Category Archives: Politics

07.16.14
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Oakland City Council approves amended lease 5-2, now goes back to JPA/County/A’s for approval

A lease agreement was passed tonight. Not the lease agreement the JPA sent to Oakland’s City Council. Instead the Council voted 5-2 (with 1 abstention) to approve an amended lease that included fairly minor changes. Among those changes:

  • A clarification on how the A’s use their termination clause. Example: If the A’s provide notice on January 1, 2016, the lease ends on December 31, 2018. If they provide notice after 1/1/16, termination doesn’t occur until 2019. This was not actually a point of dispute, it’s just that the language was somewhat confusing so an example was provided.
  • A typo in the the agenda document indicated that the the developer fee/deposit for continuing redevelopment at the Coliseum (Coliseum City) was both $10 million and $20 million. This was clarified as $10 million, and was agreed upon in the lease approved by the JPA on July 3.
  • A new section 42.7 that codified lease practices defined in the 2013 (current) lease.
  • A section on Licensor (JPA) default was removed for some reason. It has been added back to the agreement.
  • If the A’s are sold, there is a clause (16.1) that explains how the team transfers the lease to the new owner without requiring JPA approval. The requested change is to include the fact that new owner must be MLB-approved.
  • Removal of language that makes the JPA liable for Raiders’ acts/omissions that are approved by the JPA. The language now solely deals with the A’s revenues and benefits going strictly to the A’s, not to any third party.
  • There’s also a need to clean up language, which is customary in contract negotiations. It’s unclear what those cleanups are.

All in all, there’s little reason for the A’s to decline the lease. On the other hand, these changes are so minor it’s a wonder why they had to be debated in public, with the exception of the typo in the second bullet point.

Council President Pat Kernighan put forth a motion early on to consider the lease with these amendments. That caused CM Larry Reid, who is also a JPA board member, to put forth his own substitute motion that would have the Council vote on the lease as is. At the end of the session, Reid’s substitute motion lost 4-3. Kernighan’s won 5-2. After the votes the Council tried to clear up whether or not the JPA or the Alameda County Board of Supervisors would have to vote on the revised agreement. Naturally, the answer is YES. The BoS will meet on July 29 to go over this new lease and perhaps the old lease two, so they may end up voting on both. The JPA will have to take another special session vote shortly thereafter, and A’s ownership will also have to sign off.

A’s President Mike Crowley was on hand to witness the festivities. After JPA counsel Jon Streeter presented the lease in great detail and asked questions, Crowley was asked to provide a comment on the amended lease. Kernighan was concerned about putting Crowley on the spot, while Reid encouraged Crowley’s opinion. Crowley said that he preferred the original lease as is, though he allowed for the typo correction. After the vote he said he was “disappointed” by the Council’s action. Whether he’s disappointed in the terms or in the fact that everyone’s in for 2 more weeks of gestation over a lease wasn’t clear. Crowley reserved further comment until he had a chance to review the terms.  Kernighan mentioned that she talked with Lew Wolff earlier in the morning, and with a caveat that she wasn’t representing him, revealed that the changes didn’t seem like showstoppers.

There was plenty of time for grandstanding, so several Council members took turns doing it. CM Desley Brooks considers the lease a regression from terms outlined last November. Streeter rebutted that, explaining the back-and-forth of the lease talks that dated back to a year ago. Streeter’s main points were that the A’s are paying double the annual rent of the pre-2013 deal, were guaranteeing $20 million even if they stayed less than the full 10 years, and provides flexibility for all interests (A’s, Raiders, BayIG, JPA, City/County). CM Dan Kalb was unusually high-strung,

Kalb went on to chastise the A’s in advance, in case the A’s don’t approve the deal with the changes. Reid and Noel Gallo were the dissenters, instead voting for the original agreement. They both sowed FUD in their comments, Gallo was more restrained while Reid pulled the full “do what you want, it’s not my fault” card.

Libby Schaaf’s comments were noticeably brief, calling an approved lease (without saying which one) a crucial step towards keeping the A’s in Oakland. Both Schaaf and Rebecca Kaplan opened with some campaign speak, which I necessarily tuned out. Schaaf, Kaplan, Kalb, Kernighan, and Lynette Gibson McElhany provided the Yes votes.

A bizarre moment came late when Alameda County Supervisor and JPA President Nate Miley took time to explain to Gallo how the City of Oakland’s Coliseum City discussions with BayIG worked. At least an hour was spent explaining details that the Council not only should’ve known weeks ago. Current former JPA members such as Reid, Kaplan, and Brooks talked up their knowledge of the issues, yet the rest of the Council seemed inexplicably in the dark. Before Kernighan made her motion, Brooks asked for a full presentation, this after Streeter answered numerous questions about the lease and negotiation.  Communication between the JPA, City, and County is so broken that it’s hard not to be skeptical about the group’s ability to work out a deal as large and complex as Coliseum City. The lack of preparation on the Council’s part was on full display and it wasn’t pretty.

Nearly 30 public comments were given. They included Raiders fans like Dr. Death and Bauce, who raged against the Council. Lil Bartholo spoke first about the team’s and MLB’s blackmail and extortion techniques. The anti-lease, generally anti-Wolff crowd was well represented. However, interspersed among them were several A’s employees who mostly spoke about simply keeping the A’s in Oakland. Out of the five employees I observed, only one overtly called for the lease to be approved. They talked about how they were both fans and employees, about how some of them had union jobs, about how they were trying to collectively bargain for benefits, but the lease fiasco puts such negotiations on hold. An SEIU rep even called for the lease to be tied to a 10-year labor agreement, which is probably an overreach. Regardless, the image of employees coming forth to stand for their jobs was powerful.

Also present was a rep from the scoreboard installation company that could be contracted to work on the Coliseum. The man (whose name I didn’t get) emphasized that the lease had to be approved soon to allow for the equipment to be ordered and installed in time for the next baseball season. Emperor Nobody got some good anger at the system in, though he ran out of time (he’s on the KTVU clip so that’s good, right?).

Attorney Streeter acquitted himself well, handling all of the questions that came his way. He had to explain the rent provisions at least twice, and covered all of the major lease aspects well. It took 2 hours and 10 minutes, but the $200 million debt elephant finally came up. There’s no obvious answer as to how it the debt gets retired. Miley mentioned that the A’s are looking to buy the Coliseum land. Those who distrust Wolff don’t believe that. Streeter then boiled down the whole point of the lease. 

Streeter addressed the A’s-Oakland parking fee dispute. Arbitration is pending. Oakland is asking for $5.4 million. If the City wins they could also be reimbursed $600,000 in legal fees. The amount that the A’s are willing to pay was not disclosed. Streeter factored a discounted amount of a potential arbitration award into the lease. Why? There’s the inherent risk that the City could lose the arbitration. That makes the lease a sort of hedge.

Finally, as further questions were asked about the leases of both the A’s and Raiders, especially the ongoing operating subsidy. While I’ve always known about the subsidy, I’ve never heard it explained in such simple terms. Basically it goes like this:

  • The A’s pay for all gameday operations: power, water, groundskeeping, security. This is for a 180-day season.
  • The A’s pay $1.5 million in rent per season.
  • The A’s receive revenue from pouring rights, stadium advertising, and a chunk of concessions.
  • The A’s keep parking revenue with the exception of the tax that has to be paid to the City & County.

Contrast this with the Raiders

  • The Raiders pay $400,000 per year in rent.
  • The Raiders split parking revenues with the JPA, their share being roughly $1.75 million for the 2013 season.
  • The Raiders pay for zero stadium operating costs, and are subsidized to the tune of $7 million per year, including the costs to convert the stadium between baseball and football (and vice-versa).

Late tonight, word came that the Raiders may want a year extension, though it wasn’t clear if that’s on top of the 2015 option year or something else. I hope the Raiders’ lease gets the same kind of scrutiny the A’s lease gets. It’s the painful yet needed part of the ongoing adult conversation.

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P.S. – Wolff met with San Jose Mayor Chuck Reed yesterday at the SJ Fairmont. The meeting was described as a “check-in.”

07.16.14
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Oakland City Council Meeting 7/16 Open Thread

If, like me, you can’t make it to the meeting tonight, you can watch the stream here. You’ll need Silverlight or Real Player to watch. If anyone knows how I can embed one of these old Granicus streams, I’ll post it here.

The comments are open if you want to have a civil, on-topic discussion. I’ll also be live tweeting and mirroring here.

Reference documents (PDF):
Agenda
Coliseum Lease

07.15.14
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Selig’s Tortures of Hell and Splitting the Baby

Update 8:50 PM – Jean Quan is trying to delay the vote, supposedly to get further concessions from Lew Wolff. Wolff’s comments today don’t sound like he’s giving any additional concessions. 

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During today’s customary pre-All Star Game media session, Bud Selig addressed the A’s stadium situation for the umpteenth time. Not surprisingly, Selig’s answers yielded little for fans to be optimistic about. Selig answers that were actual answers were mainly confined to the ongoing lease negotiations at the Coliseum, with no hint as to what would occur in the future whether the lease was approved or not.

Somehow I doubt these were Selig’s personal tortures of hell. After all, he knowingly has created these conditions. It’s been much worse for A’s fans and even local media for being forced to report on this never-ending charade, not to mention little old bloggers who try to make sense of it all. Coupled with Selig’s imploring the Oakland City Council to get the deal done was the presence of Lew Wolff beside him at the Home Run Derby last night, as well as today during the session. It was a not-so-subtle reminder of who the commissioner will side with if Oakland can’t come to an agreement on Wednesday, when the City Council will hold a special session at 5:30 to consider the lease. Meanwhile, there continues to be an epic amount of finger pointing within the Council, as the mayoral candidates take stances for or against the lease and then pull 180’s days later. Those who aren’t running for mayor are sick of the politics. While MLB’s threats seemed to have cowed the Council enough to approve the deal, there’s no telling with could happen in the next 24 hours or so. Selig also acknowledged the success of the exhibition games held in Montreal in the spring, while shooting down Montreal as a potential A’s relocation target.

If anyone feels like they’re in hell, it has to be the members of the JPA board, the Oakland City Council, and the Alameda County Board of Supervisors. The mistrust and lack of communication all point to the JPA’s eventual demise, as the two City and County partners have differing visions for how to move forward. The City has been working with BayIG and Colony Capital, and for months has not expeditiously informed the JPA on the process. The JPA decided in recent weeks to figure out a potential deal with the A’s, which could threaten the Raiders’ future at the Coliseum as much as the Coliseum City deal threatens the A’s.

Last week I wondered if the idea of one party buying out the other would come up again from Nate Miley, and sure enough it has. About the only thing that the City and County can agree on is that there are too many cooks in the Coliseum’s kitchen. Miley even brought up a split-the-baby proposal.

“I would say if we could have one party responsible out at the Coliseum and the (Oracle) Arena, that would be the preference,” Miley said.

If there could be an easy way to break up the JPA, that’s it. The arena and stadium have separate financing and debt repayment structures. They’re even separate when it comes to the assessor’s rolls.

 

Most of area is the Coliseum complex, jointly owned by the City and County. Inset within is the arena land to the left. Not shown: additional land acquisitions to the east and north.

Most of area is the Coliseum complex, jointly owned by the City and County. Inset within is the arena land to the left. Not shown: additional land acquisitions to the east and north.

The County would probably be willing to take on the arena and let the City handle the rest of the complex and the development within. If Coliseum City or Wolff’s plan required the arena land, it would be a simple deal to pay off the estimated $70 million owed on the arena after the Warriors leave, assuming that the W’s aren’t liable for the remaining debt. All the County would require is a minimum amount of parking spaces (5,000 or so) to be available and continued access to the BART station via the bridge. That’s a much more manageable situation than the stadium’s $100 million owed after 2017 ($138 million after this year) and $100-400 million in infrastructure costs required to build out a complete development.

The downside of splitting the baby in this manner is that Oakland will find itself in a much riskier position. It alone will have to figure out what to do with the remaining Coliseum debt. It would also have to finance all the new infrastructure without the County’s help. Some state or federal grants could prove helpful, but are increasingly scarce. There’s very little hope of refinancing either the arena or stadium debt in the future if neither is going to have a tenant, so it’ll be up to the developer to pay it off, else the City & County eat it.

Let’s say that the County, as Miley suggests, wants out of this project altogether. Without knowing what the A’s are planning, it’s likely that their Coliseum redevelopment will be similar or smaller in scope than Coliseum City. The problem there is the mutual distrust between Wolff and the City. The City has only been working with the Raiders/BayIG, and would presumably have them as their preferred partner. But if the A’s lease extension is approved, it could jeopardize the existing Coliseum City relationship. Mayor Jean Quan and CM Kaplan can characterize this is not having to choose all they want. MLB and NFL (through proxies) are forcing that decision. Can’t dance with two partners the whole night, Oakland. Sooner or later, one of them’s gonna up and leave, or at least find a new partner.

07.14.14
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Another sign controversy

It all started a few weeks ago, when the Oakland Fan Pledge guys reported that they had to take down their sign at a game. Was this a technicality at work, or the A’s putting the hammer on signs they don’t agree with? Since then, it appears that the takedowns have been more frequent. Sign makers are crying First Amendment violations, while defenders of the takedowns say that A’s games are private functions. Of course, they’re held in a publicly-funded venue, so there’s a gray area here*. This fans-with-signs vs. management battle has gone on for decades, and it has never failed to make management look bad. Let’s look at the A’s sign policy.

Banners and Signs:

Management reserves the right to remove any signs or banners at any time. Each sign and banner must comply with the guest code of conduct. Signs and banners may be displayed at games as long as:

• They do not obstruct the sight line of another guest

• They are not larger than 3′ tall x 6′ wide

• They are not in the field of play.

• They do not cover up any existing signage.

• They are not commercial in nature.

• They do not contain obscene or inflammatory language

• They are not paraded around the stadium.

Nothing in there explicitly discusses critiques of management, or even players. If the A’s are going to have a sign policy, they better stick to it and not go beyond their stated rules. Otherwise they’re asking for legal trouble. The backed down in 2010 after John Russo threatened to sue the A’s. Now that Russo has left the government he described as “morally corrupt” (on the way out, of course), is Barbara Parker or someone else going to step in? The only remotely sports-related opinion Parker has rendered so far has been about the City Council’s voting procedure with regards to JPA matters.

At the very least, OPD shouldn’t be helping with the takedowns. Leave Coliseum private security to do it. If someone in the legal field wants to take up the sign makers’ cause, let the chips fall where they may.

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* Reason why I say the publicly-owned stadium principle is a gray area is because private isn’t always completely private, nor is public always completely public. AT&T Park is a privately owned and built stadium, yet it’s on public land. Does that make AT&T Park more or less suitable for similar protests?

07.10.14
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BayIG backs down on lease term, Quan endorses deal, Wolff denies move out of Bay Area

Ray Ratto has been giving the stadium situation a constant read this week. Wednesday’s piece may have been the best of all, though it can mostly be summed up by this:

halfass

Can we even give the City of Oakland credit for half-assing? May be generous.

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Meanwhile, on the news front, the City received another letter Wednesday from BayIG’s lawyers, which indicated that the development mean could be onboard with a plan to provide the A’s 2 years’ notice if a replacement Raiders stadium came to fruition. That’s a backpedal from their original stance, which was to tear down the Coliseum immediately after the A’s 2015 season in order to make way for the new football venue. BayIG suffered a little blowback in the media and from fans, which may have led to this softening.

In that same article, Oakland Mayor Jean Quan continues to believe that the city can continue to host both teams, while endorsing the lease extension approved by the JPA last week. Quan doesn’t get to vote on the deal unless the 8-person City Council is deadlocked. Said Quan,

“I absolutely want the City Council to sign this agreement so that we can get on to negotiating a new stadium (with the A’s).”

We’ll see if she’s forced to break a tie. Several of the council members are undecided, perhaps hoping for concessions from the A’s that probably are not coming.

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Word came yesterday morning from The Game’s Chris Townsend that the A’s could be willing to buy out the County’s portion of the JPA, which would allow the team to work on a new development plan for the Coliseum complex. I’m looking into the legality of such an arrangement. The bond issues are heavily tied into specific revenue streams and the property is jointly owned, not divided, so it’s unclear how a private developer could legally replace a public entity. It’s also important to note that BayIG has an Exclusive Negotiating Agreement (ENA) with the JPA for any Coliseum development. That agreement doesn’t expire until October, so any developer whether the A’s or a third party can’t formally engage in talks with the JPA until the ENA expires, assuming it’s not extended. Correction 5:37 PM – As was pointed out in the comments, the ENA is only between BayIG and the City of Oakland, not the JPA. Because of this, Miley or other JPA members could engage in discussions with the A’s over the future of the Coliseum complex.

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Once again, Lew Wolff had to speak publicly about someone else’s suggestion that the A’s could leave the Bay Area. CM Larry Reid suggested the team could go to Montreal or San Antonio, places that coincidentally had hosted exhibition games in March. As I’ve said before, MLB may wield the move threat, but it’s largely toothless without a deal for a new ballpark in a target city. No rumored candidate like Portland, Montreal, San Antonio, or Charlotte is close to having such a deal in place. In fact, Charlotte just opened its AAA ballpark, surviving numerous legal challenges by a local attorney who wanted to aim for MLB, not AAA. Sorry, no Timbuktu.

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A couple other blog posts are worth reading and come from completely different angles. The first is a piece by the Motley Fool advocating for a move to San Jose. It’s a skin-deep analysis, but may portend future San Jose articles in the media, especially if Oakland continues to be a circus. The other is from Death of the Press Box writer Andrew Pridgen, who calls Wolff the “last great owner in baseball.” Mind you, he sets the post up by calling Wolff a prick.

07.08.14
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Miley and Reid stir up A’s relocation talk

If you’re Bud Selig or Lew Wolff, sometimes you don’t have to play your own cards when others play them for you. Case in point: Oakland CM Larry Reid and AlCo Supe Nate Miley both brought up the specter of the A’s leaving Oakland, perhaps for San Antonio or Montreal. Nevermind the likelihood of it happening, it’s part of the threat, and the City of Oakland should take it seriously. Even sports economist Andrew Zimbalist says so, though the relocation doesn’t have to be as far as Canada. Zimbalist:

“What they could do is make a short-term arrangement to share AT&T Park with the Giants, and you know that could go on for a couple years until they found an alternative stadium situation.”

MLB wielded the move-to-AT&T card last November and the Giants were mum about it. MLB could move the A’s there temporarily while something was worked out elsewhere. Over the last few weeks I saw some discussion about whether the Giants’s Charter Seat License program could muck things up because CSL holders may have first dibs on any regular season games at China Basin, not just the Giants. I’m not so sure about that, since the license agreement indicates that “Home Games” are specific to the Giants. There’s a gray area in how another home team’s games would be handled, but since there are already provisions for offering and distributing tickets for non-Giants game events (“Classic” events), I figure this isn’t a huge obstacle.

That aside, relocation outside of the Bay Area should be taken much less seriously. Field of Schemes’ Neil deMause lays out the difficult cases for each market and includes San Jose, which has the Giants’ territorial rights claim as its because hurdle. If MLB wants to go through the same charade for the A’s as it did for the Expos, there isn’t a huge pot of gold at the end of the rainbow. Oakland is in no position to give up a publicly financed stadium to the A’s. Portland, San Antonio, Charlotte, and Montreal can be best described as mid-level markets, and while some of those cities don’t have problematic stadium T-rights situations to deal with, a relocated team will still be invading existing TV territories, which are arguably just as valuable if not more so. Hell, it’s been a decade and MLB is still trying to unwind the O’s-Nats TV mess.

So for now, there’s nothing to see here. There’s little real action, only theatrics on the part of the JPA and Oakland. If the City calls the Wolff/Selig bluff and sends back a revised offer, then we’ll see the threats fly in earnest. Or not.

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P.S. – Keep in mind that until November and last week, MLB has been playing nice with Oakland. They allowed Oakland to entertain the Howard Terminal concept. They didn’t nudge Oakland to choose the A’s over the Raiders. Now all of that has changed. Howard Terminal has been shut down via the lease talks. MLB is waiting for Oakland to partner with the A’s after the dissolution of Coliseum City. If that doesn’t happen, MLB will have a clear indicator of how Oakland wants to proceed.

 

07.03.14
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Selig pulls out move threat card, Oakland folds like cheap tent, JPA approves lease

Today had me driving from Toledo to Pittsburgh, so much of the time I was out of pocket or unable to catch up on news. Fortunately, I arrived at my planned midpoint as the JPA was convening for a vote. This is the place I visited:

The Ohio State Reformatory

The Ohio State Reformatory

Look familiar? It’s not a college campus or an old hospital. It’s the old Ohio State Reformatory, located in Mansfield, Ohio. It’s better known as the site for the filming of The Shawshank Redemption, the great Stephen King-Frank Darabont picture that no one saw in the theaters but everyone saw on cable. I toured the prison, which would’ve been demolished if not for the film’s production and belated popularity. Like the Coliseum, much of OSR is in a steady state of decay. And like the film’s climactic scene, our own green-and-gold clad heroes at times have forded a river of sewage to escape the facility. I recognize that forcing a team of millionaires owned by billionaires to stay in mediocre conditions is nothing like actual prison. The point is that writing this blog at times is my own personal prison, one that I seemingly can never escape (especially the comments section or fools on Twitter). However, I made a promise to see this through, so it’s being done. Every so often I allow myself to feel a little hope, the dangerous concept that Red cautions Andy to squelch. Even after 9 years and with no end in sight, I still hope. I can’t allow myself to be completely consumed by cynicism. There’s already one Miserablist in the Bay Area, no need for two.

My own vacation activities aside, there is reason for hope to come out of today. First, let’s recap.

  • Yesterday, the prevailing sentiment was that the City representation on the JPA board would form a bloc and oppose proposed lease agreement, killing the deal and allowing the City to provide a counteroffer.
  • That tactic was quickly trumped by last night’s letter from Lew Wolff to the JPA, which was reported during the JPA session. Wolff indicated that if the JPA did not approve the lease, Bud Selig would grant Wolff immediate permission to move the team out of Oakland.
  • In fear of Selig’s threatened reprisal, the JPA board met in closed session to discuss the lease. Eventually the lease was approved 6-2, Rebecca Kaplan (who helped construct the lease terms) and Aaron Goodwin (who dissented on the current lease).

Now for the deal terms. The redone lease includes concessions made by both sides. Note: the deal must be ratified by the Oakland City Council and Alameda County Board of Supervisors before August 1.

  1. The A’s will be in the Coliseum through at least the 2017 season, with opt-outs available to both the team and the JPA until the 2024 season.
  2. $5 million in back parking fees that were up for arbitration in the fall are now wiped away.
  3. The A’s will pay $1.25-1.75 million in annual rent. They will be obligated to pay this through the end of the lease, unless they are able to work a deal to build another stadium in Oakland.
  4. The A’s will pay at least $10 million for a new scoreboard/ribbon board package. They will keep all revenue from the boards during A’s games. The JPA/Raiders will get revenue for football games. If the new system costs less than $10 million, the remainder will be paid to the JPA.
  5. The JPA will put together a $1 million/year maintenance fund, for use when things break. The JPA is not obligated to spend $1 million every year if maintenance spending is not required.
  6. A’s will have good faith discussions about building a future ballpark at or near the Coliseum, depending largely on what the Raiders do.
  7. The Coliseum area is the only site under consideration for a ballpark, with Howard Terminal dropped.

However you feel about the parking matter, this is a large number of concessions from the A’s. As Interim City Administrator Henry Gardner pointed out, this won’t stop the big subsidy that the City and County have to pay to keep the Raiders and A’s at the Coliseum. Then again, the counteroffer wasn’t providing any relief for that subsidy either.

The A’s have also asked for any developer interested in the Coliseum to put up $20 million towards a redevelopment project. You can call this “earnest money.” It may sound like a lot, but it’s an important form of skin in the game for the developer, something that Colony Capital isn’t providing right now. Wolff certainly isn’t afraid of dropping that kind of coin, since he bought some Fremont land in advance and paid for the CEQA study work in advance. $10 million is a good amount to keep pretenders from engaging in talks.

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This type of deal was available in November, before the last time the A’s and the JPA hit a stalemate. Selig and Rob Manfred then stepped in and negotiated the to-be-superseded short-term deal. For whatever reason, the City of Oakland hasn’t recognized that until now, Selig has treated the City with kid gloves. That explains their shock and outrage to Selig’s power play. Sorry Oakland, this is how Selig normally operates. It’s part of the standard commissioner’s playbook. At some point the hardass version of Selig was going to show up and back his owner. To expect different wouldn’t just be unrealistic, it would be downright delusional.

Things are not going to get better for Oakland. The other shoe to drop will be the reactions of Mark Davis and the NFL. Since the Raiders and A’s are effectively competing for the Coliseum, both leagues are likely to play tug-of-war with the City in order to get them to commit to either entity. That should provide Oakland with some amount of usable leverage, but that’s negated by the City’s lack of non-land resources and their concerns about the feelings of the other team/league. What you’re seeing right now is Oakland in paralysis. The NFL and MLB are only happy to shake Oakland out of it. Both leagues are gearing up their preferred and contingency plans. If Davis decides this is it and gives up on Coliseum City, the complex is all Wolff’s to negotiate. If Davis truly wants Coliseum City and sees a way to make it work, Oakland will have a tough decision to make. Which team, league and developer should they partner with? It’s a decision that no politician wants to make, especially during an election year. Yet that’s Oakland destiny. Get busy living? Andy Dufresne had to decide that he had enough of Warden Norton’s hijinks in order to plan his escape. Oakland has two Warden Nortons, and it will have to screw one of them. Otherwise Oakland could find its teams, like Norton’s money, all gone.

07.02.14
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Excerpts from Proposed Lease Agreement

Ed. – I’ve highlighted what I consider relevant sections of the proposed lease agreement and put them in this post. If you want to look at the whole thing, I’ve converted the original Word doc into PDF format. The conversion preserves the numbering within the document. The excerpts total over 4,500 words, the full document runs more than 22,000. I’m putting this below the summary post for brevity. Eventually the lease will be linked in a new section on the left sidebar.

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4.7 Revenue Generation.

4.7.1 Revenues. Licensee shall control, collect, receive and retain all revenues deriving from its operations, including but not limited to all revenues from ticket sales and distribution, merchandise sales, product and other retail sales, concessions (subject to Paragraph 12), novelties, parking (subject to Paragraph 6), telecast and broadcast rights, pouring rights, advertising, sponsorship, promotional and signage rights (subject to Paragraph 11), asset-specific branding rights to internal Stadium areas, luxury suite sub-licenses and any other revenues, consideration, barter, trade, in-kind or other benefits however derived or generated by Licensee, the Team and/or by Licensee Events and Other Events. Licensor shall control, collect, receive, retain or permit licensees other than the Licensee to retain all other revenues, including but not limited to all revenues from ticket sales and distribution, Stadium naming rights, merchandise sales, product and other retail sales, concessions (subject to Paragraph 12), novelties, parking (subject to Paragraph 6), telecast and broadcast rights, advertising, sponsorship, promotional and signage rights (subject to Paragraph 11), luxury suite sub-licenses and any other revenues, consideration, barter, trade, in-kind or other benefits however derived or generated by Licensor and/or Licensor Events, Arena Events and/or retained rights under Paragraph 11.3.3.

4.7.2 Operations and Contracts. Licensee, in its sole discretion and subject to this License and applicable law, may take any and all actions and utilize any and all processes it deems appropriate to exercise its revenue generation rights, including but not limited to hiring third parties, to whom Licensee may grant a limited sub-license to enter the Areas Licensed to perform tasks as directed by Licensee. Licensor, in its sole discretion and subject to this License and applicable law, may take any and all actions and utilize any and all processes it deems appropriate to exercise its revenue generation rights, including but not limited to hiring third parties or assigning or otherwise transferring its revenue generation rights to third-parties, and in doing so, Licensor may grant any and all licenses or delegate any and all powers or privileges that, as the operator and manager of the Complex for the City and County, it may wish to grant or delegate.

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5.7.1 Stadium Maintenance Fund. In each year of the Term, Licensor shall provide in its budget for a “Stadium Maintenance Fund” in the amount of at least One Million Dollars ($1,000,000.00). The Stadium Maintenance Fund shall be used for Licensor’s Maintenance and Repairs required hereunder. Following the first year of the Term, Licensor shall increase the amount of the Stadium Maintenance Fund by increasing the preceding year’s budgeted amount by at least five percent (5%). Subject to Licensee’s obligations under Paragraph 5.8, which obligations Licensee must continue to discharge at its own cost, for each year of the Term Licensee may direct Licensor’s use of budgeted Maintenance and Repair funds up to One Hundred Fifty Thousand Dollars ($150,000.00) for Maintenance and Repairs requested by Licensee to be performed by Licensor (including that Licensee may “earmark” all or part of such funds for work to occur in future years; provided, however, that no more than $150,000.00 may be earmarked for any particular future year). To facilitate and enable Licensee to exercise its right to direct the use of certain funds each year, Licensor will provide quarterly reports to account for the uses of budgeted funds in the Stadium Maintenance Fund in the preceding quarter.

5.7.2 Stadium Maintenance Fund. Not a Limitation or Cap. The Parties agree that the Stadium Maintenance Fund is an annual budgeting mechanism designed to ensure that a certain amount of funds is available each year for Maintenance and Repairs and to facilitate tracking of Maintenance and Repair expenditures. Licensor acknowledges that the existence of the Stadium Maintenance Fund does not limit its Maintenance and Repair obligations or put a maximum limit on the amount that it must spend for Maintenance and Repair work. Licensor further acknowledges that compliance with those obligations may require expenditures exceeding the amount in the Stadium Maintenance Fund in any given year.

5.7.3 Licensor Responsibilities.

5.7.3.1 Maintenance and Repair. Licensor, at all times during the Term, shall perform all Maintenance and Repairs of the Stadium (except such items as Licensee Maintains and Repairs as specifically provided herein), including specifically Maintenance of and Repairs of the following associated areas, structures and equipment:

  • All structural parts of the Stadium including the roof, windows, walls, floors, pillars and columns;
  • The electrical system including all electrical light standards, light fixtures and wall sockets but not including light bulbs or moveable electrical equipment;
  • The heating, ventilating and air conditioning systems;
  • The plumbing systems including without limitation all pipes and plumbing fixtures such as sinks, toilets and water fountains;
  • The Parking Area and underground utilities (to the extent such utilities are under the direct or indirect control of Licensor) subject to Paragraph 6 and its subparagraphs;
  • The Stadium seats;
  • The field drainage system;
  • All elevators and escalators;
  • All sound systems and related equipment, except in connection with any new audio components that Licensee installs as part of the Display Equipment Project, which shall be Maintained and Repaired by Licensee as provided within Paragraph 11.4;
  • All Stadium televisions and all amplifier and other systems feeding to such televisions;
  • All cabling of any nature within the Stadium except cabling installed and used exclusively by Licensee;
  • Licensee’s office space and storage provided pursuant to this License and all items and systems of the type listed in subparagraphs (a) through (k) above that affect and/or are used within Licensee’s office space and storage; and
  • All other property, systems, equipment and fixtures currently maintained and repaired by Licensor, owned by Licensor or installed at Licensor’s direction.

Licensor’s Maintenance and Repair obligations shall not include the furniture, fixtures, computers or other equipment of Licensee or of any concessionaire. Licensor shall not charge Licensee any amounts related to Licensor’s obligations, but in the event that Licensor is required to Repair any of the items described above as a result of Licensee’s negligence or willful misconduct, Licensee shall pay the costs of such Repair.

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5.10.3 Exclusive Right to Stadium Use. Licensee shall have the exclusive right to use the Stadium throughout each Baseball Season, but shall use its best efforts to influence MLB to ensure that there are at least two scheduled open weekend dates (i.e. Friday, Saturday, or Sunday) during the NFL pre-season each year for Raiders’ preseason games. Except for scheduled dates of Raiders’ games, which is a use of the Stadium for which Licensee must work in good faith to permit and have a reasonable basis for declining during Baseball Season, Licensor may use the Stadium during the Baseball Season only upon Licensee’s prior written approval, which approval Licensor acknowledges may be withheld in Licensee’s absolute discretion for the date of any Licensee Event and for any dates including and between the day before the commencement of and the last day of any of the Team’s homestands. In connection with the development of each baseball and football schedule, Licensor, Licensee and the Raiders will attempt to accommodate the reasonable scheduling requirements of each other and of the respective leagues and will work in good faith to resolve any disputes arising therefrom. The Parties acknowledge that MLB may not allow Licensee to commit to make the two football weekends available in each of August and September non- consecutively, nor, because of playoffs and the World Series, will MLB commit to make any weekend in October available for scheduling of a football game. Subject to all of the above, the Raiders shall have scheduling priority and the absolute right to use the Stadium for its games from the end of Team’s Baseball Season each year through the end of the following January.

5.10.4 Protected Dates. Not later than January 15th of each year within the Term, Licensee may designate to Licensor in writing up to five (5) Home Games on which dates Licensor agrees not to schedule any Licensor Event or to permit any Arena Event (other than a Warriors game) unless it (a) concludes at least two (2) hours prior to the scheduled start of a Home Game; or (b) commences at least six (6) hours after the scheduled start of a Home Game.

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7.2 Early Termination Rights.

7.2.1 By Licensee. Beginning January 1 of the second full year of the Term (January 1, 2016 – December 31, 2016), Licensee shall have the right to terminate this License prior to expiration of the Term by providing Licensor written notice of intent to terminate on or before December 31st of any year during the remainder of the Term, with the effective date of termination occurring as of December 31st of the second year following notice. If Licensee terminates this License in connection with any move to a stadium outside of the City, Licensee shall pay on the effective date of termination, in lump sum, all annual license fees pursuant to Paragraph 8.1 below for the remainder of the full 10-year Term, as if this License were operative throughout the Term and had not been terminated. Licensee shall not be obligated to pay such annual license fees if Licensee terminates this License in connection with a permanent move to a new or re-built stadium on or adjacent to the Complex site or to a different stadium within the City.

7.2.2 By Licensor. Licensee acknowledges that a plan may develop for construction of a new football stadium for the Oakland Raiders. Licensor shall keep Licensee reasonably informed of any information related thereto. If Licensor presents Licensee with a Raiders Construction Plan, Licensor and Licensee shall, for a period of thirty (30) days thereafter, negotiate in good faith for an amendment to this License that will account for the financial, operational and other consequences that Licensee would suffer from the construction and operation of such planned football stadium. Such negotiations shall not be necessary if the Raiders Construction Plan includes substantial demolition of the Stadium. If such good faith negotiations are unsuccessful or unnecessary, Licensor may terminate this License upon written notice of intent to terminate to Licensee, such termination to take effect sixty (60) days after the conclusion of the second (2d) Baseball Season that commences after such notice. (By way of example, if Licensor provides Licensee with such termination notice on June 15, 2016, this License will terminate sixty (60) days after the conclusion of the 2018 Baseball Season.) Between the time notice of termination has been given and the date of actual termination, Licensee shall cooperate in good faith with any activities by Licensor or its designees that may be necessary to prepare the site in advance of construction, including by providing reasonable access to any areas for which Licensee has exclusive use rights, so long as no actions are taken by Licensor or its designee and nothing is required of Licensee that unreasonably interferes with Licensee’s operations. For the sole purpose of a possible termination to accommodate a Raiders Construction Plan, the Parties agree to amortize on a monthly, straight-line basis (i) Licensee’s total verified cost reported to Licensor under Paragraph 11.2 for the Display Equipment Project, plus any amount paid directly to Licensor thereunder, and (ii) all other amounts paid by Licensee during the Term for mutually agreed upon improvements to the Stadium or Complex (“Additional Licensee Improvements”) under Paragraph 5.9, provided that Licensee’s costs for Additional Licensee Improvements will be subject to amortization hereunder only if Licensor shall have acknowledged to Licensee in writing at the time of Licensor’s approval of such Additional Licensee Improvements under Paragraph 5.9 that such improvements will be subject to the provisions of this Paragraph 7.2.2. Amortization shall occur from the last day of the month in which the particular improvement is completed throughout the remainder of the planned 10-year Term. Following termination by Licensor in connection with a Raiders Construction Plan, Licensor shall pay Licensee the entire unamortized balance of such improvement costs as measured from the date of completion of installation of the improvements being amortized to October 31st of the year in which termination is to take effect. Licensor shall make such payment not later than December 31 of the year in which termination becomes effective. By way of example, if (a) the Display Equipment Project is completed during March 2015 and the total verified project cost is $11,020,000 and (b) Licensor provides proper termination notice on June 15, 2016, then (x) the $11,020,000 will be amortized on a monthly schedule from March 31, 2015 through October 31, 2024, with $95,000 amortized on the last day of each month beginning on March 31, 2015, (y) this License shall terminate effective sixty (60) days after the conclusion of the 2018 Baseball Season and (y) Licensor shall pay Licensee, no later than December 31, 2018, the lump sum of $6,840,000 ($11,020,000 minus (44 months times $95,000)), plus whatever sum may be due for the costs of Additional Licensee Improvements, utilizing the same amortization methodology. The Parties acknowledge, however, that subject to Paragraph 16, Licensor’s obligation to pay Licensee under this Paragraph 7.2.2 may, and likely would, be passed through to any third-party developer that undertakes the Raiders Construction Plan.

8. LICENSE FEES

8.1 License Fees. Licensee shall pay to Licensor an annual license fee of One One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) for 2014, One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) for the first full year of the Term (January 1, 2015 – December 31, 2015), and after that, One Million Five Hundred Thousand Dollars ($1,500,000.00) for each of years two through five of the Term (2016 through 2019), and One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) for each year of years six though ten the Term (2020 through 2024). Except for fees in 2014, when payment was due June 30, 2014, the full and timely payment of which is a condition of the Parties’ entry into this Agreement, Licensee shall make each annual payment April 1st of each year of the Term. Each payment shall be due and owing immediately upon each payment date and shall be considered payment in advance for all use and other rights granted under this License during the subsequent twelve months. Subject to Licensee’s right to cure under Paragraph 22.1.2, any late payment shall be subject to a late fee of two thousand five hundred dollars ($2,500) per day and any accumulated delinquency shall carry interest at a daily compounded interest rate of ten percent (10%) per annum.

8.2 Prohibition on Deductions. Licensee shall not deduct, offset or otherwise withhold any amounts payable by it to Licensor under this License Agreement except to the extent expressly authorized under Paragraphs 17.1, 17.2, 17.3, 20.2, 23.2 or 27.2 herein. Any payment delinquency uncured under Paragraph 22.1.2, including any unauthorized deduction, offset or other withholding (a) shall (in addition to the late charges and interest under Paragraph 8.1), accrue pre-judgment interest at the maximum statutory interest until paid in full, (b) shall trigger a payment owing to Licensor to compensate it for difficult-to-calculate harm in the amount of all remaining Annual License Fees under Paragraph 8.1, and (c) shall give Licensor the right, at its option, to seek declaratory and injunctive relief in court or in arbitration (notwithstanding Paragraph 38) terminating the License and all of Licensee’s rights thereunder, including its rights of use and occupancy under Paragraph 4, effective immediately if the delinquency takes place outside of the Baseball Season, or otherwise effective on the day after the conclusion of the last Licensee Event during the Baseball Season in which the delinquency took place. Monetary recovery for any such delinquency may be sought in court or in arbitration, at Licensor’s option, notwithstanding the provisions of Paragraph 38 herein. Should Licensor file an action seeking monetary relief for any delinquency under Paragraph 8, Licensor shall be entitled to recover its entire attorney’s fees and costs upon entry of judgment in its favor or in the event that any of the delinquency is paid or ordered paid prior to entry of final judgment.

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11.2 Stadium Display Equipment. Licensee shall, no later than October 31, 2014, commit to spending not less than Ten Million Dollars ($10,000,000.00) to purchase and install (i) two (2) new digital video/score boards, a new digital ribbon board or boards on the Stadium Plaza Level Façade (the video/score boards and ribbon boards will be referred to collectively as “Digital Displays”), and, if Licensee chooses to do so, in its sole discretion but subject to Licensor’s approval below, a new integrated audio system, and (ii) and associated new control room equipment capable of programing, controlling and storing digital content for the new Digital Displays along with associated audio (collectively, all components, equipment and systems comprising and related to the new Digital Displays, the new audio system, if installed, and the associated new control room, will be referred to as the “Display Equipment”). Licensor acknowledges that, by agreeing to undertake the purchase, installation, maintenance and repair of the Display Equipment (the “Display Equipment Project”), Licensee will be relieving Licensor of substantial future Maintenance and Repair costs that Licensor would otherwise be required to bear. The Parties agree that time is of the essence for the completion of the Display Equipment Project. As soon as possible after the Signature Date, Licensee commits to provide to Licensor detailed costs, plans and equipment specifications for the Display Equipment and to seek Licensor’s approval for the Display Equipment Project under Paragraph 11.4 after providing that information, which approval shall not be unreasonably withheld or delayed. The Parties agree to cooperate and use mutual best efforts to achieve completion of the Display Equipment Project by April 1, 2015. Upon completion, Licensee shall provide Licensor with a report detailing the equipment purchased, work performed, and total cost (as measured by the total project cost without reference to whether Licensee obtained financing for the Display Equipment Project), together with copies of reasonable backup verification of such costs including invoices, cancelled checks or other proof of payment or payment obligation. If such total amount is less than Ten Million Dollars ($10,000,000.00), Licensee shall pay Licensor the difference within thirty (30) days after Licensor’s written acceptance of the contents of such report.

11.2.1. Licensor Consultation. Licensee shall have absolute discretion on the selection of all Display Equipment and shall perform all work required to purchase and install the Display Equipment (excluding any necessary structural work to the framing cabinet structures and support beams that will house and support the Display Equipment (“Display Equipment Structural Work”), which shall be Licensor’s responsibility), but shall consult with Licensor in connection therewith. Licensor shall cooperate with Licensee during the entire Display Equipment Project, including without limitation the installation of all Display Equipment, in connection with which Licensor shall perform any Display Equipment Structural Work reasonably necessary to facilitate such installation. The Parties shall confer in good faith and seek to agree about whether any Display Equipment Structural Work is required for installation of the Display Equipment, and if they cannot agree, shall follow the procedures for resolution set forth in Paragraphs 5.7.3.4 and 5.7.3.5.

11.2.2. Structural Work. The Parties recognize that, if Display Equipment Structural Work is necessary for the Stadium Display Project, that work could potentially delay the projected April 1, 2015 completion date for the Stadium Display Project. As soon as reasonably possible after the Signature Date, Licensee will identify specifically in writing the particulars of the Display Equipment that Licensee plans to install in order for the Parties jointly to determine the extent of any Display Equipment Structural Work. So long as Licensor works diligently and in good faith to complete any Display Equipment Structural Work as soon as possible after receipt of Licensee’s writing, Licensor shall have no liability for any losses attributable to delays in meeting the April 1, 2015 completion date (including without limitation in any instance where Licensor works diligently and in good faith but Licensee by its own conduct interferes with, delays, or impedes Licensor’s process of evaluating or undertaking such work).

17. DAMAGE AND DESTRUCTION

17.1 – Major Damage – Repairable. In the event of the damage or destruction of the Stadium so that Licensee cannot reasonably use the Stadium for Home Games, and there are insurance proceeds available to Licensor to pay eighty percent (80%) or more of the cost of repairing the damage, such repairs can be performed under applicable governmental laws, rules and ordinances, the design and construction work can be reasonably completed within eighteen (18) months after the date of damage, and will enable Team to play at least one complete Baseball Season at the Stadium during the remaining Term as the same may be extended by mutual agreement of the Parties, and Licensor delivers notice to Licensee within one hundred twenty (120) days of the date of damage that such repairs can be so completed, then this License shall remain in full force and effect, and Licensee shall have no liability to pay any fees or perform its other obligations hereunder with respect to the Stadium during any such period when Licensee is unable to use the Stadium, and Licensor shall refund to Licensee a portion of annual fees under Paragraph 8.1 already paid by Licensee based on the rights lost by Licensee as a result of the damage and repairs. Licensor shall collect and expend all funds required to repair the damage at the earliest possible date. During the period that the damage is being repaired and Licensee cannot reasonably use the Stadium for Home Games, Licensee shall have the right to play Home Games in any other one or more comparable stadiums located in the Licensee’s Home Television Territory and acceptable to MLB or, if no such stadium is available on commercially reasonable terms, then in the stadium available as close to Licensee’s Home Television Territory as is reasonably possible and acceptable to MLB that is available on commercially reasonable terms for use by Licensee until the Stadium is again ready to be used for Home Games; provided, however, that the Parties acknowledge that MLB may relocate affected Home Games to the stadiums of the Team’s respective opponents. Subject to any scheduling requirements of MLB, and subject to the repairs being reasonably acceptable to MLB, Licensee shall recommence playing Home Games in the Stadium from the date specified by Licensor in a written notice delivered at least thirty (30) days before the first Home Game to be played in the Stadium stating that the repair work has been completed to the extent where the Stadium can reasonably be used for Licensee’s Home Games.

17.2. Major Damage – Not Repairable. In the event of damage or destruction of the Stadium so that Licensee cannot reasonably use the Stadium for Home Games, and there are no insurance proceeds available, or insurance proceeds are available but are less than eighty percent (80%) of the cost of repairing the damage, or the repairs cannot be performed under applicable governmental laws, rules and ordinances, or the design and construction work cannot be reasonably completed within eighteen (18) months after the date of the damage, then for a period of thirty (30) days after the facts regarding the insurance proceeds and governmental laws are known to Licensor (which Licensor shall promptly communicate to Licensee) but in no event more than 120 days following the date of damage, Licensor shall have the right, exercised by written notice to Licensee within such period to terminate this License or to keep the License in force and proceed to repair the damage at Licensor’s cost. If Licensor fails to notify Licensee of its election within the 30-day period then Licensor shall be deemed to have terminated the License at Licensee’s election and immediate notice to Licensor. If Licensor elects to repair the damage and the work cannot reasonably be completed or in fact is not completed within eighteen (18) months after the date of the damage, then Licensee within thirty (30) days after notification from Licensor of its election to repair the work (if the repairs cannot be reasonably completed within eighteen (18) months) or within thirty (30) days of Licensee being notified (if the repair work will not be completed within the eighteen (18) months) that the work will not be completed within the eighteen (18) months, shall have the right to terminate this License by written notice to Licensor. If Licensor elects to repair the damage, then the provisions of Paragraph 17.1, dealing with the repairs and 17.3 dealing with the obligations of Licensee during and after the repairs are made, shall apply. To the extent that Licensee has paid annual fees in advance under Paragraph 8.2 for the right to use the Stadium, and as a result of Major Damage, that use is no longer possible during such quarter, Licensee shall be entitled to a pro rata refund or credit of fees for the number of months remaining in the quarter for which Licensee has paid fees. During the time period beginning with the damage and destruction through either the re-opening of the Stadium or termination of this License, Licensee shall have no liability to pay any fees or perform its other obligations hereunder with respect to the Stadium.

17.3. Less Than Major Damage. In the event of damage or destruction of the Stadium and there has not been a material reduction of the seating and/or parking capacity and the playing field can be configured to meet MLB standards so Licensee can reasonably continue to use the Stadium for Home Games, then Licensor at its cost shall promptly repair the damage to the extent possible under applicable laws and shall do all acts required to protect users of the Stadium from any hazards created by the area damaged or the repair work. During the period of any such repairs Licensor shall continue to perform all of its obligations hereunder and to the extent areas of the Stadium are used by Licensee shall use its best efforts to provide temporary additional areas in the Stadium or Complex where Licensee can continue to perform the activities previously engaged in the damaged areas. In the event Licensor is unable to reasonably provide sufficient temporary areas, it shall be Licensee’s responsibility at its cost to obtain such facilities as are required outside the Complex. Licensee’s obligations to pay fees for such unusable areas shall be reduced on a pro rata basis, and Licensee’s other obligations hereunder with respect to such unusable areas shall be abated, until the date repairs have been completed.

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20.1 Property Taxes and Assessments. The Parties acknowledge and agree that the appropriate City of Oakland or County of Alameda entity shall pay any and all real property Impositions including, without limitation, any transaction privilege tax or other similar Imposition (collectively, “Real Property Taxes”) now or in the future levied, assessed or otherwise payable in respect of the Stadium or Complex or any part thereof. Licensee shall have no responsibility for any Real Property Taxes.

20.2 Licensee’s Responsibility to Pay All Taxes. Licensee shall pay and is responsible for all federal, state, City of Oakland and County of Alameda Impositions, including all income, sales and use taxes, payable on account of revenues reserved to or retained by Licensee from the operational and use rights granted to, and exercised by, Licensee under this License.
43. CONTINUED STADIUM DISCUSSIONS
Licensee and Licensor (or Licensor’s designee) shall continue to engage in good faith discussions concerning the development of a new baseball stadium for use by the Licensee that would be a permanent home for the Oakland Athletics, provided that such discussions shall solely focus on the development of a new baseball stadium that would be located on land within or immediately adjacent to current Complex property. If agreement is reached on development of such a stadium, the Parties will renegotiate any terms of this License Agreement that may need to be modified or eliminated in order to facilitate the construction of the new stadium. The Parties’ discussions concerning a possible new stadium will continue during the Term until Licensee communicates to Licensor that Licensee has made a decision on a permanent baseball stadium at another location or until Licensor provides Licensee notice of early termination (as provided in Paragraph 7.2.2.) in connection with a Raiders Construction Plan.

07.02.14
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Summary of 2014 Coliseum lease agreement

OAKLAND ALAMEDA COUNTY COLISEUM AUTHORITY

July 3, 2014

STAFF REPORT

6a. Resolution Approving and Authorizing the Execution of a Stadium License Agreement between the Oakland Alameda County Coliseum Authority and Athletics Investment Group LLC

Background. The Oakland Athletics (“A’s”) have been operating at the O.co Coliseum under the current License Agreement (the “License”) since October 31, 1995. It has been amended and extended a number of times. The last extension, in November 2013, extended the License through December 31, 2015. After the 2013 extension to the license was approved, the A’s requested that the Authority work with them to come up with a longer term License Agreement For a number of months, representatives of the A’s and the Authority have been negotiating terms of that License. In light of the desires of both parties to reach a longer term agreement and to begin to work on the possible replacement of 0.co as the home of the A’s, the negotiators are proposing to the Authority a Stadium License Agreement (the “2014 License”) which is attached to this report. The A’s have expressed willingness to sign this form of 2014 License.

Proposed Terms of the Amendment. The following is a brief summary of some of the proposed terms of the Amendment. The full form of the proposed form of the Amendment is attached for review.

• Term. The term of the License would commence on the date the last approval is obtained and terminate on December 31, 2024.

• License Fees. The A’s agree to pay license fees for use of the stadium of $1.75 million in 2014; $1.25 million in 2015, $1.5 million from 2016 through 2019, and $1.25 million from 2020 through 2024. The 2014 License explicitly prohibits the A’s from withholding license fees as a method for resolving disputes and provides strong protection against such withholding in the future.

• Early Termination. The 2014 License provides for certain early termination rights.

  • Construction of new Raiders’ stadium. The Authority is permitted to terminate the 2014 License if certain criteria are met with respect to a plan to build a new stadium for use by the Raiders on the Coliseum site. This termination would take place 60 days after the end of the second baseball (sic) from the date the Authority give notice of an intent to terminate.. The clause permitting early termination by the Authority to accommodate a new Raiders’ stadium contemplates that the A’s would not have to leave the Coliseum Complex site, but could build their own new stadium on the site at a different location than the new Raiders’ stadium.
  • The A’s move from Coliseum site. The 2014 License also provides that, beginning in 2016, the A’s may give notice of an intent to terminate. Termination by the A’s would be effective December 31 of the second year following notice. At the earliest, any termination by the A’s could not take place until December 31, 2018. If the A’s terminate in order to relocate to any permanent stadium site outside of the City of Oakland, the A’s are required to pay in a lump sum the remaining license fees through the end of the term. This lump sum early termination payment by the A’s would not be required if the A’s were to move to a new stadium anywhere within the City of Oakland.

• Improvements to Stadium. The A’s agree to spend not less than $10 million to install a new scoreboard system in the stadium by the 2015 baseball season. The Authority agrees to pay for any structural work that may be required to support the scoreboard installation. The A’s would pay to maintain and operate the scoreboard and retain all advertising generated from the scoreboard for A’s games and events. The Authority will control the revenues from advertising on the scoreboard for all other events in the Stadium, including Raider’s games. The Authority agrees to spend not more than $1.5 million to provide enhanced lighting to the parking lot and certain areas of the Stadium.

• Stadium Maintenance and Repair. In connection with the Authority’s obligation to maintain and repair the Stadium, the Authority agrees to fund a Stadium Maintenance Fund by setting aside $1 million each year, increasing by 5% each year, to fund its ongoing maintenance and repair obligations. The A’s may designate $150,000 of this fund each year for a particular project. The Authority is required to maintain the stadium even if the amount required exceeds the amount available in this fund. The 2014 License provides for an expedited dispute resolution should the A’s and the Authority disagree on the necessity and cost of the maintenance and repair obligation.

• Scoreboard caps. The Authority will pay $200,000 per year for the use of the scoreboard caps where the am name is currently displayed. The 2014 License contains provisions that delineate the rights of the parties should the caps be removed in connection with the installation of a new scoreboard.

• Continued Stadium Discussions. The 2014 License provides that the A’s and the Authority will continue to engage in good faith discussions regarding the construction of a new permanent home for the A’s on or adjacent to the Coliseum property.

• General Release of Claims. As a condition to entering into the 2014 License, the A’s and the Authority agree to release all claims against the other party, including the claims that are the subject of an arbitration proceeding.

• Financial Impact to the Authority: The A’s have provided a financial analysis showing that, compared to the last 10 years of the 1995 License Agreement, the proposed 2014 License Agreement has the potential to return total cash value to the Authority of more than triple that provided by the 1995 License Agreement (and more than double the cash value on a present value basis).

Further Approvals. The Management Agreement, between the Authority, the City of Oakland and the County of Alameda, requires that each of the City and the County approve the 2014 License. In addition, Major League Baseball must approve the 2014 License before it becomes effective.

Recommendation. Staff recommends that the Board of Commissioners adopt the resolution approving and authorizing the execution of the 2014 License and requesting that the City of Oakland and the County of Alameda approve the 2014 License..

Deena P. McClain
Acting Executive Director

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P.S. – This agreement, which is supported by Alameda County and the A’s, is to have a vote on July 3. If it passes, the matter would go to the Alameda County Board of Supervisors and the Oakland City Council, who each would have to approve separately. Oakland has indicated that it will vote against the lease and provide a counteroffer. The A’s have indicated that they will not entertain any such counteroffer.

06.30.14
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A rift opens between Oakland and Alameda County

In the aftermath of the PR disaster that was Friday’s JPA meeting, discord between the two halves of the JPA, the City of Oakland and Alameda County, was revealed. Tensions had been simmering under the surface for some time, most evidently on display during the all-hands joint meeting last December. In Friday afternoon’s Trib article, JPA Board Chair and AlCo Supe Nate Miley expressed his discontent with the City, calling the no-show a step towards dissolving the JPA. He again brought up the possibility of the City buying the County out of the JPA, which would allow Oakland to go it alone on Coliseum City.

Neither party has the available cash to buy the other out, but Miley seems bent on making it part of the discussion. The implications would be huge. Coliseum City talks have divided the JPA into Oakland as the more pro-Raiders group and Alameda County as more skeptical and perhaps leaning towards the A’s. There are major fundamental differences between how the two sides characterize the talks. The City is optimistic about BayIG and the Raiders, whereas the County is questioning where the money will come from and is already looking at alternatives. Should this divide stay intact, it’s difficult to see how the two sides could come together to approve a large-scale redevelopment scheme like Coliseum City. Maybe the rift can be healed as more information comes in that could build confidence with the County leaders. Coliseum City’s current trajectory makes such a kumbaya moment nearly inconceivable.

I’m starting to think that if the JPA had a quorum and took a vote, the lease extension would’ve been approved 5-3 or 6-2, which would’ve forced the City Council to vote on it. There are 2 CMs on the board and 2 Oakland appointees, Yui Hay Lee and Aaron Goodwin. Goodwin has frequently taken independent positions in the past, most recently being the lone dissenter on the short-term lease vote in November. At the time, Goodwin cited the lack of a long-term agreement with the A’s as the reason for his dissent. 10 years is a much longer commitment, even with the opt-outs (which have been standard practice at the Coliseum for years). When the JPA took $3 million out of the capital improvements fund to fund the Coliseum City studies, it was Goodwin who was concerned about the impact the siphoning would have on the relationship with the A’s.

Goodwin’s name should be familiar to those with some sports business knowledge because he’s been an agent to numerous NBA players for 20 years. His current client list includes Oakland native and Portland Trail Blazers point guard Damian Lillard, among others.

If Goodwin didn’t like the lease or chose to vote as a bloc with the rest of the City side, the results would’ve been 4-4, a stalemate. That probably would’ve forced the JPA to go back to the drawing board, which would’ve been fine in that everyone would be forced to be honest about where the JPA stood with regards to the lease.

With a 5-3 or better vote, the next course of action would’ve been for the City Council and the County Board of Supervisors to vote on the lease. Let’s assume that the Supes approved the lease. It would’ve been up to the City. There’s no telling what could’ve happened. There are several potential outcomes:

  1. Council draws up resolution in support, votes to approve lease
  2. Council draws up resolution in support, votes to kill lease
  3. Council draws up resolution against lease, sends their own version back to JPA
  4. Council never makes resolution, lease never comes up for vote

Any of the last three outcomes makes the City look bad in MLB’s eyes, especially after Bud Selig prematurely announced that a lease agreement had been made. Selig’s power play and not-so-subtle wording put Oakland on the defensive. Whether it’s a setup to force Oakland’s hand or Selig simply siding with Wolff, it’s a difficult decision for the City to make with the Council attempting to balance the A’s and Raiders’ interests. As symbolically good a lease would look to Wolff and Selig, it could look terrible to Mark Davis and Roger Goodell. But the City had to know that this day was coming, and that to keep stalling until a solution magically appeared for them was a pipe dream. Selig has discounted Howard Terminal in concurrence with Wolff. Davis considers Coliseum City the last shot for Oakland, and continually has been disappointed by the lack of progress on the deal front. Oakland’s time to tap-dance around the issue is coming to an end.

That leaves the one lingering question about the lease extension, Why now? The A’s lease is up in 2015, not this year, so the urgency feels out of place. Maybe Selig decided to get the first domino rolling, knowing that Coliseum City had a timetable for a decision later this year. Sports law expert Nathaniel Grow considers a new extension potentially damaging for San Jose’s antitrust lawsuit against MLB. That seems like a long shot, especially considering San Jose’s shaky legal standing in the first place. If that is the motivation, it’ll prove once and for all that MLB isn’t terribly concerned about local politics. They’re looking out for baseball. Everything else ends up collateral damage.