Category Archives: Owners

07.17.21
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How to Turn Win-Win-Win into No-Win in a Few Short Hours

Well, that was a disaster.

Friday morning started off with great anticipation, as fans and the media eagerly awaited the City of Oakland’s version of a term sheet. As I wrote last week, the City and the A’s are working at cross purposes in trying to come to terms, as the A’s don’t want to stray too far from what they proposed while the City wants change enough of it for the City Council to pass it.

The term sheet with attachments dropped Friday morning at 9:15 AM. Reporters from all major Bay Area print and broadcast outlets swooped in to study it. Now keep in mind that the City is now dealing with two term sheets, the one proposed by the A’s during the spring and the version put together by City staff. While the A’s and City keep working to come to agreements on major deal points, the only big achievement so far is a consensus on a 25-year non-relocation clause, up from 20 proposed originally by the A’s.

The City’s term sheet entirely omits the offsite IFD (infrastructure financing district), called JLS though it doesn’t include Jack London Square proper. Instead the focus is on a single IFD at the 55-acre Howard Terminal site. From a passage standpoint this is the best move by the City, since the offsite IFD didn’t have broad support and likely wouldn’t withstand a vote of property owners to tax themselves. However, the A’s lobbied for the offsite IFD from the beginning and continue to push for it, turning the issue into a potential showstopper.

Casey Pratt from ABC7 and Brodie Brazil from NBC Sports California both interviewed A’s President Dave Kaval later in the day. Kaval didn’t budge much on the IFD stance, though Pratt caught Kaval not being forthcoming about the state of a potential short-term extension at the Coliseum. I started to feel uneasy at points in both interviews as I got the feeling that Pratt and Brazil were practically negotiating, but for what? The City has its own negotiating team, as do the A’s. Were they representing fans, who until now have been criminally underrepresented? Perhaps, though there are always dangers in turning this already public negotiation even more public. I understand wanting to give fans some nuggets of hope, but this isn’t the way to do it. It’s already a confusing mess, since if the resolution passes on Tuesday it will likely be rejected out of hand by the A’s. If it’s voted down, which the A’s prefer, the City will have to go back to the drawing board while the A’s will have license to look beyond Vegas in terms of relocation. Hell, they’ll have the freedom regardless of what happens on Tuesday. That Kaval already has a Vegas trip planned immediately after the vote indicates that Kaval and Fisher are anticipating either outcome.

What I find puzzling is that at some point in the past 3/6/12/18 months the City should have recognized the offsite IFD was a loser and proactively adjusted the plan accordingly, or at least pushed the applicant (the A’s) in that direction. Now City has a funding gap of $351.9 million and no clear path(s) to bridge it. Kaval mentioned in one of the previous public hearings that the A’s could get the ballpark built with only $22 million in infrastructure built prior to opening day. My guess is that $22 million would go only towards the fencing and other safety measures that would be required for minimal rail safety, though obviously that’s far short of the full grade separation wanted by Union Pacific and Amtrak.

Howard Terminal ballpark with lots of park and open space around it

The A’s chose to propose the ballpark with all of the virtually all of the needed infrastructure, especially the transit hub, located offsite. In doing so, they made the offsite part of the project much more expensive. The transit hub, which will cover a two-block stretch of 2nd Street, is likely to cost $50-100 million to implement. There are also the bridges to build for grade separation. If the A’s included the transit hub as part of the Howard Terminal IFD, they could’ve reduced the offsite cost while providing a reasons for the City to invest in the transit hub: efficiency and better packaging. The team probably didn’t go this route because they didn’t want a transit hub right next to their luxurious condo towers. The funny thing about that is that because they already conceded the western blocks of the site as a buffer against Schnitzer Steel, those blocks are set up well for office uses, parking, and a transit hub if they want it.

Site plan with the southwest corner cut out for the expanded turning basin

Even if the transit hub is relocated, the grade separations remain a priority, even moreso because of the refocused traffic. That $352 million cost doesn’t magically go away. As I leafed through the term sheet it struck me that the offsite infrastructure cost is about the same as the construction cost for PacBell/AT&T/Oracle Park (not adjusted for inflation). It never gets cheaper, and as the A’s keep dillydallying with sites and cities, the price will continue to rise especially if new requirements they didn’t anticipate 10 or 20 years ago are piled on.

Other cities will be talked about as the A’s and MLB grow more frustrated with Oakland. These days that’s par for the course. Just remember that there are a couple factors that will have sway that no candidate city can control. One is inflation, or the rising cost of construction. That’s partly explained by building more complex buildings than what used to be standard (see my visit to Globe Life Field as the most recent example). Places that need retractable roofs and comprehensive HVAC systems can add a cool $300-400 million off the top. That’s an equalizer for Oakland. The other factor is written into the MLB’s constitution.

As a team in one of the largest markets, the A’s agreed to be taken off revenue sharing indefinitely. When that occurred I complained that Oakland, while in the powerhouse Bay Area, is functionally more of a mid-market team like San Diego or team in the Midwest due to its inherent disadvantages in media and location. Regardless, the A’s have to play by big boy rules, so they get no quarter, no revenue sharing. That means that any move to a new market (Portland, Las Vegas, Vancouver) must be contemplated not only as a new market, but also a market that will require the A’s to go on revenue sharing due to yes, inherent disadvantages in media and location or market size. If MLB’s philosophy is to get franchises off revenue sharing as a necessity (call it small market welfare), moving the A’s to a much smaller market contradicts that notion. Ironically, crippling the A’s revenue picture a few years ago may be the one thing that saves the A’s for Oakland in the end. If only they can get a ballpark built.

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P.S. – The Oakland Coliseum is about 16 acres in size. It’s huge. The Howard Terminal looks very close, maybe 14 acres. The packaging could be a lot better for 30,000 seats.

07.08.21
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Let’s Take Stock

It’s the early morning of July 8. In less than two weeks, the City of Oakland is scheduled to vote on a term sheet, which despite it being a non-binding document, could play a major role in determining whether the Oakland A’s remain the Oakland A’s. Will it be the term sheet submitted by the A’s? A term sheet written by City staff? Or a compromise version that incorporates key principles from both parties? Or will the parties reassess this mess of a situation, and punt?

Towards the end of today’s study session, Council Member Dan Kalb, who chairs the Community and Economic Development Committee, offered his assessment of how Howard Terminal has progressed since the beginning of the year:

Tonight I’m hearing from the optimists that this all smacks of negotiation in one form or another. Looking at it through Kalb’s (and the other City Council members’) prism, the view is much more chaotic. We are now to believe that the A’s provided their term sheet in January with every intention of getting it approved with minimal changes. Then, having not received much feedback early this year, the A’s publicly released the term sheet in April. City staff, with its divergent goal of getting a term sheet in place that would get enough votes for the Council to approve it – a markedly different goal from the A’s take-it-or-leave-it proposal – scrambled to get that passable term sheet in place. As of now it’s still not finalized. Once it is, if it is passed, it will go back to the A’s for their approval or markup. Or the A’s could find points to compromise and approve it, or dismiss it altogether.

That’s a wide range of outcomes to have at this artificially late stage of the game. There are major deal points that have not been agreed upon yet, chiefly the issues of affordable housing within Howard Terminal and the fate of the “offsite” IFD encompassing much of the area north of Howard Terminal and going west to Mandela Parkway and east all the way to Oak Street. I tweeted out a snap poll to gauge which was most important among the four main issues I identified.

The affordable housing question seems like the most cut-and-dried issue. Simply put, any major development in Oakland requires a percentage of it to be considered affordable housing. The target is 15%, though because Howard Terminal is under the Oakland Army Base redevelopment rules, the target at HT is only 8%. That equates to 240 affordable homes in the final buildout. A lowered goal should be achievable, right? Not for the A’s, who feel they’re already providing enough via tax increment from the development that could fund affordable housing elsewhere. That argument worked well 20 years ago when California’s housing crisis was less stark. Now it’s downright unreasonable to expect that a developer could go this route especially with the historically poor yields of finished affordable housing throughout the Bay Area. 

To illustrate, let’s posit that a newer one-bedroom apartment at HT costs $2,300/month. Under one measure, affordable housing could mean that apartment costs a qualified renter $1,500/month, plus an $800 monthly subsidy paid by an affordable housing fund. That subsidy translates to roughly $10,000 per year, which multiplied by 240 units equals $2.4 million per year. I recognize I’m oversimplifying the problem with this illustration because I’m not tackling levels of affordability, but it should serve the discussion well. No matter how you slice it, that’s a hefty expenditure to be paid by tax increment, a developer, or a renter.

Next up, let’s look at the non-relocation clause. The City wants a term of at least 45 years, which would keep the A’s in Oakland for the next generation or two. The A’s are promising only 20 years, which they say is in keeping with other markets where, as Dave Kaval pointed out, the ballpark is often publicly financed (meaning the City is putting skin in the game). If the City isn’t directly subsidizing the ballpark, the A’s have less reason to take a longer than standard contract. From a practical standpoint, it’s rare to see relocation occur when the first lease term ends, mostly because a team has spent enough time and resources cultivating its home fanbase that it seems wasteful to pursue another so quickly. That generally holds true in baseball, where the last relocation was in 1972 (Washington Senators-Texas Rangers). In other sports it’s far more common, whether you’re talking about the Raiders or hockey in Atlanta. Usually whatever complaints a team has about its venue or market can be addressed by upgrading the facility or building elsewhere in the same market. The A’s sudden scorched earth campaign has sort of laid waste to Oakland, leaving Howard Terminal as the only desirable spot in the East Bay market.

The other major issue concerned the two IFDs or infrastructure financing districts. The A’s prefer two, one at the 55-acre Howard Terminal site and the offsite JLS site. City prefers a single IFD which would essentially be Howard Terminal with few surrounding parcels. City thinks the single IFD structure would be easier to get buy-in from Alameda County, which as you might have heard, isn’t exactly jumping for joy at the prospect. For their part, the A’s continue to say that they need both IFDs to ensure there’s enough tax increment revenue to cover all of the infrastructure and other costs. The problem with this is that without the JLS IFD there’s a major funding gap. As @hyphy_republic noted, City has identified Port-related sources that could backfill that need. Those would have to be studied thoroughly for their efficacy. As I started processing this detail, it occurred to me how ironic it is for the City go to the Port for funding while alienating Port stakeholders who are among the harshest critics of the proposal.

Lastly, there’s a question about the amount of community benefits in the package. The concern is that most of the money raised by tax increment usually goes straight to hard infrastructure in a straight line, or perhaps affordable housing. Other community programs may be more likely to be sacrificed in the event of a budget crunch or just plain old-fashioned value engineering.

Remaining milestones assuming it gets that far: Tell me how the City of Oakland is supposed to make a final approval of this project in September as Dave Kaval suggests

Look, I have no idea if the term sheet will pass in less than two weeks. It might, and then in September the County could choose not to take part, wrecking the project. Again, someone could punt on 7/20 and hope MLB doesn’t accelerate relocation talks. All I know is that this project has now come up in three separate major public hearings in the last two months: the Oakland Planning Commission, the Alameda County Board of Supervisors, and now the Oakland City Council. In every venue there was serious tension and rancor between the governing body and the applicant (the A’s). You’re not going to just wipe it away by calling it negotiation. This is much deeper than mere negotiation. The City and the A’s appear to be at cross purposes, and if you throw the County into the mix, all three are. This is what I worried about when Howard Terminal was first proposed and when it came back to life. It’s an already complex set of circumstances made all the more complicated by the current regional economy. Maybe there is a breakthrough on the horizon. Judging from CM Kalb’s reaction, he was expecting a breakthrough sometime ago. It ended up being a mirage.

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P.S. – The City has officially opened up discussions on its half of the Coliseum complex. I’ll save that discussion for another day.

P.P.S. – You read that right earlier and I almost forgot to mention it. During the hearding, the A’s filed a suit against Schnitzer Steel alleging a Clean Air Act violation. Now that’s some multitasking.

06.02.21
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Ghost of Blue Ribbon Panel Speaks Out in Favor of… The Coliseum

Former Giants VP Corey Busch, who was part of Bud Selig’s Blue Ribbon Panel to study the A’s future in Oakland (and San Jose) a decade ago, was interviewed by the Merc’s Shayna Rubin yesterday. And boy, did Busch had some thoughts.

The big reveal was Busch’s belief that former Giants owner Bob Lurie was never going to ship the team to Florida. Selling the team was, as Busch recounted, merely a ruse to motivate a local buyer for the franchise, which eventually happened when Peter Magowan stepped up. That’s not to discount the tremendous amount of drama at the end of Lurie’s ownership tenure, which involved St. Petersburg and dalliances with San Jose and Santa Clara. Exploration of the South Bay included A’s owner Walter Haas agreeing to cede Santa Clara County to the Giants, which was previously an unassigned territory for MLB’s purposes. The South Bay is now and forever San Francisco Giants territory, even though they will probably never play a game there.

Busch also went out of his way to defend the Coliseum, decrying A’s ownership’s desire for a downtown ballpark – and only a downtown ballpark – at Howard Terminal.

Busch determined the Coliseum site was viable in 2014 on Selig’s blue-ribbon committee to explore ballpark options. He still attests the A’s can build the ballpark village of their dreams around the site. MLB and the A’s declared this month that the Coliseum site “not viable” as a location for a new park.

“The notion that the Coliseum, if properly developed in its totality, is not acceptable is kind of silly. It’s nonsense,” Busch said. “I know for a fact there are people in the commissioner’s office who know the Coliseum site is a good site.”

All Bay Collective’s 2018 Estuary Commons concept (Coliseum/Airport area)

Right now the Coliseum is not in the conversation due to the stubbornness of ownership. At some point it will re-enter the picture, unless everything from this point forward falls in line for Howard Terminal. For all their posturing, the A’s still continue to attempt to buy the City’s half of the Coliseum. And even though Dave Kaval announced the A’s were on “parallel tracks” with Oakland and Las Vegas (I thought there was no “Plan B”?), it’s not hard to see a third path, one that brings them back home.

05.30.21
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Another Prop Has Occupied My Time

Is everyone clutching their pearls tightly?

Oakland’s City Council has a non-binding vote scheduled for July 20 on the Howard Terminal project. If the majority of the council votes Yes, the project continues, including the tangled negotiations for community benefits, transportation, and mitigation for the Port stakeholders. HT proponents, who are mostly a ragtag bunch of volunteers at this point, are pushing the pro message.

But what happens if Howard Terminal gets voted down?

That’s a subject that hasn’t been broached much by local or national media. Honestly, who wants to spend much time gazing beyond the edge of a cliff? Given A’s ownership’s recent Vegas trip, Sin City would appear the be in the lead as a candidate for relocation. A’s President Dave Kaval even nixed a planned trip to Portland, desiring to explore Vegas further.

So Vegas is the ace in hand, while Portland is the ace in the hole. Except they’re not. They’re both bluffs at this point. Kaval’s trip to Vegas was exploratory in nature, with no definitive sites or organized funding instruments at hand. Kaval tweeted from a Golden Knights playoff game, which created blowback from fans. There were meetings with Las Vegas Mayor Carolyn Goodman, representatives from Henderson (where the Raiders training facility is located), and Summerlin (where the A’s AAA affiliate Aviators play). The three options provided are far from ideal. Let’s break them down.

Mayor Goodman wants to redevelop the old Cashman Field/Cashman Center complex to include a domed stadium just as her husband did. As the site is within city limits and not in unincorporated Clark County like the Strip, that makes sense. However, going north past Downtown (Old Las Vegas), past a freeway, and to the Cashman site, is its own cliff in a sense. I visited Cashman a few years ago, before the stadium was converted for soccer use, and well, it’s the same dump the A’s played in 25 years ago while the Coliseum was refurbished for the Raiders, except that it has aged. The concept for now is to level both the ballpark and the small convention space next door and build a domed stadium on the spot. Kaval weighed in with the Las Vegas Review Journal on the subject, including one foul tasting nugget:

Domed stadium? Say it ain’t so, Dave.

Henderson doesn’t have a specific site to offer up to the A’s yet. Summerlin’s plan would presumably be to build the dome over the curiously named Las Vegas Ballpark. Both Henderson and Summerlin are 10 miles from the Strip, in nicer neighborhoods than Cashman. As I considered the options, the A’s and MLB’s likely strategy became clearer to me. It all comes down to Vegas’s previous successes with the NHL (Golden Knights) and NHL (Raiders). Though we haven’t heard about it, I wouldn’t be surprised to see the recently vacated Sam Boyd Stadium enter the picture. It’s also 10 miles away (east) of the Strip.

If MLB considers Vegas a small market from a population and TV audience size perspective, any relocation or expansion-to-Vegas strategy will have to include a plan to capture as many tourist fans as possible. In the past that was somewhat controversial for the potential competition between pro sports and other forms of entertainment, but now, it’s all fair game and can be somewhat synergistic depending on whatever events are happening during baseball season. That makes the location of the ballpark key, as a 30-minute ride away from the Strip is not conducive to capturing much of that tourist base.

Last year, Caesars put the off-Strip Rio Hotel and Casino up for sale. There were rumors that the site would make a good landing spot for a MLB team, with space for a domed stadium and a mega-development. Alas, a real estate firm gobbled up the property and is rebranding it a Hyatt Regency among other things. Given how the stakes for teams were raised by Commissioner Rob Manfred recently, it’s worth asking whether The Strip or an off-Strip site is the only location in Southern Nevada that makes sense. If we’re going by the standard of placing a ballpark in the middle of a downtown or central business district, Henderson and Summerlin don’t make the cut the same way Fremont or anywhere on the I-680 corridor wouldn’t work in the East Bay. Never mind that the ballparks for the Braves and Rangers violate the “downtown” standard.

Beyond Las Vegas’s stalking horse status, let’s consider next steps. For Vegas to work for three-quarters of baseball owners to approve a move, there needs to be a clear economic advantage in moving a team there. Southern Nevada had the benefit of a Stanley Cup Finals-bound team in its inaugural year, truly an enviable feat. There’s plenty of earned goodwill to keep attendance strong there for years to come, plus the Golden Knights get the spoils of being the pioneer in the market. Despite the pandemic-marred 2020 regular season, Raiders attendance should be strong thanks to its large migratory fanbase. MLB is different in that so much of a team’s revenue is generated locally from ticket/suite sales and local television rights.

Sportico reports that the A’s pulled in $220 million in revenue for the 2019 season, the last full regular season on record. 2019 also happened to be the last year the A’s received a revenue sharing receipt (25% share), which showed when the team stripped costs to the bone in 2020 by laying off front office employees, minor leaguers, even scouts. The teams in the middle of the revenue pack, Minnesota and Milwaukee, had figures of $289 million and $286 million in 2019. That makes the gulf between the A’s and other small market teams that opened new ballparks recently around $70 million, inclusive of all media and sponsorship deals but without revenue sharing thanks to the A’s big market status. If the A’s move to a smaller market, they will immediately become a revenue sharing recipient simply because they won’t be able to compete with the big markets. Despite the top-heavy big-market focus of MLB franchises, baseball realizes that it needs all 30 teams to compete at least once in a while. If Tampa Bay moves to Montreal or a Southern city there won’t be a revenue sharing change.

The A’s remain a unique case because of its place as the economically inferior team in a two-team market. The traditional markets, New York, Chicago, and Los Angeles, don’t have strange revenue carveouts or oddly gerrymandered territories. The A’s are a sort of enclave (think Piedmont or Newark) within Northern California, which is dominated by the Giants. The O’s and Nats’ relationship is defined mostly by the O’s owning the sports network that broadcasts both teams.

“Howard Terminal or Bust” is effectively the admission that the A’s can no longer function as a big market team under the current operating situation. They must move to a newer (albeit not bigger) stadium where they can maximize revenue. The A’s are only starting to rebuild their radio presence after a controversial online effort. The A’s TV revenue is in the middle of the pack among MLB teams, which is fine for now and helps to stabilize the franchise. Altogether, the A’s exploration of other markets is ostensibly the search for a replacement level market. If the A’s can get that extra $70 million annually through Howard Terminal, the team can stay in the East Bay. If they can’t get that $70 million, they might as well find out if that money can come elsewhere. Personally, I think they’re going to find out that’s a much tougher task than it seems. Local TV revenue is transforming thanks to streaming threatening to make many RSNs obsolete. Radio is a wounded animal, a necessary annoyance. Ballparks are getting smaller while trying to cater a more exclusive clientele. If the A’s and Oakland are going to prove they can hang with the big boys, Howard Terminal is the way to do it.

That’s what they want you to believe, anyway. I’ll have more to say on that later.

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P.S. – Henderson, NV, was in MLB’s sights two years ago, when the Arizona Diamondbacks used a trip to Henderson to help pressure Maricopa County to help fund improvements to Chase Field. A ticket tax was approved earlier this month, though the team is being coy about whether they’ll use it. Henderson played its role well that time.

P.P.S. – The City of Oakland is urging the Alameda County Board of Supervisors to fork over a matching share of funds from the EIFDs (Enhanced Infrastructure Financing Districts) proposed for the Howard Terminal project. One of the EIFDs is for the 55-acres of Howard Terminal. The other is for a large swath of Jack London Square and the surrounding neighborhood, which got me thinking:

I thought Alameda County wanted out of the pro sports business?

08.05.20
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A’s sue California DTSC over Schnitzer Steel

Quick version:

Need more? Okay.

The A’s filed a lawsuit against the State of California, claiming that the State didn’t enforce 2018 environmental regulations meant to keep metal recycling facilities like Schnitzer Steel from accidentally starting fires. A website, SchnitzerWatch.org, was set up by the A’s, along with a change.org petition which has around 1,200 signees as of 8/5 @ 10 PM. The petition also has a number of donations, which is good for the A’s legal fees supporting this effort. Considering that they already list two law firms and may have more on retainer, they’ll be making withdrawals quite frequently.

Additionally on my tweet, is a reference the March lawsuit brought by coalition of Port companies, also against the State, over Howard Terminal. That lawsuit was about the CEQA streamlining the A’s were seeking, and whether the A’s got certification by January 1, 2020 (they didn’t).

If you’re keeping score, both the A’s and Port interests are not suing each other, but rather the State of California (DTSC and SLC, respectively) over those agencies’ treatment of the offending parties (Schnitzer and A’s, respectively). So in both cases, the complainants are snitching. This doesn’t mean these lawsuits automatically cancel each other out. There may be a way to come to an agreement, but considering how both sides have had six years and nothing’s happened yet, I wouldn’t hold my breath. It’s much more likely that both will go to court in separate cases, whenever it’s safe to add those cases to the dockets and hear them. It’s also worth nothing that the A’s only role in the area is as a lessee of office space at Jack London Square. They don’t own any property yet, unlike Schnitzer.

On Sunday night, I wrote about the timeline slippage for Howard Terminal the A’s published over the weekend. Fast forward to Wednesday, the A’s file the lawsuit, and President Dave Kaval makes the media rounds.

Deeper in Kaval’s tweet thread is an interesting nugget:

Caught up in all the talk about helping West Oakland, Kaval says, “We’ll fight this fight regardless of what happens with the ballpark.”

And right there, the A’s created an escape hatch for themselves. If this fight becomes too difficult, they could abandon Howard Terminal, retreat back to the Coliseum (which they may entirely own in a few months), and pledge to clean up Schnitzer for the sake of West Oakland. Maybe those change.org donations will go towards an environmental fund, who knows?

On the other hand, let’s posit that the A’s take this all the way in court. What are the A’s asking for?

When Schnitzer accepts old cars or appliances to scrap, those hunks of metal are often contaminated. Those contaminants (oil, chemicals, rubber) aren’t easily cleaned away, and some may turn into lighter fluid for scrap metal fires. From skimming both the complaint summary and DTSC’s explainer of the metal shredding process, there aren’t many good alternatives. And if you look at the news, it’s a pretty widespread problem, one not yet solved with technology. A similar metal recycling facility in Chicago was closed in May after a series of fires, controversially reopening yesterday. For the benefit of West Oakland residents, it would be best to copy the operating model of another facility that functions without causing fires. A City of Chicago document outlines one method of storing the scrap indoors in a fireproof enclosure, which sounds like a good idea for Howard Terminal (Note 8/6 11:30 AM: At least one West Oakland activist agrees). Is anyone proposing that? Would that be enough? I’m as much an environmental expert as I am a lawyer, so I can’t speak with any more clarity on the efficacy of that method.

Schnitzer Steel can’t keep skating beyond well-expired deadlines. Neither can the A’s with theirs. In both cases, companies are going to have to make significant investments to prove their worthiness. If they don’t, they’re not doing West Oakland or the entire City of Oakland any good. All this posturing we’re hearing from both sides is just a way to delay making those investments.

Finally, there’s an unusual footnote to this whole affair. Today’s lawsuit by the A’s was brought by the law firm Keker Van Nest & Peters. March’s lawsuit filed by PMSA/Schnitzer was brought by Pillsbury. You may remember that both firms helped the Giants fight off the City of San Jose’s territorial rights challenge. Now they’re effectively on opposite sides: Pillsbury reps the Port interests while Keker is working for the A’s. Even in these pandemic times, life is good when you’re on a retainer.

Spiderman pointing meme

Added at sierraspartan’s suggestion

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P.S. – Almost forgot, the Schnitzer Watch site has no A’s branding on it, even though the A’s filed the lawsuit. Why? Who knows?

08.02.20
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Pushback causes Howard Terminal to get pushed back

Saturday morning is not normally I time to check sites for updates. However, it was August 1, so there was a small chance of seeing something new. If you checked the A’s We Are Rooted site for Howard Terminal over the past several months, you were greeted with this graphic:

Old timeline

By June, it was becoming embarrassingly obvious that this graphic would need to be updated. So I sent out a tweet asking Dave Kaval for it. Ask and ye shall receive, as they say:

New timeline (8/1)

The differences? First of all, there’s no groundbreaking date in 2021 or 2023 Opening Day. In fact, neither is promised at all. What we’re left with are dual Oakland City Council and Port of Oakland votes a year from now, which at this point looks and sounds like a rapidly deflating balloon.

Second, the Draft EIR period is being undersold, as usual. That’s the period when opponents normally launch lawsuits against projects. The problem now is two-fold. While the A’s spent a lot of time and lobbying money trying to line up bills to streamline Howard Terminal through the CEQA process, the project is currently stuck in legal limbo while the state tries to figure out if the A’s successfully applied by the end-of-2019 deadline. It’s bad enough that there’s a protracted battle over the streamlining issue, where the A’s consultants keep submitting addenda to support the project while opponents file letters claiming that the project isn’t eligible.

Excerpt

Excerpt from Port companies letter against project (highlight mine)

Here’s the thing. I didn’t even want to write this post. When the sh*t hit the fan in March, I felt it would be best to let the dust settle and resume coverage when the EIR is released. Reasonable plan, right? Well, you know what they say about best-laid plans. Kaval says the EIR should be published by September. Which sounds okay, except that’s already a year delay from what was promised previously. At this point, we don’t really know when the document will be released. If past is prologue, I have to put the likelihood that we’ll see the draft version at 50/50.

Sadly, that’s all too typical of A’s ballpark projects since I started this blog 15 years ago. The EIR process, which for most people sounds like a tediously boring bureaucratic step, became a crucial gating mechanism for the viability of big projects. Last week, I tried to recall all of the sites beyond the Coliseum that the A’s have studied so far.

  1. Coliseum North (2006, no draft or final EIR)
  2. Pacific Commons (2008, no draft or final EIR)
  3. Warm Springs (2009, no draft or final EIR)
  4. San Jose (2010, EIR certified by City – who also was applicant)
  5. Laney/Peralta (2017, no draft or final EIR)
  6. Howard Terminal (2018, waiting for draft)

It doesn’t end with the draft, though. Publishing the draft kicks off the review and comment process, which opponents are already throwing a wrench into with their pre-emptive lawsuit. The 45-day comment period is a minimum guideline and tends to get drawn out as comments pile up and staff has to write responses or even make major or wholesale changes to the project.

This is why I cautioned so many readers and A’s fans against jumping on the HT bandwagon too eagerly. It, like most of the other past initiatives, is rife with conflict and litigious opponents. For now, I’ll continue to stay the course, hoping that the draft EIR is released and we’ll have something cool to talk about. Perhaps I’m asking too much. I’ll end with my favorite John Wooden quote:

Never mistake activity for achievement.

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P.S. – When I first referred to the changed timelines yesterday, I got the usual blowback from HT fans who for some reason cannot comprehend why I’m not on the bandwagon. If those people can’t understand why from reading the post above, I can’t help them. Sorry, folks. Hope is not a strategy.

05.28.20
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Fairweather Owner

You’ve probably seen John Fisher’s letter to fans from a couple days ago. In case you haven’t, here it is:

To our friends, family, and colleagues,

I hope each of you and your families are safe and sound during this challenging period.

I am writing to you personally today because you are our fans, employees, and members of our A’s family. This has been a tremendously difficult day and I wanted to share some important updates with you. While I normally stay behind the scenes, mostly because I believe in the leaders who run the team day-to-day, I felt that you should hear this news directly from me given the extraordinary nature of these times.

I am very saddened to let you know that we have implemented a significant temporary furlough of staff positions, and reduced compensation for staff members who are not furloughed. We are also suspending compensation for the A’s minor league players.

Our first priority is to those who are being impacted by these decisions, and we will do everything possible to support them during this time. Many of those affected by these decisions have been loyal to the A’s for years – some even decades. I want to apologize to every person impacted.

Baseball is more than a job – it is a way of life. People who work for our team are our family – our very foundation — and they work tirelessly to help the A’s compete in this most precious game. COVID-19 has brought a tragic loss of life and sickness to so many in our community, and it has impacted us all in ways we could have never imagined. Our organization, like so many others across the country, has had to make tough and painful decisions. We all miss baseball, and we want it back as soon as possible. We want the season to get underway soon, and we believe that the healing power of the game will help bring our community here at home – and across the nation — together again.

I know that many of you will wonder why the A’s are cutting costs now. Nobody knows how this pandemic will evolve over the long term. What is clear is that our revenues will be dramatically reduced this year. None of this diminishes the pain of today’s actions, but it is an honest acknowledgement of the circumstances of the moment.

I became involved with the A’s because I love the game of baseball. I love the drama that can unfold in a few innings, or even a single pitch. I love rooting for our team. I want our employees and fans to know that we remain deeply committed to the long-term future of the Oakland A’s, including our new ballpark, which we know can be a positive force for the City of Oakland and the East Bay. With this said, above all else, my concerns today are with every single person in our organization who is being personally affected. Through no fault of any of our staff, today’s actions are hard.

We look forward to welcoming employees and fans back to the game as soon as possible.

Sincerely,

John Fisher
Oakland A’s Managing General Partner

Fisher’s communiqué, his first as the true face of A’s ownership, is a sharp contrast from what we’ve seen from Lew Wolff and Dave Kaval, who were both brought in as frontmen to interface with fans and the business community in order to rally support for new ballpark initiatives. Since Wolff was moved from the control person role to an emeritus one, Fisher has taken a more prominent role, at least during baseball’s owner’s meetings, possibly at baseball’s behest. Though Fisher has behind practically all of the tough decisions made by the front office since 2005, this is the first time he truly had to put himself in the position to weather the backlash.

A’s ownership is getting to a crucial point, part of cycle that has been repeated since they were born over a century ago.

*Omitted the Schott-Hofmann group from the tweet because of the 240-character limit.

Fisher bankrolled most of the 2005 purchase of the A’s for $180 million. Forbes’ 2020 valuation of the team (presumably done pre-COVID) was $1.1 billion, which means that whatever was used to finance the purchase was paid back and then some. Everything after that is pure equity, especially when you consider the minimal capital improvements (ballparks and facilities) made by the ownership group since ’05. Most of the expenditures in recent years have been in sales and development, of the Howard Terminal plan and A’s Access at the Coliseum. When I spoke to Wolff many years ago about how a ballpark would be financed, he said it would be equity-based, but demurred on the details.

As for Fisher the individual, much has been made about his net worth. Also according to Forbes, as of April he was worth $2.1 Billion, not too shabby. That obscures the fact that only 2 years earlier, he was worth $2.8 Billion. Most of the $700 million loss was due to the the flagging fortunes of GAP, the family business.

No one’s shedding tears for Fisher now or ever. He was was rich before the pandemic, he’ll still be rich after. Furloughed scouts and minor leaguers not getting mere stipends don’t have that luxury. The cycle of A’s ownership, which may be repeating itself, remains troubling. It’s not a unique story. Pro sports franchises are hobbies or playthings for their owners, who usually buy those franchises with proceeds from other endeavors. Fisher has the family GAP money. Walter Haas was from Levi’s. Charlie Finley sold insurance. Only Connie Mack made his name as a baseball man from the start, which made it difficult for him to withstand the Great Depression and limited his income.

GAP is a strange mirror image of the A’s, forgoing rent and laying off workers by the thousands. In both cases there is a single fundamental truth to both businesses: there is no revenue. When revenue dries up, you look for expenditures to cut. You start with non-essential positions, like the bizdev folks the A’s hired during the Howard Terminal push over the last two years. Then you go with the minor leaguers and staff, who have no union and are considered more fungible than MLB. Those salaries are paid by the big league club’s player development budget, not by each minor league affiliate. In the past that amounted to $40-50 million annually across all minor league levels.

Going into 2020, the A’s had some money coming in. They had deposits and monthly installments on season tickets of different types, plus spring training revenue through the middle of March. I don’t know how the other game-related revenue deals (broadcasting, ads, concessions) are structured so I can’t comment on that. There’s also money from the league’s revenue sharing plan, which thanks to the current CBA was phased out gradually for the A’s (25% of a full share in 2019 or approximately $5 million, fully phased out in 2020). That aspect of the deal was premised on the A’s building Howard Terminal and emerging as a fully self-sufficient franchise when it opened in 2023.

In good times, pushing all your chips behind Howard Terminal makes sense. As we’ve seen as the plan progressed, its success depended on everything falling into place, from the environmental approvals to the working agreements with neighbors. The margin for error on a plan that complex was remarkably slim, especially when you take into account all of the external factors and how they could affect the day-to-day operation of the team. (BTW in case you’re wondering, there’s still no published draft EIR). Those external factors have created a sort of perfect storm moment for the franchise, rendering them broke in the face of the pandemic. We’re seeing what happens when you don’t make contingency plans on small and large scales, to horrific effect.

As the calendar moved from March into April and May with play stopped and no clear date to resume, I could see all the line items, the various expenses that Fisher and the rest of the ownership group would have to decide to retain or cut. Longtime minors coach Webster Garrison was spared from furlough as he recovers from COVID-related illness this spring. To treat him like the rest of the staff would’ve been a PR disaster of epic proportions, as if it isn’t already. The brutal truth of it all is that $5 million in reduced revenue sharing funds is already not going to go very far. The Rule 4 draft is two weeks. The Marlins and Padres were recently cited positively for continuing to pay players and minors staff for the next few months. Good for them! They still get revenue sharing! They should pay everyone accordingly! MLB owners and players are still divvying up the what’s left of the revenue pie for 2020, and the A’s have effectively painted themselves into a corner. If, as rumored, the ownership group has been squirreling away the revenue sharing checks into a rainy day fund, well, 2020 is a damned monsoon, John. Do what you will.

03.03.20
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EIR will come out eventually (advanced thumb twiddling)

UPDATE 11:30 AM – The A’s are trying to respond to all the questions.

Can you imagine what this will be like if March comes and goes without delivery of the EIR?

The problem with this step of the process is that it’s opaque and inscrutable. So we wait.

—

ORIGINAL POST

Any day now.

I hope you readers understand why over the past several months I haven’t devoted many posts to the EIR process. Having read the completed reports for Levi’s Stadium, Earthquakes Stadium, and Chase Center, I wanted to wait until there was a finished (draft) work product for the Howard Terminal ballpark. And so we wait for that product.

Good thing we have spring training to pass the time. Until the report arrives, enjoy the spring. There’s plenty of other things to read. Or other diversions.

02.03.20
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Barracuda to get their own Tank

Expanded training facility with planned garage (not depicted) across the street

When the Worcester Sharks moved to San Jose to share an arena and a practice facility with their parent club, I was curious to see how long that would last. The answer apparently is six years, as last week the rebranded San Jose Barracuda announced plans to construct a new, 4,200-seat arena adjacent to the Solar4America training facility they continue to share with the Sharks. From the press release:

The 4,200-seat spectator arena will include locker rooms, training facilities and executive office space for the Barracuda, an in-arena Jumbotron with a 360-degree LED display ring, 12 suites, eight loge boxes, one theatre suite, a 46-person party deck, three bar locations, seven food concession stations, a press room and press box and two team merchandise stores.

While I’m glad for the players and the Sharks farmhands that they’ll get better facilities, I feel an opportunity to grow the sport is being lost in the process. The Sharks are effectively doubling down on the South Bay, instead of using an opportunity to grow the sport. To the Sharks’ credit, they also operate ice rinks in Oakland and Fremont, so they are providing some exposure to the sport. When it comes to playing pro ice hockey, fans will still have to come down to San Jose or all the way out to Stockton for the privilege, which is disappointing. As longtime readers of this blog are well aware, I am more than anything else an advocate of spreading the “wealth” of pro sports all over the Bay Area and Northern California. It provides exposure to all communities instead of concentrating teams in San Francisco or San Jose, where ironically, the actual wealth is. This consolidation trend works against my desire and to me seems short-sighted.

Barracuda Tank looks pretty nice

I suspect that Oakland was out of the question, because the Oakland Ice Center can’t be easily expanded and the Sharks don’t operate the Oakland Arena, which is newly empty with a part-time tenant in the Panthers arena football team (who kick off in March). The ‘Cuda play a 68-game schedule, which means the arena would have to maintain an ice surface on-and-off for a full seven months annually. Hockey teams remain sensitive to ice surface quality, which is tough to maintain in balmy California. A leading argument for having both the Sharks and Barracuda play at SAP Center was to give a reason to maintain the ice at the big arena. Instead, the Sharks are pulling back at SAP, opening dates for concerts and other events while consolidating work at an expanded Solar4America Ice facility.

I have a few friends who are season ticket holders to the Barracuda, so I’m interested to see how willing they’ll be to move southeast with the team. It’s only 3+ miles, but anyone who goes to SJ Giants or SJSU Spartans football games nearby know that public transit isn’t a great option to the South Campus area. Parking should be easier as a garage rises across the street from the facility to replace the spaces lost with the expansion. Another loss is a city-owned firing range at the edge of the property, though I don’t know enough about that to gauge its impact. SJSU’s hockey club is probably licking their chops, since they already play at Solar4America Ice and would enjoy the benefits a new arena provides to a college program. First, the Sharks might want to beef up their electrical capacity.

With the Sharks’ minor league affiliate getting its own arena and SJSU blowing out the east side of CEFCU/Spartan Stadium to expand it, it’s a boom period in what is historically a sleepy industrial part of town. Along with what the Giants are doing in Scottsdale and Phoenix, I guess people have money to burn.

01.06.20
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Giles out as A’s COO to start own business

Fairly big news out of Jack London Square today:

Giles had been largely responsible for the subscription-style “A’s Access” plans that supplanted traditional season tickets, as well as other OOTB marketing ideas.

Next time you see Chris Giles he might be slinging a guitar instead of a bat

My immediate thought is that Giles was getting good feedback around baseball (and perhaps other sports) about how well A’s Access was implemented. He then saw a nice consulting opportunity coming out of that. His work, in the COO role, is more-or-less done for now. If Howard Terminal gets approved, which likely won’t be this year, Giles would be waiting like the rest of us for the next big steps. Chief Operating Officer was, for the A’s, created for Giles, so if Giles is replaced, I could see the A’s filling from within the organization or choosing not to replace Giles at all. Ron Leuty’s SFBT summary suggests that the A’s have a deep bench if the need arises.

Even if I were a huge Howard Terminal supporter, I wouldn’t be too concerned about the loss of Giles or some of the other organizational losses over the last few months. The A’s are, after a long period of running lean, growing a much larger sales and marketing side of the business. Some attrition is to be expected. As I’ve been saying throughout 2019, we haven’t hit the really difficult obstacles yet. Save your fretting for when those come up.