Category Archives: News

01.17.12
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News for 1/17/12

Today I did an TV interview on Get Real with Brian Stuckey, a show produced out of CreaTV San Jose. CreaTV is a non-profit to whom Comcast has farmed out all of their public access programming for much of the South Bay. The segment will air January 30 on Comcast channel 15 with a web stream simulcast, so my ugly mug won’t show up until then. I doubt anything will have fundamentally changed by then, but you never know.

On to the news.

  • Matier and Ross report that nothing official happened on the A’s-to-San Jose front. That’s true at least when it comes to making a decision or coming to a compromise plan. We set those expectations going into the owners meetings. Yet background work did occur, including the presentation to the executive committee and Selig’s statement that the A’s are now on the front burner. Write that off all you want, it’s movement that wasn’t happening six, nine, twelve months ago. Remember that as incalcitrant the Giants are, there’s always the threat of binding arbitration to force the Giants’ hand. Commissioner Selig won’t give San Jose a greenlight for a vote (for either MLB owners or the city referendum) unless the Giants drop their lawsuit, making the legal action the last real weapon in the Giants’ arsenal to block the A’s efforts.
  • While the Giants are doing everything possible to stop A’s ownership, they’re actively encouraging new arena deals. We all know about their overtures towards the Warriors. Yesterday, Larry Baer gave a pep talk to Sacramento civic leaders pushing for a new downtown Kings arena. Baer said that after four defeats at the ballot box, the effort to get a ballpark going was “worth the fight.” I imagine that Lew Wolff feels the exact same way, Larry.

“It can be done, don’t give up,” Baer said. “You must persevere, you must exercise patience, you must have strong leadership in the private and public sector.”

When a man’s right, he’s right.

  • While the Oakland-only crowd was eager to jump on a graf in the M&R report, they buried the lead: Thanks to the death of redevelopment, the City of Oakland will have to cut 200 jobs and hand out 1,500 pink slips. The Mayor and City Council may also have to take huge cuts in pay on top of cuts already taken last year. How does this affect San Jose? Not that much, since as of the end of 2011 there were only about 10-12 people left in SJRA, with budget cuts and changes already enacted. Not that San Jose actually anticipated the change. SJRA’s fiscal issues forced it shut down early.
  • Less than three months from the opening of the Marlins Ballpark in Miami, and there’s no solution for funding transit options that can bring fans from downtown or the nearest Metrorail (BART-like) station.
  • The Cubs are replacing their right field bleacher section with a Green Monster Seats-style party deck, fronted by one of those new-fangled LED scoreboards.
  • Santa Clara’s City Attorney declared a petition effort by 49er stadium opponents illegal. That doesn’t mean the opponents can’t sue. We’ll see if they have the resources to sue for the right. We’ve seen this happen before.

On a lighter note – since Jeffrey and I will both be at FanFest, would any readers like to do a meetup? Not exactly sure of where we could do it, we can talk through the details.

01.14.12
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The San Diego problem

I frequently look to San Diego for inspiration, whether for the weather, the beer, my brother’s wonderful Rottweiler, Jojo, or major league baseball. No, I’m not saying that the Padres are baseball’s model franchise. Instead, San Diego – the market – is a good comparison to the way the A’s are situated in the Bay Area. Consider the following:

  • With a population of 3 million, San Diego is slightly larger than the East Bay’s population.
  • The gross metropolitan product (GMP) of San Diego is slightly larger than that of the South Bay. (The East Bay is considered part of the San Francisco region from a Census perspective).
  • San Diego has a broad economy, from the military and government services to healthcare to technology.

San Diego will never be able to have a large share of the Southern California television and radio market because of the presence of the two Los Angeles teams. That hasn’t stopped the team from inking a 20-year TV deal with Fox Sports, worth $25-30 million per year. It pales in comparison to the Angels’ new deal and the upcoming Dodgers’ deal, but it’s still a major improvement over the $15 million per year the Padres were getting from broadcast station Cox-4. The deal starts in April.

Of course, this is MLB, where any snag that can be hit will be hit. Commissioner Bud Selig tabled the sale of the Pads from John Moores to Jeff Moorad as other owners raised numerous questions about financing that weren’t satisfactorily answered. Both Selig and Moorad say the snag won’t jeopardize the sale. It sounds like Moorad will take Jim Crane’s recently vacated hot seat, as the sale gets dragged on for several more weeks or months while outgoing majority owner John Moores stews.

According to this summary from Gaslamp Ball, Moorad has all of his money lined up, including the last $100 million of cash in escrow. That’s somewhat impressive, given that Moorad was given an unusual five-year phase-in plan to acquire all of the team. Moorad sold his minority stake in the Diamondbacks, got Bob Piccinini and others (many of whom are Modesto based) in a 12-member investor group, and seemingly got the money three years ahead of schedule. Yet there remain questions about what debt instruments Moorad used to raise the capital, and perhaps additional questions about where some of that TV money is going to go when the Padres start getting paid (some of it may go to pay down debt instead of the team). All of this harkens back to the McCourt debacle, where Frank kept borrowing against the team and related properties to fund an extravagant lifestyle for him and his ex-wife. With new debt rules in places thanks to the new CBA, Moorad’s group may be Exhibit A in ensuring that teams, especially mid-markets, stay true.

A decade ago, Piccinini-Dolich group experienced similar troubles when trying to buy the A’s. They brought in numerous new partners over several months, trying to appease Selig and the owners. Whether you believe they were shafted or there were lingering unanswered questions about how the group would finance and run the team, their bid was denied. Though it’s interesting to consider for a moment that with the makeup of the Padres’ investor group and Moorad’s place as the managing partner, it’s not hard to see that had things turned out differently, Moorad might be the A’s owner now, perhaps phasing out Dolich over time. Would the group have been so steadfast to stay in Oakland, or would Piccinini have become a Ken Hofmann-like weak supporter of the East Bay? Would Moorad, smelling the money in the South Bay, have gotten his agent juices flowing again and pushed for San Jose? We’ll never know. If you want to see how the Piccinini group would’ve operated the A’s with limited resources (like those in San Diego), all you need to do is see what Moorad does in the future with the Padres.

01.12.12
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Now we’re getting somewhere. Maybe.

So the news today started off with this:

 

All of that – and Lew Wolff’s reaction to Selig’s statements – is in today’s Mark Purdy article. There’s also USA Today baseball writer Bob Nightengale’s reply to Mike Davie’s inquiry:

Sounds like things are moving along. As for an actual resolution? Who knows? Bud Selig’s extension was approved 29-1, the dissenting vote coming from outgoing Padres owner John Moores. Jeff Moorad’s takeover bid has not yet been approved. Why? My guess is money. Say, isn’t Bob Piccinini in that group? He should be able to pump it up lickety split.

01.11.12
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Mesa deal closer, San Jose deal not

Update 11:00 PM – Mark Purdy has a recap of today’s “events”.

MLB.com’s Barry M. Bloom reports that while Commissioner Bud Selig’s three-man panel made a presentation to the Executive Council today, there was nothing new to report on the Oakland/San Jose situation. The panel has presented information at different intervals, so this is no surprise. However, remember that everything comes from the top down: panel presents to Executive Committee, then the issue (probably) goes to the Relocation Committee, then to all of the owners for a vote (if it gets that far).

Spring training homes have no expressed territorial rights, so Lew Wolff’s efforts to put together a deal with Mesa at HoHokam Stadium continue unabated. According to Bloom, improvements to Hohokam would cost $10-15 million, with the city footing 60% of the bill and the A’s 40%. I look forward to seeing the plans, and will dissect them as you’d expect me to when the time comes.

01.11.12
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Owners Meetings and FanFest Open Thread

Update 5:44 PM – These tweets from Sports Business Journal’s Eric Fisher look important:

Now the original post:

Again, I don’t expect anything to happen at the owners’ meetings other than Bud Selig getting his extension and some rules-related changes. Yet there is this fresh off the wire from Mark Purdy:

It’s probably nothing. Or is it?

There is other news. Today I was asked to participate in the Blogger Event at FanFest. Naturally, I accepted the invite. Interviews with players and such are not where this blog usually goes, but I appreciate what the A’s are doing to work with the blogging community, so it’s incumbent upon me to reciprocate. Any ideas on how I should do this? Does anyone with a video camera want to tag along? I’m open to suggestions.

In the meantime, read Wendy Thurm’s (@hangingsliders) excellent post at SBNation detailing a very reasonable solution to compensate the Giants for territorial rights.

01.10.12
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News for 1/10/12

Didn’t expect to have so much news this week, and it’s only Tuesday. Here we go.

  • MLB Commissioner Bud Selig is expected to accept a two-year extension to his current term, which expires after the 2012 season. If Selig looks at the A’s as unfinished business, then it’s good he’s staying on instead of throwing the A’s over the fence for the next commissioner.
  • U.S. Department of Transportation officials were expected today to recommend $900 million in federal matching funds for the BART-to-Silicon Valley Phase I extension, which would terminate at the San Jose Flea Market. The decision would then move to Congress to approve, which was characterized by Gary Richards as a “formality”.
  • During the Raiders press conference introducing new GM Reggie McKenzie, team owner Mark Davis fielded a few questions about the stadium situation. He maintained a similar stance to his father about stadium prospects: “We’re going to try to get something done here (in Oakland) but if we can’t we have to get something done somewhere.” Oakland, Santa Clara, and LA are under consideration, without Davis committing to any specific site. The hiring of McKenzie will allow Davis to focus on the stadium search. One thing I took away from the presser: Mark Davis is committed to owning the team in the long run and considers it his family.
  • Oracle is opening a new office in downtown San Jose, in the same building as accounting firm PriceWaterhouseCoopers. The office could have 265-440 employees. Oracle owns the building as part of its acquisition of BEA Systems.
  • SF Planning Commissioner Mike Antonini has been working with architecture firm HKS (Rangers Ballpark, Miller Park) and a financial services firm who could provide up to $600 million for the forlorn 49ers Hunters Point stadium project. Antonini is trying to raise $1 million from private sources to complete a study.
  • Oakland’s City Council is discussing (right now!) how to deal with the end of redevelopment. There is talk about a successor agency, which would be very limited in scope (affordable housing mostly). Oakland North has an excellent infographic explaining where the redevelopment budget goes. Oakland appears to have two choices: A) allow the successor agency to be created but not with enough money to properly operate, or B) let it expire completely and lose all control or powers normally attributed to redevelopment agencies. They have until Friday to make their decision.

More as it comes. Owners meetings start tomorrow, with the A’s not on the agenda. The Merc’s Tracy Seipel has an overview of the current situation.

01.09.12
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Poole gets it terribly, horribly wrong

Monte Poole has written yet another screed about Lew Wolff and John Fisher. Three questions about this: 1) Would Poole be writing this if the Raiders had made the playoffs, giving him something to write about?, 2) Couldn’t he have bothered to ask Wolff about this?, and 3) Is Poole now tasked with the now-retired Dave Newhouse’s role as chief ownership critic?

Apparently the answer to the first two of those questions is a resounding NO. Poole’s grievous error comes down to this:

Months prior to taking co-ownership, while working as the A’s executive hired to find a suitable yard, Wolff proposed a “ballpark village” on land north of the current site. That’s rich. He realized such a project would require relocating 60 to 80 businesses. And, by the way, Wolff added that this village would require the creation of a new BART station, this one between the Coliseum and Fruitvale stations.

That was their pitch to Oakland. Judge for yourself the goodness of the faith within.

Meanwhile, Wolff said zilch about the land to the south, from the stadium perimeter through the parking lot and out to Hegenberger Road. There’s a Denny’s not much else, other than plenty of space, mostly paved.

Amazing how only a few years can bend someone’s memory. Here’s what really happened:

  • When he was working for Steve Schott and Ken Hofmann, Wolff suggested looking at the HomeBase site (a.k.a. “Coliseum South”). They wanted to split the cost on a $500k feasibility study there, with the Coliseum Authority (JPA) paying the other half. The Authority declined to pay for their share, and the idea died.
  • Wolff did not present the 66th-High “Coliseum North” concept until August 2005, five months after he took control of the franchise.
  • For whatever reason, even though Larry Reid and others from Oakland considered Coliseum South a possibility after Coliseum North collapsed, no one pursued the option.
  • The Coliseum eventually bought the property in 2010 years after HomeBase was destroyed in a fire, dedicating the land to a Raiders stadium redevelopment project.

All Poole needed to do was call or email Wolff. Or Guy Saperstein. Is it that hard? I suppose it is.

Mark Purdy gets a lot more of the history right, though he fails to include the Oakland/East Bay ballpark study of 2001.

01.08.12
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Oakland focuses on EB-5 program to replace redevelopment funding

We now know how Oakland will replace all of those lost redevelopment dollars: Foreigners! At least that’s the program according to today’s Trib report by Angela Woodall.

Before I go further, I have to give credit to Oakland Mayor Jean Quan for going this route. It has some potential, and it’s something that we’ve discussed on the blog previously as it pertains to a foreign investment in a new Sacramento Kings arena. While it’s unfortunate that neither she nor the City Council have had the “adult conversation” I argued for in the post, at least Oakland’s been resourceful enough to identify a path forward.

It makes sense for Oakland to look for creative, out-of-the-box methods to attract investment to the City, and the federal government’s EB-5 program is one of them. Quan has gone to China to look for investors, and may be onto something with EB-5. The program allows immigrants a green card if they put $1 million or more into a new or “troubled” American businesses. Investors also have to create 10 full-time jobs with each application. That money requirement goes down to $500,000 in the case of rural or high unemployment areas, Oakland being one of the latter. Pool enough of these together and a company may have enough capital to move forward.

The Bay Area Regional Center is a government-certified investment firm whose charter is to bring in foreign investment under the EB-5 program. Its service area is most of the Bay Area and Sacramento. Yet the projects it identifies as most ready for investment are three in Oakland. That’s not surprising because BARC is based in Jack London Square, with one of its principals being Oakland developer Jim Falaschi. In fact, BARC is trying to bring in nearly $70 million for Signature’s stalled Oak-to-9th project. (Signature is also trying to get Lawrence Berkeley Laboratory to build its next campus there too.) The Trib article notes that BARC was involved in the $8 million Tribune Tower deal, though records of actual foreign investment in the project are murky. An admission that BARC “is still looking” for a project 2 1/2 years after opening, while honest, is not encouraging.

That’s not to say that EB-5 programs don’t attract investment. Chinese investors put $249 million into the Atlantic Yards project in Brooklyn, though that money didn’t go directly into the Barclays Center arena. According to Bloomberg Businessweek, $1.5 billion has come into the U.S. from foreign investors through EB-5. Like any government program, it’s rife with bureaucratic delay. Applications have often taken months to process. One report this week indicates there are some kinks to work out as the program grows. It can be difficult for foreign investors to separate the good investments from the poor ones based on sales pitches from needy businesses who could easily inflate their projects’ potential.

As cities start to look for alternate avenues for investment, the market for foreign investment will start to get competitive. For Oakland, the biggest issue may be, well, Oakland. Foreigners can understand investing in New York, Los Angeles, or San Francisco. They also get things like ski resorts or wineries. Oakland, for obvious reasons, is a tougher sell. It’s possible that Oakland will need to claim multiple success stories before they can attract enough investors for a major project like Coliseum City. There’s still the problem of getting team owners and leagues to buy in. They’re the head while the foreign investors are the tail. Every application is an investment, not just $500k for a green card. It’s going to take a lot of selling – and even more believing – for Oakland to pull off major funding with EB-5. Or as economist Scott Barnhart, writing for EB5info, wrote in response to a NY Times editorial:

For example, if the 34 floor tower typically used for retail, office space and/or residential purposes did not qualify in New York, one can be assured that states with the highest unemployment levels are not likely close substitutes for a Manhattan address for either the developer or prospective investors, so this project would likely be shelved. Similarly, a large condominium in Florida will not sell if located in a high unemployment area away from the coast instead of a lower unemployment area on the coast, yet the labor will be imported to the site.

There’s a reason why O29 isn’t taking off. And it’s the same reason why Victory Court and Coliseum City probably won’t take off either. It’s still worth a shot, at least from the City’s perspective.

Finally, the EB-5 program is limited to 10,000 approved visas per year, potentially limiting investment. Compared to going the regular (and now shuttered) redevelopment route with its self-contained process, EB-5, with all of its marketing, multiple stakeholders, and delay, may be tantamount to climbing Mt. Everest.

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To read more about EB-5, check out the EB5news site and Twitter feed, and EB5info.

01.07.12
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49ers release club seat license prices

Apparently the bye week is only for the players, because the 49ers front office has been busy. Aside from hammering down lease terms and dealing with newly energized opposition to the stadium project, the team has also taken the time to release pricing (via the Merc’s Mike Rosenberg) for their club “seat builder licenses.”  And boy, the prices are a doozy. Not as bad as what the Cowboys charged their fans, but considering the same Cowboys-owned company that market the Cowboys’ licenses was hired to sell the 49ers’, it stands to reason that the pricing models would be somewhat similar. Lower club seats on the 50 yard line will carry a $80,000 license fee along with a season ticket price of $3,750.

Ticket price based on 10-game season ticket package

In 2009 I took a stab at SBL pricing. I couldn’t have been more off. Prices for prime seat location licenses are more than five times what I guessed. Whether the market will actually bear those prices is up for debate, though the marketing firm must have done some research over the last six months to determine pricing. Mike Rosenberg’s article doesn’t mention financing for the licenses, but I expect that financing will be available. It’s just another way for the 49ers to make money on the stadium. At 9% over 20 years, the $80k license would cost $8,040 per year, or $795 per month.

Timing has to be taken into consideration. Would the 49ers be able to charge these prices if the team had racked up another sub-.500 record? Probably not. Because they have home field advantage and at least a decent shot against either the Saints and Packers, the fanbase is back – which means demand is back.

As is customary with ticket sticker shock, many fans will be priced out of the prime seats. The 49ers haven’t yet announced pricing for regular seats, so I’m curious as to how many of those will carry SBL fees. This pricing model could imply that the premium seat buyers will carry much of the freight for construction, which could drive down the ticket prices for other locations. On the other hand, it could mean that rising costs and debt have to be passed on to the public in the form of SBL prices. We’ll have to wait to see the prices on non-club seats to know for sure. I don’t think licenses will come with 80% of all seats like Cowboys Stadium, but I’ve been wrong on this already once.

01.07.12
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Herhold tracks down history of SJ stadium vote

Whether or not I agree with their work, Scott Herhold’s piece in today’s Merc is why I’m glad there are still veteran reporters and columnists at the Bay Area papers. Herhold takes the wayback machine to 1991, when another Merc employee, Susan Strain, led the charge for a referendum on any stadium or arena project of 5,000 seats or greater.

Strain, now in New Orleans, was then living in Hyde Park, a quiet northside neighborhood framed by the old City Hall and County Government Center to the west, 880 and 101 to the north, Japantown to the south, and light industrial businesses to the east. She and other Hyde Park residents objected to the possibility of a homeless shelter opening in their neighborhood (IIRC an emergency women’s and children’s service center opened instead). Frustrated by the lack of response by City Hall, Strain really got Mayor Tom McEnery’s attention by organization a referendum push, a requirement that still exists to this day. Though it’s short, the article gets Strain’s and McEnery’s sides of the story, and is a good read.

In hindsight, the referendum requirement has probably prevented multiple sports opportunities from happening in San Jose, by scaring off teams or their parent leagues looking to build or locate teams there. The leagues’ M.O. for the last several decade or so has been to avoid a vote as much as possible (Target Field, Marlins Ballpark), even when it involves getting into legally suspect territory regarding financing.

The actions leading up to the San Jose Arena vote should also provide lessons to all parties in the ongoing stadium debates in Santa Clara and San Jose. Petitioners looking to reopen the 49ers stadium deal on financial grounds had to compete with local IBEW members looking to dissuade the public from signing any petitions. The San Jose ballpark is already going to vote so it’s unlikely to follow the same script, but you can bet that labor will be out in force to support the project if there is any sign of it being in jeopardy.

P.S. – Speaking of the Niners, they’ll be paying $12.5 million to Cedar Fair to get the Great America operator to drop its lawsuit. All that for four Sundays a year? Well played, Cedar Fair.