Category Archives: San Jose

07.31.12
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The future is temporary

Spurred by LoneStranger’s thought experiment on AN which carried over to here in expanded form, I had an email back-and-forth with him about what’s possible post-2013. I suggested a concept that he add to the post, and when I realized how long it would take to flesh out and how much longer it would make his post, I decided it deserved its own treatment. So here goes nothing.

First off, I have to say that I have no idea what will happen in the next 18 months. Oakland Mayor Jean Quan was at the game last night and hung out in the right field bleachers for the duration, which was quite impressive. Lew Wolff will be on the broadcast in the third inning this evening to talk – something, probably about the team for the most part. For the A’s to stay at the Coliseum after the 2013 season, those two have to start negotiations on some kind of lease extension. I’ve heard out of Oakland that the City is going to play hardball and try to get the A’s to commit long term. Councilmember Rebecca Kaplan and others have been comfortable in claiming that the A’s have nowhere to go. I’ve also heard that discussions between the City and Raiders have been accelerating, perhaps to the point of getting something announced prior to the Raiders’ lease ends (also in 2013). Any future at the Coliseum for either team depends largely on what happens with the still nascent Coliseum City project, and we probably won’t know anything about that until the end of the year at the earliest.

The old Coliseum will have to be demolished to make way for a hotel or perhaps parts of two new stadia.

Knowing that new stadia for the Raiders and A’s can’t possibly be ready before 2016, the most practical solution would be to figure out a way for them to co-exist for another three years. Oakland and Alameda County want to use that extension as leverage against either team, but that’s not a great play. The Raiders could easily become roommates at the 49ers stadium for at least three years, leaving the Coliseum in the lurch. If the Coliseum JPA chooses to shut out the A’s, the decision will provide more than enough justification for MLB to hasten a move to San Jose – even while MLB is keeping Oakland in the game by not deciding anything yet.

Now, if circumstances conspire to have the A’s leave 2013 due to construction of a new football stadium or other reasons, the A’s will have to play somewhere. There’s no stadium in San Jose as Municipal Stadium is too small and unacceptable amenities-wise. They may be able to play at AT&T Park for a while, though as we’ve seen this week scheduling the two teams to not overlap schedules can be tricky.

Barnstorming for a series here or there can work from a marketing standpoint. The players union, on the other hand, will probably have considerable objections to a barnstorming team, especially one that has to do it for three or four years. The union and its members would prefer permanence. It’s not the minors, it’s the majors, and the players deserve major league treatment. While there’s been no poll on this, I imagine that free agents could look at the situation and declare it a organizational demerit, just as the Coliseum now isn’t exactly a selling point.

Then there’s the matter of cultivating the fanbase. If the team is going to stay in Oakland or move to San Jose, every effort has to be made to cultivate that fanbase. Having a traveling team hampers that effort significantly, so I would expect that the A’s and their civic partners would do everything possible to make a temporary home seem as permanent as possible. The transitional three years are very delicate. With the San Jose Earthquakes, we’ve seen what happens when the organization delays building a new stadium – the fanbase gets restless. The stakes are much higher with MLB, and Bud Selig isn’t going to approve a temporary solution that doesn’t at least attempt to maximize revenue.

Knowing all of these factors, I suspect that the A’s would play those transitional years in a temporary stadium. It may not hold more than 20,000 seats. It would be built in the vein of numerous temporary facilities such as the soccer stadia at the 2010 World Cup in South Africa or some of the venues at the London Summer Games.

London’s Olympic Stadium holds 80,000 for the games, but was designed to be deconstructed to a 25,000-seat permanent capacity by virtue of a large, removable upper deck. Some of the materials used are either recycled or are recyclable. Many concession stands are not permanently installed, which reduces costs and simplifies the dismantling process.

London Olympic Stadium is designed to be scaled down and repurposed. Note the very large upper deck. Image from London 2012

The Basketball Arena, which has been affectionately nicknamed “The Mattress”, is an entirely temporary structure. At 12,000 seats, it can be considered the bigger cousin of the 3,200-seat tent arena the Warriors are building in Santa Cruz. After the Olympics and Paralympics, the arena will be removed, though there doesn’t seem to be a fully coherent re-use plan in place.

Temporary basketball arena. Image from London 2012.

I think the A’s could easily build a 20,000-seat temporary stadium at either HomeBase lot next to the Coliseum or on the Hunter Storm part of the Airport West development near Earthquakes Stadium site in San Jose. Either site would work because it would be available for cheap or free and there would be no worries about competing development, at least in the near term. Infrastructure already in place for the nearby stadia could be leveraged (concessions, facilities) with potential additions easy to scale back or value engineer. In both cases, already approved EIRs or uses would already be in place, with supplemental studies possible but easier to anticipate and manage than completely new studies. And if the A’s plan properly, they could re-use parts of the old stadium in the new one, though that has proven trickier to execute than conceived. Once the temporary facilities have completed their work, they could be dismantled and re-used, donated, or recycled, leaving behind a perfectly ready-to-build site.

Airport West site. Temporary ballpark could conceivably be built on orange land if a lease agreement were worked out.

Cost would be the huge mover. The Quakes have spent the last few years ratcheting down the cost of their new stadium, only to introduce new features when demand arose. That, and the construction methods they’ll be using, could be very useful if they wanted to deploy a temporary stadium anywhere. How much of the stadium would be seats, as opposed to bleachers? What kinds of premium facilities would be built, and where would they be located? How fancy would the clubhouses be? These are all valid and hard-to-answer questions, and there’s no doubt that MLB would have a lot of input into how any temporary stadium would be situated and conceived. Chances are that the project would cost at least $30 million, and could escalate quickly. Would it be worth it? That’s for A’s ownership to figure out.

07.25.12
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Hacks don’t understand the competitive window

The Chronicle’s Scott Ostler is signing onto the claim that the A’s recent on-field success serves to foil Lew Wolff’s plans to move to San Jose. He’s not the first. The Trib’s Monte Poole and the Press Democrat’s Lowell Cohn have done the same since the All Star Break. The reasoning is that the way the A’s are playing, it proves with complete certainty that the A’s can, in fact, compete in Oakland.

Anyone who has read most Bay Area sports columnists over the years could see this dime store analysis coming. It’s more than ludicrous, it’s absolutely fallacious. Think about it. These writers are basing the viability of a franchise on 17 games. 17 games! Look, I’m the last person to rain on this parade and I’m loving every minute of this run, but to base any long-term decision-making on 17 games is the stupidest idea I’ve ever heard. The sample size is incredibly small. Over the next 1-4 years, it may prove to be the start of a trend. Then again, it could be a blip. If the A’s fade in August-September the same way the Mets and Indians are now, what does it mean for success in Oakland? Nothing, because there’s no real causality there.

If we’re going to look at any trends, it’s the team’s 40-24 (.625) record with Yoenis Cespedes in the lineup. The team was pretty bad in May, largely due to Cespedes not being in the lineup for lengthy stretches. It didn’t help that Josh Donaldson and Daric Barton were black holes regularly manning the corners, while Josh Reddick was left to carry the lineup in the Cuban defector’s absence. Now with better contributions from numerous fringe and platoon players plus continued health (knock on wood) for Cespedes, the A’s are doing just enough offensively to win games.

None of this is very related to the A’s long term success. Cespedes is locked up through 2015 unless Billy Beane flips him for prospects. Yet Beane is keenly aware of the organization’s continued inability to develop quality hitters, so unless rivals offer Billy the moon for either Cespedes or Reddick, the heart of the order isn’t going anywhere. Beyond that, there are questions about Cespedes’s durability. The Cuban baseball season is only 90 games long, and Yoenis has had little nicks already and a tight hamstring halfway through his rookie campaign. If Cespedes runs into a lengthy injury spell like what befell Joe Mauer and Justin Morneau in Minnesota, the A’s will be screwed moving forward unless certain hitters on the farm (Grant Green, the just-injured Michael Choice, other recent draftees) make miraculous Sean Doolittle or Dan Straily-style transformations into solid contributors.

We’ve talked a bit about the competitive window every have-not team faces. Refuse to acknowledge it at your peril. San Diego, Arizona, and Colorado all had brief, 1 or 2-year runs in the past few years. When injuries hit or players didn’t perform up to potential, all three teams sold off key players in order to rebuild for the next competitive window. The same just happened to the Miami Marlins, who nearly doubled their 2011 payroll in hopes of bringing in bigger crowds and revenue. With the team fighting to keep itself out of the NL East cellar, the Marlins are looking to sell off vital pieces. Already Hanley Ramirez has been traded to the Dodgers, and Josh Johnson may be the next one out of town. The aforementioned Twins had a bright future prior to the 2011 season, then Mauer was lost for half the season and Morneau struggled to recover from concussion symptoms. Now they have no choice but to rebuild, starting with a trades of Morneau and Francisco Liriano that many are anticipating in the future. Competitive windows for many mid- and small-market teams all were slammed shut in a hurry.

For the have-not teams, the competitive window means there’s little room for error, practically no room to absorb expensive mistake contracts. The Dodgers had plenty of flexibility to absorb Ramirez’s contract. The Yankees somehow got Seattle to pay for part of Ichiro’s contract even though the Pinstripers sent back a middling starter and a guy who had already been traded or cut six times in his short career. The A’s have a league-low $55 million payroll, which gives them the flexibility to pick up a one-year rental. It doesn’t give them the flexibility to start trading for guys with long, bad contracts, like Ramirez and Jimmy Rollins. Brett Anderson is due for some raises in the coming years. Reddick is sure to become a Super Two thanks to his breakout season – which will give him a hefty raise. He could very well be locked up through his arbitration years this offseason. Cespedes will be paid nearly $30 million over the next three years. Beane and David Forst will have to decide which young pitchers to keep and which ones to use as trade pieces. Kurt Suzuki already has a bad contract and he’s worth pennies on the dollar. By 2014, the A’s could easily be committed to spend $40-50 million on just 4-5 guys. It’ll help that new national TV money is on the way, but it doesn’t mean that fiscal responsibility will go out the window.

Sustaining the competitive window will depend greatly on picking the right guys to commit to (remember the Chavez-Tejada debate from a decade ago?) and those cornerstone guys staying healthy. If not, all bets are off. It won’t prove that the A’s should leave Oakland posthaste. What it would prove is that the A’s again are a big-market team that is forced to operate like a small-market team because of revenues from playing in Oakland. The current CBA calls for the A’s to get off revenue sharing by 2016 as long as the team stays in the Bay Area, however the stadium solution occurs. That’s language from on high saying that having the A’s in the Coliseum is not what MLB has in mind, no matter how good this run is or how many pies are thrown. The Lodge doesn’t care about 17 games. They care about the long view.

07.18.12
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Lather, Rinse, Repeat

We’ve heard this one before. USA Today’s Bob Nightengale was on The Chris Townsend Show with guest host Brodie Brazil on Monday night. He indicated that something will happen in August, when the next owner’s meetings are slated to be held in Denver. Nightengale claims that if a vote isn’t held (Wolff has asked for one as a procedural matter), Bud Selig will rule on the matter. Nightengale noted that he has been wrong about this before (as have I), and at this point – 40 months into the debate – there’s little evidence to indicate that this will be resolved in short order.

The big admission of this apparent deadlock is that when asked about the situation during a press conference prior to the All Star Game, Selig replied that both teams still have numerous questions to answer. Seriously? At 40 months? Surely, the commissioner and his exploratory committee have had ample time to look at every option, look under every rock, comb every bit of the Bay Area landscape. Admittedly, there are plenty of questions for the contingent cities as to how they’ll complete the deals that will be necessary to host a new ballpark. Those issues aren’t under the Giants’ and A’s control, and they can’t see proper resolution until a decision on how to progress is made. Whichever way it goes, one team (and some city) is going to be upset. The longer this gets delayed, the more expensive the eventual solution becomes – whether it’s in Oakland, San Jose, or elsewhere.

Then again, why bother? It’s not as if the A’s matter to baseball. Inertia, thy name is Selig.

06.28.12
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Clawback, Part III: Diridon transfers to be reviewed in July

The post-redevelopment landscape remains somewhat chaotic as new legislation and decisions by the State Controller’s office fill in some of the information and procedural gaps. On April 20, Controller John Chiang sent a letter out to all so-called “successor agencies” that were assigned to clean up after the dissolution of each municipality’s redevelopment agency. The letter asked for all property transfers that occurred after January 1, 2011 to be returned to the successor agency so that they could be disposed of under the auspices of AB1x 26.

Following up that letter was another letter from Stand for San Jose’s law firm, San Francisco-based Pillsbury Winthrop Shaw Pittman LLP. The firm represents the San Francisco Giants, and Stand for San Jose’s astroturf war against the San Jose ballpark project has always been transparent, with the S4SJ throwing everything against the wall to see what will stick. The letter asks for all transfers to be reversed in keeping with the January 1 date, citing that SJRA transferred the land to SJDDA on March 8, 2011, and entered into an option agreement with the A’s on November 8, 2011.

Fortunately, the Controller will start a review of the case on July 9, with the process taking 4-6 weeks. While a decision on the land transfer won’t settle everything in the City and S4SJ’s ongoing legal battle, it should at least guide the next steps regarding use of the land, whether the transfer/option is allowed to move forward or the land has to be sold by the successor agency under new terms. For what it’s worth, the agency’s board consists of City and County pols. The chair is San Jose Mayor Chuck Reed, with general counsel being City Attorney Rick Doyle. Next meeting of the oversight board will be August 9, after the summer recess. The Controller may have rendered a decision by then.

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In related news, at today’s oversight board meeting it was revealed that the successor agency expected to have all $86.9 million that the County withheld by this afternoon. This will allow the City to fulfill its August 1 debt service payment obligation. The resolution of this matter also allows the agency to get a letter of credit extension, which was completely up in the air until this week.

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Added: The San Jose/Silicon Valley Business Journal reports that the City of San Jose and Santa Clara County worked out a deal in which the County wouldn’t challenge the Diridon transfers. The Controller still has to make its determination.

06.26.12
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Clawback, Part II (Updated)

First we had Santa Clara County pulling $30 million in RDA funds back from the 49ers stadium project/Authority. Now we’ve got the flipside, as State Controller John Chiang has ruled that the County went too far in holding back $86.5 million in funds due to the City of San Jose.

The money came from collected property taxes and proceeds from the sale of numerous City-held properties. The money’s needed to service outstanding debt, which had already been downgraded to junk status by Fitch because of the holdup. The bond ratings should be restored to some degree, but the damage is done. The now-defunct SJRA’s successor agency oversight board is having its regular meeting on Thursday. I may attend it.

It’s a bit early to say what kind of effect this will have on either Cisco Field, 49ers Stadium, and City of Oakland (HJKCC) since it’s just one of a series of rulings that will be made in the coming months. A follow-on editorial from the Merc is pushing for the County to surrender the funds so that the bond payments can be made by the end of the month. In addition, a budget trailer bill (AB 1484) in the Legislature is trying to better define the limit and range of the powers of oversight boards and successor agencies.

Update 6/27 3:32 PM – AB 1484 passed and is headed to the governor’s desk. The big takeaway is that the carveout for affordable housing projects is now set. Until now, affordable housing was as much on the chopping block as any other types of redevelopment work.

06.23.12
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Padres to sell for $600 million

Fox Sports’ Ken Rosenthal got the tip last night that the San Diego Padres are about to be sold. Three bidding groups have been pared down to two: the O’Malley family led by Peter Seidler, and Gary Jabara, with the O’Malley family reportedly in the lead.

The total price of the sale is expected to be $800 million, with $600 million for the team itself and $200 million for the Padres’ equity share of the recently launched Fox Sports Net San Diego regional sports network.

Jeff Moorad was supposed to be the owner, having negotiated a $530 million price a few years ago with a five-year phase-in of the acquisition. During the last offseason, it became clear that forces within MLB (the “Lodge”) were not going to approve the sale, so when combined with John Moores’ realization that he could get more thanks to the new TV deal, the Padres were pulled out from under Moorad (and minority partners such as Bob Piccinini).

Compared to this year’s Forbes valuation of $458 million, the combined $800 million sale price represents a 75% premium over the appraised value. Even when the TV component is separated out, the premium is 31%. In the wake of the Dodgers’ record-shattering $2.1 billion sale price, some sort of premium was to be expected, and I wrote then that $600 million for the Padres was a good starting point. The Padres serve as a good benchmark for any potential sale of the A’s, because the teams’ market dynamics are similar. San Diego represents the A’s if the A’s got a new ballpark and TV deal, thus the higher valuation ($458 million vs. $321 million).

All of this makes it fairly easy to project what the A’s would be worth on the open market. Lew Wolff has said unequivocally that the team is not for sale, but it’s still a worthwhile exercise – at least on the blog. If I apply the 31% premium to the A’s now, the new asking price is at least $420 million. That’s not going to be enough for Bud Selig, as one of his main responsibilities over the last decade has been to raise franchise sale prices on behalf of outgoing owners as much as possible. If he wasn’t able to lobby to get San Jose for frat buddy Lew Wolff, he’d at least give Wolff and John Fisher a massive golden parachute. It would be practically inconceivable to have any starting price be any less than $500 million. Add at least $500 million in private funding for a new ballpark (more depending on the site), and the cost to keep the A’s in Oakland becomes a cool $1 billion. That’s why I thought it curious when the fan letter to Fisher from the spring circulated, imploring the majority owner to either work to stay in Oakland or sell the team.

$500 million for the team, $500 million for the stadium. Those two parts are attached at the hip, because Selig wouldn’t approve any sale without a bulletproof (and underway) ballpark development plan. The problem with such a plan is that any future franchise sale price would be less than the combined $1 billion, because of the nature of the stadium financing. Building a new ballpark is like buying a new car and driving it off the lot – depreciation immediately kicks in. Since much of the ballpark revenue would be directed toward paying debt, it would reduce the attractiveness and market value of the franchise. Anyone who bought the franchise would be burdened by that debt until it was cleared 30, 40 years later – and that doesn’t even take into account debt incurred to buy the team. The same revenue/valuation drag goes for San Jose, except that at least Wolff/Fisher bought the team in 2005 for the relatively low price of $180 million, and they would presumably be able to service the debt better thanks to Silicon Valley’s economic strength.

So there you have it. $1 billion to keep the team in Oakland. Good luck with that, Don Knauss and company.

06.19.12
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Notes on 6/19/12 SJ City Council Session

I got to the session just as public comments were ending. YES!!!

Four artificial turf soccer fields would be built on land previously reserved for a BART maintenance yard.

Council has their questions, though they seem to be on the verge of approving the deal with few reservations. Observations:

  • One of the key issues is financing. The $10 million shortfall in funding would be covered by the sale of commercial paper (with either HUD approval or from city reserves) and a Parks Trust Fund loan of up to $8 million, or both.
  • The loan or other funding would be paid back by a projected $500,000 in annual revenue from renting out the fields. The Quakes would be paid at least $333,000 every year to manage the stadium.
  • It should be noted that the land that the Quakes stadium and the new soccer fields would sit on would remain City-owned in the end. The Quakes paid a $2 million option at the end of 2010 for the land, and would pay another $5 million. Under the previous agreement, the land would be deeded back to the City.
  • The picture from the previous post had shown three soccer fields. There will be four, and they would be artificial turf.
  • The Earthquakes would partner in the facility.
  • The Quakes would move their youth development soccer academy from Danville to the facility.
  • Team would also give away $78,000 in Quakes tickets annually to the community.
  • Councilman Don Rocha would prefer one of the fields be grass, citing his 8-year-old daughter’s tearing of her ACL on an artificial turf field elsewhere in the county. Staff indicates that if a single grass field were instituted they’d have to do a new revenue pro-forma and re-bid the project, temporary delaying the project. The facility’s business model is based on rapid turnover, which is impossible with grass fields. Note: the Quakes second team isn’t allowed to use the Quakes’ training field.
  • Councilman Xavier Campos would like some anti-gang nonprofits to have access to the fields, perhaps via a new scholarship program being put together by the City and the Quakes. Mayor Chuck Reed counters that the facility will be revenue driven, which could make an equal-access facility impossible. (*tension*)
  • Hunter Storm, the Quakes, and the City have had an ongoing dialogue regarding the development.
  • Each of the districts would provide $100,000 towards the construction of the facility.

Update 4:16 PM – Item approved unanimously, with an amendment regarding the availability of an extra suite for low-income or underprivileged residents also approved. Interestingly, Mayor Reed “rallied” staff to get both the stadium and public fields built by 2014, not 2013.

One other Cisco Field-related item – The City Council/Diridon Development Authority unanimously approved a resolution which allows for an extension of the Property Based Improvement District, defined as essentially Cisco Field, HP Pavilion, everything in-between, and properties north to Julian Street. In addition, properties within the district would be assessed $4,000 per year. Previously, a vote was taken among property owners. 91.4% were in favor.

06.19.12
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Another Airport West land deal + Muni budget item approved

Well, there goes a potential backup plan.

San Jose is getting ready to restructure the land deal (also see rendering) at the Airport West (FMC) property. In February, the City approved the Earthquakes Stadium project, which is to be located on the southern end of the property. Originally, the Wolff-Fisher group planned to build offices and perhaps a hotel on the remainder of the land. Now that remainder will be developed by South Bay developer Hunter Storm, with the section closest to the train tracks set aside for new soccer fields adjacent to the Earthquakes training pitch.

Overlay showing how Airport West property will be subdivided. Earthquakes practice field is the green block on the furthest right.

That last part is especially new, because that land was initially destined to be part of a BART maintenance facility. With BART for now terminating at Berryessa while full funding for the rest of the Silicon Valley extension is to be determined, the land would sit idle if not for this change. Plans currently call for an expansion of the Hayward BART maintenance facility to accommodate the extension, and there may be an option along the extension line for another yard if called for.

The controversial part is that in executing this land deal, the total proceeds to the City will go down $10 million. While the City has an equivalent surplus, in the previous agreement Wolff wasn’t expected to complete the land purchase until 2015. In the new proposal, Hunter Storm would pay for its share of the land by the end of the month. Revenues from the Quakes Stadium and the soccer fields would begin in 2013.

As for the Earthquakes Stadium itself, the article mentions that it’s under FAA review/audit. Apparently this is because the FAA wants to check out light spillage from the stadium light design to ensure that it doesn’t create any difficulties for air traffic. Problems don’t seem likely, but this is a bureaucratic government organization we’re talking about. Already the FAA has determined that both the 49ers stadium and Cisco Field would require temporary flight restrictions due to the way they are sited within the SJC flight path. The FAA review is the only issue remaining that delays stadium construction.

I’ll be at the City Council session later today to cover this issue.

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Just across the wire – City Council voted 8-3 to approve $85,000 in improvements to Municipal Stadium. Noted is the fact that the City Council can reopen discussions later over how the Giants’ subsidies are spent – especially if they’re used to fund a lawsuit against the City. Later is probably 2013, when the lease is due for renegotiation. Will there still be a lawsuit in play at that point? We’ll see over the next year or so. One thing to keep in mind – as long as the uncertainty regarding the lease and lawsuit hang over the club, it would be hard for ownership to sell the franchise to new San Jose-based interests. Outside San Jose, that’s a different story. The City Council was careful to say that there’s room for both teams within city limits, a posture that has really only come to the forefront in the last couple of years.

06.15.12
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I got your lease right here!

In the world of pro sports, $85,000 is not much money. It barely pays for a month of a rookie minimum contract in MLB. It’s the rough equivalent of one decent section’s worth of revenue at a San Francisco Giants game, or the A’s typical daily parking take. In the grand scheme of things, it’s not much. For the City of San Jose, it might be a very important piece of leverage which the City can use against the San Jose SF Giants.

The Merc’s John Woolfork reports that the City wants to get more financial disclosures from the team before it authorizes $85,000 in maintenance funds for Municipal Stadium. The main thrust of the argument against the expenditure comes from a memo (PDF) jointly written by councilmembers Sam Liccardo and Pete Constant.

Finally, as we contemplate whether to continue subsidizing the rent and repair at Municipal Stadium or any other City facility, we should know the extent to which any related entity is financing litigation costing our taxpayers thousands of dollars. Extended delays caused by frivolous CEQA litigation could stall or prevent the most transformative private economic development project – a privately-financed half-billion dollar major league baseball stadium- in anyone’s memory. It would seem minimally sensible to know whether we’re paying for the bullets with which we’re being shot.

Indeed, why subsidize someone else’s antagonism? It’s not exactly neighborly of the Giants to continually come to the trough while suing the city.

Moreover, the memo shed some light on the sweetheart deal the SJ Giants have been getting from San Jose for years. The team is set up as a nonprofit, which is not entirely unique among minor league teams. Thanks to the Giants being a nonprofit, their rent at Muni starts at $1,000 per month. Think about that. The Giants pay less in rent than most apartment renters in San Jose, or the rest Bay Area for that matter. The Giants contribute to upkeep as part of the lease terms, as does the City. But keep in mind that whatever leasehold improvements the team makes can be a tax writeoff (one of many depreciation items), which makes it the costs only slightly more than trivial. And the nature of the improvements is important: the City has paid for structural maintenance and improvements, such as a new scoreboard, electrical equipment, and lockers. The Giants have paid for value-add items like flat screen TVs on the concourse. Next year, the last of the current lease, the Giants will pay $29,000 in rent, which is a tiny improvement.

The memo also compares the Giants’ deal with the Sharks’ lease at Sharks Ice (next door to Muni) and Team San Jose’s arrangement at the San Jose Convention Center. The Sharks paid $5.5 million over the last two years for capital improvements and debt service for Sharks Ice, in addition to $5.3 million in rent just last year alone at HP Pavilion. With the lease due for renegotiation next year, the SJ Giants will be lumped in with the A’s and Raiders, whose respective leases also expire in 2013. Just as you can expect the Oakland leases to reflect additional contributions from the teams, the same should be expected of the SJ Giants.

After all, the Giants definitely don’t need the nonprofit status they’ve had since the beginning of their existence in 1988. That might have made sense back then, when it wasn’t clear how well the community would support the franchise (Lew Wolff knows a little about that). The Giants are routinely one of the best gate performers in A-ball and have their operations almost completely subsidized by their SF parent club/owners. If the Giants want to keep operating as a nonprofit, per the next lease they should comply with the Council Policy 7-1 (PDF), which requires financial disclosures of nonprofits operating city facilities:

…under Council Policy 7-1, non-profit organizations obtaining use of city facilities at a reduced rent must provide a “certified financial statement, including sources of funding and any constraints applied to funds,” and the “City may require, prior to and during the lease/property use agreement, the submission of such additional information as may be needed.”

It would be the neighborly thing to do. If the Giants don’t like it, well, I’m sure there are plenty of other places ready to offer a sweetheart stadium deal. Then we’ll see what kind of blowback the Giants get for being both leeches and antagonists. The irony is delicious. Oh, and if you think this has no teeth, here’s some very interesting language from Council Policy 7.1:

A below market lease/property use agreement may be terminated by the City at any time for any of the reasons established in the lease/property use agreement…

– and –

The City will not enter into leases or property use agreements at below market rates to organizations engaged in political activities or to religious organizations that would use the leased premises to promote sectarian or religious purposes.

Can the Giants’ efforts to derail Cisco Field be called political? Not overtly, but there’s something there.

06.12.12
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Quakes sell out luxury suites, start selling club seats

Even though the official groundbreaking has yet to occur, the San Jose Earthquakes announced today that they have sold out their entire allotment of luxury suites – 12 in all. In addition, the club announced that they are now selling club seats to the public. A total of 576 club seats will be made available, all at field level, just like the suites.

Club interior

There always was room for premium facilities to be built, so it makes sense that they’d wait to introduce club seats until other premium options such as suites were sold out. The key thing I noticed when looking at the renderings is the lack of walls. In last year’s big Lew Wolff interview, he mentioned how expensive it is to fully build out a space with air conditioning. The sold-out luxury suites are the only premium option that is fully built out. The club here won’t be behind walls of any kind and doesn’t appear to be air conditioned, which should reduce operating costs a good amount. The amenities don’t look any less plush than at other venues, and patrons will have in-seat service.

Four separate club areas consisting of four three-row sections apiece will be spread throughout. Two will be located near midfield, two towards the ends. Priced by the row, tickets will range from $90 to $125 per seat in season ticket packages, 20% more for single game purchases.

Patio suite exterior and interior

The Quakes are also selling patio suites, which are like the luxury suites except with no walls (or A/C). This option effectively splits the difference between the club seats and the luxury suites.

View from Patio Suite

I have a feeling that Lew and Keith Wolff are using Earthquakes Stadium as a testbed for future offerings at Cisco Field. If they can get the mix of hardcore Quakes fans, general soccer fans, and casual fans right, there are numerous lessons that are applicable to the construction and deployment of similar amenities at Cisco Field. For now, the stated capacity remains 18,000, though as we can see in this case, market conditions can change quickly.