Category Archives: Politics

12.26.12
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Imagine a Coliseum without Mount Davis

Following up Monday’s post about Mt. Davis, here are the specifications for the Coliseum if the Raiders did not come back in 1995. The ballpark boom had begun, but the Coliseum hadn’t yet been completely overshadowed by the retro mallpark. In 1993, the Coliseum complex won a statewide architectural award. Improvements conceived by both the Coliseum and the A’s were feasible and small in scale. Compared to the $80 million $100 million $200 million renovation for the Raiders, the changes for the A’s would have been fairly modest at the outset.

4. PLANNED STADIUM MODIFICATIONS

4.1 Stadium Improvement Plan. Licensor (Coliseum JPA) and Licensee (A’s) have approved a scope of improvements to the Stadium as set forth in Exhibit C. In the event the Raiders have not entered into or agreed to enter into an agreement for more than ten years with Licensor for the Raiders’ use of the Stadium on or before September 30, 1995, Licensee shall have the right in its sole discretion by notice given not later than September 30, 1995, to cause Licensor to complete Stadium improvements as follows:

[a] Construction of up to 5,000 club seats and a related club lounge, for completion by March 31, 1996, and as more particularly described in Exhibit C. The total cost of the stadium improvements plan will not exceed $10 million. Licensee’s representatives will be included in all design, planning and construction meetings.

[b] Stadium improvements described in [a] above will be financed through the issuance of bonds. The bonds will be authorized in 1995 and sold as construction is implemented. It is understood that Licensor’s existing bonds will be deceased.

[c] Licensee shall have the right, at Licensee’s sole cost and obligation, to finance and cause Lincesor to construct such additional Stadium improvements as Licensor and Licensee shall mutually agree in connection with the construction of the Stadium improvements and finance plan described above.

[d] On or after November 1, 1995, either Licensor or Licensee may request the other to negotiate in good faith to approve, in the sole discretion of both parties, respectively, a Stadium improvements and finance plan to provide for the construction of improvements in addition to those set forth in Section 4.1[a] and [c] above, in an amount not to exceed $60 million and under financing terms mutually agreeable to Licensor and Licensee, provided however, to the extent permitted by such financing, Licensee shall recover the actual cost of additional Stadium improvements financed by it under Section 4.1[c] above. Licensee’s sole remedy for the parties failure to approve such a plan shall be the early termination rights described in Section 7.3 below.

[e] In order to provide amortization of the existing bonds issued by Licensor and new improvement bonds, Licensor’s revenue from the Stadium naming rights, club seat premium, together with ticket surcharge revenues would be deposited into an improvements construction fund beginning in 1995.

[f] In addition to stadium improvements, a stadium maintenance fund shall be established and funded by Licensor in the amount of $500,000 annually beginning in 1996 and escalated at 5% per year thereafter. Stadium major maintenance would be paid for from this fund annually. In the event that the transfer in any year is less than the required annual contribution, then Licensor shall deposit the shortfall. Surpluses in the improvements construction fund which are available for the transfer shall be used to offset prior years deficits.

Effectively, the renovation project would have only consisted of what is now known as the West Side Club, for $10 million ($1.2 million/year). Another $50 million could have been available over time, which would’ve been used to replace all of the orange seats and bleachers, redo the clubhouses (maybe the A’s would’ve taken the old Exhibit Hall space instead of the Raiders) while adding a batting cage, build more field boxes, maybe even remove the outfield stairs and move the bullpens there. New scoreboards would’ve required a new agreement and new funding.

All of that would’ve been nice for the 10-year lease that was under consideration. By the end of that lease, December 2004, the pressure would’ve been on to replace the Coliseum. Why? At the time, all of the old cookie-cutter stadia were in the process of being replaced. While Three Rivers and Veterans didn’t get any improvements prior to their replacement, Busch Stadium was made more baseball friendly after the football Cardinals left for Arizona and the Rams played half of the 1995 season at Busch. That arrangement lasted a decade, setting up a transition period until the current Busch was funded and built.

What we don’t know is whether or not Oakland and Alameda County would’ve given up on trying to get the Raiders back. My guess is that the various forces working to bring the team back (Don Perata, Elilu Harris, George Vukasin Sr., Scott Haggerty) would’ve kept trying, at least until Harris gave way to anti-stadium Jerry Brown. Who knows? Oakland by now may have completely established its identity as a baseball town, instead of dealing with two unsatisfied teams in, what Monte Poole called, “a house without distinction”.

12.24.12
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Mount Davis specifications

With all this talk of lease extensions, I decided to go back into the original 1995 lease the A’s had at the Coliseum (for my own edification). The document, which was signed by Wally Haas as he was selling the team, goes over two specific scenarios: what happens for the A’s if the Raiders return, and what happens for the A’s if the Raiders don’t return. That latter part will be covered soon. For now, take a look at the language that eventually resulted in what we now know as Mount Davis, the 10,000-seat, 90-skybox grandstand in the outfield. The language is copied verbatim, typos and all.

B. CENTER FIELD GRANDSTAND STRUCTURE PERFORMANCE SPECIFICATION

Design Intent:

Constructed in the 1960s, the Oakland-Alameda County Coliseum has its origins in the symmetrical, reinforced concrete modernist style engineering structure that was prevalent throughout this period. Of these parks, Oakland is singularly the best baseball park. This is a great place to see a game with the fan close to the action and comfortable in spite of the facility’s size. Seating surrounds the field, is intimate and humanly scaled. Circulation reinforces one’s location and orientation to the field at all areas nd levels.

The proposed centerfield grandstand structure must reinforce this environment. It cannot be a monolith looming over the outfield fence. Other than the playing field, it will be the natural focus of the stadium. Therefore, the structure’s size, shape and mass must provide a positive contribution to the stadium’s overall design.

Mass:

Mitigation of the structure’s mass, vacant stadium seating and vacant luxury boxes must be part of the overall design concept. The upper level seating shall be covered in the baseball configuration, this level and potentially elements of the vertical elevation shall incorporate team graphics, back-lighted advertizing signage and regional artwork to break up and reduce the structure’s scale. These elements shall become an integral part of the structure’s overall appearance. However, mitigation cannot rely on coverings and signage alone.

The structure shall relate to the existing stadium’s size and proportion, not exceeding it in overall height. This structure shall incorporate league scale design elements: a diverse, articulated, angular building profile with strong shadow lines, which diminish the overall mass of the structure. It shall present an appropriate character of scale, proportion, facade detail and material to compliment the park. The structure shall also incorporate small scale design elements to enhance the seating, circulation and the overall pedestrian environment through texture, materials, color and detail.

Scoreboard and video boards shall be placed on the structure for optimal baseball viewing. These will include:

• A scoreboard/message board fully populated scoreboard, zone mapped and broke out as required for both video and text display.
• A separate video board.
• A manually operated out-of-town scoreboard.

BART Entry:

This must be an appropriate statement of entry, creating a welcome statement with a sense of place, even though it is not the main entry to the stadium. The BART bridge shall terminate at a formal gate and lead to a roomy concourse(s). The plus 33 concourse should connect flush with the rest of the stadium at that level or by ramp. The plus 6 level must be continuous around the entire stadium. The BART entry shall present a pedestrian scaled environment low height lighting, attractive street furniture with integrated signage, attractive fencing to screen from view the slew/industrial beyond and mitigation of the overhanging upper deck structure. These pedestrian areas shall be part of a cohesive circulation system that leads the visitor to all services, facilities and concessions stands.

Program Elements:

Program elements shall be considered which influence the massing and appearance of the building. The outfield fence shall maintain its general configuration, 8 feet high padded, 300 down the lines, 375 at the power alleys and 400 at deep centerfield. An asymmetrical angular fence is encouraged. The 5000 “bleacher” seats shall be as close to the field as possible. These seats must have unobstructed sight lines of the field consistent with the existing seating areas. This seating shall be continuous behind the fence, interrupted only by the batter’s eye. The batter’s eye shall match the existing 40 feet high x 96 feet wide; height to be confirmed. Best efforts will be made so that the first row of seating shall be no more than four feet above the top of the fence, possibly separated from the fence with landscaping.

Two years after the structure was completed, Steve Schott and Ken Hofmann sued the Coliseum JPA over lost revenue related to the Mt. Davis addition and the compromising of the Coliseum as a baseball venue. The parties eventually settled, resulting in the sweetheart lease the A’s currently have.

12.22.12
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“Temporary”

So what does “temporary” mean anyway?

For Lew Wolff, it means five years after 2013 spent at the Coliseum, followed by what he hopes is a smooth move to San Jose.

For Mark Davis, it means five more years at the Coliseum while a new Coliseum and village are built next door.

For the Coliseum Authority (JPA), it means… well, they haven’t exactly articulated what that means, have they? It may mean one new stadium, or two. It means having the Raiders and A’s pay more to stay temporarily at the Coliseum in order to reduce the subsidy Oakland and Alameda County currently pay to keep the place running. How much more? We don’t really know. It’s a delicate balancing act. In the previous post I alluded to Davis and Wolff not wanting significantly higher rents at the stadium, yet that’s exactly what will be required if the JPA is to reach its goal of offsetting costs better.

The Merc’s John Woolfork and the Chronicle’s John Shea have dug into the lease matter more, getting reaction from local pols.

Woolfork found that the lease extension talk started in July 2011, when A’s President Michael Crowley first requested a lease extension. With the negotiations going very slowly, the surprise is the MLB tried to help act as an intermediary in the discussions but was rejected by the A’s.

Shea’s big find was that Wolff, while preferring to stay in Oakland over a move to a “temporary home venue”, admitted that “there are options” for such a transitional home.

Those two new pieces of information are huge. Whether or not you believe Wolff is bluffing with the temporary venue idea, he just played that card. He’s thinking about it. And you can bet that he has at least one location in mind. It’s out of the standard team owner playbook. Many will feel that the A’s are locked into the East Bay thanks to territorial rights, and that more than anything should dictate how the A’s and MLB act. Most of the time, these positions are merely negotiating ploys to extract concessions. Playing the temporary venue card is a sure sign of desperation, which Wolff has displayed for some time. If it forces MLB to act on his request or the JPA to commit to a Raiders stadium that would remake the Coliseum complex (per the letter), it will have been well worth it. If it results in a “mutually beneficial” five year lease, it buys everyone time to figure out the next step.

There is a value proposition in play. In the short term (the length of the extension), the A’s will be averse to a lease that hurts their revenue position. For instance, the Warriors’ lease at Oracle Arena had the team pay $7.5 million for the 2011-12 season. That figure includes revenue sharing of club seat and suite sales, which helped finance the arena. The A’s rent for 2012 is $1 million, and they get to keep parking and some ad/concession revenues. If the A’s were forced to pay something closer to what the Warriors pay while giving up revenue, that’s up to a $10 million hit to team revenue, or -6% or so annually. Suddenly the lease extension isn’t just a matter of convenience, it’s a real question of cost-benefit. There is a point at which it costs too much to stay at the Coliseum, especially if there are no agreements on improvements to the old stadium such as scoreboards or even plumbing (those resources would be used on new stadia). I don’t think the A’s should get the sweetheart deal they’ve been on since 1995, but this seems like too much considering the age and state of the Coliseum.

That’s how the specter of a temporary home comes closer to being real. If the A’s are faced with having to forego $10 million in revenue each year for five years, would it make sense to invest that money in a different option? A temporary option?

One more to consider: If you attended a Warriors home game this year, you probably noticed the lovely, brand new high-definition, center-hung scoreboard. It’s part of an $8 million improvement plan at Oracle Arena that was implemented to upgrade technology. Half of the project was paid for by the W’s, and the rest was split between the JPA and AEG, the new arena operator. The bidding process for a new operator for both the Coliseum and Arena included a requirement that the winning bidder pay for improvements at Oracle Arena. The vendor for the arena’s technology package? Cisco. For whatever reason, there was no request to make any additional improvements to the Coliseum. New anything at the Coliseum could help convince either of the tenants to stay.

12.21.12
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A’s ask for 5-year Coliseum lease extension (Updated to include Wolff’s letter)

At the end of the 2012 regular season, the Chronicle’s Matier and Ross wrote that the Coliseum Authority sent A’s owner Lew Wolff terms of a five year lease extension at the Coliseum. The purported catch was a $50 million exit fee should the A’s leave early for San Jose. Now the LA Times’ Bill Shaikin reports that Wolff has sent a letter to the Coliseum Authority (JPA) asking for – that’s right – a five year extension.

In a letter to the body that governs the Coliseum, A’s owner Lew Wolff agreed to keep the team in Oakland for at least five years “regardless of the outcome of our efforts to obtain a new facility in the City of San Jose.”

In the world of stadium negotiations, these are chess moves. It’s important to try to look multiple steps ahead. There are a lot of ways this could play out, though there is a complicating factor which I’ll get to in a bit.

First, as onerous as a $50 million early termination fee sounds, if Wolff is pushing back the opening date of Cisco Field to 2018 it’s not that big a deal, since Wolff won’t have any motivation to get it done early. On the surface, the JPA may be insistent on including the clause. Wolff may be just as determined to get it removed, simply because of the flexibility it provides. Why be encumbered by $50 million when you don’t have to be, and when historically that hasn’t been the case?

If there’s a threat, it comes in the form of something else Wolff alludes to.

“The A’s organization certainly prefers to remain in Oakland for the next five years rather than being forced into looking elsewhere for a temporary home venue. If possible, we should retain the 130 full-time jobs and the almost 800 union jobs that encompass a full baseball season, the fun of the A’s, and Major League Baseball in Oakland for five more years.

“I believe the A’s have a great deal to contribute to the area for the next five years, and even thereafter.”

“Being forced into looking elsewhere for a temporary home venue” is the threat. In August I wrote about the possibility of the A’s not being able to come to terms after 2013. It forces Commissioner Bud Selig’s hand. From the looks of things, MLB so far hasn’t been involved in lease discussions. This may force Selig to get involved directly, from negotiating the extension to figuring out a long term solution, which has been going on since Wolff joined the A’s in 2003.

Even if the parties (including MLB) only focus on the short-term, there is one other factor that comes into play: the Raiders. The Raiders have had more productive talks with the JPA regarding a lease extension, and something was supposed to be announced this fall, yet nothing has. The A’s currently pay higher rent than the Raiders, but the Raiders are obligated to share a small amount of in-stadium revenue annually, making their lease payment technically higher than their Coliseum-mates. Both the A’s and Raiders are keenly aware of each others’ desire to make whatever lease at the Coliseum as low as possible. Yet the JPA wants to rework the terms to help pay off more of the debt service and operating costs, which Bloomberg mentioned yesterday amount to a $17 million annual subsidy.

If the A’s are being asked to pay a $50 million exit fee, are the Raiders being asked to do the same? Are the terms on the table for both teams comparable, or do they favor one team over another? Neither owner wants to feel they’re being ripped off, and neither wants to feel locked in if it isn’t necessary. Strangely, the Raiders have more leverage than the A’s, since they could bolt for Santa Clara or even LA if things don’t work out. The A’s don’t have that luxury.

Just as the City of Oakland and Alameda County have to approve lease terms for Coliseum tenants, MLB has to at least informally green light any lease terms for the A’s. Selig will frown upon anything that looks like it’s trapping or penalizing the A’s, since a bad lease could negatively affect the A’s franchise value.

Maybe an A’s lease extension that’s agreeable for both them and the JPA will materialize quickly. Maybe not. If I’m reading the tea leaves on Wolff’s statement, though, he’s forcing the situation. And he’s doing it by not formally doing much at all.

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Update 2:45 PM – BANG got Wolff’s letter and posted it. I’ve copied the whole thing for your convenience:

December 21, 2012

To all concerned and interested:

I believe our organization has been and continues to be a positive member of the City of Oakland and Alameda County community.

Our policy regarding the JPA is to agree on the most mutually beneficial lease relationship to remain in the O.co Coliseum. To that end, we seek a lease extension that will allow us to remain here for the next five seasons. Our president, Mike Crowley, who has administrated our lease for the past 16 years, has full and complete authority to enter into a lease agreement that we hope will be beneficial to our fans, the City and County, and our organization.

Yes, we need a new baseball venue, and sadly, we have not found any path to one in the City of Oakland or in the City of Fremont. None of the three City of Oakland administrations that we have operated under has ever presented a realistic approach for a new ballpark to us. The lack of viable options here is not the fault of any public administration or private party, but rather is due to broader circumstances that impact the elements needed for a Major League Baseball venue.

Regardless of the outcome of our efforts to obtain a new facility in the City of San Jose, we would remain at our current venue for a minimum of five years. If an opportunity arises for the JPA to implement a new or renovated stadium for the Raiders or any other tenant, our lease would have a cancellation clause in favor of the JPA.

I stress that the A’s organization certainly prefers to remain in Oakland for the next five years rather than being forced into looking elsewhere for a temporary home venue. If possible, we should retain the 130 full-time jobs and the almost 800 union jobs that encompass a full baseball season, the fun of the A’s, and Major League Baseball in Oakland for five more years.

I believe the A’s have a great deal to contribute to the area for the next five years, and even thereafter. I further believe, and hope that having the benefit of a five year income stream and the jobs our organization brings in will be viewed as a benefit to the City and County. Simply, Mike Crowley needs an authorized party with whom he can negotiate and complete a new five year lease between the JPA and the A’s.

Thank you for any time and consideration you can afford this request.

Sincerely,

Lewis N. Wolff

LNW: sk

I have to reiterate that the JPA had sent the A’s lease terms before the end of the regular season, which Wolff obviously has not found acceptable, otherwise we’d have an announcement about a lease deal. The ball is now in Oakland/Alameda County’s court.

12.21.12
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Bills reach deal for 10-year lease extension and $130 million renovation

The Buffalo Bills announced that they have reached an agreement with Erie County and the State of New York to make $130 million of improvements to almost 40-year-old Ralph Wilson Stadium. The deal also includes a 10-year extension to the current lease for the Bills, which was originally scheduled to end next summer.

Oakland/Alameda County and the Raiders aren’t talking about renovating the Coliseum, they’re talking about a new Coliseum. If they were considering renovation, they probably wouldn’t be happy with the amount of public money that’s involved. Here’s how the whole deal breaks down.

  • $35 million from the Bills
  • $41 million from Erie County
  • $54 million from the State of New York

Improvements include a new scoreboard, changes to concession areas and gates and technology. $130 million doesn’t go as far as it used to.

A report in the Buffalo News digs deeper into the deal, and finds that the Bills can leave after year 7 of the lease by paying $28.3 million to buy out the remaining years. The report by Tim Graham also found an interesting loophole:

If a new owner bought the Bills and wanted to move them, then the county and state would have two remedies, as allowed by the lease agreement. The first is to file an injunction to prevent a move. If a judge declines to order the Bills to stay, then the Bills would have to pay $400 million in liquidated damages with the exception of a window after the seventh year of the deal.

An unlikely chain of events would create this scenario. The key is the health of Bills owner Ralph Wilson, who at 94 is the oldest owner in the NFL and has had trouble attending games over the past couple of years. If the Bills were sold, it seems like the new owner would wait until the “window” or after the lease expires to make the move.

It’s unclear if the Bills will apply for G-4 funding from the NFL. No mention was made of the NFL’s stadium loan program in today’s announcement. It seems possible that the Bills chose to go the cheaper route to avoid having to pay back the loan (no matter how small) when the team is sold, which is the current rule.

Bills CEO Russ Brandon was careful to characterize the improvements as short-term, with an eye towards a new permanent home sometime towards the end of the extension.

“The investment, while significant, is modest in contrast to building a new stadium or engaging in a major retrofit, far less than what the interest alone would be on a new stadium over the term. We look forward to the opportunity to execute this plan and to join Governor (Andrew) Cuomo and County Executive (Mark) Poloncarz as we work toward a shared vision for the future of the Buffalo Bills beyond the term of this deal.”

This eliminates the Bills as a Los Angeles relocation candidate, which is no surprise as they weren’t high on the list anyway. While Bills fans and local pols should be pleased by the deal, let’s not make more of it than what it really is: kicking the can down the road.

12.17.12
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Save Oakland Sports meeting postponed again

An update at the Save Oakland Sports Facebook page shows that tonight’s scheduled meeting and presentation have been postponed. Today’s meeting was supposed to be a rescheduling of a November meeting. It is not known when the meeting will be rescheduled.

postponed

Oakland Police (OPD) has its hands full, with elevated security expected at schools in the wake of the Newtown massacre and last week’s settlement approval by a federal judge. The deal prevents OPD from falling into receivership, at least into next summer.

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Note: The last two installments of the Gameplan series will be posted later today. After what happened at Newtown, I figured it could wait. Here’s a list of places to donate in support of victims, their families, and the Newtown community:

 

12.13.12
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Gameplan: Sacramento

If you’re Oakland or San Jose, things could be worse. Much worse. Take the state capital. It has only one major league team whose ownership would have left already except that they’re too broke to do it. The arena is falling apart due to cheapness. And the market is a government town, among the hardest hit by the recession. Fan groups have been more energized and organized than any in the Bay Area in their efforts to keep the Kings in town, to no avail. The City spent money on studies, and business leaders spent and pledged money towards a new arena. It all nearly went away after the 2010-11 season and could go away again next April. It’s bad times all around.

When we last left off with the Maloof family, they were being lured to Virginia Beach with the promise of a new arena all to themselves, with taxes and a state subsidy paying for the Kings relocation costs. Those plans got a big stop from Virginia Governor Bob McDonnell (R), who didn’t allocate $150 million in requested money to the arena in the 2012-13 state budget. McDonnell isn’t completely shutting down the arena effort, he just wants a firmer plan on how the financing is going to work.

That didn’t stop the City of Virginia Beach from moving forward, as its City Council today approved the arena plan without the $150 million state funding, expecting that a future budget amendment will take care of the need as additional studies and prep work are done.

Seattle also looms, as it has a temporary arena and plans for a future arena (which has critics in the Mariners and Amtrak). The problem is there that point man Chris Hansen would prefer to buy the team from the Maloofs instead of just being a landlord. The Maloofs, as handcuffed as they are, have shown no intention of selling the Kings.

What’s Sacramento to do? It can sue the Maloofs for defaulting on loans once the team skips town, but not before that happens. Even then, that can’t really stop the team from moving. It’ll just force the family to give up Sleep Train Arena and the surrounding land along with some sort of cash settlement. The team itself is under control of a limited partnership, which makes it more-or-less out of reach unless the family declares bankruptcy.

Arena land has some development value, though not much. Meanwhile, Sleep Train Arena remains decrepit and the market remains small. A hockey team from the south might be a good candidate (as well as a new regional rival for the Sharks), STA is not built for hockey. Yet I think hockey may be the best chance for major pro sports if the Kings leave. Fans have shown they’ll support a team 41 times a year in a 17,000-seat arena even with high ticket prices (the Kings are among the top half in the NBA). Sacramento could also get in line for an expansion NBA franchise, but it’s hard to see the city getting in front of Seattle for the next franchise unless a fully-subsidized arena is offered.

Selling old ARCO’s development rights isn’t as feasible as it was a few years ago because the death of redevelopment has removed a key financing method for new public infrastructure: tax increment. It’s a shame that if the Kings are lost to another city, the forces that will need to be marshaled to sell the public on a new arena with a large amount of public money will be an order of magnitude more difficult than what they’ve had to do the last few years. Maybe it’ll be enough that the Maloofs aren’t involved to sabotage anything.

Then again, maybe David Stern can pull one last power play to keep the team in Sacramento. Or a white knight like the Ron Burkle could come in, even though he’s proven to be not much of an activist champion type when it comes to his sports properties. It seems more likely that the team will leave, karma be damned, and life will have to go on without the Kings. It’s just as familiar as it is tragic.

12.12.12
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Gameplan: Oakland

When the NFL instituted a new stadium loan program concurrent with its new CBA in 2011, a horserace was implied. Enshrined in the CBA is an earmark of 1.5% of the league’s annual revenue for stadium construction and renovation. This includes anything from planned stadia to ongoing debt for stadia built during previous CBAs. The league’s 2011 revenue was around $9.5 billion, putting that earmark at $142.5 million per year and rising. With the 10-year CBA in place, banks and lenders can feel secure knowing that the funding mechanism for whatever loans that make to teams and municipalities are practically the gold standard in pro sports. That paved the way for the following projects:

  1. 49ers stadium in Santa Clara: $200 million in G-4 program loans, plus $500 million in additional loans from Bank of America, US Bank, and Goldman Sachs
  2. Vikings stadium in Minneapolis: Up to $200 million (possibly $163 million) in G-4 funding out of a total of $477 million team contribution, though public share is somewhat shaky
  3. Lambeau Field expansion: $58 million in G-4 money for $143 million expansion project allotted earlier in the fall

Discussions continue for G-4 funds to help with renovations to Ralph Wilson Stadium in Buffalo ($200 million project), along with the new stadia being requested by the Raiders and Chargers. And this week, the Atlanta Falcons announced a framework for a new, $1 billion stadium. The framework is really quite simple.

  • $300 million from hotel taxes in the Atlanta area (public share)
  • $700 million from the Falcons, which would presumably include up to $200 million in G-4 loans.

While the Falcons fanbase has recently been solid (above 95% sold the last 6 years), it’s not expected that PSL revenue yields will be as high as for the 49ers, Cowboys, or Giants. A vaguely modest $100-200 million chunk from PSL sales is part of the equation. But it’s that top line item that is worth studying further.

The Atlanta metro area has a whopping 94,000 hotel rooms, 15,000 in downtown Atlanta alone. That enormous inventory allows Atlanta to host large events on a regular basis, whether it’s the Super Bowl or large conventions. The City of Atlanta even has the power to levy an occupancy tax on hotels in neighboring College Park, next to Hartsfield-Jackson Airport. So if Atlanta and Fulton County want to raise money through a hotel or car rental tax, it can raise a lot of money.

  • 40,000 rooms (<50% occupancy) x $1.25 (1% occupancy tax increase) x 365 days = $18,250,000

$18 million per year would go a long way towards funding a new stadium. Could Oakland and Alameda County pull off something like this?

According to visit Oakland, the entire city of Oakland has a little over 3,500 hotel rooms. There are probably 10,000 or less rooms throughout all of Alameda County. Even with a higher occupancy rate, Oakland/Alameda County would be lucky to pull in a sixth of what Atlanta gets, or $3 million/year. It’s not horrible, but it’s definitely a secondary funding source. Worse, Oakland already hiked its bed tax from 11% to 14% in 2009 (Measure C), in order to help fund the Oakland Zoo, Chabot Space Center, and visit Oakland. Citizens who approved the previous hike in a landslide may be less inclined to go to the same well a second time.

Yet there needs to be a clear definition of what the public share is going to be. The Coliseum JPA might be able to get away with pledging only $100-150 million as Santa Clara did. Of course, Santa Clara’s Stadium Authority (the Coliseum JPA counterpart) is technically liable for up to $800 million. At least they negotiated protections that everyone hopes never gets tested.

Oakland Mayor Jean Quan may be pushing for EB-5 funding to help. The controversial program has had allegations of fraud, but could provide a sort of triple-threat with the Coliseum City project. Hotel projects are reportedly a popular project for EB-5 funds. Should a “package” of 100 applicants put in their $500k-$1M and get approved, Coliseum City would have $25-100 million available for a hotel and/or stadium. That would not only help defray the cost, it would also provide additional hotel rooms (and tax revenue) to further pay off the project. Another potential federal program threatens to undercut EB-5: a visa to any foreign investor who buys a house worth $500k or more. Now, if I’m a Chinese national who wants to put my kid through Stanford, would I rather go with the EB-5 and be forced to invest in some other business, or buy a house in Palo Alto/Menlo Park for my kid to stay in and flip it for a profit when he went off to grad school? The latter seems a lot cleaner to me.

Then there’s the prospect of a sales tax hike similar to the failed Measure B1 campaign. Yes, sales tax-funded stadia are anathema in California and should be considered nonstarters. Yet if Oakland really were in a hurry to get things like Coliseum City and OAB funded, they could go it alone and impose a citywide tax. Again, it’s not going to provide a ton of sales tax revenue since Oakland is not that big a city (400k population) and is severely underretailed. Plus Alameda County would not be happy with Oakland levying its own tax hike because it would complicate any Measure B1-like planned hikes.

Oakland has a lot of ways to put together a Coliseum City deal. While I talked exclusively Raiders here, the same public options would be available for an A’s ballpark nearby. It’s up to Mayor Quan and the City Council to start having that adult conversation that I’ve been harping on them to have for at least a year. If December 17th’s presentation occurs without any talk of how to fund Coliseum City, it will show that Oakland isn’t ready to have that discussion. It’ll be hard to take Oakland seriously. At some point, you have to decide to stop kicking the can down the road. The Raiders and A’s have leases that end in 2013. Time to stop talking about a deal, and start making a deal.

11.16.12
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News for 11/16/12

Belated congratulations to Bob Melvin for winning AL Manager of the Year. While there’s no photographic evidence, Melvin’s daughter Alexi admitted to pieing him in the face recently. All in celebration, of course.

On to the news.

  • MLB’s big three national television contracts were approved this week during the owners meetings. Apparently this was so anticlimactic that only a single tweet about the news emerged, from Eric Fisher of Sports Business Journal.
  • As mentioned yesterday, all ballots in Alameda County have been counted. With that, Measure B1 appears to have been narrowly defeated by less than 700 votes. Perhaps the backers had a false sense of security due to the lack of fervent opposition. Back to the drawing board, I guess. [Contra Costa Times/Denis Cuff]
  • Fox is fixin’ to buy a big piece of the YES Network. Not the Yankees’ piece, the part owned by Goldman Sachs and Providence Equity. The network is worth as much as $3 billion, making the two-thirds share up for grabs worth $2 billion. [NY Times/Amy Chosick, Michael Cieply]
  • The Rangers have announced that they will play two exhibition games at San Antonio’s Alamodome in March. The stadium’s only full-time tenants are the UTSA college football team and the AFL’s San Antonio Talons. The seating bowl layout (see pic below) makes it even less baseball friendly than previous square/rectilinear multipurpose domes like the Metrodome and Kingdome because it has a very limited number of corner seats. It’s also a bit narrower along the football sidelines than the Metrodome and not all of the rows retract, making the right field line dimension perhaps as small as 280 feet. Backers of MLB to San Antonio see this as a good sign, but the arrangement is a double-edged sword. Just as the Cowboys staged training camp in the same Alamodome multiple times, the Ryans are doing this to reaffirm the brand throughout the state, not to promote MLB there. After all, the Rangers have some solid TV money to protect.  [San Antonio Express News/Josh Baugh]

Picture of one side of the Alamodome stands retracted for a 2010 Dallas Cowboys training camp session. Picture from Sports Nickel.

  • The ballpark for the Midland Rockhounds (A’s AA affiliate) will soon be losing its naming rights partner. Citibank has been the sponsor since shortly after the ballpark opened. The ballpark sits as part of the nicely designed and manicured Scharbauer Sports Complex, alongside one of the best high school football stadia I’ve ever seen. It is the land of Friday Night Lights. [Midland Reporter-Telegram/Sara Higgins | Bud Swanson]
  • The Mariners are going a different route to make a splash in the offseason, unveiling plans for what will be the largest video/scoreboard in MLB. The display will measure 57 feet tall by 201.5 feet wide, with a resolution of 3840 x 1080. Effectively that’s two Full HD screens side-by-side. At 11,425 square feet, the display will be 70% larger than the display the Astros had installed at Minute Maid Park last year, and 30% larger than baseball’s largest current screen at Kauffman Stadium. Panasonic will be the manufacturer, displacing Daktronics. The display is part of a $15 million capital improvements fund, negotiated by Seattle/King County and the Mariners prior to the opening of Safeco Field. [MLB.com/Greg Johns]
  • Chris Hansen released renderings for his dream arena in the SoDo neighborhood of Seattle. The concept, penned by 360 Architecture, is reminiscent of 360’s Sprint Center project in Kansas City. It’s meant to house both basketball and hockey teams. Unlike Sprint Center, Hansen’s arena won’t be built without commitments from existing NBA and/or NHL franchises. Ironically, the opposite is what occurred in Kansas City, as the city chose to plow forward with an arena with no permanent tenants. That would put KC and Seattle in direct competition for any future franchise moves. [KING 5/Chris Daniels, Travis Pittman | 360 Architecture]
  • Minnesota Governor Mark Dayton (DFL) played to populist roots earlier this week by decrying the Vikings’ plans to sell PSLs at their $1 billion stadium. Most everyone throughout the Twin Cities expressed confusion at this sentiment, since it was pretty clear from the beginning that PSLs were a crucial piece of the financing plan. [MN Gov. Dayton | Minneapolis Star-Tribune Editorial Board]
  • Perhaps just in time for the start of the Mike D’Antoni era in LA, DirecTV and Time Warner Sportsnet agreed to a carriage deal of the fledgling regional sports network. (Laker fans weren’t missing much the last two weeks anyway.) Terms were undisclosed, but TWCSN has been seeking $3.95 per subscriber per month, making the channel among the most expensive RSNs in the nation. [LA Times/Joe Flint]
  • The City of Reno swore in a new City Council this week, and with that came swift action. They nixed the narrowly approved debt restructuring/refinancing plan completed just before the election. That puts both the team and the city in a bind. The team is threatening to leave without a tax subsidy. The Council clearly wants nothing to do with the debt liability. This snag gives the two sides about a year to figure out some sort of solution before Aces ownership figures out a move. If the Aces leave, Reno would be stuck with the debt anyway. Already the city has stopped making debt payments, pushing its credit rating into junk status. [Reno Gazette Journal/Brian Duggan]
  • Did you know about the Sacramento Sports Commission? If you didn’t , then it matters little as it’s about to be dissolved. The commission’s job was to attract different types of sporting events and maintain relationships with governing bodies like the NCAA, so that Sacramento venues could remain in constant rotation for major events such as NCAA championships. The task will probably end up with Sacramento’s Convention and Visitor’s Bureau. One of the reasons for the dissolution is that SSC failed to repay a $400,000 loan taken out for the 2011 World Masters Athletics Championships. [Sacramento Bee/Ryan Lillis]

That’s it for now. Feature on media coming over the weekend.

11.15.12
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The Fish that killed Miami

Somewhere along the way, Jeffrey Loria lost the script. It was fairly simple, really. An owner of a “poor” franchise kept his house in order and received revenue sharing checks until he built a new ballpark. Then when the new ballpark money started rolling in, the franchise would be healthier, the team could significantly reduce if not completely eliminate its revenue sharing take, and the owner could spend as much as he wanted. That’s how it worked in Minnesota and Washington, that’s how it would work for the other teams that hadn’t gotten new parks yet.

The unwritten rule of all of this is that Loria could also spend as little as he wanted, even with a new ballpark. Last December, Loria kicked off a free-spending phase that last all of seven months. He had Larry Beinfest trade for Jose Reyes and sign Mark Buehrle, Ozzie Guillen, and Heath Bell. The Marlins were in the running for Albert Pujols and lost out when they refused to include a no-trade clause. As the Marlins sputtered towards the All Star Break, Loria gave up on his high-roller mode and set Beinfest out to go into fire sale mode. Hanley Ramirez was first to go, then Gaby Sanchez and Edward Mujica. Loria and stepson David Samson saved the best for last with this week’s blockbuster trade of – well, all of their veterans – to the Blue Jays for clubhouse cancer Yunel Escobar and prospects. While Giancarlo Stanton is expected to stay put because he’s good and cost-controlled, Ricky Nolasco and Logan Morrison may also be on the outs. If they were traded, the Marlins’ 2013 payroll could be under $20 million, unless Commissioner Bud Selig steps in and forces the Marlins to add a bunch of veteran one-year contracts. As for the big trade that made so many in baseball angry, Selig is reviewing it and while he’s angry, so far he sees no reason to rescind the deal.

It’s not so much the trade itself that’s revolting, it’s the circumstances surrounding the trade. Already, many in Miami and within baseball had reason to be suspicious of Loria, who ran the Expos into the ground and ran the Marlins on the cheap when he acquired his current team. Dealings with municipalities became so rancorous that Samson had to become the frontman in stadium discussions and Selig had to send in Bob DuPuy to negotiate the deal. Somehow the City of Miami and Miami-Dade County were swindled as so many municipalities had in the last 30 years

Other sports that have salary caps also have salary floors, making it difficult to pull off fire sales of this magnitude. Thanks to the lack of a salary floor, there will probably be two teams in 2013 – the Marlins and Astros – whose payroll will be lower than any payroll in the other three major sports. Yet MLB will also have 5-7 team payrolls that are higher than anything in the other three major sports. The economic system in MLB not only allows this inequity, it promotes it among its ranks. Selig can talk all he wants about greater competition including low-revenue teams, but in the end the four LCS teams all had payrolls above $110 million. On the other end, the Marlins have no incentive to wean themselves off the revenue sharing teat because they, as a small market team, are entitled to revenue sharing under the current CBA. In revising the agreement, MLB went to pains to define big markets and small markets, ensuring that teams in the top 15 markets all transition off revenue sharing.

From the current MLB CBA, Attachment 26 – a list of teams in order of market size and their yearly revenue sharing status. Miami is 23rd, Oakland is tied for 7th with San Francisco.

Should the trade be approved, Selig could get punitive and take away some amount of revenue sharing money due to the Marlins next month. Since there’s no proper mechanism for redistributing or reallocating the funds, what will probably happen is that Selig will push Loria to end the fire sale at this point and then spend $20-30 million on veteran free agents who could round out a roster. It won’t do anything to heal the relationship with fans or lure premier players whose agents are rightfully suspicious of Loria. It will, however, give off a sheen of “trying” when it’s clear that Loria definitely isn’t. He must have learned to cut bait early when he tried to parlay the 2003 World Series win into multiple playoff appearances. The NL East proved tough sledding with a rebuilt Phillies squad and evergreen Braves team in competition. The Marlins finished 2004 and 2005 with above-.500 records, yet finished well back in the East. One recent suggestion has been to strip the Marlins of the 2015 All Star Game, which would be fair. The Game is a team’s reward for successfully building a stadium. Reassigning the game or postponing it for a few years is a reasonable punishment, though it pales in comparison to more punitive and less feasible actions such as engineering a franchise sale.

So yes, Loria will get a wristslap at worst. He’ll lose revenue at the ballpark for certain, especially if attendance dips below 20,000 per game as it was prior to Marlins Ballpark. Lost revenue could total $30 million. No one’s going to cry for him. Assuming he gets $40 million in annual revenue sharing, he’ll pull $85 million from MLB without selling a single ticket. In 2014 that will go up to $100+ million because of new national TV deals. Rent is incredibly cheap at $2.4 million. Loria can bide his time and let a rebuilding team move its way into contention, at which point he and Samson can try to convince the public and players that things will be different this time around. Once bitten, twice shy.

Reaction from the Marlins trade should have long resonating impact on efforts to build ballparks in the two Bay Areas, but I wouldn’t count on it. The differences between the Tampa and Oakland situations and what happened in Miami are vast. The Rays have fielded competitive teams for a long time but are locked into a lease at Tropicana Field, as well as the City of St. Petersburg because the mayor won’t allow the team to expand its search to Tampa. The A’s were competitive this year and have a bright future, but ownership also wants to look outside Oakland and is being prevented from doing so by the cross-bay Giants. Lew Wolff wants to self-finance the ballpark to avoid dicey public funding measures. By ratifying the new revenue sharing market definitions, Selig and the other owners are pushing for the A’s to get off the dole. Given the size of Tampa Bay market, it would seem that the local economy couldn’t capably support a privately-funded stadium. This memory will remain fresh if the respective owners or the commissioner play ransom when the CBA ends in 2016. Still, you can’t discount the collective ability of pols to buy into a bad deal. It happened in Miami, it happened in Oakland not too long ago, it’s happening in El Paso now.

It’s too bad this stadium business is so expensive. Teams that build their own stadia have the most incentive to remain competitive, to spend on payroll, to win. They don’t have gigantic subsidies to fall back on. If more teams went that route, we might have fewer instances like this Miami mess. And competition would be real, not a farce.