Category Archives: Politics

05.31.12
by

Tuman: Oakland should be like Brooklyn, not Detroit

Joe Tuman re-entered the public sphere in Oakland today with a scathing indictment of Oakland’s attempts (such as they are) to keep its pro teams in town. In an op-ed in the Tribune, Tuman called the Coliseum City project’s proponents in City Hall “depressing” and “in denial”. Those words could be important a five months from now, as Tuman is running for the At-Large City Council seat this year against Rebecca Kaplan. Both were also in the 2010 mayoral election, with Kaplan finishing 3rd and Tuman 4th to Jean Quan.

First, back to Tuman’s column. Tuman, who is also a professor of communications at SF State, compared Coliseum City (and indirectly, Victory Court) to China Basin and AT&T Park.

What did work in San Francisco is the new AT&T baseball park. But while we in Oakland admire that, we often overlook that economic redevelopment of SOMA (south of Market area) was under way before the new ballpark was planned or constructed.

It occurred because so many tech companies and startups wanted office and loft space in the less-expensive SOMA area.

Tuman absolutely nails it here. Yes, the Giants deserve credit for transforming a rundown section of San Francisco, but let’s remember that in 1997, the region was in the throes of the dot-com boom, epicentered only a few blocks from the ballpark site. That’s why when people ask, I say that South Park was just as important or more important than Pac Bell Park. Back then, SOMA was one of the last redevelopment frontiers in SF (remember the live-work zoning weirdness?). In most cities with new ballparks, the ballpark district is where you can find reasonably priced apartments, condos, and office space. In SF? Yeah, right.

Every so often I get a question from an East Bay citizen or fan about why companies from the SVLG couldn’t just support the A’s if a ballpark were built in Oakland or some such. I usually reply with an answer along the lines of, “You know how a San Jose stadium wouldn’t be convenient for you? Well, an Oakland stadium isn’t convenient for them.” Things are different from football, which plays the majority of its games on Sundays, or basketball/hockey, where the schedules aren’t as rigorous as MLB’s. Convenience is only one factor, with civic/regional pride and the attractiveness of the location are major factors. In the post-redevelopment era, with tax increment usage forbidden or severely curtailed, these redevelopment-based models need to be replaced with something more practical and smaller in scale (I’ll go into this more later tonight).

Tuman also goes on to point out how there’s no Airport Connector stop along Hegenberger which could be a focal point for transit-oriented development.

Zennie Abraham got Tuman to comment on Zennie’s blog about the A’s during his mayoral campaign.

Should Oakland Sue The Oakland A’s?

Tuman’s not in favor of using the legal process against the Oakland A’s, which seems to be threatening to leave Oakland every year, as he thinks it just encourages them to try harder to do so. But suing the City of San Jose is something Tuman’s willing to consider, as that municipality has worked to try to take the A’s away from Oakland, interfering with contracts between the parties in the process.

Tuman says he will be a friend to all of Oakland’s sports teams, but does not want to give away public money to retain them.  But he does leave tax increment revenue as an exception because of it’s market  generated nature.

Tuman isn’t anti-sports. He is realistic about the City’s interests and likelihood in keeping one or more of its teams, and frankly it’s good to hear this kind of talk. It’s a lot more honest than anything that’s been coming out of City Hall for the last few years. Now, Tuman probably isn’t going to beat Kaplan with her plucky attitude and infectious energy, especially on the campaign trail. (It’s a bit ironic that a communications professor is woefully behind on linking up with social media.) Still, a little more honesty and reason can’t hurt discourse. Honest discourse is exactly what Oakland needs.

Of course, the Brooklyn that Tuman refers to has itself succumbed to the allure of pro sports. Barclays Center will open this fall and the once-New Jersey Nets have already taken up the Brooklyn moniker replete with new colors and logos. Sometimes even Brooklyn can’t always be Brooklyn.

05.21.12
by

SF, Warriors set to announce arena deal

Just like that, Coliseum City is in jeopardy.

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

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

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

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

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

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

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

05.19.12
by

Asking for the moon

Thanks to a spectacularly bad lease negotiated by St. Louis pols, the Rams have the right to a “top tier” stadium as long as they stay near the Gateway Arch. This week, St. Louis found out just what “top tier” (top eight) means. The City gulped and tabulated just how much it’ll cost for the Rams to stay there: $500-750 million.

A PDF of the proposal was acquired by the St. Louis Post Dispatch. It’s worth viewing if you want to follow along with the rest of the post. The St. Louis Convention and Visitors Commission put together its own $124 million proposal (PDF), which mostly touts the incremental improvements that have been made over the past several years.

Mind you, that won’t pay for an entirely new stadium. Instead, two-thirds of the Edward Jones Dome would be blown out, including the roof. Only parts of the upper deck and one side of concourses would remain. The field would be moved slightly to accommodate new seating, and completely new seating decks and concourses would be built in the other two-thirds of the stadium.

Old Edward Jones Dome cross-section compared to new dome roof/seating deck arrangement

Edward Jones Dome sits in a very tight block in downtown St. Louis, hemmed in by the America’s Center convention facility to the west and N. Broadway to the east. Expanding the footprint of the stadium would wipe out N. Broadway, which happens to be half of a major thoroughfare. The extra space consumed by the fattened stadium would be used for new team locker rooms and premium amenities. The cross-section of the stand looks a little too much like Mt. Davis for my liking, especially the enormous upper deck. Field suites and field level clubs are a must-have.

Amazingly, the Rams’ proposal doesn’t include either a retractable roof or a Dallas-style center-hung scoreboard. The roof will have a panel that can slide open to let in more light, like a sunroof on a car. New scoreboards would be placed in the corners, replacing the end zone scoreboards that are not even three years old. I’m surprised by this. The team has the city over a barrel. They’re already asking for the moon, why not get some asteroids on the side while you’re at it?

I’ve never seen a game in person at the Trans World/America’s Center/Russell Athletic/Edward Jones Dome, so I can’t directly speak to how good a stadium it is. I’ve heard the field is poorly lit for some reason. I know it can get very loud inside. The concourses are wide, and the amenities fairly plush, befitting a $280 million stadium built in the mid-90’s. The top tier clause allows the Rams to escape the Gateway City after the 2014 season, which means the race is on to figure out a solution, or else owner Stan Kroenke could easily look elsewhere – like LA. The only thing that may give Kroenke pause is AEG’s insistence that it get a minority share of any relocated franchise in exchange for building the downtown LA stadium. Regardless, LA poses a significant threat, even though Kroenke is a born-and-bred Missourian.

The Rams don’t quite have the Mayflower trucks at the loading docks yet. Their proposal and one from the CVC will go to arbitration in the next year or so. Whatever the arbiter decides is the winning proposal, the County will have the option to commit to that package of improvements. If they do, the Rams will be locked in through at least 2025. If not, the Rams will have those trucks idling and ready to go.

As large and unnecessary as the Rams’ proposal sounds, it would be at best a top-four NFL stadium, surpassed technically by Cowboys Stadium and MetLife Stadium, and the AEG stadium if that comes to fruition. EJD and the Georgia Dome (1992) kicked off the boom era of new NFL stadia construction, so it’s not surprising that both were the first to be considered outdated by the league.

My question about any kind of NFL stadium expenditure, as usual, is How can anyone justify the cost? Let’s say that the project costs $700 million. Over 30 years at 7%, that’s $52 million per year in debt service. To make it worthwhile, the Rams and St. Louis would have to get an additional $100 million in new direct revenue every year. The stadium will compete with other domes for Final Fours and will continue to function as an extension of America’s Center, so that helps a bit. But most of the steady revenue will come from football games and related activities. To put it in perspective, the Rams are 30th among the 32 franchises in revenue at $228 million in 2011, according to Forbes. If they get another $100 million and apply it to 2011, they would catapult to #4 in the league, ahead of both New York teams. Does that seem likely, given the tiny St. Louis market and the Rams’ second banana status within the market? I doubt it.

05.18.12
by

The illusion of pendulum swings

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

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

Here’s what we knew going into the meetings:

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

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

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

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

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

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

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

05.14.12
by

SF officially pursuing Warriors + LA Live observations

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

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

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

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

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

Setting up for the "Battleship" red carpet premiere

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

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

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

05.09.12
by

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

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

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

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

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

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

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

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

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

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

Oakland, Taking Control of Its Destiny

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

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

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

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

Mile wide, inch deep.

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

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

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

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

05.07.12
by

Capitol Raiders

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

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

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

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

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

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

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

05.04.12
by

The Knauss Plan, for now

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

…

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

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

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

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

stickball

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

 

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

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

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

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

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

Tilliss:

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

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

05.03.12
by

The enemy of my enemy is my friend, Part Deux

Shortly after Commissioner Bud Selig convened his three-man panel to figure out what to do with the A’s, all sorts of political machinations started happening. That included then-Oakland City Attorney John Russo (now City Manager of Alameda) penning a lawsuit threat against the A’s. I wrote back then:

What recourse do the Giants have, then? They can try to go to bat for Oakland, even though they have no history of doing that previously. Even though, in moving to China Basin, they’ve actively siphoned East Bay fans away from the A’s. Even though they’ve held a regional hegemony for decades. It wouldn’t be hard to posture themselves as saviors of baseball in Oakland – no matter how strange that sounds – as it wouldn’t require much effort and could be done in a sort of stealth mode. It wouldn’t be difficult to get a few letters from prominent pols in order, so no problem there either. The best part is for the Giants is that it works. It paints Wolff as a villain and Oakland as a victim, despite the backstory’s greater complexity.

Eerie, no?

Now we have word from the Trib that Jean Quan has met with Giants ownership. That wouldn’t be the first time. Perhaps it’s completely altruistic, in that they’re instructing her on how to put together an AT&T Park-style stadium deal, the kind that Clorox CEO Don Knauss is pursuing. (Knauss also had a lengthy interview with KQED.) Then again, this is the same Giants ownership group that may have pulled a power play to kill the Piccinini-Dolich group’s chances to buy the A’s, because the Giants didn’t want an Oakland-based group owning the A’s:

More likely, Piccinini suspects the San Francisco Giants ownership had a hand in convincing Selig to make sure the deal never materialized, especially since Selig has called the A’s move from Kansas City to Oakland “a terrible mistake.”

“I can tell you there’s an executive with the Giants, who shall go unnamed,” Piccinini said. “I ran into him at a Warriors game. He said, ‘I hear you’re getting involved with the Padres. We want you in San Diego; we just didn’t want you here.’ “

Speaking of Piccinini, he’ll be available soon if he wants to deal with the struggle to be an owner again. Piccinini is part of the Moorad group who were teased the Padres, only to have the rug pulled out from under them. Moorad won’t be able go after another team, knowing that there are permanent veto votes against him within the Lodge. Much of the rest of the Central Valley base of the ownership group should be available, and they could pull in another frontman – Andy Dolich, perhaps?

If Piccinini’s right, the Giants don’t care for the A’s in Oakland or anywhere else in the Bay Area. That makes it frustrating to see Quan consult with the Giants. The Giants aren’t doing the City of Oakland any favors. Just because they may have a somewhat allied interest (keeping the A’s out of San Jose) doesn’t mean they are allied.

If Quan’s smart, she’ll ask for some of the SF sponsors that Oakland will need because as much as the East Bay wants to puff its chest out , the pickings are slim. The Chron 200 is an annual list of the Bay Area’s largest independent, publicly-traded companies by revenue. Generally these are companies with revenues over $100 million annually. Some private companies, like Bechtel, or subsidiaries, like Matson (Alexander & Baldwin), and nonprofits (Kaiser Permanente) are excluded. Distributed by region, San Francisco has 19 of 200, with 5 in Marin County and 26 in San Mateo County. Santa Clara County has 102, or 51% of the list. Oakland has 3 companies on the list, the East Bay in total has 38.

Chron 200 list by city/county-region

If you combine SF, San Mateo, and Marin Counties, you get 50 companies. That’s not significantly greater than the East Bay’s 38 – or 40 if we include Kaiser and Matson. Straight up it would appear that there’s enough corporate strength in the East Bay to make a privately financed, $500 million ballpark happen. But the Giants’ argument for years has been that they needed the South Bay to finance AT&T Park. If that’s true then there’s a logical incongruence at work. Either the South Bay was required and there’s no other way but to include them, or the South Bay wasn’t required and the strength of the West Bay is enough. So which is it?

Also, check out the imbalance of companies in the Giants’ designated territory and the A’s. The Giants have over 75% of the Chron 200. The A’s have less than 20%.

The secrecy of the mystery ownership bidder is also a bit baffling. Lew Wolff has said that no interested party has asked him directly about selling the team. Instead, whoever’s interested has chosen to use back channels to engage Wolff – once. What is the point of that? If the East Bay coalition’s goal is to first work with the current ownership group to develop a plan to keep the A’s in Oakland, why have they never directly called Wolff once? They’ve gone semi-public twice in the last several months to indicate there’s an ownership group in waiting. Seems to me it’s a lot harder to put together a press conference than to call Wolff or arrange a meeting. For whatever reason, they haven’t done the latter. In the last comments thread, a question was posed, “Why doesn’t Lew listen to what these guys have to say?” I think the answer is that they have to present something to the man first. They’ve presented a plan to MLB three years ago that went unanswered. If they want to work with Wolff, they might want to first try to, you know, work with Wolff instead of posturing. It’s somewhat embarrassing that Mayor Quan has probably spent more time talking the Giants brass than the A’s. If A’s ownership is the enemy, don’t pussyfoot around it or hedge. Declare it and get to work. Otherwise it’s just another exercise in scoring PR or political points. And the only real winner in the end is the Giants.

04.21.12
by

What the NFL wants, it gets

You have to hand it to Roger Goodell. He has a playbook for getting stadium deals moving, and by God it works. Goodell lets the team owner come up with a proposal, and if it stalls he comes in with Goldman Sachs in tow and/or a threat to move, implied or otherwise. As a result, Santa Clara put up $900 million in public loans and cash for the 49ers stadium project, while the Vikings – after much debate – are getting a deal crafted in the Minnesota legislature that could provide up to $800 million in public assistance for stay home.

In the Vikings’ case, all it required was a little open-ended discussion about Los Angeles and a sighting of owner Zygi Wilf’s private jet in SoCal. LA Mayor Antonio Villaraigosa has become the Oscar Goodman of football, an outsider but serious power player whose city’s existential threat to other cities forces them to the table. The Vikings deal is by no means complete, but it’s further along than any talks to date, so that has to be encouraging for both Vikes fans and Wilf.

On Thursday, the 49ers officially broke ground on their new home as of the 2014 season. The stadium will undoubtedly be impressive and significantly better than Candlestick Park in just about every way imaginable, except affordability. (I thought I was going to get some pictures of the event but that fell through, sorry.)  Now we can talk in earnest about the Bay Area hosting a future Super Bowl or World Cup matches. It’s pretty exciting, despite my misgivings about the finances.

And it’s with that news that I can sit back, somewhat detached from the plan and say that I’m jealous of the 49ers right now. I don’t want a major handout for the A’s or Goldman Sachs waiting in the wings. I don’t need a stadium that costs more than a billion dollars. I just want a new place where I can take friends, where it doesn’t feel like pulling teeth to ask them if they want to go. A place that celebrates baseball, not merely hosts it at best adequately. Despite what some readers think, I don’t care where it’s built. If that’s Oakland, great. If it’s San Jose, so be it. Even Sacramento I wouldn’t mind so much at this point. My stance has always remained steady all this time – as long as it’s privately financed and I can get to it locally, I’m all for it. On this blog and elsewhere we have these endless debates about what it will take, territorial rights, what resources specific cities can offer, and there will be plenty of time for that later. For now let’s simply look at the leagues.

Mostly, I’m jealous that the NFL can get its stuff together on stadia so much better than MLB. It doesn’t matter that on the whole NFL stadia cost twice as much. The projects should be far riskier because of the expense and the inherent lack of utilization. In the post-downturn, post-redevelopment California, the toughest market to build anything new, the NFL will have beaten MLB by at least two years, maybe more. In the time that Bud Selig has had his panel discussing what to do about the A’s, we could’ve had a fancy (or not) groundbreaking. We could be talking about the future. Instead, we’re treading water as usual. No one can tread water forever.