, especially in years when attendance isn’t impressive. It’s a deal that, if presented to either Lew Wolff or Mark Davis, would be politely declined by both. It’s not something that would be approved by either the NFL or MLB. Similar lease terms helped allow the Seattle Supersonics to leave the Emerald City, and they’re making it easy for the Warriors to look across the Bay towards San Francisco – even though the price tage for a new arena will be huge.

Now, that isn’t to say that Tripp’s concept is bad. If you’re an Oakland-only partisan or someone who doesn’t scratch the surface like Cohn, it might sound great. And at least Tripp is being fairly transparent about the substance of the deal, whereas we have few clues about Oakland Mayor Jean Quan’s Coliseum City plan other than federal transit money or the exotic EB-5 visa program (neither of which will provide much money to build any stadia). The problem is that so much revenue has to go towards paying off the project that it severely limits the amount that can go to the tenant teams. That puts the teams at a handicap relative to their division and league competitors. Both owners and the leagues are going to agree to deals that give them the highest levels of revenue and control. A large mortgage for the A’s is somewhat mitigated by the fact that it can be deducted against revenue sharing. Any deal that doesn’t give the team revenue control is inferior, even if a high-revenue/control deal means creating greater risk (see: 49ers).

Moreover, while the plan doesn’t say redevelopment explicitly, it’s effectively a redevelopment plan when it talks about entitlements. That may be the most risky thing of all. Tripp and his investors probably have a target in terms of real estate sales and fees associated with those sales that will help pay back the debt ($90-100 million per year if separate football and baseball stadia are built). If they don’t hit those targets because of an Oakland real estate market that trails the rest of the Bay Area, what does it mean for the teams? Investors want to counterbalance risk with return and protection if possible. With limited government help, the risk may be excessive. Remember that former New Jersey Nets owner Bruce Ratner faced several delays in trying to move the team to Brooklyn, which eventually forced him to sell the team and the development to Russian billionaire tycoon Mikhail Prokhorov. Bailout guys like Prokhorov don’t grow on trees.

Tripp’s plan is the first of many such proposals for Coliseum City, and he admits that he’ll know if it’s workable in 18 months, around the time several studies regarding Coliseum City are due. If nothing else, his proposal should stimulate discussion within Oakland about how Coliseum City can get accomplished – not just to keep the teams in place, but to allow them to thrive. For any team to stay in Oakland the financial terms need to make the teams more than merely competitive. As long as the teams face revenue limitations from any proposal, they’ll keep looking for better deals elsewhere. That said, if Tripp is able to successfully get commitments from one or both teams, he’ll deserve extreme kudos. Third time would be the charm, I guess.

07.14.12
by

New National TV deals are the tide that lifts all boats

Come 2014, the A’s will be a much richer team, a team capable of fielding a $100 million payroll. And they won’t have to build a ballpark, negotiate any new local media deals, or raise ticket prices to do it. That’s because new national television deals will be in place for the 2014 season, and they promise to make every team a good deal richer.

A flurry of stories have come out in the last week to trumpet the coming broadcast rights war. All of the current national broadcast deals expire at the end of next season, making this next set of TV rights negotiations a total free-for-all. I’ve assembled some of the articles for your perusal.

Currently every team gets around $24 million per year in national TV money via three contracts (Fox, ESPN, TBS) plus international and digital media revenue. All told, it’s at least $33 million per team per year from baseball’s central revenue, or $1 billion for MLB total annually. According to many industry observers, the new TV rights deals should net MLB around $2 billion per year by themselves, at least doubling if not tripling the amount each team will get. That won’t mean all that much to the Yankees or Red Sox, since they’re often up against the luxury tax threshold. For a team like the A’s, however, it’s manna from heaven. A bump to $2.1 billion (a reasonable guess at this point) will put $70 million in every owner’s pockets, every year.

Let’s look at this at the micro level. Estimates have the A’s 2011 revenue at $160 million, though Lew Wolff will argue that it’s less. With greater ticket sales this year and other incrementally growing revenues, I’d wager that $160 million is a realistic number for this year (Forbes might say that it’s $165 million or more). Now add $42 million in fresh national TV money, and suddenly every team in baseball, including the A’s, is a $200 million revenue franchise. Use the typical 50/50 ratio of payroll to revenue, and the A’s payroll is $100 million. Simple, right? ($230 million doesn’t seem so far away anymore.)

Ah, but there’s more to it than that. Chances are the digital media and international broadcast money will also grow. Several teams will approach $300 million in revenue, which means that $150 million payrolls will become more commonplace. Again, all without raising the price of a single ticket. The A’s will continue to be a have-not relatively speaking, but that extra money should make it easier for ownership to sign a young slugger past arb years, or more than one. While we currently think of $75-80 million as the practical upper limit for payroll when Billy Beane feels the team is in contention, that amount should be the lower limit for payroll in the coming years. Giants ownership grumbled loudly about keeping this year’s payroll to $130 million. That figure should be their lower limit in 2014.

Exploding TV money will have one other important effect on teams: franchise valuations and sale prices should continue to grow. The Padres sold for $600 million plus $200 million for their share of the new Fox Sports San Diego network. I figure that puts the A’s at $500 million now, and that’s without the benefit of the new TV money. In 2014, the A’s should be worth $600 million easy. Knowing the gravy train that’s coming, Wolff/Fisher would be crazy to sell the franchise anytime soon, regardless of what happens to their San Jose ballpark pursuit in the near term. On the flip side, the growing franchise value will only make it that much more difficult for an outside group (Don Knauss & Co.) to buy the franchise and finance a stadium, soon to be a combined $1.1 billion price tag. If we’re looking for an event to burst the valuation bubble or dissuade Wolff/Fisher from continuing to own the team, the new TV contracts definitely aren’t it.

The most fascinating part of this will undoubtedly be the negotiations. When the last rights were negotiated, baseball was considered a sport on the decline among the networks, best relegated to regional sports networks and ESPN. Since then, NBC and CBS have launched their own sports network competitors to ESPN. Fox may convert Speed to all sports instead of just motorsports, the same way NBC converted OLN and CBS did CSTV. All three would want baseball as a tentpole for their fledgling networks and for their cable bundling efforts, the better to wring ever higher subscriber fees from consumers.

  • Today’s youth probably have no idea that NBC was once the network that carried baseball, with Vin Scully and Joe Garagiola announcing Saturday’s Game of the Week. The peacock has now gone over a decade without baseball, and their desire now is hot and heavy. Baseball is just what NBCSN needs to gain traction among viewers, in addition to the Game of the Week. Keep in mind that because NBC’s big tentpoles are Sunday Night Football, the Olympics, Notre Dame football, and the NHL, there are huge swaths of weekend daytime programming for NBC that have no pro sports at all. That might lead people to think that when it comes to sports, NBC is out of sight, out of mind. Is NBC/Universal/Comcast will to spend money on MLB the way the company never would under Jeff Zucker? We’ll see. Pros: Better integration with Comcast Sportsnet properties. Cons: An even larger Bob Costas soapbox.
  • CBS has rarely had MLB on TV over the last few decades, the exception being a financially disastrous gig in the early 90’s (thanks, Toronto Blue Jays). The Tiffany Network also owned the Yankees during the 60’s. That was about as far as they went. CBS likely has the same motivations as NBC. Under Les Moonves, the network has tended to stay away from baseball, so either they saw the light if they’re interested or it’s purely a carriage play. Pros: The unlikely yet possible resurrection of the MLB on CBS theme, which had a “The Natural” 80’s-style majesty. Cons: Potential re-teaming of Sean McDonough and Tim McCarver, one of the worst announcing tandems in broadcast history.
  • Fox is the incumbent, and frankly, they’ve been shit the entire time. At the outset, Fox declared war on ESPN, claiming that its “tribal” approach to sports by grabbing RSNs would allow it to integrate well with the national broadcast. That never happened, and Fox has only retreated ever since. Not that I liked the now-discarded theme song, but to replace it unceremoniously two years ago with the NFL on Fox theme clearly showed where the network’s thinking is. The move to 4 PM broadcasts this season is a good one because it opens the afternoon slots for teams, but I can’t help but think Fox just did it because they didn’t have any primetime programming on Saturday nights for the East Coast. Pros: Can’t think of any except maybe Ken Rosenthal. Cons: Fox may get even lazier in its handling of MLB.
  • ESPN may have the most to lose. They absorbed the hit that came with the launch of the MLB Network (not part of the conversation BTW), and focused on making sure their web and news coverage stayed solid in the face of new competition, though they let go of quite a few talents along the way. They still have Sunday and Wednesday night games and little good to replace them if they lost those properties. Try as it might to jam as much NFL news into its summer programming, ESPN can only go so far with football. The network has reduced the number of games per week it broadcasts. It may be forced to bid to broadcast more games per week if the other cable sports networks are willing to do the same. Pros: Webgems. Cons: Chris Berman.
  • TBS will probably get outbid on its little property, Saturday Night Baseball. They tried to transition from the Braves to all teams using all of their Atlanta-based talent and production and have generally done poorly or have been ignored in the process. Handling of the playoffs, which Turner tried to do similarly to the way it handles NBA games, was confusing and  generally abysmal. Clearly, national baseball broadcasts weren’t in Turner’s wheelhouse. Pros: Eck in studio. Cons: Dick Stockton.

There’s a decent chance that MLB will structure bidding so that a network can bid on a specific league, the way the NFL splits broadcasts for its two conferences. That would be an interesting twist, though it would create an inherently unequal situation due to the popularity of the Yankees and Red Sox. I’m certainly not digging the idea of AL nights and NL nights. Digital carriage also has to enter the picture. Streaming of national games may be part of every deal, though you can bet that they’d still be subject to those frustrating blackout rules.

How do think this new windfall will affect the A’s in the future? How should broadcast rights be distributed? Do you have a favorite channels on which you’d like to see national broadcasts?

07.13.12
by

It’s different in Texas

Carpe diem.

It works in ballpark building too, though as A’s fans we wouldn’t know about it first hand. It’s happening in El Paso, TX, where the political and civic community is rallying to get a minor league stadium built in time for the 2014 season.

El Paso hasn’t had affiliated minor league baseball since 2004, when a group headed by George Brett sold and moved the 42-year-old Diablos AA franchise to Missouri. Since then, the city has had an independent league Diablos team in place, but has longed to return to the true minors. When the Padres’ attempt to build a stadium in Escondido died last summer in the redevelopment crunch, El Paso saw its chance. The AAA Padres were to play at Tucson for one or two seasons as a temporary gig. Their future permanent home would be the city that gave the quickest, best deal the Padres could get.

That brings us to yesterday, when MiLB announced that El Paso would get the Padres in 2014, assuming that a new ballpark deal were completed in time. The existing minor league park, Cohen Stadium, is just a shade over two decades old. From what I gather, it’s comfy yet utilitarian, lacking in the premium facilities AAA teams look for nowadays. Moreover, the city fathers want the new park downtown. With the time constraints, El Paso couldn’t afford to waste time bargaining for or claiming eminent domain over privately owned land. Yet there was precious little publicly owned land on which something the size of a ballpark could be built. Apparently that left the City no other choice but to build at City Hall.

Existing El Paso City Hall. Image from ElPasoInc.com

There’s a large parking lot behind City Hall, but that’s not large enough. So the City is going to demolish and relocate City Hall just so that there’s enough room for the new ballpark. (Odd note: the building is close enough to the border that two years ago it was hit by stray gunfire ranging from across the border in Juarez. El Paso itself is considered the safest large city in the nation.) A location for the future City Hall has not yet been determined. The total cost of relocating City Hall could be $22-38 million.

The speed at which all of this has come together for El Paso is astonishing. They’re avoiding a initial public vote on the deal terms, saving it for an occupancy tax which may or may not come up in November. Texas has no CEQA, which allows the City to avoid much of the process grind California faces. The ballpark will cost $50 million and will be publicly financed, with the Padres responsible for a $200,000 rent payment every year for 25 years and a percentage of game revenue to pay off the loan.

In 2014, we should see a new El Paso Diablos AAA franchise playing in a sparkling new stadium, with a beautiful view of the Franklin Mountains in the background. The City has taken less than a year to make what many cities would consider a sea change, committing to spend nearly $100 million to bring in AAA baseball. Amazing.