Category Archives: News

12.06.11
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Cedar Fair retains Great America ownership, everyone’s happy

JMA Ventures, the 49ers-affiliated company that was set to buy Great America from them park operator Cedar Fair, is not going through with the purchase after all. That means that the park will stay a Cedar Fair property, which seems to be just fine with all concerned parties. In addition, Cedar Fair and the 49ers appear to have come up with an agreement to keep both entities happy for the foreseeable future. From Cedar Fair’s press release:

The Company also announced that it has reached a long-term agreement with the San Francisco 49ers related to the construction of the stadium and parking for NFL and other stadium-related events for the life of the new stadium. The agreement is still subject to the execution of a definitive agreement and the approval of the Stadium Authority and related approvals from the City of Santa Clara.

It’s yet another one of those small details that needs to be worked out for the Santa Clara stadium to move forward. I’m just guessing here, but it appears that prior to the start of the lawsuit which triggered all of this, Cedar Fair laid down its cards and said, “You can shut us up if you buy the park.” The 49ers, not wanting another obstacle, acceded to the demand and put together its bid. After both parties sat down to figure everything out, the 49ers realized it wasn’t their core competency and looked for another way to make it work. Cedar Fair then dictated terms (undisclosed), the 49ers agreed after some haggling, and the two parties signed on the line which is dotted. Now I’m curious to see what new Great America-specific terms are in the 49ers stadium lease, not that there aren’t enough terms to hash out.

12.06.11
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Reinsdorf plays the heavy

Bulls/White Sox owner Jerry Reinsdorf has a unique bit of experience under his belt: he’s overseen the construction of a publicly-financed stadium (New Comiskey Park/US Cellular Field) and a privately-financed arena (United Center). He once played the I’ll-move-the-team-to-Tampa card with the White Sox and turned it into the birth of the new era of ballparks. He also has a reputation as a shrewd negotiator and plain talker. So I suppose it was not all that surprising that, when Susan Slusser and John Shea caught up with Reinsdorf at the Winter Meetings this week, he had a few choice words about the A’s situation.

Major-league owners can vote to overturn territorial rights, and recent signs point to a potential vote on the issue at the owners’ January meetings. The A’s will have at least one prominent backer in White Sox owner Jerry Reinsdorf, a longtime friend of A’s owner Lew Wolff.

“I’m totally supportive of Lew getting a new ballpark and going to San Jose,” Reinsdorf said. “He needs to be there. It has to come to a head soon.

“Certainly, (the Coliseum is) past its time. In my opinion, Oakland’s past its time, too. Oakland’s had plenty of opportunity to build a stadium and hasn’t gotten it done.”

Within MLB, it’s been well known that Reinsdorf backs his buddy Lew Wolff, along with Commissioner Bud Selig. As a 30-year tenured owner and a member of MLB’s Executive Committee, he’s been known to have nearly as much sway as Selig. When it comes to rallying votes and gaining consensus, Selig and Reinsdorf should be able to pass just about anything, including a resolution to the A’s-Giants territorial rights battle. Will that actually happen? It sure looks that way, based on how Billy Beane’s practically gushing about it.

As for Reinsdorf’s quip about Oakland, that was just mean and unnecessary. Then again, this is the man who sided with Jerry Krause over Michael Jordan.

12.05.11
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NHL approves radical realignment

The NHL has been talking about realignment for some time now. The move of the Atlanta franchise to Winnipeg truly got the ball rolling this year, though there seemed to be a consensus that the changes would be minor, such as moving Detroit or Columbus from the Western to the Eastern Conference. Instead, the NHL is choosing to scrap its division and go with four regional conferences. Motivated by a chance to reduce travel costs, schedule formatting would be as follows:

  • 5 or 6 games against teams in conference
  • 2 games (home-and-home) against teams in the other three conferences

Here’s what we have now:

And starting next year:

Personally I would’ve preferred three conferences of ten teams each, but this should do. I hope this leads to seeding without regard to region/conference, even if it means five teams qualify out of one conference while only two or three come out of another conference.

12.03.11
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Stand for San Jose sues City of San Jose

AP’s Janie McCauley has the news of a lawsuit filed by Giants astroturf group Stand for San Jose against the City of San Jose. The group alleges that City “abused their powers and ran roughshod over their legal duties, including their duties to protect the public’s right to vote and to comply with laws designed to protect the environment, prior to committing to sell public lands for a Ballpark Project.”

I snipped a piece of the City’s municipal code for occasions like this:

4.95.010 Prohibition of the use of tax dollars to build a sports facility 
The city of San José may participate in the building of a sports facility using tax dollars only after obtaining a majority vote of the voters of the city of San José approving such expenditure.

A “sports facility” for the purpose of this chapter is to be any structure designed to seat more than five thousand people at any one time for the purpose of viewing a sporting or recreational event.

“Tax dollars” for the purposes of this chapter include, without limitation, any commitment to fund wholly or in part said facility with general fund monies, redevelopment fund monies, bonds, loans, special assessments or any other indebtedness guaranteed by city property, taxing authority or revenues.

Nothing herein shall be construed to limit the city from allowing the construction of a sports facility funded by private investment.

If any provision of this chapter or the application thereof to any person or circumstance is held invalid, then the remainder of this chapter and application to other persons or circumstances shall not be affected thereby.

The phrase “participate in the building of a sports facility” has always been subject to interpretation. For some, it can mean the City bearing some of the direct construction cost of a stadium. It could mean contributing some or all of the land, especially if the land is sold or leased at below market rate. It seems that Stand for San Jose thinks that the City needed approval via a referendum before signing off on the land deal, even though it’s just an option at this point. The City has been consistent in that it will put the entire package – land deal and all – up for vote when all of the details are completed. By going in Stand for San Jose’s route, virtually every step of the process would have to approved by a public vote every time. The idea sounds like a recipe for gridlock, especially when you consider that the EIR process started in 2005, four years before Stand for San Jose was hatched by the San Jose Giants. All this time, a year after EIR certification, and that’s when you decide to file a lawsuit?

Of course, the Giants (both SF and SJ) could have chosen to stay quiet for years because they were lobbying the City for improvements to Municipal Stadium. Convenient then, that the timing of all of these political and legal actions would occur after the City provided redevelopment funds for Muni? Way to bite the hand that feeds you, Giants. Even more convenient, take a look at how a referendum is required for any venue with a capacity of 5,000 or more. Muni’s capacity? 4,200. Should Muni’s improvements have required a referendum too?

On the other hand, I think the A’s and City could reduce some of their exposure to these types of actions if the Diridon land deal was simply done at market value. Wolff Urban Development is buying the Hotel Sainte Claire at market value, why not the ballpark land? – is what people will argue. This 2005 SV/SJ Business Journal article hints at possible actions if City pushed for a discount. Then again, it’s likely that Stand for San Jose would simply sue based on the EIR, forget the land deal. Coincidentally, the positive budget deficit news reported yesterday (now down from $80 to $25 million) actually works against both Mayor Chuck Reed and Stand for San Jose, since resources won’t be so scarce in the near term.

I would’ve had more sympathy for the mini-Giants had their owners not chosen to sell out to the big paternal Giants to the north. Now it’s just one big corporate interest trying to push around another with the City in tow. We know that the Giants’ motive is to have the A’s leave the Bay Area altogether, or at least rot in the Coliseum for years to come. Thankfully, it appears that Bud Selig is getting off his duff and getting the Giants to the table. Then maybe, just maybe, all this B.S. posturing can stop. Or, as Christina Kahrl tweeted:

http://twitter.com/#!/ChristinaKahrl/status/142832962747113472

Two other observations – note how Stand for San Jose shared the news with the Associated Press instead of the local news outlets when they filed the lawsuit. Looks like someone else is figuring out how to work the national media as well. Also, I like how Stand for San Jose has no problem filing tons of paperwork with the City, yet can’t bother to post any of these filings or letters on their website. Come on astroturfers, if you’re gonna call for “transparency”, you should at least practice what you preach.

12.02.11
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NFL, 49ers bring in the big guns for stadium financing

Congratulations are in order to the 49ers and the City of Santa Clara for lining up all of the necessary financing for their now-$1.02 billion Santa Clara stadium. The Merc’s Mike Rosenberg reports that a consortium of lenders including Bank of America, US Bank, and Goldman Sachs will be providing the bulk of the financing, $850 million. The rest will come from the NFL and the City’s redevelopment funds.

It all sounds promising, but forgive me for being skeptical about this:

Essentially, the two sides are betting that the stadium will create so much profit that they will be able to pay off the loans over about 25 years. If that money doesn’t materialize, the 49ers are on the hook to pay the difference in higher rent payments to the city.

I’d have to thoroughly read the terms of the 75-page agreement to know how iron-clad that is. A rough read right now shows that the way it’s set up, the City-run, quasi-governmental Stadium Authority will lease the stadium to “Stadco”, an entity created by the 49ers to manage the stadium. Stadco will then sublease the stadium to the team itself. I suppose the point of this is to provide some amount of insulation for both the City and 49ers. Here’s some relevant language from Section 8.6:

The recourse of any lender of any construction or permanent financing obtained by Stadco shall be limited so that no City, Agency or Stadium Authority funds, assets, or operating revenues or City enterprise funds will be used as collateral. For other sources of Stadco funds described in the Final Financing Plan that are not loans, Stadco shall provide to the Stadium Authority for its review and approval, evidence, reasonably satisfactory to the Stadium Authority, that such funds shall be available as of the Close of Escrow to pay Development Costs.

This seems to be good for the City from the standpoint of protecting it upfront, as Stadco is responsible for rounding up the financing. As long as the 49ers can meet their revenue projections to pay off the $60 million or so in debt service annually, plus other stadium costs. Of course, that’s been my question from the beginning. At this point I don’t think Santa Clara will be stuck in a position like Oakland/Alameda County or Hamilton County in Ohio, simply because the broader Valley economy should remain strong. Nevertheless, Section 19 covers a default situation by either Stadco or the Stadium Authority. If the 49ers can’t come up with the dough, it’ll be a sign that the team is in such financial straits that the team would descend into bankruptcy, and in that case the team would have to be sold and the courts will decide what to do next (see: Frank McCourt).

12.02.11
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News for 12/2/11

Now that the tryptophan has worn off, we’re starting to get some news again.

  • Wolff Urban Development (Lew & Keith Wolff among others) is buying the Hotel Sainte Claire in downtown San Jose. The hotel, on the corner of Market and West San Carlos, is currently owned by Larkspur Hotels. Marin-based Larkspur dozens of other hotels throughout California, including the Larkspur Landing chain. Prior to Larkspur’s ownership, the Sainte Claire was part of the Hyatt chain. That’s all well and good now that the Wolffs will have three hotels in downtown (Fairmont, Hilton, Sainte Claire). The interesting scuttlebutt is that there may be some higher-ups at MLB that may be involved in the Sainte Claire purchase, perhaps with an eye towards revamping it so that it becomes the official hotel for MLB road teams. That would be a smart move, since right now the Hotel Valencia at Santana Row is eating their lunch in terms of attracting road teams (in this case, NHL squads). The Valencia is only slightly larger, but much newer than, the Sainte Claire, so the Wolffs will have to put a good amount of money into improvements to match or surpass the Valencia. SV/SJ Business Journal asked a consultant, Thomas Callahan of PKF Consulting, how much the Sainte Claire would cost. Callahan pegged the price at $34 million. (David Goll, Silicon Valley/San Jose Business Journal).
  • Staying downtown, San Jose Mayor Chuck Reed may be able to avoid a divisive budget battle with public employees unions thanks to new, lower pension cost projections that cut next year’s budget deficit in half, from $80 million to $40 million. Reed will argue that the projections are a one-time reprieve and that more fundamental changes are required, but this news will certainly make his case look weaker, especially because the unions appear to be offering concessions that will bridge that $40 million and more beyond the next budget year.
  • Moving to a mayor with a different set of concerns, Oakland Mayor Jean Quan’s supporters held a press conference yesterday that may have actually been a proactive rally against a recall petition effort, which is expected to begin next week. So that’s the point when Mayor Quan starts getting proactive. (Matthai Kuruvila, Matier and Ross, SFGate)
  • Meanwhile, a few A’s players have been making the rounds within the community. First it was Jemile Weeks and Tyson Ross at the Alameda County Food Bank on Wednesday, followed by the annual A’s Community Fund Holiday Party on Thursday. (Jane Lee, MLB.com)
  • A ceremonial groundbreaking at New York’s Willets Point (outside Citi Field) kicks off a $50 million redevelopment plan that will surely gentrify that part of Queens. (Nicholas Hirshon, NY Daily News)
  • Historical footnote: the New York Post revealed that prior to building the original Yankee Stadium in the Bronx, the pinstripers were looking for a stadium on 42nd Street in Manhattan. Now that would’ve been different. (David K. Li, NY Post)
  • In what may be the start of a trend, the New England Patriots and Miami Dolphins are pursuing development of casinos within shouting distance of their respective stadia. (Douglas Hanks, Miami Herald)
  • Ed Roski’s Majestic Realty (of the City of Industry NFL plan) and UNLV are still working on a new arena/stadium deal. (Paul Takahashi, Las Vegas Sun)
  • Magic Johnson is teaming up with Stan Kasten as part of a group bidding on the Dodgers. (Bill Shaikin and Bill Plaschke, LA Times)

More as it comes.

11.29.11
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Quakes introduce suites at SJ stadium

When the San Jose Earthquakes announced their plans for a stadium near SJC, observers noted the capacity (15,000), shape (horseshoe), and the seeming lack of luxury suites. Now the team has remedied that last flaw, unveiling a package of luxury suites to be located on both the field level and the rim of the stadium.

The stadium’s original design had a very short first deck and a large second deck, which made it easy for the Quakes to add suites if the economy was friendly enough to do so. In going this route, some other premium seating will be displaced, but the 12 field suites alone should boost the team’s bottom line significantly.

View from behind a suite at field level

What may be more interesting is how the suites are being pitched to potential buyers. The suites have NanaWall-esque moving glass walls instead of a typical door-and-fixed window setup. It’s expected that a number of high school and college events will be held there, which is a smart move given the lack of modern facilities in the South Bay. Concerts are not in the sales brochure, which indicates how sensitive the Quakes are about noise and the venue’s potential as competition for HP Pavilion. Field level suites are $350,000 for a 5-year contract.

Suite seating arrangement. Note non-suite seats to the right.

You might remember how the Fremont ballpark concept would’ve had a level of suites only 10-15 rows from the field. It looks like that amenity will go to the soccer stadium instead, with the ballpark getting the traditional level of suites cantilevered over the lower deck.

Just as the ballpark may grow in capacity as a late game tweak, changes such as the addition of luxury suites can be made for the Quakes’ stadium. We can look forward to more such changes as these projects move from paper to concrete.

11.28.11
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A’s plan spring training move to Mesa

In April the A’s and the City of Phoenix were set to extend a lease at Municipal Stadium and Papago Park, assuming that the parties could figure out a way to pay for around $10 million in improvements. Unfortunately the deal fell through, which led to discussions with neighboring Mesa, where the Cubs are building a new, $99 million facility on the west side of town to replace HoHoKam Stadium (ballpark) and Fitch Park (training facility). The A’s would move into HoHoKam/Fitch after the Cubs leave in 2014.

It’s terribly unfortunate that the A’s and Phoenix couldn’t come to some kind of agreement. Muni is the most transit-accessible Cactus League facility and it has a ton of parking around it. The Phoenix Zoo is within walking distance, and the views of Papago Park beyond the outfield are excellent. HoHoKam’s best attribute is its size, with a capacity of 12,623 (nearly 4,000 more than Muni). It also has a berm in the outfield, a feature never built into Muni.

By 2016, Valley Metro will extend its light rail line to downtown Mesa, putting it roughly 1.5 miles from HoHoKam. It’s unclear what improvements would be needed or requested by the A’s to move to HoHoKam/Fitch. With the A’s leaving Muni for good, only one Cactus League team will remain within Phoenix city limits, the Milwaukee Brewers (at Maryvale). The Brewers may leave Maryvale at some point because the neighborhood is a bit sketchy. That would leave Phoenix with zero Cactus League sites, which is strange considering how big the city is.

11.27.11
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It’s gouging season

Hello everyone, I hope you’re having a splendid Thanksgiving weekend.

I have another CBA article coming tomorrow. For now, there’s an item in the Merc’s Internal Affairs column today. Apparently, AT&T is holding out on their land for a a whopping $150 per square foot, or $6.5 million per acre. That’s roughly the market price in 2005, when the ballpark process started in earnest and the real estate market was still bubblicious.

Real estate professionals familiar with the industrial area chuckled heartily, saying that the AT&T land is worth closer to $25 to $35 a square foot.

AT&T and the other holdout landowner have every right to ask for as much as possible. It’s fair business for them, and there will be some displacement that needs to be addressed. The threat of eminent domain, coupled with MLB’s blessing, should bring the price down since those two factors will reduce the landowners’ leverage. As I’ve written before, the most likely outcome will be that the Wolff/Fisher group will make one offer once they get MLB’s approval and let the chips fall where they may. If the landowners want to get as much as possible they’ll want to avoid the possibility of eminent domain, since there’s always a chance a judge will give a minimal land valuation. Legal fees will only make the whole ordeal more wasteful. That said, the holdouts may have a threshold that they’re not willing to drop below, so it could very well go into eminent domain proceedings. There is no given at this point. We’ll just have to see how it plays out.

11.22.11
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Big market, low budget

In February I wrote about a potential revenue sharing rollback in the new MLB collective bargaining agreement. While today’s joint announcement didn’t produce a percentage rollback (or contraction for that matter), there is a sort of rollback coming for revenue sharing. And the way it’s constructed, it’s targeted at one team in particular – the Oakland Athletics. Here’s the relevant text (courtesy of The Biz of Baseball):

IV.. REVENUE SHARING

a. The net transfer value of the Revenue Sharing Plan will be the same as the current plan. Net transfer amounts will continue to grow with revenue and changes in disparity.

b. The fifteen Clubs in the largest markets will be disqualified from receiving revenue sharing by 2016. The revenue sharing funds that would have been distributed to the disqualified Clubs will be refunded to the payor Clubs, except that payor Clubs that have exceeded the CBT threshold two or more consecutive times will forfeit some or all of their refund.

c. The Commissioner’s Discretionary Fund will increase from $10 to $15 million per year.

Again, no percentage rollback (A). It’s item B that has enormous implications for big market teams. The revised revenue sharing system effectively shuts the big market teams out of the program by the end of the CBA, gradually losing 25% of any revenue sharing receipt annually until 2016 when it’s eliminated entirely. The Bay Area is the #4 media market and is #6 in population, so neither Bay Area team would be eligible for revenue sharing in the future. Sounds like a deadline and a decision for the A’s, right?

Not so fast. SI is reporting that a provision in the new CBA allows the A’s continue on revenue sharing past 2016 if there is no resolution. So what does this all mean?

The A’s are in a unique and unenviable position among the 30 MLB franchises. They are both a big market team and a low budget team. In the long run, they can’t be both. No other big market team operates on revenue sharing, year after year. When Lew Wolff and I talked two years ago, I mentioned that the A’s were the only two team market where one franchise pays into revenue sharing while the other receives it. He replied that he hadn’t heard the Giants-A’s dynamic phrased in such a manner. I joked that he could take that up to the league office if he wanted at no charge.

MLB appears to be taking the steps to ensure that the A’s are positioned to become a full-fledged big market team. Getting a stadium deal in place is only the first step. Vastly improved media and sponsorship deals are just as important. That doesn’t mean the A’s will reach the Red Sox or even the Giants in terms of revenue, but if they can achieve the medium revenue levels of the Nationals or White Sox, they’d be considered self-sufficient. Both Wolff and Billy Beane are aware of this.

One explanation for the provision may be that the A’s might not be able to open a new ballpark in San Jose until after 2016, though there has been no indication that this is the case. If Wolff isn’t given the go-ahead to move to San Jose, there’s no telling what will happen down the road. It should set up the A’s for a sale at some point. The problem with this is that we know that an Oakland-based buyer with knowledge of the area’s low revenue generation would have to buy the team at a discount, whereas other buyers looking to move the team elsewhere would be willing to pay full price. Hopefully it never gets to that point. MLB is not going to approve Oakland’s continued stay on welfare. They’ll move the team out of the area instead.