Category Archives: Owners

05.29.12
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A room with a view

One of the more lamentable facts about modern indoor arenas is that, unlike their outdoor brethren, most arenas do nothing to celebrate the environments and neighborhoods in which they reside. Cold and insular, arenas are all about focusing on the floor or action. Attempts to draw attention to the crowd such as the “Kiss Cam” are token distractions. Get in the crowd, get the show over with, and get everyone out ASAP. There’s no time to linger or savor an event.

It wasn’t always this way. Some of the postwar arenas attempted to bring in the outside. This was best executed at the old Portland Veterans Memorial Coliseum, which still stands next to its much larger successor, the Rose Garden. Memorial Coliseum was a simple, elegant square wrapped on all four sides by glass curtainwall. The round, undulating seating bowl inside the shell provided a clean visual line that gave the building its purpose and indicated where an observer was in relation to the seats.

Views of Portland were available on all four sides of Memorial Coliseum.

The pre-1997 Oakland Coliseum Arena also showed this kind of elegance. A larger arena than the one in Portland, the Coliseum Arena boldly used floor-to-ceiling glass, with a concrete exoskeleton to protect it. Like Portland, the rim of the upper seating bowl was clearly visible, though the Warriors and the arena operator chose to use dark curtains to prevent any clerestory effect. Both arenas were designed by Skidmore, Owings, and Merrill, a firm more known for skyscrapers (Sears/Willis Tower, WTC Freedom Tower) than sports properties.

Early cutaway drawing of the old Coliseum Arena

One of the key directives for the Coliseum Arena renovation was that the building needed to be stuffed with as many seats as possible, since the old 15,025 capacity was great for generating sellouts but poor for generating revenue. So they packed the place to the rafters with seats and redesigned the seating bowl to conform more to basketball instead of the neither-fish-nor-fowl multipurpose seating bowl of yesteryear. Over 4,500 seats were added in the process, an impressive feat of packaging and engineering. Lost in the transformation was the grace of the old design. New concrete entry lobbies were added to the exterior. The regular entrance from the plaza became a club entrance. The glass walls had to be retrofitted, cluttering the look.

In the Warriors’ unveiling of the Piers 30-32 site, the renderings ownership showed had an arena pictured, more as a placeholder than anything else. They were very clear to note that there were no detailed renderings or even a specific design at the moment. Considering the site’s pictureque waterfront locale, a great amount of effort may have to be undertaken to design the building so that patrons can appreciate views of downtown, the Bay Bridge, and the East Bay hills. If that doesn’t happen, the arena may be considered nothing more than a big concrete box. Nobody wants that. I don’t think the W’s will go back to the circular seating bowl, but there are still ways to open up the space to the outside. One way is to do what many new arenas have done – remove some cheap upper end seats, even entire sections.

North (left) upper tier removed, which should create an enviable Downtown-Bay Bridge panorama.

In addition, the concourses could be laid out to allow views of the action from concession stands. Mind you, implementing some of these ideas could prove costly because they may translate into greater amounts of costly square-footage being built to satisfy the vision. The W’s should know by now that they have a chance to build a truly iconic building, and to skimp would be wrong and practically indefensible. Arena architecture is not known for looking backward or in a retro manner. In this case there’s truly something to be learned from looking at the past, and it can only result in a better arena, one that celebrates everything happening outside its walls just as much as the events inside those walls.

05.24.12
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Peter Guber talks to Tierney & Davis

Warriors co-owner Peter Guber went on The Drive yesterday, and the 20-minute interview that came out of it was the most entertaining bit of owner-speak I’ve heard in a long time. Guber is not like most co-owners, sitting in silence. He’s a Hollywood producer with showmanship befitting the town. A big-money player may work as the managing partner, whereas Guber appears to have a running mate-like role, selling the team’s concepts and working over the media. Joe Lacob, like Lew Wolff, has had some difficulty establishing a rapport with the local media and fans. For Guber this is old hat. However, Guber is taking on a similar role with the Dodgers, one that will take just as much effort if not more, so I can see why he wouldn’t be a managing partner of any one team.

Guber explained the process of selecting a San Francisco site, why Oakland was passed over (which will fall on deaf ears in the East Bay, I figure) and his history of ownership stints dating back to Mandalay Sports Entertainment, a conglomerate of minor league franchises including the model minor league team, the Dayton Dragons. Curiously, he considered the Warriors the only Northern California NBA franchise, a clear indicator that the Maloof family is more than one-foot-out-the-door in Sacramento. He even got in a little shot at the Maloofs:

GUBER: We believe – it’s a belief – that we’re going to turn it [the arena] into reality. We believe we can accomplish it. If we didn’t believe it, why would I take the energy and resources in the third act of my life and put it into something I thought was folly? No. All of us believe – Joe [Lacob], the different owners of the group, there’s a large group of intelligent owners – believe this is a beautiful, successful endeavor that we can bring to fruition. If we didn’t, I would go play poker in Las Vegas.

TIERNEY: Which casino by the way?

GUBER: Let me put it this way. Not. The Palms.

Guber went on to talk about how Larry Baer brought the Lacob-Guber team in to buy the Warriors. Guber indicated that Baer could have ended up as part of the ownership group, but dropped out during the process.

GUBER: When Larry Baer – yes, Larry Baer – called me at home in Los Angeles and said, “How would you like to buy the Warriors?” I said, “Great!” It fit my compass. I wanted to be able to get to a place within an hour, that I could go there regularly and be part of the community. Before, I had worked with Bob Piccinini to buy the Oakland A’s. In fact, closed the deal, made the deal with Billy Beane at my house, gave him a piece of the equity, negotiated the whole thing. Then, lo and behold, Bud Selig said “we’re going to do contractions” back in 2002 or 2004. “Let’s do contraction!” You know what contraction is? Not the same as what women have before they have a baby. This is what the league said they wanted to do with the teams. They wanted to get rid of Oakland and Minnesota. Ultimately, they made a deal with Lew Wolff about a year later. My partner (Lacob) went after that team as well. So Larry Baer said, “Let’s try to get the Warriors.” We went after the Warriors. Larry dropped out. Joe and I teamed up to buy the Warriors.

There’s a problem in Guber’s timeline. The contraction threat came with the 2002 CBA negotiations, which were the greatest threat for a work-stoppage since 1994-95. Contraction talk had started in 1999, and dragged on contentiously until August 30, 2002, when a deal was put in place that pushed out the contraction threat to 2006. The 2006 deadline passed without a peep, and contraction hasn’t come up in any substantive discussions since. The new CBA, which was finally made publicly available today, has language that the league won’t talk contraction until after the CBA expires in 2016. I digress.

Again, Guber talked 2002. But the Dolich-Piccinini group was knocked out in 1999, not 2002, a fact confirmed by Piccinini himself. Either the group was kept in play until 2002 as Guber said, or he has his dates mixed up. Piccinini is now also a part of the Warriors’ ownership group. He was also part of Jeff Moorad’s failed bid to buy the Padres. From the looks of things, Larry Baer was very active in getting the group as far away from the A’s as possible. Contraction died, which foiled the Giants’ attempt to get rid of the A’s via subterfuge. Now there’s simply no economic justification for it, and the price to contract two teams (estimated $1 billion) is too high for the owners and MLB to swallow.

The only question I have coming out of this is one I’ve had for the last few weeks: Why on earth is the City of Oakland working with the Giants and Larry Baer? Sacramento Mayor Kevin Johnson said yesterday that he is looking at the A’s situation closely, with Sacramento potentially there if something can’t be done in the Bay Area. Guess who’d love it if the A’s had no choice but to leave the Bay Area? Larry Baer.

Update 8:47 PM – Guber was referring to the “secret” 2001-02 negotiations done by his group, Mandalay, and Steve Schott. The group also included Bob Piccinini, which I was not aware of until the interview. At the time, Schott was pushing for a move to Santa Clara and was in discussions with the City Council. Because of the sale talks, the Council felt betrayed and terminated any further pre-development work. The ownership would have included, among others: Guber, Piccinini, Paul Schaeffer (Mandalay VP), and Billy Beane. It’s difficult to keep these ownership groups straight. 

05.21.12
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SF, Warriors set to announce arena deal

Just like that, Coliseum City is in jeopardy.

The interwebs are abuzz with reports that the Golden State Warriors and the City of San Francisco are going to announce a Pier 30/32 arena deal as soon as this week. The team has issued a non-denial denial, and the rumor appears to have multiple sources, which makes this news possibly the proverbial smoke that will lead to fire.

If true this is terrible for the Coliseum City project’s prospects. By virtue of an arena’s typical utilization, the arena part of the complex is a a major anchor that the project needs. Losing the Warriors removes at least 43 home games from the schedule, totaling 800,000 annual spectators. Oakland/Alameda County could refashion the arena to better attract more concerts and other types of events. The risk with that plan is that the old arena in Oakland and the new arena in SF will be only 11 miles apart, so they’ll be competing for exactly the same acts and events. The Warriors will have the advantage of new technology to make their venue superior and more flexible for staging. They’ll also have a great incentive to keep the arena as busy as possible since they’re footing the bill for the construction cost. This affects HP Pavilion to a degree as well since it will be overshadowed by its much newer competitor to the north. However, HP Pavilion is over 40 miles away, serving the South Bay. This sort of spacing is already evident in the Bay Area with Chronicle Pavilion in Concord and Shoreline Amphitheatre in Mountain View. The two major LA arenas (Staples Center, Honda Center) are also a good distance apart, allowing both to combine to serve the bulk of the LA market.

The W’s leaving means that the naming rights deal with Oracle, which runs through the 2015-16 season, has a very slim chance of being renewed. There’s little point for Oracle to do so, as the marquee tenant will be in the process of vacating while the arena itself will be at a competitive disadvantage compared to its competition across the bay. Even though Oracle CEO Larry Ellison lost out to the Lacob-Guber group when bidding on the Warriors two years ago, the SF Warriors brand should be more valuable than the GS Warriors, making a potential naming rights deal something that Ellison should consider.

Currently there’s about $95 million of debt outstanding at the Oakland/Oracle Arena. With each lease year completed $5 million comes off, leaving a shortfall of $70 million for the W’s to pay off if they leave at the end of the 2016-17 season. This amount would be payable by the team regardless of whether they played in SF or Oakland. This is because Oakland positioned Coliseum City as having a new arena to replace the existing arena. This effectively adds $70 million to the cost of the new Oakland arena because there’s little chance that Oakland/Alameda County will operate the new and old venues side-by-side. If you were Joe Lacob and you knew that you’d have to pay $70 million either way, why would you choose Oakland over SF?

This gets to the heart of Oakland’s problem in pitching Coliseum City to its tenants. All three teams want much greater revenues, and just as important, greater control over revenue streams and more independence from each either. They’ve been able to coexist with little friction over the last decade, but that didn’t come about without a good deal of previous strife as all three teams have had legal battles with the Coliseum Authority. Mayor Jean Quan has already put out yet another letter restating Oakland’s commitment to the Warriors, just as she did with the A’s. What she and the JPA need to do – which they haven’t done yet – is explain how Coliseum City will significantly increase each tenant’s revenues (W’s rank 13th according to Forbes) compared to other options. Instead we’re having discussions about whether or not Coliseum City can pay for itself, which is a major perception problem. Most of the City’s arguments have been about how Coliseum City will benefit Oakland, with little said about how each team will benefit. Only the Raiders part of the project has any traction, thanks to ongoing planning work designed around and with input from the team. Yet the Raiders continue to entertain options outside Oakland just in case Coliseum City doesn’t take off. All three teams and ownership groups know how difficult their respective plans are on their own. To tie feasibility and risk into other parts is unnecessary, even foolish.

SF has shown its willingness to speed up the environmental review process when needed, as it did with the America’s Cup project. A similar effort could be done for the Warriors’ arena, with the caveat that the impacts for an arena will be significantly different. The America’s Cup only occurs once every three years over a short, well-defined timeframe. An arena gets 800k visitors annually for NBA games plus another 500k or more for other events. Onsite parking at the W’s arena is expected to be only 1,000 spaces, leaving the team and city looking a few thousand more within the vicinity to meet demand. It’ll be a challenge to get the W’s arena approved and built. SF’s advantage is that it has successful precedents in AT&T Park and, coming soon, the America’s Cup. That’s experience that matters.

This new SF arena plan is in its infancy, so it’s premature to call this one “in the bag”. One thing’s for certain – the two parties are heavily motivated and appear to be making measurable progress. If only we could say that about an A’s ballpark…

05.18.12
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The illusion of pendulum swings

There’s been a wide range of reaction from Bud Selig’s non-update yesterday.

  • Gwen Knapp: “No decision means ‘no’ to the A’s. They aren’t getting the rights to San Jose, not yet, not soon, not even over Larry Baer’s stone-cold corpse.”
  • Mark Purdy: “And no action was taken — although Wolff’s quotes do indicate the blue-ribbon panel’s findings back up his contention that none of the Oakland stadium ‘proposals’ amount to anything.” (Purdy also brought up a potential antitrust case on KNBR.)
  • Ray Ratto: “So [the owners] see no compelling reason to hurry toward a decision they don’t want to make anyway.”
  • Art Spander: “The solution to all this is for Wolff, who wants nothing to do with authorities and business people in Oakland, a place he doesn’t live, to reach a compromise.”
  • Robert Gammon: “…it seems clear that the Giants’ presentation was more persuasive and that the rest of the league has no intention of overruling the Giants’ opposition to the A’s move.”
  • Jon Heyman: “Some progress is seen in that a significant amount of discussion is being dedicated to the A’s to the point where the talk has moved from committees to baseball’s Executive Council.”
  • Buster Olney: “The time has come for Oakland Athletics owner Lew Wolff to start firing off lawsuits in effort to move to San Jose — or sell the team.”
  • Ken Rosenthal: “Do not get distracted by any of this. The A’s focus is still on San Jose. The focus of the entire sport is on how the A’s can get to San Jose.”
All of that came from a few rather innocuous quotes from Bud Selig. At this point it doesn’t matter what Selig did or didn’t say – the quotes have been twisted so completely that anyone can weave their own “truth” from owners meetings.

Here’s what we knew going into the meetings:

  • There would be no official action taken on T-rights.

That’s it. Both the A’s and Giants made presentations, which some believe is encouraging and some don’t. Former Giants managing partner Bill Neukom was present at the meetings, presumably to plead the Giants’ case. It seems likely that both teams will continue to make presentations at future owners meetings until a decision is made.

The decision thing is the issue. The sad truth of the matter is that MLB doesn’t have to decide anything anytime soon, just as Lew Wolff doesn’t have to sell the team anytime soon. The A’s will stay afloat via revenue sharing through the end of the CBA, and as long as Wolff and Billy Beane don’t get out in front of their skis in terms of payroll, the team should continue to make money. In that short-term vein, the “best interests of baseball” may be to keep the status quo. You could easily say that Selig is kicking the can down the road, where his eventual successor will have to resolve the dispute. You might also say that the tossed off comment about moving outside the Bay Area is strategic one meant to incite at least a little panic. That may have worked in Miami and Minneapolis, but it’s not going to work here. It never has.

Eventually that short-term position will end and be replaced by a long-term, permanent solution. That’s when some kind of decision will have to be made. Unfortunately for us A’s fans, we have no idea when that might happen. There’s certainly no urgency on the matter. Maybe MLB is waiting for the Giants to retire debt, though the prospect of the team refinancing some of the remaining debt creates a gray area in its own right. The post-redevelopment world hasn’t shaken out yet, and won’t for at least several months.

Until some of these variables settle, it’s in baseball’s best interests to keep both Oakland and San Jose in play. For Selig to kill either option would be poor strategy on his part. San Jose boosters and politicians may be frustrated, but at least the city has most of its pieces in place. Oakland is finally getting some momentum thanks to Don Knauss, though it’s too early to tell if that momentum is real and sustainable. As long as a decision isn’t made on San Jose that shuts out Oakland, another lease extension at the Coliseum can be negotiated. This vague flexibility even opens up the possibility that Fremont could re-enter the picture, perhaps as soon as the next elected mayor takes office in 2013.

The wildcard here would be if San Jose decides to unleash the legal hounds. Again, this is where I think Selig’s M.O. comes into play. As long as Selig can say, “We’re still studying this,” there’s no specific decision to point to that San Jose can build an antitrust case around. Sure, they can make threats, but until someone files a case it won’t mean much.

Until then, what we’ve got here is a Mexican standoff. How do those usually turn out?

05.17.12
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Update from May 2012 Owners Meetings

Piping hot updates from Fox Sports’ Ken Rosenthal and Sports Business Journal’s Eric Fisher. First Rosenthal:

;

Now Fisher:

In sum, no news, they’re still working on it and it may take longer to get right.

Selig deserves a lot of criticism for not being more decisive on this matter, but he is absolutely right about the issue being very complicated. Then again, he gets paid $18 million a year to run baseball. It’s his job to deal with complicated issues.

Update 11:26 AM – The media AP is running with the “move out of Oakland” story.

Update 11:47 AM – For added context, a Jon Heyman article yesterday had Bill Neukom at the meetings this week. The fact that he’s still representing the Giants indicates that he’s still the lead for the team on the T-rights issue. Like it or not, he casts a shadow.

Update 2:44 PM – As predicted in the comments, Lew Wolff had to clean up Bud Selig’s mess.

“Number one, my only objective is to remain in the Bay Area,” A’s owner Lew Wolff said Thursday. “And based on all our studies, plus receiving no indication from the blue-ribbon committee that we missed anything, the only location we can find to build a ballpark that’s do-able is in downtown San Jose. I intend to do that. And we intend to invest half a billion dollars in private funds to do so.”

Cleaning up Selig’s mess. That’s what a fraternity brother is for.

05.14.12
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SF officially pursuing Warriors + LA Live observations

According to Matier & Ross, the City of San Francisco has sent a letter to the Warriors urging the team to work with the city on a new arena deal in SF. A month ago it was revealed that W’s ownership was looking at Piers 30 & 32, which were removed from the America’s Cup waterfront development plan due to cost. Nothing has changed to indicate the site isn’t the frontrunner, though the team could still work out a deal with the Giants in the China Basin/Mission Rock area as a backup plan.

There are height restrictions that will come into play, just as they did with AT&T Park. Given the City’s political will that pushed through the America’s Cup EIR, I have to think the stars would similarly align for the Warriors’ arena efforts.

It’ll be interesting to see if this motivates Oakland to ramp up its Coliseum City efforts. Given the number of events the arena holds annually (150-200), I suspect that keeping the Warriors is practically the linchpin in making Coliseum City work. With AEG in the picture, it’s possible that they may have a business plan to make the arena work without a team, probably by retooling the arena as the Bay Area’s premier large concert venue, like Sprint Center in Kansas City. Of course, making it “work without a team” is a subjective matter, as KC is paying through the nose in debt service while AEG is the one making money in the partnership.

LA Live was built out over several years, with Staples Center and the convention center as anchors

Between the Stadia EXPO and lunch at Philippe’s, I walked around downtown. I’ve never done that in LA, since for me the only reason to be there is an event at Staples Center. Oakland is trying to pattern Coliseum City as something similar to LA Live. That’s a tough one to duplicate, as I explained a few weeks ago. LA Live is a complex of numerous live venues, a multiplex, two luxury hotels, restaurants, all of it adjacent to Staples Center and the Los Angeles Convention Center. There’s always a lot of activity, even when it isn’t apparent.

Setting up for the "Battleship" red carpet premiere

As I was walking through the area, a crew was getting the rigging set up for the LA premiere of the action blockbuster “Battleship” (yes, inspired by the board game). It was 2:30 PM and people were already camping out, getting prime spots to view Rihanna and Brooklyn Decker as they walked the red carpet. Oakland got its brush with Hollywood fame when the Moneyball premiere was held at the Paramount last fall. It shouldn’t expect much more than that. Later this week Staples will hold six playoff games in five four days, including a doubleheader on Saturday. That’s not realistic for any arena in the Bay Area.

So what is realistic? If there are three major arenas in the Bay Area thanks to the Warriors crossing the bridge, the Oakland/Oracle Arena will suffer. There simply isn’t enough demand to fill all three venues regularly, and one will eventually turn into the “budget” arena to remain competitive. The best thing Oakland can do is everything possible to keep the Warriors in the Coliseum complex. I’m not sure what that will take, and I’m not certain that will be enough to overcome the cachet of San Francisco. For Oakland’s sake, I hope they put their best foot forward.

Update 6:43 PM – Oakland has responded with a statement reiterating their commitment to the Warriors. Curiously, it’s the first real indicator that Oakland is pushing for a new arena to replace Oracle Arena, something that has not shown up in public documents to date. Oakland’s advantage versus SF is that they shouldn’t require a brand new arena. What incentive is there for the W’s to build in Oakland if they have to pay for it?

05.09.12
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Wolff willing to meet with Knauss + Quan & Miley in Chron

From the end of Joe Stiglich’s recap of Tuesday night’s thrilling walk-off slam win (courtesy of Mark Purdy, I assume):

A’s owner Lew Wolff said Tuesday that he would be willing to meet with Don Knauss, the Clorox chief executive officer who is spearheading the latest effort to keep the team in Oakland. But Wolff, who is traveling in Europe, said he would spend most of that meeting outlining his unsuccessful efforts to build an East Bay ballpark.

“If they want to look at all that, I would do that,” Wolff said. “I would be delighted to meet with him.”

For the sake of argument, let’s say that they meet in mid-June. That’s after the owners meetings and before the All-Star break, and without knowing the two men’s schedules, probably enough lead time to schedule something. Wolff explained what he’s going to do, which is in all likelihood to give the presentation he gave MLB some time ago. Knauss will probably try to sell Wolff on Oakland. He may or may not bring up the Giants’ T-rights. He’ll bring up his Coca-Cola/Minute Maid experience. What will he have on hand to try to refute Wolff’s case against Oakland? Keep in mind that Wolff has been working on this stadium business for longer than Knauss has been at Clorox.

Coming out of this hypothetical meeting, expect both men to have their talking points. Wolff will explain that he’s tried everything he could. Knauss will probably say that circumstances merit a fresh approach. Beyond that, what should we expect? Prepared statements? Mini press-conferences? No one should expect some great solution to come out of meeting, or that Wolff will suddenly feel like selling the franchise.

Will Oakland backers continue their PR war for the next month? Interestingly, the thrust of this campaign currently goes over Wolff’s head – appealing to John Fisher and MLB, not addressing Wolff directly.

While most fans were reading the Tribune ad from early Tuesday morning, Oakland Mayor Jean Quan and Alameda County Supervisor Nate Miley penned their own op-ed in the Chronicle. From the piece:

Over the past three years, MLB has made it clear that any new A’s ballpark would require the public agencies to provide land, infrastructure and some parking while the team would finance construction. Under this type of public-private partnership, the city and county’s general fund would not be put at risk. The city and county already own the land, and only minor improvements to the infrastructure surrounding the ballpark are needed. There is ample land at the new ballpark Coliseum site to provide the team with development rights, which could assist with the financing. The parcel is large enough to meet Major League Baseball’s specifications.

That’s a curious selling point, because the reality of Coliseum City appears to be different, at least according to a case study published by the Airport Area Business Association in conjunction with Coliseum City principal JRDV and students at UC Berkeley’s Haas School of Business. From the study:

Oakland, Taking Control of Its Destiny

The Coliseum complex presents a unique opportunity to prepare a pioneering business model that generates revenue for both public and private interests. A winning plan to finance, build, and operate a new Oakland stadium will draw upon historical data and the successes of other urban cities across the U.S. in developing projects that revitalized their surrounding communities and invigorated local and regional economies.

The estimated community benefits amount to upwards of $1.3 billion in direct spending, tax collection, employment, and wage earnings. Nonetheless, can the City of Oakland and Alameda County really afford to go down this path again given that it is still repaying its previous Coliseum bond and loan debts of at least $145 million?

Can Oakland overcome the challenges and obstacles it faces, and make the new stadium a reality? Are the withdrawal of redevelopment monies, the negative perception of Oakland (and especially Deep East Oakland) by investors, and the soft commercial real estate market insurmountable? Can the City of Oakland and Alameda County garner the public support required to approve the necessary public financing and inspire investor confidence?

It’s funny, the PR campaign hasn’t mentioned much about the difficulties Oakland and Alameda County face. It’s also curious, though not surprising, that the study has no mention of the A’s as a future tenant at Coliseum City. It only considers the Raiders and Warriors. Quan and Miley want people to believe that putting in a new ballpark is as easy as adding a bedroom onto a house. It’s all part of the disjointed narrative that the Oakland lobby continues to push: no consensus on a site, all sites are great, no broad, honest public discussion of the obstacles any project faces.

Mile wide, inch deep.

P.S. – A snippet from today’s Oakland Tribune editorial gets the tone right:

The next step — and this will likely be one of the toughest ones — is for the city to demonstrate some uncharacteristic vision. It must grab this opportunity with a firm grip and hold on with all its might.

That will mean putting asunder petty bickering and other nonsense to come together in common purpose. Not just saying the words in a photo op, mind you, but actually doing it.

When was the last time the City of Oakland accomplished a major project that didn’t turn out to be a budget-busting mess marked by political infighting and legal drama?

05.08.12
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Ad/Open Letter to Fisher in today’s Oakland Tribune

The following letter was placed in today’s Tribune (PDF).

An Open Letter to John Fisher, Majority Owner of the Oakland A’s

May 8, 2012

Dear Mr. Fisher:

After five years of failed efforts to move the A’s out of Oakland, the time has come for you to sit down with Oakland and Alameda County officials to negotiate to keep the team in a world-class ballpark in Oakland. If you won’t do this, then, as long-time Oakland A’s fans, we’d ask that you please sell this once proud franchise to someone who will own and operate it as both a successful team and as a civic asset for our community.

Since moving to Oakland in 1968, the A’s have achieved tremendous success on the field, winning four World Championships, six American League Pennants, and 13 AL West division titles. The Oakland A’s have produced five Cy Young, seven MVP and seven Rookies of the year winners in Oakland – a far better record of success than almost any Major League team and certainly better than the San Francisco Giants.

Prior to your decision to buy the team, the people of the East Bay supported their A’s, regularly drawing in excess of 2 million fans a year while also receiving strong support from the business community. But your very public campaign to leave Oakland has taken a serious toll on the team’s ability to draw fans. Annual attendance has dropped 25% (from 1.9 to 1.4 million) in the five years since your management team proclaimed, “it’s out of the question” that the A’s will remain in Oakland. The drop-off is even worse if you go back to 2004, the year before you bought the team, when the A’s drew 2.2 million fans. Overall, during your ownership, attendance per game has dropped 33% from 27,000 to 18,000.

This decline in attendance following your ownership of the A’s comes at the same time the East Bay, the A’s territory, has continued to grow rapidly. In fact, the East Bay is one of the fastest growing regions in the area and is home to hundreds of large and growing companies including The Clorox Company, Kaiser Permanente, Safeway, Chevron, Pixar, Peet’s Coffee & Tea, Pandora, Dreyer’s Ice Cream, 24 Hour Fitness and Cost Plus to name just a few. And, the East Bay is also at the geographic center of one of the largest and most important television markets in the country.

And, while the market and the historic record of fan support make clear for all to see that the East Bay is a proven good baseball region, there is nothing that precludes the A’s from competing for corporate sponsorship and fans from Silicon Valley right now – other than, of course, the quality of the product on the field, commitment of the team to provide a good fan experience and the competence of management.

Above and beyond its demonstrated market capacity, the people of the East Bay reflect the mosaic that is California. It is one of the most diverse regions in the country and Oakland is perhaps the most diverse city in the country with large African-American, Latino and Asian-American populations. Baseball constantly talks about its commitment to diversity – and presumably such a commitment would apply to owners such as yourself embracing being in such a diverse market. Oakland and the East Bay’s diversity is a strength that the A’s management should be looking to benefit from and of which Major League Baseball should be proud.

We understand that you and your investors need to make a return on your investment. However, given what you paid for the team and its most recent Forbes magazine valuation, you will certainly achieve a very good return when you choose to sell the team. And, given that the East Bay has proven it is a good baseball market from a business perspective, you will be able to make even more money – and do the right thing as the steward of a civic asset that is so important to the region – by committing to three basic principles.

First, commit to actively work with the ongoing effort to build a new stadium in Oakland. This effort is well underway and making significant progress.

Second, commit to winning by investing in the team. To date, the enterprise value of the team has gone up; you make money through baseball’s revenue sharing model; and re-invest very little back into the product on the field.

And, third, commit to showing respect to the people of Oakland and the East Bay. Since you acquired the team, time and time again efforts have been made to disrespect the fan base and the broader community. Obvious corporate sponsors are never contacted. And, the fan experience at the ballpark is less than ideal as compared to other Major League venues.

Mr. Fisher, the time has come to do the right thing. Sit down. Talk. Agree to keep the team in Oakland where it belongs.

Respectfully,

Greg McConnell
President
Oakland Jobs & Housing Coalition

Mike Davie
Founder, BaseballOakland.com

Jorge Leon
President, Green Stampede

Joseph Haraburda
President & CEO
Oakland Metropolitan Chamber of Commerce

Sara Somers
A’s Season Ticket Holder Since 1988

05.07.12
by

Capitol Raiders

No, I don’t mean the Raiders moving to Sacramento. I’m referring to the state’s raid on redevelopment agencies, which we discussed last week.

At issue is a matter of dates. The state contends that via its new redevelopment laws, transactions that occurred in 2011 between RDAs and third parties (developers) are up for review, and that those that were done after June 28, 2011 would be struck down. June 28 is notable because that’s the date that bill AB 1X 26 was signed by the Governor. (A companion bill, AB 1X 27, was also signed by Governor Brown, but was killed by the state Supreme Court in December, leaving no path forward for redevelopment as we knew it.)

Cities are saying that there is no implicit cut-off date because none was specified in the legislation. There are dates for when certain transition activities are supposed to occur, but those were not the “effective immediately” date the state is gunning for. The League of California Cities’ lawsuit was filed last July. October 1, 2011 was when the RDAs were supposed to wrap up all activities, but the lawsuit granted a limited stay, so the RDAs were able to continue operations to some extent. San Jose City Attorney Rick Doyle characterized the legislation as “rushed” when referring to the lack of a date. Now the cities are saying that the effective date is April 20, 2012, the date Controller John Chiang sent letters to affected cities ordering properties to be transferred to the state.

If October 1 is decided as the transfer date, both the SJDDA-Wolff land option deal (November 2011) and funding for the Coliseum City feasibility (March 2012) would be in jeopardy. In the land deal’s case, the property would be transferred to the state and would subsequently be sold or auctioned, preferably for as close to market value as possible. The key there is that Wolff locked in a discount based on the property’s use for a ballpark, a price that would be presumably lower than an open market price. If the state were to assume and sell the land, there would still be an opportunity for Wolff to buy the land. The market isn’t great in the Diridon area right now, but when speculation comes into play all bets are off. If the city refuses to put the ballpark  parcels on its transfer list, the state could sue to get the land, which would tie up the deal for some unknown amount of time. Eventually the land will be sold because the state needs to get proceeds for the state budget and for schools, so it’s a matter of when and how much as opposed to if.

In Oakland’s case, the problem is a matter of expenditure, not property. $3.5 million has been approved for the study, which is supposed to be concentrated in the Coliseum-Hegenberger-Edgewater area. If the state gets the funding for the study struck down, all work would have to be terminated and would remain incomplete, unless a third party came in and volunteered the funds for the rest of the study. Perhaps Let’s Go Oakland or Don Knauss’s group could front the money. The issue there is that both groups prefer waterfront ballpark sites over the Coliseum, so those precious resources may not be best spent on what is effectively a third option, and a bunch of stuff that is not related to a ballpark at all.

There’s also a third way that is emerging, though it’s definitely an edge case. The successor agencies that are taking over for the RDAs are county-based bodies that report to the state. Their boards ultimately decide how the assets get divvied up. Some counties have had their own redevelopment agencies that were also affected by the new law. In Sonoma County’s case, they’ve chosen to keep two redevelopment projects going that would normally have been turned over to the state because they felt the projects were worthwhile. There would appear to be a conflict of interest for in-county activities as opposed to city-county activities, which are more arms-length. Alameda County’s board could conceivably come to Oakland’s rescue because both are partners in the Coliseum JPA. At this point it’s too soon to tell if that will a matter of discussion.

Both the Oakland and San Jose situations are not quite doomsday scenarios (that already happened when 1X 26 was passed), but they create uncertainty and delay at the very least. For Lew Wolff it’s a matter of cost. If Bud Selig is looking to put off a decision until all of this shakes out, he certainly has reason to.

05.04.12
by

The Knauss Plan, for now

Clorox CEO Don Knauss has been making the rounds, first on KQED yesterday, then on KNBR this morning, and finally on The Game during the lunch hour. All three are worth consuming, so if you haven’t done that yet, get through all three links, then come back and read the rest of this post. Cool?

…

Okay. Knauss was very consistent with his messaging, which should be no big deal for a CEO of a high profile public company. The bullet points from his pitch were these:

  • Knauss and other East Bay business interests would like to meet with Lew Wolff and perhaps MLB to discuss options in Oakland.
  • If current ownership (Wolff/Fisher) continues to believe that there is no shot in Oakland, Knauss has put together a potential ownership group with members in the East Bay and others in SoCal that could buy the team, keep it in Oakland, and build a ballpark.
  • The group has identified three sites in Oakland. The preferred sites are the two on the waterfront: Howard Terminal and Victory Court. The Coliseum complex is the third site, though it is not “preferred”.
  • Financing for the stadium would be patterned after the model the Giants used to build AT&T Park. This includes the selling of seat licenses.

During The Wheelhouse, Mychael Urban pressed Knauss for answers about plan specifics and why the group has never directly contacted Wolff. Knauss replied that in the first case, he wanted to at least until after the May owners meetings (though he didn’t say anything would be released at that point), and in the second case, he “wanted to respect the process” MLB has put forth with the commissioner’s panel and so forth.

Well then, how does one go about making it work as the Giants did in China Basin? Thankfully, some very smart economists – John M. Quigley, Eugene Smolensky, and Stephen J. Agostini – have gone to the trouble of diagramming the process.  The flowchart below comes from a paper titled Stickball in San Francisco. It’s better known as the San Francisco Giants’ case study in the book Sports, Jobs, and Taxes by noted sports economists Roger Noll and Andrew Zimbalist. Ready? Here’s the secret recipe:

stickball

Step-by-step instructions on how to follow the Giants’ plan.

 

See? Easy peasy, no sweat right? Sure, there are a few things that are different, such as the need for a ballot measure. Oakland has long claimed that it doesn’t need one. That claim originated from two theories: that either Oakland could leverage redevelopment money or the powers within the Coliseum Authority (JPA). The latter still stands technically. The former? As long as Oakland’s pledge to take care of costs to put the site together stands, and those site costs keep rising (Victory Court was at last count $250 million), the Mayor and City Council are going to have an extremely difficult time convincing the voters that they shouldn’t vote on it. Even in the Coliseum’s case, going without a vote is inherently very risky because many of the people on the JPA board are standing office holders, such as Ignacio De La Fuente and Scott Haggerty. The stench of the Mt. Davis deal still hangs thick and heavy over the Coliseum, and the Authority is having trouble refinancing existing debt at the complex. Does anyone honestly think a $2+ billion megaproject like Coliseum City won’t go to a vote? The project is calling for its own streetcar! Maybe Knauss will don a Harold Hill costume the next time he does a press conference.

Then again, Knauss expressed a preference for one of the waterfront sites. We know that Victory Court is incredibly expensive and that some current landowners aren’t exactly going to roll over for a ballpark, even though they are great Oakland supporters. Maybe it’s time to revisit Howard Terminal one more time. It’s difficult to see how the Howard Terminal site would work. Matson, one of the key corporate supporters at yesterday’s press conference, consolidated operations at HT several years ago. There’s no readily available place to relocate Matson should they give up HT. I suppose it’s possible they could give up a portion, say 15 of 50 acres, in exchange for some kind of break from the Port. Then it just be a matter of dealing with the nearby power plant and prepping the site, which would require completely new pilings/foundation work (just like AT&T Park). Judging from the price tag for SF’s Piers 30 & 32, the cost would be around $80 million to start plus whatever the price is to compensate Matson. Whatever that total is, it’s probably cheaper than Victory Court. (Personally I’d pick HT just because of its proximity to Beer Revolution, but that’s just me.)

Finally, there’s the matter of seat licenses. Knauss and his partners think there’s a market there. Lew Wolff has said there isn’t a market from the beginning. Who’s right? I’ll defer to Wolff, who has access to the season and advance ticket sales rolls and has a pretty good idea of what people are willing to pay for tickets and premium offerings. The Giants’ $255 million financing package included $75 million from 15,000 charter seat licenses. That’s a $5,000 average upfront payment (available in installments, of course). Is the market really there as Knauss claims? Consider for a moment that the 49ers are selling seat licenses right now. The Raiders, if they get a new stadium built at the Coliseum, will require their own seat licenses. They may also be in the mix for whatever venue the Warriors cook up. The A’s would be entering the fray with, if using the formula the Giants used, 20% of the ballpark cost, or $100 million of seat licenses. The A’s don’t have the Giants’ 25,000-strong season ticket roll, or the reputation of having a large number of premium ticket buyers (Green Collar Baseball, anyone?). So you’d have three, possibly four teams selling seat licenses along with more expensive tickets. That’s a good way to oversaturate the East Bay, a market which has historically shown trouble maintaining solid fanbases unless the teams are ultra-successful. These financing terms don’t work unless great support can be maintained through thick and thin, or at least if some of the load can be sloughed off to corporate interests. Otherwise someone has to make up the shortfall, and as we saw from the OFMA debacle, the results can be disastrous. MLB and Selig know this, and they won’t be impressed just because someone says “we can work it out”. Selig will want to see pledges, upfront payments, real tangible proof that seat licenses can be supported and that there won’t be a shortfall that drags down the franchise. The CBA has a provision that the A’s have to come off revenue sharing by 2016, unless they’re still at the Coliseum. MLB is not going to approve a plan that creates huge risk for the team and causes them to stay on revenue sharing even with a new ballpark.

Perhaps the best predictor of how portable the Giants’ financing model is comes from a 2002 AP article which quotes former owner Peter Magowan and  Rob Tilliss, the JP Morgan consultant who put the deal together. Magowan:

“You cannot expect a private ballpark to be built in Cincinnati or Milwaukee, there’s not the economic base there. It’s not the Silicon Valley,” he says. “And we couldn’t do it today. We were very lucky in our timing we had low interest rates and a very good economy.”

Tilliss:

“It definitely is not a one-size-fits-all kind of model.”

Knauss’s argument is that economically, Oakland is closer to San Francisco or Silicon Valley than it is to Cincinnati or Milwaukee. I find that hard to believe.