Category Archives: Owners

02.05.13
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We’ve seen this movie before

Think about it. Barely over a year from now, a crew will assemble at Candlestick Point and take down the venerable, unlovable, frequently renamed Candlestick Park. Developer Lennar wants the land clear to redevelop as soon as possible, and that means reducing the drafty concrete bowl to dust. The 49ers’ Santa Clara stadium is moving forward by leaps and bounds, setting aside doubts about its readiness for the 2014 NFL season. As with most big demolition jobs, the ‘Stick’s destruction will have a ceremony for 49ers and Giants fans to remember the old stadium. The Giants moved over a decade ago and haven’t looked back, the 49ers appear to be doing the same in moving two counties south.

There’s time for a proper eulogy when the event actually occurs. For now, let’s look at the events that led up to this point.

It’s easy to forget that in 1997, the Eddie DeBartolo, Jr.-led 49ers proposed a new stadium flanked by a shopping mall and a massive garage (9,000+ spaces) at the ‘Stick. It’s all a very 90’s vision, with a large amount of public financing via sales tax increment, a grossly underestimated construction cost ($200 million added within a year), voting irregularities, and a new outlet mall designed to complement existing SF shopping districts such as Union Square. Voters approved the $100 million set aside for the plan, which languished for years as the 90’s dot-com boom went bust and DeBartolo was caught bribing former Louisiana governor Edwin Edwards $400,000 for a casino license. (Edwards, who is also infamous for his “live boy, dead girl” quote, has a reality show starting this month featuring him and his new wife, who is 50 years his junior.)

The 49ers' Candlestick replacement-cum-mall plan was oh-so-90's

The 49ers’ Candlestick replacement/mall plan was oh-so-90’s

Even as the plan withered and died when DeBartolo’s less spendthrifty sister and brother-in-law took over the team, the $100 million remained there if someone, anyone was interested in taking over redevelopment of Candlestick Point. So when the team started talking with Santa Clara about building a stadium near the team’s headquarters, SF Mayor Gavin Newsom had the plan dusted off and brought in mega-developer Lennar to give it an update. Lennar moved the stadium site from Candlestick Point to Bayview/Hunters Point, dropped the mall idea, and replaced it with various income-level housing developments and an office park. A carveout for the stadium with a green parking lot was envisioned as a fallback plan just in case Santa Clara fell through. Voters in 2007 (10 years after Eddie D’s plan) approved the Lennar plan. The 49ers remained lukewarm to the stadium because of costs to cleanup contaminated land and the cost of a short bridge to bring vehicular traffic from the Candlestick side to the Bayview. Things only got worse when the stadium was pitched as the anchor for a future Summer Olympics hosting effort, the complexity and uncertainty of the bidding process scaring off the 49ers and the league.

Lennar's Candlestick/Bayview/Hunter's Point redevelopment plan

Lennar’s Candlestick/Bayview/Hunter’s Point redevelopment plan

Newsom tried to “warn Santa Clara” not to tie up public funds on the stadium, while State Senator Carole Migden wrote SB 49, a Hail Mary of a bill designed to prevent teams from moving within 90 miles of their current home (within territory). That bill, like the stadium mall plan, went nowhere, leaving SF with no leverage and a still-uncertain plan to keep the team in town. The 49ers and the NFL went on the offensive in Santa Clara, went door-to-door to sell their stadium, and got voter approval in 2010. Since then it’s been all details such as the EIR process and a couple of NIMBY-related lawsuits, bringing everyone to last year’s groundbreaking ceremony and the impressively fast construction work since then.

A footnote to this story is the presence of one Fred Blackwell. Blackwell served as the SF Redevelopment Agency’s Executive Director from 2007 until 2011, then jumped across the bay to take Oakland’s Assistant City Administrator job (also redevelopment). While Mission Bay had most of SF’s redevelopment focus over the past decade or so, the ongoing state of affairs in the southeast part of the city always made it a target area. Mission Bay was always the one with real economic promise. Still, Blackwell oversaw much of the debate between Lennar, SF’s Board of Supervisors, and community groups all looking out for various interests and generally not getting very far very quickly. Eventually, the project’s EIR totaled 7,700 pages and Lennar shelled out millions to nonprofits in the name of affordable housing and other community benefits.

Blackwell may feel he’s in a similar position to 2007. During last month’s Coliseum Authority meeting, it was revealed that the Raiders and the NFL really just want to focus on a simple stadium, not the broad vision that the City of Oakland is considering. Like the scope creep that helped sink the SF stadium concept, a wide ranging and ultimately very complex redevelopment scheme in East Oakland may make it difficult for the Raiders to commit to staying if the vision remains fuzzy and exponentially more difficult to pull off than a stadium-only plan.

It’s easy to see why the Raiders want to narrow their scope. They’re not making claims of a renaissance in East Oakland. The last thing the team or league wants is to see the stadium jeopardized by a dependency on another component of which it has little or no control.

Getting the two visions (one is effectively a subset of the other) together will not be easy. A look at the pattern of NFL stadium development over the past 20 years shows that few have been part of any kind of urban renewal plan, unlike ballparks or arenas. With the limited number of football games in a season, this makes sense. The notable exception to this rule has been Lucas Oil Stadium in Indianapolis, which is not part of any redevelopment scheme, but rather an expansion of an existing convention center footprint. The Atlanta Falcons want to move to a site closer to the Georgia World Congress Center for a similar purpose. In Oakland, the stadium may have a retractable dome, which would inflate its cost significantly but also provide greater flexibility to hold different types of events. Even with ballparks, urban renewal is not a given. The St. Louis Cardinals’ Ballpark Village is finally starting construction nearly a decade after Busch Stadium opened.

Can Blackwell and Oakland pols pull together all of the resources, the financing, and the political will to execute a vision that’s projected to be twice as expensive as the scaled down Lennar-Bayview plan? Not even mighty SF could prevent the 49ers from escaping all of the craziness. It would be hard to blame the Raiders for following a similar, simpler path.

02.01.13
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Rams win arbitration case, will St. Louis pay up?

A three-man arbitration panel ruled today in favor of the St. Louis Rams over the City/County of St. Louis, setting the stage for what will be either a major public payout for a renovated/new stadium or the Rams leaving Missouri altogether.

Last year, the Rams and the public agency (St. Louis Convention and Visitors Commission) that runs the Edward Jones Dome presented different cases for what renovations would be required to make the Dome “top tier”, per the stadium’s lease. The Rams pushed to rebuild the roof and two-thirds of the stadium, a project that would cost up to $700 million. The agency’s offer was $128 million. Given the age of the facility and the number of new ones that have been built since, it only makes sense that the arbitration panel would rule in favor of the Rams. The St. Louis CVC now has 30 days to decide if it wants to go through with the renovations as specified by the Rams, or allow the lease to become year-to-year after the 2015 NFL season.

The ruling notes that for the Dome to be considered top tier, individual components of the stadium and the stadium as a whole would have to be among the top eight (quarter) in the league. The ruling doesn’t specify which stadia are top tier, but it’s not difficult to figure which ones would qualify in terms of amenities and fan experience:

  • Cowboys Stadium (2009)
  • MetLife Stadium (2010)
  • Lucas Oil Stadium (2008)
  • University of Phoenix Stadium (2006)
  • Reliant Stadium (2002)
  • Mercedes Benz Superdome (1975, renovated 2006 and 2011)
  • Ford Field (2002)
  • CenturyLink Field (2002)

This list could soon include the stadia for the 49ers and Vikings, raising the bar for the CVC in the process. The final determination date of top tier is March 1, 2015. Although the Rams are asking for lot, the simple fact of the matter is that they could’ve asked for more, like a fully retractable roof or Texas-sized scoreboards. Chances are, they would’ve been awarded it. That said, the ruling is pretty clear that what the Rams are asking for would propel “The Ed” to top tier status:

The Panel finds and concludes that The RAMS 2012 Plans will produce a First Tier stadium and that the CVC 2012 Plans will not. That is the Award of this Panel. There is no reason for the Panel to produce its own plan.

That last part is important, as it gives the Rams all of the leverage in future negotiations, should they choose to negotiate. The panel notes that it was left with a clear choice between one set of plans that would bring the stadium to top tier status and one that wouldn’t. One wonders if CVC had made a more accommodating offer, whether that would have been deemed acceptable by the panel.

The political phase comes next, and it promises to be juicy. There seems to be little public support for the cost and scope of renovations the Rams are asking for. In addition, the Cardinals could file a protest, considering that Busch Stadium was largely paid for with private dollars. The panel previously denied a CVC claim that the Rams pay for 49% of the project cost.

While the next decision is up to St. Louis pols, Rams owner Stan Kroenke has all the cards. Kroenke has repeatedly stated that he wants to keep the team in St. Louis, so an LA threat may not loom as large as it would for the Chargers, or even the Raiders. Still, AEG’s Farmers Field project should prove an effective stalking horse if Kroenke chooses to use it. Already there is some talk about the Rams moving to a new open air stadium, which could be located downtown or in the suburbs of St. Louis County. The Rams’ real goal may be to get a venue where they have control over all revenue streams, even if it means some sort of private contribution towards the stadium’s cost. In the end, a new stadium may be the only solution that works for both parties, since it wasn’t clear where the Rams would play while the renovations at the Dome happened (the project could take as long as three years).

The CVC uses the Dome as part of its convention facilities, and there may be a case to allow the Rams to leave for another stadium in the area because it’ll allow the CVC to open weekends that would normally be used for football games. That argument doesn’t seem to have legs, not when Indianapolis built a new stadium for the Colts and an expanded convention facility, and Atlanta is considering doing the same for the Falcons.

It’s not panic time for St. Louis Rams fans yet. But with Kroenke in such an advantageous position, no one can afford to play hardball with the man. The best they can hope is that Kroenke suddenly becomes magnanimous. Kroenke doesn’t have a track record of going all out for his teams (Rams, Denver Nuggets, Colorado Avalanche, Colorado Rapids, Arsenal), so don’t bet on him going all out for a new stadium.

01.31.13
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Millionaires need not apply

In 1960, Arnold Johnson sold the A’s to Charlie Finley for $4 million ($31 million today).

In 1981, Finley sold the team to Wally Haas for $12.4 million (also about $31 million today).

Steve Schott and Ken Hofmann bought the A’s from Haas in 1995 for $95 million ($140 million in 2013), followed by Lew Wolff and John Fisher buying the franchise in 2005 for $180 million ($210 million today). If you’re looking for hockey-stick style growth, owning a pro sports franchise is a good bet.

That makes the big news this week out of Sharks camp rather eye-opening. Partners Kevin Compton and Stratton Sciavos are selling their stakes to Hasso Plattner, who has until now been the silent money in the ownership group. A reason cited was ongoing losses sustained by Sharks Sports and Entertainment, totaling $15 million during the 2011-12 season. Assuming that they’re not engaged in accounting hijinks, Compton’s and Sciavos’s individual losses (or cash calls) were probably in the $1-2 million range. While I can’t find a published net worth of either, it’s clear that neither approaches the wealth of Plattner, the SAP head (and Larry Ellison foil) who is worth $7.2 billion, more than the Giants’ Charles Johnson and Fisher combined. For Compton and Sciavos, $1 million is nothing to take lightly.

Plattner even admitted today that hockey teams don’t make money. A man of his wealth can truly own a team like the Sharks and absorb a loss without batting an eyelash. He also owns CordeValle golf course in South County (San Martin), several other golf courses in Africa and other hotels. That doesn’t mean he’ll start going crazy with free agent signings in the future, but he can afford to be less concerned about having to make cash calls when the time comes. The Sharks aren’t hurt by turnout at HP Pavilion. They’re hurt by lagging national and local TV revenues. Both of those can improve over time, but they’re definitely playing a long game, not one where a millionaire coming in might look for 8-10% annual returns. The Sharks’ lease is on the second of three five-year options, the last of which ends in a decade.

It’s that return-poor situation that probably doomed Greg Jamison, the former Sharks CEO who missed today’s deadline to assemble a group to save the Coyotes in Phoenix. That’s despite Glendale, AZ promising an eight-figure subsidy for each of the next 20 years to offset the team’s operating losses. Now that a new City Council has promised to not give away the farm for another Coyotes ownership group, speculation is rampant that the team will once again relocate. Prime candidates include the Toronto suburb of Markham, Ontario, where the City Council approved an arena last night. The favorite may well be Seattle, where an arena deal is in place and an ownership group has deep pockets, especially in the form of Microsoft CEO Steve Ballmer.

If you want to be taken seriously in the business, it’s best to have at least one multi-billionaire on your team to cover the occasional lean times and cash calls. Especially in hockey.

01.29.13
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Dodgers to become first $500 million franchise

You’re saying, “No that’s not right. Didn’t the Dodgers sell for $2.3 billion last year?” That’s absolutely right. What the headline is referring to is $500 million in annual revenue. That’s all thanks to the deal the team has signed with Time Warner to create Sportsnet LA. The new regional sports network is set to launch with the 2014 season, so for now the Dodgers will have to limp along with Fox Sports. Sportsnet LA will give the Dodgers at least $280 million per year. The deal will run 25 years and provide the Dodgers with control over the network’s programming.

To understand what this means for the franchise and baseball as a whole, let’s look at how the new TV money will fit into the team’s revenue picture.

  • $84 million in national revenue (much of it from new national TV contracts)
  • $150 million in tickets and parking (based on 3.5 million total attendance)
  • ~$30 million in additional local revenue (radio, sponsorships)
  • $280 million from Sportsnet LA

Final estimate for 2014: $544 million. That will absolutely blow the Yankees, the longtime standard bearer, out of the water. There’s only so much the team can do to affect payroll because of luxury tax implications. Still, it’s an impressive haul that has to keep Larry Baer and company awake at night. There’s nothing the Giants can do to get within shouting distance of that figure unless they cut ties with Comcast and start their own RSN.

As much as the Giants owners may cry foul, one man who isn’t is Lew Wolff. When asked by USA Today’s Bob Nightengale to comment on the Dodgers’ coming windfall, Wolff sounded circumspect:

“I don’t know the details of the (TV) deal,” Oakland Athletics owner Lew Wolff told USA TODAY Sports, “but it’s a magnificent transition in the respect of the value of baseball. I’m hoping that when good things happen, all ships rise.”

Even if the Dodgers are required to share their entire revenue, Wolff says he is not concerned about the gulf between small and large-market clubs.

“That’s always going to happen,” Wolff said “but the Yankees haven’t’ hurt baseball, in my opinion.

“They’ve made us a lot more valuable.”

Can’t hate the player or the game, I suppose.

Pending league approval of the deal, the one matter that remains is the impact of revenue sharing. A bankruptcy court ruled that the value of any TV contract subject to revenue sharing is only $84 million, not $280-320 million. MLB argues that all of the Sportsnet LA money is subject to sharing. With the revenue sharing formula set up as a sliding scale to hit big revenue teams harder, the potential impact to the league and the have-not teams could be huge. Take that $544 million figure above and remove central revenue. Under MLB’s formula, the Dodgers would have to share ~40% of $460 million, or $184 million. If the bankruptcy court ruling stands, the team would have to share 40% of $164 million, or $65.6 million. That’s a difference of $118.4 million. Now consider that the total value of funds redistributed in 2012 via revenue sharing and the luxury tax is estimated to be $400 million. That means the Dodgers alone would bump the pool by almost 30%.

And if you’re Lew Wolff and your franchise can continue to receive revenue sharing through at least 2016 while there is no new stadium, the A’s annual revenue sharing receipt could go up by at least $10 million. Without selling a ticket, A’s 2014 revenue could be in the neighborhood of $140 million – though much of that would come at the end of the year, applicable to the following year. No wonder Wolff’s supportive. It helps the bottom line and inflates franchise value, leaving a franchise sales price of $500 million in the dust. Who’s in a hurry to build a ballpark now? Then again, it’s not certain where the A’s will play after this season…

01.23.13
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Baer softens stance, new San Jose rumor emerges

Earlier today, Giants CEO Larry Baer was on the MLB Network show Clubhouse Confidential, reflecting on World Championships and Barry Bonds, when he spoke briefly about the A’s and their continuing ballpark problem. A couple of sharp observers were watching closely, including KCBS’s Joe Salvatore.

Fangraphs’ Wendy Thurm also picked up on this, and I was quick to reply:

I later qualified things:

So here’s what I know. Remember how Bud Selig imposed a gag order on both ownership groups going back over a year ago? That went part and parcel with the Commish bringing (forcing?) both parties to the table. Over the past couple of weeks I’ve heard from multiple sources that Selig apparently has other team owners lined up and ready to approve a move to San Jose. The remaining issue is, naturally, compensation to the Giants. Effectively, we can consider the battle half over for the pro-San Jose forces. Getting Giants ownership to back down from their no-negotiation stance is a major development. That said, determining proper compensation for the rights to the South Bay is not expected to be a picnic. Prior to this latest set of rumors, I had heard that the Giants were seeking $200 million or more to cede San Jose. In keeping with the A’s giving away the South Bay in the first place 20 years ago, A’s ownership wanted to keep the payment as close to $0 as possible. With such a huge gap, it’s hard to know what number would be mutually acceptable for both parties. They may be subject to binding arbitration, which is sometimes the case when settling team-team or team-league disputes.

The remaining issue is one of timing. Lew Wolff has been pushing out a San Jose ballpark opening date, first to 2016 and now 2018. Unless there’s some newfound sense of urgency on his part, he’s probably in no hurry to pay money for something he won’t be able to claim for several years. He’s probably not willing to make a huge lump sum payment for the privilege either. Then there’s this upcoming season, which is the last at the Coliseum without a new lease extension, and there have been no real talks about an extension to date other than Wolff’s request for a five-year deal. So there has to be determination of when to make an announcement that doesn’t impact the A’s finances and their status in Oakland in the interim. For those and related reasons, no one should expect an announcement anytime soon. Chronicle beat writer Susan Slusser checked in with Lew Wolff and another source, and got this out of the owner:

If it happens for real, we won’t hear about it until it’s all done, approved by the owners and Selig. Until then, keep dreaming.

—

Added: A transcribed snippet of the Larry Baer-Brian Kenny interview:

KENNY: What’s the club’s view on the Oakland A’s attempt to go to San Jose?

BAER: Our view is that it’s really up to the commissioner and the baseball processes. We’re not involved talking about it. It’s really something that the commissioner has to sort out. Obviously the A’s need a new ballpark and we hope that they get one.

—

Note: Clubhouse Confidential is on MLB Network today at 4:30 and 9:30 PM.

01.23.13
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Oakland City Council session briefly upstaged by Coliseum JPA-related vote

So there I was Tuesday night, home sick with the flu instead of at my weekly Pub Trivia night. I figured that I’d keep an eye on the Oakland City Council session, because the debate regarding the William Bratton hiring was expected to be thick and fierce. To my surprise, the discourse was more civil and less disruptive (measured in degrees) than many #oakmtg sessions, As I write this, the meeting is still going on and there remains a large number of speaker cards, meaning the session may easily run past 1:30 AM.

There was one item of tangential interest to the crowd that reads this blog on the meeting’s agenda. That was the appointment of two City Council members to the Coliseum JPA’s 8-person Board of Commissioners. Former Councilperson Ignacio De La Fuente was the Chair until last weekend, while the other seat representing the City Council on the board is currently held by Desley Brooks. Larry Reid, who has previously served on the Board, was appointed without a hitch. That was no big deal because Reid is replacing De La Fuente. Brooks, on the other hand, had expected to remain in her capacity on the Board but was cast aside in favor of Rebecca Kaplan. After a motion was made to nominate Kaplan, a full 30 people came up to speak in support of Brooks. Many spoke about Brooks’ record supporting the black community. The Twitterverse blew up with jokes about Brooks, her colleagues in the Council, and the rather personal, catty, tense nature that the proceedings transformed into.

Brooks has been out of favor with Council President Pat Kernighan, who has the power to make appointments such as this one. A major criticism of Brooks that emanated from the debate (though not from the Council members themselves) was that Brooks’ abrasiveness makes her difficult to work with. Being an outsider to Oakland politics, I can’t substantiate that claim, or the undercurrent of corruption taint that follows Brooks. But there is some level of agreement within that Brooks’ attitude was an issue despite her legion of supporters. As an alternative, Kaplan’s more congenial nature was meant to improve working conditions inside the board. I guess.

Eventually the Council voted 7-0 to approve Reid and 6-1 to approve Kaplan, with Brooks being the dissenter on the Kaplan vote and Reid absent for both votes. The discussion leading up to those votes shed some light on the struggles in the JPA and the problems the City has having the $20 million annual subsidy for the JPA as the City’s albatross. In defending herself, Brooks noted that she brought AEG in to replace SMG. She mentioned that her focus has been to reduce the drain that the sports complex has on the City, even if that means forgoing certain opportunities that might come its way. For instance, remember how there was talk about having a WNBA team play in Oakland, especially after the Sacramento Monarchs franchise folded? Brooks argued that hosting a team would’ve cost $35,000 per game that the City didn’t have. That translates to $600,000 for a full season of games, plus whatever nominal costs would be associated with prepping the arena to host a team. (Obviously there’s more to having a WNBA team in Oakland, but we’re focusing solely on hosting the games right now.)

Who was the Oakland politician most gung-ho about bringing in a WNBA team? Kaplan. Who’s pushing Coliseum City the hardest? Kaplan. When it was Kaplan’s turn to speak on her nomination, she didn’t hesitate to bring up Coliseum City’s potential, though she qualified her words a little by saying that it wasn’t solely “about the sports (teams)”, it was as much about redeveloping an area that long needs it. As we all know by now, redevelopment as an institution has been blown up by Governor Brown, with mostly small-scale efforts like affordable housing left as available project types for cities to work on.

Just like that, two of the councilmembers who could be considered more skeptical of the sports-as-savior strategy (IDLF, Brooks) were replaced by two who are all for it (Kaplan, Reid). None of this means that anything substantial will happen with Coliseum City anytime soon. It’s still going to cost billions of dollars to pull off and will require commitments from at the very least the Raiders to have any shot of happening. However, if developers or AEG wanted a sign that things could go more smoothly on the political front for them, this is it.

The WNBA team idea, which has receded from consciousness in the Bay Area over time, sounds like a very good project for Oakland and its business community to pick up. A franchise is worth somewhere in the $10 million range, less than MLS. Player salaries are affordable. The schedule runs during the NBA’s offseason, so there are no date conflicts at Oracle Arena. Plus there’s the advantage of the Bay Area as something of a hotbed for women’s basketball, thanks to the stalwart Stanford program and a recently powerful Cal program. It’s achievable, doesn’t require ridiculous amounts of resources from the business community, and as has been demonstrated in Seattle, a franchise can survive and even thrive when its NBA brother leaves town. That’s not to say that Oakland should give up on the A’s/Raiders or even the Warriors. Far from it. It would show that Oakland and the East Bay can coalesce to get a team that the community can rally around. Even Mayor Quan has referred to that possibility. It’s kind of hard to know if Oakland is capable of big successes if it doesn’t have small ones to build upon, and its biggest success were decades ago. If you want a test case, well, there it is. Seize it.

01.21.13
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News for 1/21/13

Update 11:00 PM – Tomorrow at 2 PM Mayor Johnson will hold a press conference where further plans to keep the Kings in Sacramento will be unveiled, possibly including the disclosure of one or more assembled bidding groups for the the franchise.

NorCal has it pretty good these days in terms of sports. Unless you’re a Raider fan. Or the Kings fan. About the Kings…

  • Around the end of the AFC Championship Game, a flurry of reports from national sources had the purchase/sale agreement between the Maloofs and the Hansen-Ballmer group sewn up, with the paperwork being submitted as early as tonight. The price hasn’t budged from the oft-discussed figure: a $525 million valuation with the Hansen-Ballmer group paying for a 65% majority share, or $341.25 million. One new wrinkle is the Maloofs’ demand of a non-refundable $30 million deposit, which sounds like either pure desperation on the buyers’/sellers’ part or a sign that the move will be rubber stamped with it reaches the NBA’s Board of Governors. The remaining 35% of minority shares have not been arranged to be sold in any way except for a 7% chunk that will be sold in a bankruptcy proceeding. For their part, Sacramento Mayor Kevin Johnson and forces in Cowtown continue to work towards providing a counteroffer. It’s unclear if that counteroffer will get more than a cursory look. [Pro Basketball Talk/Aaron Bruski | ESPN/Marc Stein]
  • In the latest Matier & Ross column, there’s an item about John Fisher attending a Warriors game courtside with W’s owner Joe Lacob. “That prompted one East Bay mover and shaker to speculate that a deal might be in the offing for Lacob to buy the A’s,” a notion that was summarily shut down by Lew Wolff. Hmmm, who could that East Bay mover and shaker be? Perhaps someone who is working as a consultant for the Warriors to move the team to SF? Grasping at straws, anyone? [SF Chronicle/Matier & Ross]
  • Lew Wolff spoke at the Silicon Valley Business Journal’s Economic Forecast breakfast on Thursday. SVBJ had one choice quote from Wolff, “I want people in LA to say ‘the one place in California I want to build is San Jose.’ ” Wolff also joked, “Next time I’ll take on the pyramids instead of baseball.” Nonsense, Lew. You just have to be more of a dick to the other owners to get your way. [Silicon Valley Business Journal/Shana Lynch]
  • A little-reported story on this blog has ended rather quietly. That would be the ballad of Charlotte lawyer Jerry Reese, who filed lawsuit after lawsuit against the City of Charlotte and Mecklenburg County to prevent a AAA ballpark from being built there. Reese’s reasoning was that any such deal would impair the market’s ability to get a major league stadium deal done. After a judge threatened sanctions, Reese agreed to settle and drop all lawsuits, including those related to a AAA ballpark under construction in Uptown Charlotte. Charlotte is considered a somewhat overextended market for MLB to begin with so it’s hard to take such an effort seriously, but you can’t blame Reese for trying. [Charlotte Observer/Gary L. Wright]
  • No surprise that the Chargers will stay in San Diego at least through the 2013 season. Better to wait until the AEG sale happens (or doesn’t). [NFL.com/Dan Hanzus]
  • Cleveland Browns Stadium will now be known as “FirstEnergy Stadium, Home of the Cleveland Browns”. Poetic. [Cleveland Plain Dealer/Tom Reed]
  • The 49ers may hold off on selling naming rights to their stadium until the proper deal comes in. With all of the advance money coming in, they can afford to wait. One thing they don’t have compared to another unnamed stadium, Cowboys Stadium, is the sheer number of events held annually that can help draw enough attention for a company to justify the naming rights fee. I imagine that the 49ers will get a naming rights deal done before Super Bowl L in 2016, the better for a bidder to take advantage as MetLife will prior to Super Bowl XLVIII. [SF Chronicle/Matier & Ross]
  • One stadium is getting rid of its naming rights sponsor, Sporting Park in Kansas City, KS. They’re distancing themselves from Livestrong for obvious reasons. One not-so-obvious reason: the MLS All-Star Game will be held there this year. No need for a tarnished brand to represent the league in that manner. [Reuters/Simon Evans]
  • The Cubs have unveiled plans for their massive renovation of Wrigley Field. Besides the oft-reported newer, larger clubhouses, there will also be two large club areas behind the plate, expanded concourse areas throughout, and a patio in the left field corner. One new deal point is that the Ricketts family is willing to pay for the $300 million themselves as long as the City of Chicago/Cook County doesn’t start placing a bunch of restrictions on what the club can/can’t do at Wrigley. More night games, anyone? [Bleacher Nation]
  • Sports economist Andrew Zimbalist considers downtown Tampa the best place for a Rays ballpark. That won’t make the keep-em-in-St. Pete-crowd happy. [Tampa Bay Times/Stephen Nohlgren]
  • One community in Florida is having a tough time figuring out what to do with a stadium-related sales tax once the stadium is paid off. [Florida Today/Matt Reed]
  • It seems that the only way to introduce a new stadium concept in Las Vegas is to make it bigger and more ostentatious than the previous concepts. The UNLV Now concept has a $800-900 million cost attached to it. That seems very Vegas to me. The new wrinkle: a 100-yard long video screen stretched along one of the sidelines. Why put seats in the best place you could have a video screen there instead? [Las Vegas Sun/Ray Brewer]
  • The Oilers and the City of Edmonton are reportedly close to a new arena deal. Oilers ownership backed off a $6 million/year subsidy demand, which was a major sticking point previously. Instead, the team will be asking for more direct subsidies upfront. [Edmonton Journal/Marty Klinkenberg]
  • As the Kings prepare to leave their home of 25 years, another former Kings home may be up for demolition. That home is Kemper Arena, which was barely a decade old when the Kings moved from Kansas City to Sacramento in 1985. An effort is underway to save Kemper, spearheaded by the namesake’s descendants. Kemper Arena hosted the 1988 Final Four, numerous “home” games for the Kansas Jayhawks basketball team, and most ignominiously, the 1999 WWF event Over The Edge, during which Owen Hart plummeted 70 feet to his death from a malfunctioning harness. [KCTV-5/Chris Oberholtz]
  • According the Milken Institute, the South Bay is the #1 economic market in the country. SF/Peninsula is 36th, while the East Bay is 155th, below Vallejo-Fairfield and Fresno. Milken seems to attribute much a market’s economic power to its tech proliferation, which might penalize the East Bay, but if you look at the rankings, it doesn’t. [Milken Institute]
  • It what has to be considered your classic Friday afternoon bad news dump maneuver, Clorox announced that it’s selling its headquarters building in downtown Oakland for $110 million. The buyer is real estate firm Westcore Properties. Westcore is leasing back more than half of the building to Clorox, though the length of the lease was not disclosed. The news comes several months after Clorox relocated much of its R&D staff to Pleasanton. Now I can understand Clorox not wanting to deal with the overhead of being a landlord, and the company runs quite lean with a small cash position. But whenever you hear about similar sell/leaseback deals, they usually aren’t good. A similar deal was reported that very same day by Sony when the tech giant announced that it was selling its midtown Manhattan headquarters for $1.1 billion. The Maloofs sold and leased back ARCO Arena because they were low on cash. In other words, no one’s celebrating about this. [Oakland Tribune/George Avalos | Financial Times/Michiyo Nakamoto]

More as it comes. One quick viewing note: on most cable/satellite systems, NHL Center Ice is doing a free preview through the end of the month. Check your local provider.

01.18.13
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No please, really, take your time Oakland

The Coliseum Authority released its agenda for the upcoming January 25th meeting. On the agenda is a procedural item of voting a new Chair and Vice-Chair. The other item, 6b, involves the following:

6b. Resolution of the Oakland Alameda County Coliseum Authority:
1. Waiving Competition and Authorizing Staff To Negotiate One or More Professional Services Contracts to Conduct

Studies for Site Planning and Development Scenarios, and to Create Estimates Of Building Budget And Profit And Loss Statements, For a Potential New Stadium and Related Development on Land Currently Owned By The Authority That Lies Within the Coliseum City Specific Plan Area, for a Total Amount Not To Exceed $500,000; and

2. Authorizing Staff To Competitively Procure and Negotiate One or More Professional Services Contracts to Conduct Studies of Revenue Potential and Market Demand From a Potential New Stadium and Related Development on Land Currently Owned By The Authority That Lies Within The Coliseum City Specific Plan Area, for a Total Amount Not To Exceed $500,000; and

3. Authorizing the Chair of the Oakland Alameda County Coliseum Authority to Execute Contracts for Services With Selected Consultants Without Returning to the Authority Board; and

4. Amending the Authority’s Budget to Allocate up to $1,000,000 in Available Oakland Alameda County Coliseum Authority Funding For These Purposes

Woah there, wait a second. Is the JPA really saying that it still has studies to complete? It needs to do financial projections and a development plan? And it’s executing this now without competitive bidding? You have got to be kidding me. This stuff was supposed to be done by now. Funding for Coliseum City was authorized in February 2010, almost three years ago. This is supposed to be the easy part.

Now, maybe the upshot is that the Raiders and JPA came to an agreement on a lease extension, allowing these funds to be freed up. But if anyone from the East Bay is looking for signs of progress soon, this certainly won’t help. At this rate the 49ers will have been at their Santa Clara stadium 7-10 years before anything gets built in Oakland. Also, note that the resolution says stadium in singular form. Will there be a two-stadium alternative, as some pols believe is the best option? Or are they talking about another multipurpose stadium? I can’t wait. Actually, I guess I can. I have no choice.

I suppose these “additional” studies can be completed by the end of the year. In a week full of unbelievable BS news in the sports world, this ranks up there, at least locally. Suspiciously, the JPA’s annual financials have not yet been released. They probably won’t show much in the way of funds spent on Coliseum City so far. This is so disappointing, and yet, par for the course. No wonder the Warriors plowed their own path. They can’t trust the JPA to make anything happen in a timely manner.

01.18.13
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David Stern’s Reverse Solomon

As much as I enjoy much of the drama in the Kings-Sacramento-Seattle love triangle, even I don’t want to bog down this blog with daily updates on the situation. If a deal is signed, the Maloofs apply for the move, or something happens in April when the NBA’s Board of Governors is set to meet, I’ll write about it. Until then, the Kings issue is best relegated to the weekly newswrap.

However, I’ll take this story in a different direction. There’s a solution on the horizon, one that can satisfy all parties: the Maloofs, Chris Hansen, Mayor KJ and Sacramento civic leaders alike. It all starts and ends with two old guys who spent a couple of years in St. Louis.

What’s that, you say? There’s no NBA team in St. Louis? Well, that’s absolutely correct. There hasn’t been a NBA franchise in St. Louis since the A’s moved to Oakland. The St. Louis Hawks moved to Atlanta and never looked back. The only other pro basketball team that has graced the city since is the ABA Spirits of St. Louis, whose two-year stint in the Gateway City was marked more by off-the-court actions than on-court.

That’s because when the ABA merged with the NBA, Spirits team owners Ozzie and Daniel Silna pulled off one of the greatest deals in the history of pro sports, one that continues to benefit the Silnas and haunt David Stern to this day. As several ABA franchises such as the Baltimore Claws and Virginia Squires sputtered to the end, other franchises that were in better financial shape were under consideration to be brought in as new NBA franchises. Eventually, the NBA decided it would accept only four teams into the league: Denver, Indiana, San Antonio, and the New York Nets. It was the culmination of several years of lawsuits, threats, and strife for both leagues as the NBA was struggling with huge image problems. Two teams remained to be dealt with, the Spirits and the Kentucky Colonels, long regarded as the most stable franchise in the ABA. The Chicago Bulls had NBA rights to Artis Gilmore, and they wanted him so badly that they blocked the Colonels from being included in the merger. The NBA paid $3.3 million to Colonels owner John Y. Brown, Jr. to fold the franchise. Soon after the merger, Brown, who owned KFC prior to getting into the pro hoops business, bought the Buffalo Braves and later swapped that for the Boston Celtics.

Ozzie and Daniel were a different story. Instead of taking the $3.3 million payout, they chose to take only $2.2 million and a 1/7th share of national TV revenues for the 4 merged teams in perpetuity. Back in the mid-70’s, no one knew how big the NBA would be. It was common for playoff games and even the finals to be broadcast on tape delay. The Silnas’ prescience became legendary as the league took off only a few years later with Magic-Bird and then soared to unimaginable heights with Michael Jordan. Ever since, the brothers have been getting a 4/7ths team share of national TV money, which has grown exponentially since 1976. In recent years that 4/7ths share has meant around $17 million every year for doing absolutely nothing. It’s the height of rent-seeking, and the crazy thing is that last September, they filed suit to get even more! Now they want cable and international TV dollars, claiming that they lost everything during the Bernie Madoff scandal. No settlement has yet been reached between the Silna brothers and the NBA.

This is where the Kings come in. We know that the franchise’s value has been inflated because of the sale talk and the Maloofs’ financial liabilities. It’s a situation in which one city will come out the winner of the franchise, while the loser may get a “promise” of an expansion team down the road. When it comes to expansion, leagues tend to be hazy on their promises, especially when the leagues don’t really need the cash (like the NBA) and owners naturally don’t want to slice off another piece if they can help it. Yet there’s an interest in getting rid of the Silnas, who have long been a thorn in Stern’s side. Some kind of buyout would also help the 4 former ABA teams, since they’d be on a level playing field in terms of national TV money. 3 of the 4 franchises are in small/mid-markets, so this is no joke.

While the Kings will be sold in a straightforward transaction, the “losing” city’s prospective ownership group can pay an expansion fee, which thanks to Kings-related inflation, should be $500 million. Take some of that money ($200-250 million) and give it to Silnas and their lawyer, while splitting the rest up 29 ways (new Kings owners not included). The other teams would get a one-time $8.6 million-$10.9 million infusion, and future TV money would be split 31 ways instead of 30.57 ways inequitably. The downside is that all other shared revenues would also be split 31 ways, but that’s limited to merchandise and other non-TV sources (not tickets). The Silna brothers walk away with a quarter billion dollars, Stern fixes that nagging legacy problem, and fanbases in Seattle and Sacramento are happy. The NBA would do well to solve this problem before TV contracts come up for renewal after the 2014-15 season. By acting now, owners will have complete cost controls and expanded revenue sharing throughout the life of the CBA.

Funny thing to point out – the total combined national TV revenue for the ESPN/ABC/TNT deals is $930 million annually. It’s quite a coincidence that the total splits into 31 neat, $30 million shares. The solution only works if the Silnas are interested in a big lump sum payout, which they have rebuffed twice already. A quarter billion dollars, however, may be an offer they can’t refuse.

01.17.13
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Two mayors, two different approaches

Some people are going to view this post as more piling on Oakland. It’s not. It’s a demonstration of what leadership is, and what it means to follow through. You’ve been warned.

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Many of the mayors throughout the country are in Washington this week to attend the US Conference of Mayors, where the big topic is gun violence and how to reduce it. The big fish at the event is Vice President Joe Biden, who President Obama tasked with developing a plan for gun control and other related initiatives.

In the face of increasing criticism over her effectiveness in handling the crime and murder rates in Oakland, Mayor Jean Quan left for the conference earlier this week. Her office says that she is “hoping to have conversations” on how to reduce the crime rate, which frankly, sounds like a bad excuse for taking a trip to DC for the inauguration. Maybe she’ll get some kind of commitment from someone in a federal capacity, but VP Biden’s team put together the plan and President Obama signed 23 executive orders without needing Quan to be in DC.

Also in DC for the conference is MC Hammer, who became an employee of the city’s Convention & Tourism Bureau last November. Hammer’s position is to promote tourism, which I have to imagine is a difficult sell when everyday there are headlines about one shooting or another. So there are two Oakland leaders in DC at the moment.

Now all of this would be little more than your typical Washington hobnobbing session if it weren’t for the actions of Sacramento Mayor Kevin Johnson, who abruptly canceled his trip to DC. Why would he cancel the trip even as he was scheduled to speak?

The things that KJ is referencing are his efforts to put together (in parallel) a competing ownership bid that would keep the Kings in Sacramento and an arena package that would be acceptable to David Stern and the NBA owners. KJ is working with a deadline of March 1st. Quan’s deadline for both the Raiders and A’s is effectively the end of the year, so she technically doesn’t have to act too swiftly. But it’s telling that while East and West Oakland are going to hell, Quan is in DC just a month after going to China. In both cases, she’s trying to find solutions, money, or both outside of the city. On the stadium front, Quan has created one task force or another and authorized money for a Coliseum City study which has not yet materialized. There isn’t much to show for Victory Court or Howard Terminal (so far) for that matter. Meanwhile, KJ is rallying forces in the Sacramento region to find a solution. It’s a stark contrast, and while there’s a good chance neither will be successful in the end due to circumstances beyond their control, it’s clear that there’s one mayor who’s trying, and another who’s simply asking for help and not actually doing much.

Then again, this is Quan’s last Twitter update (she’s more active on Facebook):

Welp.