We’ve heard this one before. USA Today’s Bob Nightengale was on The Chris Townsend Show with guest host Brodie Brazil on Monday night. He indicated that something will happen in August, when the next owner’s meetings are slated to be held in Denver. Nightengale claims that if a vote isn’t held (Wolff has asked for one as a procedural matter), Bud Selig will rule on the matter. Nightengale noted that he has been wrong about this before (as have I), and at this point – 40 months into the debate – there’s little evidence to indicate that this will be resolved in short order.
The big admission of this apparent deadlock is that when asked about the situation during a press conference prior to the All Star Game, Selig replied that both teams still have numerous questions to answer. Seriously? At 40 months? Surely, the commissioner and his exploratory committee have had ample time to look at every option, look under every rock, comb every bit of the Bay Area landscape. Admittedly, there are plenty of questions for the contingent cities as to how they’ll complete the deals that will be necessary to host a new ballpark. Those issues aren’t under the Giants’ and A’s control, and they can’t see proper resolution until a decision on how to progress is made. Whichever way it goes, one team (and some city) is going to be upset. The longer this gets delayed, the more expensive the eventual solution becomes – whether it’s in Oakland, San Jose, or elsewhere.
Then again, why bother? It’s not as if the A’s matter to baseball. Inertia, thy name is Selig.
Category Archives: Owners
39 months and counting
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MLB Commissioner Bud Selig just had his midseason “state of baseball” presser prior to tonight’s All Star Game. He fielded numerous questions about expanded instant replay (not yet), the Mitchell Report (feel good about it), and TV blackouts (working on it). As for the A’s:
Selig says A’s/Giants situation is in his hands. “Both clubs need to answer a lot of questions for us.”
— Bill Shaikin (@BillShaikin) July 10, 2012
39 mos in on #As stadium study. But again, nothing new from Selig on this — Eric Fisher (@EricFisherSBJ) July 10, 2012
Wolff and Baer have said it’s in commissioner’s hands, and Selig just agreed. — John Shea (@JohnSheaHey) July 10, 2012
I asked Selig what the main hangup is with A’s stadium issue and he said “The main hangup is we don’t have the answers yet.”
— John Shea (@JohnSheaHey) July 10, 2012
There’s a bottle of Balvenie DoubleWood sitting across from me as I write this, and even though it’s early it’s looking really good right about now.
Padres to sell for $600 million
Fox Sports’ Ken Rosenthal got the tip last night that the San Diego Padres are about to be sold. Three bidding groups have been pared down to two: the O’Malley family led by Peter Seidler, and Gary Jabara, with the O’Malley family reportedly in the lead.
The total price of the sale is expected to be $800 million, with $600 million for the team itself and $200 million for the Padres’ equity share of the recently launched Fox Sports Net San Diego regional sports network.
Jeff Moorad was supposed to be the owner, having negotiated a $530 million price a few years ago with a five-year phase-in of the acquisition. During the last offseason, it became clear that forces within MLB (the “Lodge”) were not going to approve the sale, so when combined with John Moores’ realization that he could get more thanks to the new TV deal, the Padres were pulled out from under Moorad (and minority partners such as Bob Piccinini).
Compared to this year’s Forbes valuation of $458 million, the combined $800 million sale price represents a 75% premium over the appraised value. Even when the TV component is separated out, the premium is 31%. In the wake of the Dodgers’ record-shattering $2.1 billion sale price, some sort of premium was to be expected, and I wrote then that $600 million for the Padres was a good starting point. The Padres serve as a good benchmark for any potential sale of the A’s, because the teams’ market dynamics are similar. San Diego represents the A’s if the A’s got a new ballpark and TV deal, thus the higher valuation ($458 million vs. $321 million).
All of this makes it fairly easy to project what the A’s would be worth on the open market. Lew Wolff has said unequivocally that the team is not for sale, but it’s still a worthwhile exercise – at least on the blog. If I apply the 31% premium to the A’s now, the new asking price is at least $420 million. That’s not going to be enough for Bud Selig, as one of his main responsibilities over the last decade has been to raise franchise sale prices on behalf of outgoing owners as much as possible. If he wasn’t able to lobby to get San Jose for frat buddy Lew Wolff, he’d at least give Wolff and John Fisher a massive golden parachute. It would be practically inconceivable to have any starting price be any less than $500 million. Add at least $500 million in private funding for a new ballpark (more depending on the site), and the cost to keep the A’s in Oakland becomes a cool $1 billion. That’s why I thought it curious when the fan letter to Fisher from the spring circulated, imploring the majority owner to either work to stay in Oakland or sell the team.
$500 million for the team, $500 million for the stadium. Those two parts are attached at the hip, because Selig wouldn’t approve any sale without a bulletproof (and underway) ballpark development plan. The problem with such a plan is that any future franchise sale price would be less than the combined $1 billion, because of the nature of the stadium financing. Building a new ballpark is like buying a new car and driving it off the lot – depreciation immediately kicks in. Since much of the ballpark revenue would be directed toward paying debt, it would reduce the attractiveness and market value of the franchise. Anyone who bought the franchise would be burdened by that debt until it was cleared 30, 40 years later – and that doesn’t even take into account debt incurred to buy the team. The same revenue/valuation drag goes for San Jose, except that at least Wolff/Fisher bought the team in 2005 for the relatively low price of $180 million, and they would presumably be able to service the debt better thanks to Silicon Valley’s economic strength.
So there you have it. $1 billion to keep the team in Oakland. Good luck with that, Don Knauss and company.
They call that F U money
Good choice, Larry Ellison, good choice.
Word spread earlier tonight that Oracle CEO and twice-spurned NBA franchise-bidder Larry Ellison secured a deal to buy 98% of the Hawaiian island of Lanai. Initially the reports did not list a price for Lanai. Newer reports had the asking price at $500-600 million.
Ellison greatest love is yachting, so it stands to reason that the billionaire 36 times over would eventually seek out a dominion of his own to practice his sport. Lanai is one of the best yachting venues in the world. It’s secluded and secure enough for Ellison’s BMW Oracle team to develop and sail without much interference, and it’s “halfway” to New Zealand just in case the Kiwis win again.
Lanai has either over 3,000 residents or less than 2,000 depending on who you ask. It has two Four Seasons resorts – the same number as the Bay Area. Security can be remarkably tight since a private company runs the entire island (which is public).
In celebration of Ellison’s crazy-like-a-fox purchase, I’ve put together the following table comparing Ellison’s Lanai purchase to a typical NBA franchise.
Evil mountain/volcano lair potential is real.
I’m sure that Ellison has had this in the works for months, just as he did with the America’s Cup San Francisco development. Since that part had to be curtailed due the cost of developing Piers 30/32, it could be that he was motivated to pull the trigger on Lanai. It probably didn’t help the man’s legendary ego that some mere near-billionaire half Ellison’s age negotiated a deal to buy the Memphis Grizzlies.
On a related note, SF’s Pier 29 suffered significant damage from a four-alarm blaze that destroyed much of the pier’s warehouse structure. The structure was meant to house concessions and sponsor exhibits for the 2013 America’s Cup. Officials from the City and developers said that the fire wouldn’t impact the development.
Another Airport West land deal + Muni budget item approved
Well, there goes a potential backup plan.
San Jose is getting ready to restructure the land deal (also see rendering) at the Airport West (FMC) property. In February, the City approved the Earthquakes Stadium project, which is to be located on the southern end of the property. Originally, the Wolff-Fisher group planned to build offices and perhaps a hotel on the remainder of the land. Now that remainder will be developed by South Bay developer Hunter Storm, with the section closest to the train tracks set aside for new soccer fields adjacent to the Earthquakes training pitch.
Overlay showing how Airport West property will be subdivided. Earthquakes practice field is the green block on the furthest right.
That last part is especially new, because that land was initially destined to be part of a BART maintenance facility. With BART for now terminating at Berryessa while full funding for the rest of the Silicon Valley extension is to be determined, the land would sit idle if not for this change. Plans currently call for an expansion of the Hayward BART maintenance facility to accommodate the extension, and there may be an option along the extension line for another yard if called for.
The controversial part is that in executing this land deal, the total proceeds to the City will go down $10 million. While the City has an equivalent surplus, in the previous agreement Wolff wasn’t expected to complete the land purchase until 2015. In the new proposal, Hunter Storm would pay for its share of the land by the end of the month. Revenues from the Quakes Stadium and the soccer fields would begin in 2013.
As for the Earthquakes Stadium itself, the article mentions that it’s under FAA review/audit. Apparently this is because the FAA wants to check out light spillage from the stadium light design to ensure that it doesn’t create any difficulties for air traffic. Problems don’t seem likely, but this is a bureaucratic government organization we’re talking about. Already the FAA has determined that both the 49ers stadium and Cisco Field would require temporary flight restrictions due to the way they are sited within the SJC flight path. The FAA review is the only issue remaining that delays stadium construction.
I’ll be at the City Council session later today to cover this issue.
…
Just across the wire – City Council voted 8-3 to approve $85,000 in improvements to Municipal Stadium. Noted is the fact that the City Council can reopen discussions later over how the Giants’ subsidies are spent – especially if they’re used to fund a lawsuit against the City. Later is probably 2013, when the lease is due for renegotiation. Will there still be a lawsuit in play at that point? We’ll see over the next year or so. One thing to keep in mind – as long as the uncertainty regarding the lease and lawsuit hang over the club, it would be hard for ownership to sell the franchise to new San Jose-based interests. Outside San Jose, that’s a different story. The City Council was careful to say that there’s room for both teams within city limits, a posture that has really only come to the forefront in the last couple of years.
I got your lease right here!
In the world of pro sports, $85,000 is not much money. It barely pays for a month of a rookie minimum contract in MLB. It’s the rough equivalent of one decent section’s worth of revenue at a San Francisco Giants game, or the A’s typical daily parking take. In the grand scheme of things, it’s not much. For the City of San Jose, it might be a very important piece of leverage which the City can use against the San Jose SF Giants.
The Merc’s John Woolfork reports that the City wants to get more financial disclosures from the team before it authorizes $85,000 in maintenance funds for Municipal Stadium. The main thrust of the argument against the expenditure comes from a memo (PDF) jointly written by councilmembers Sam Liccardo and Pete Constant.
Finally, as we contemplate whether to continue subsidizing the rent and repair at Municipal Stadium or any other City facility, we should know the extent to which any related entity is financing litigation costing our taxpayers thousands of dollars. Extended delays caused by frivolous CEQA litigation could stall or prevent the most transformative private economic development project – a privately-financed half-billion dollar major league baseball stadium- in anyone’s memory. It would seem minimally sensible to know whether we’re paying for the bullets with which we’re being shot.
Indeed, why subsidize someone else’s antagonism? It’s not exactly neighborly of the Giants to continually come to the trough while suing the city.
Moreover, the memo shed some light on the sweetheart deal the SJ Giants have been getting from San Jose for years. The team is set up as a nonprofit, which is not entirely unique among minor league teams. Thanks to the Giants being a nonprofit, their rent at Muni starts at $1,000 per month. Think about that. The Giants pay less in rent than most apartment renters in San Jose, or the rest Bay Area for that matter. The Giants contribute to upkeep as part of the lease terms, as does the City. But keep in mind that whatever leasehold improvements the team makes can be a tax writeoff (one of many depreciation items), which makes it the costs only slightly more than trivial. And the nature of the improvements is important: the City has paid for structural maintenance and improvements, such as a new scoreboard, electrical equipment, and lockers. The Giants have paid for value-add items like flat screen TVs on the concourse. Next year, the last of the current lease, the Giants will pay $29,000 in rent, which is a tiny improvement.
The memo also compares the Giants’ deal with the Sharks’ lease at Sharks Ice (next door to Muni) and Team San Jose’s arrangement at the San Jose Convention Center. The Sharks paid $5.5 million over the last two years for capital improvements and debt service for Sharks Ice, in addition to $5.3 million in rent just last year alone at HP Pavilion. With the lease due for renegotiation next year, the SJ Giants will be lumped in with the A’s and Raiders, whose respective leases also expire in 2013. Just as you can expect the Oakland leases to reflect additional contributions from the teams, the same should be expected of the SJ Giants.
After all, the Giants definitely don’t need the nonprofit status they’ve had since the beginning of their existence in 1988. That might have made sense back then, when it wasn’t clear how well the community would support the franchise (Lew Wolff knows a little about that). The Giants are routinely one of the best gate performers in A-ball and have their operations almost completely subsidized by their SF parent club/owners. If the Giants want to keep operating as a nonprofit, per the next lease they should comply with the Council Policy 7-1 (PDF), which requires financial disclosures of nonprofits operating city facilities:
…under Council Policy 7-1, non-profit organizations obtaining use of city facilities at a reduced rent must provide a “certified financial statement, including sources of funding and any constraints applied to funds,” and the “City may require, prior to and during the lease/property use agreement, the submission of such additional information as may be needed.”
It would be the neighborly thing to do. If the Giants don’t like it, well, I’m sure there are plenty of other places ready to offer a sweetheart stadium deal. Then we’ll see what kind of blowback the Giants get for being both leeches and antagonists. The irony is delicious. Oh, and if you think this has no teeth, here’s some very interesting language from Council Policy 7.1:
A below market lease/property use agreement may be terminated by the City at any time for any of the reasons established in the lease/property use agreement…
– and –
The City will not enter into leases or property use agreements at below market rates to organizations engaged in political activities or to religious organizations that would use the leased premises to promote sectarian or religious purposes.
Can the Giants’ efforts to derail Cisco Field be called political? Not overtly, but there’s something there.
Kaiser Permanente to sponsor Warriors’ Santa Cruz arena
Warriors ownership moves quickly, you have to give them that.
As reported by the Santa Cruz Sentinel, the team now has a naming rights sponsor for its Santa Cruz D-League home, along with a logo for the Santa Cruz Warriors. I figured they’d use a surf theme. Instead they kept it quite close to the corporate identity, right down to the use of the Copperplate font.
Perhaps Brick Tamland should be the Santa Cruz Warriors' mascot
Oops, here’s the proper logo:
Now there's a trident.
The curious thing about Kaiser’s move is that the company has no facilities, no hospitals, no presence in Santa Cruz County. Competitors like Sutter and CHW do, and there’s little stopping Kaiser from expanding surfside – yet they haven’t. If anything, the move allows Kaiser a chance to have its name mentioned frequently without paying the freight for a major venue naming rights deal. I had argued in the past that Kaiser, which has sponsored the Warriors for years as well as the LA Angels, would have a hard time justifying a multimillion, decades-long naming rights deal as a nonprofit. A deal of this scale, which may well be part of Kaiser’s recent presenting sponsorship deal, is a lot easier to swallow.
The Warriors and the City of Santa Cruz have only a few months to get the tent arena built in time for the upcoming NBA/D-League season, which is guaranteed to include an exhibition game played by the big Warriors. When groundbreaking occurs, I’ll be sure to head over there for the ceremony and every so often to check on the arena’s progress.
P.S. – I noticed something interesting in the D-League’s scheduling. To presumably keep travel costs low, a road team will often play a two-game weekend series at an opponent, a scheduling model not practiced by either the NBA or NHL. It’s not particularly consequential for fans, but it makes sense for the league.
Quakes sell out luxury suites, start selling club seats
Even though the official groundbreaking has yet to occur, the San Jose Earthquakes announced today that they have sold out their entire allotment of luxury suites – 12 in all. In addition, the club announced that they are now selling club seats to the public. A total of 576 club seats will be made available, all at field level, just like the suites.
Club interior
There always was room for premium facilities to be built, so it makes sense that they’d wait to introduce club seats until other premium options such as suites were sold out. The key thing I noticed when looking at the renderings is the lack of walls. In last year’s big Lew Wolff interview, he mentioned how expensive it is to fully build out a space with air conditioning. The sold-out luxury suites are the only premium option that is fully built out. The club here won’t be behind walls of any kind and doesn’t appear to be air conditioned, which should reduce operating costs a good amount. The amenities don’t look any less plush than at other venues, and patrons will have in-seat service.
Four separate club areas consisting of four three-row sections apiece will be spread throughout. Two will be located near midfield, two towards the ends. Priced by the row, tickets will range from $90 to $125 per seat in season ticket packages, 20% more for single game purchases.
Patio suite exterior and interior
The Quakes are also selling patio suites, which are like the luxury suites except with no walls (or A/C). This option effectively splits the difference between the club seats and the luxury suites.
View from Patio Suite
I have a feeling that Lew and Keith Wolff are using Earthquakes Stadium as a testbed for future offerings at Cisco Field. If they can get the mix of hardcore Quakes fans, general soccer fans, and casual fans right, there are numerous lessons that are applicable to the construction and deployment of similar amenities at Cisco Field. For now, the stated capacity remains 18,000, though as we can see in this case, market conditions can change quickly.
News for 6/10/12
We’re overdue for one of these.
- Matier and Ross reported on the contents of the Wolff-Knauss summit two weeks ago. Wolff laid out his 1 hour, 45 minutes case, Knauss and other East Bay execs made their case to work in Oakland – or sell the team. When the latter came up, things apparently got a little testy.
The only flare-up came when Knauss suggested that the business execs had deep-pocketed investors who would buy the A’s if Wolff and his ever-silent co-owner, John Fisher, weren’t interested in keeping them in Oakland.
“You can’t buy what’s not for sale,” Wolff told the group, according to Knauss. “I’m surprised you brought that up.”
- In the same article, contractors at the Cal Memorial Stadium retrofit indicated that the project may not be ready in time for this fall’s football opener. Not that big a deal, same thing happened at Stanford.
- Prices for the non-premium seats at the 49ers stadium have been revealed. The per-ticket prices aren’t bad, but some fans may bristle at the required seat license fee (which can be financed). The pricing structure looks very similar to that employed at Cowboys Stadium, which makes sense considering that the firm marketing the seats is partly owned by the Cowboys.
- If Farmers Field begins construction next year, it’s likely that the E3 convention, held last week, would have to be moved out of the LA Convention Center. San Diego, anyone?
- Chelsea F.C., which has seemingly won everything this season in the Premier League other than the outright league championship, lost out to other developers in its bid to redevelop the hulking Battersea Power Station into a new, 60,000-seat stadium.
- KNBR’s Damon Bruce tweeted on Friday that the Warriors’ Piers 30-32 deal was dead. So far the story hasn’t been corroborated, and other sources indicate it’s incorrect. Seems odd to say something’s dead when it the process hasn’t yet started.
- The Arena Football League suffered its first ever forfeited game when players on the Cleveland Gladiators went on strike before the scheduled Friday game against the Pittsburgh Power. The strike is part of an ongoing CBA negotiations.
- Marlins manager Ozzie Guillen joked that he’d contribute “a couple million” towards a new Tampa Bay Rays ballpark.
- Keeping the Astrodome running and up-to-date could cost $270 million or more, even though the dome wouldn’t have a tenant team.
- The Glendale, Arizona City Council approved a deal that would bail out incoming Phoenix Coyotes owner (and former Sharks exec) Greg Jamison to the tune of $325 million over 20 years to stay in the desert suburb. Jamison has not yet been fully approved to take over the Coyotes by the NHL’s Board of Governors, pending a review of the Jamison group’s finances. The conservative Goldwater Institute wants a temporary restraining order to see if the deal violates the state Constitution.
- In another cautionary tale about public dollars being spent for sports facilities, the Chicago suburb of Bridgeview is in debt up to $250 million for its MLS stadium. What’s paying for the shortfall? Property taxes.
- Update 6/11 12:19 PM – Numerous sources are reporting that (near) billionaire and Ubiquiti Networks founder/CEO Robert Pera is buying the Memphis Grizzlies. The sale price has not been disclosed. Pera is only 34 years old and is partly based out of San Jose. Update 4:00 PM – The price is in the $350-375 million range. The buyout for the FedEx Forum lease is $105 million as of next year.
Happy reading.
Baer, Wolff had dialogue (really!)
Thanks to CSN’s Casey Pratt for going to the trouble of pulling quotes from two of The Game’s Newsmakers interviews with Larry Baer (Monday) and Lew Wolff (Thursday). For the most part, neither executive said anything substantive about the Giants-A’s stalemate, which means that once again, we’ve got to put up the proper image.
If you want to torture yourself by reading into the interviews, you can glean a few things about what has been happening:
- Both Baer and Wolff are pointing to Commissioner Bud Selig to resolve the dispute.
- Baer and Wolff have had an ongoing dialogue (negotiations) regarding territorial rights.
- Baer backed off from saying that the Giants would welcome the A’s looking elsewhere, such as Sacramento. The Giants consider the Bay Area a two-team market.
- Wolff continues to press that the plan is San Jose-or-bust.
- Asked about what happened during Wolff’s meeting with Don Knauss, Wolff demurred and asked the interviewers (Tierney and Townsend) to ask Knauss.
Everything else we’ve heard before ad nauseum. This concludes your weekly non-update.
newballpark.org 