Category Archives: San Jose

10.14.11
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Wolff, SJ ready to roll on remaining Diridon land purchases

We’re almost exactly one month from what could be a very pivotal owners meetings in Milwaukee. And while Commissioner Bud Selig may not end up feting his colleagues over a Brewers’ World Series, it may be that Selig’s frat bro Lew Wolff will be the one celebrating. Merc scribe Tracy Seipel reports that the recently formed San Jose Diridon Development Authority (a.k.a. SJ City Council) will meet in closed session to arrange an option from which Wolff could buy the remaining ballpark site parcels.

As discussed previously, Wolff would in all likelihood have to pay for both land and moving costs for the affected landowners/business, since SJDDA/SJRA is tapped out now and for some time to come. One thing that may help is that Maritz Wolff, Wolff’s real estate investment firm, sold a series of hotels in August for $570 million. Some portion of that could easily offset the estimated $24+ million of the remaining land buys. Now that I think about it, I wonder if the timing is set up for a 1031 exchange, which would limit tax exposure for Wolff (in-depth knowledge on this subject is above my pay grade).

Seipel also reports that the purchase may be part of a final push to convince Selig and the other owners:

Mayor Chuck Reed explained it another way:

“It’s so that Lew can go to the commissioner of baseball and say, ‘I control the dirt.’ ”

Reed characterized the plan as taking away “one more little reason the commissioner can’t make up his mind.”

Because of the black cloud over redevelopment and the lawsuit against the state, it’s possible that much of the money may have to be reclaimed by SJRA for its extortion payment to the state, the big bond payment that’s due next month (which could cause a default), or other issues that the agency has to address. It’s not just a matter of SJRA being broke. They also can’t enter into any new agreements, which is probably what caused City to in a moment of prescience create SJDDA. It’ll be interesting to see how the option agreement is structured. The Airport West agreement went through some major changes before arriving in its current form.

Seipel ends the piece with a note from City Attorney John Doyle, who said that a referendum will be required for the ballpark/land transaction.

There are a number of follow-up questions that can only be answered by the actions of SJDDA and affected parties in the coming weeks:

  • What will be the final price for the transaction(s)?
  • Does this lead to Wolff buying all of the land, or giving the purchased part back to the City/SJDDA?
  • Unlike Airport West, the purchase of Diridon has a much earlier deadline. What is that deadline?
  • Is Wolff in effect bailing out SJRA by doing this?
  • While Reed openly cheers on the influence that this move may have, Doyle (as you would expect) tamps down expectations on MLB’s decision-making. What’s the story here?

The road ahead promises to be scenic, and a little bumpy.

10.10.11
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$230,000,000

After the defeats of both the Yankees and Phillies in the divisional round, the most oft-tweeted fact was that all of the payrolls of the remaining four teams (Detroit, Texas, Milwaukee, St. Louis) were less than $107 million. All four teams can be considered midrange in terms of revenue and payroll, which makes it incredibly refreshing that those are the four left standing, not the mega-money teams of the biggest markets. We can only hope that this continues, if only to start a trend of “right-sizing” payrolls all over baseball in order to optimize efficiency. (Yeah right.)

That culling of the playoff herd was preceded by Lew Wolff’s observation (during the Tuesday interview with Carl Guardino) that should the A’s make the move to the South Bay, the team’s annual revenue could jump to $230-240 million. At first that seemed improbable and to me, perhaps a bit of a lark. Over the weekend I started to dig into the numbers to try to understand if it was possible. Not only is it possible, by the time the A’s finish their first year at Cisco Field, $230 million may be mandatory.

To get a better sense of this, it’s best to look at how MLB’s revenue has grown over the last decade, especially since the first revenue sharing CBA year in 2003. Back then, baseball’s total revenue was a shade under $3.9 billion. Last year was a cool $7 billion. During the last decade, the average annual revenue growth has been 6-7% year over year. That growth slowed with the recession, but it’s realistic to see growth rebounding to at least 4%, which would at least outpace inflation. To that end, I’ve run some projections over the next few years with a 5% growth rate (conservative, I expect Commissioner Selig and the owners to be satisfied with no less than 6% if the corporate customer base is considered healthy enough).

Mean and median revenue figures differ because of the distribution of big market teams with very high payrolls.

It gets even more interesting when the numbers are broken down per team.

Growth will be largely dictated by new media/broadcast deals, as well as additional gate revenue from new venues in Florida and California.

By 2015, the average revenue should be $250-260 million, an amount that would support a payroll of $125 million, almost twice what the A’s payroll was this past season. In effect, projecting to $230 million is merely trying to keep up with the Joneses. It’s what will be required for the A’s to truly minimize their revenue sharing “welfare” status. If the A’s can’t hit the median or mean revenue mark on a somewhat regular basis, it’s probably worth asking if it makes sense for the Bay Area to host two teams.

Rough revenue projections. Figures are for illustration purposes only and are not meant to be exact. Model assumes a continuation of the current 34% straight pool revenue sharing plan.

To get to $230 million in 2015, the A’s ownership group will have to sell the hell out of Cisco Field, including a 50% jump from 2014 to 2015 across the board in terms of local revenue sources. Given the meager results they’re getting while at the Coliseum, this is not an impossible task. (The Twins experienced a similar jump when Target Field opened.) Season sellouts for the first year or two would go a long way towards hitting the target. In 2015, the difference between 24,000 per game and 32,000 per game is over $26 million, let alone whatever additional money they get if the ballpark is larger than 32,000 seats.

When Lew Wolff and Billy Beane talk about planning for the next three years, the reasons for doing so start to crystallize when the numbers are laid out like this. Already, the Earthquakes’ $60 million stadium appears to be moving forward without significant upfront sponsorship commitments, indicating that Wolff is willing to make the cash calls necessary to get the ball rolling there. I’ve heard rumblings of private equity firms perhaps being involved, though it’s hard to see any heavy investment there when the return may not be as great as what such firms may be looking for. After all, it was only two months ago when Wolff said:

(Baseball’s) not an internal rate of return 20% or something like that. You shouldn’t be in this business if you want that.

Getting commitments for Cisco Field should not as difficult as for the Earthquakes stadium; in fact it should be a highly competitive situation. Still, ownership has to be looking at trying to reduce debt service as much as humanly possible, so they must have an internal target of upfront money they’ll need to push forward. Maybe it’s $200 million, maybe more (roughly 40% of the total cost). This is incredibly important because the private stadium loan market could be a complete wildcard over the next couple of years. Keeping debt service manageable doesn’t just help the bottom line, it will surely raise the franchise’s valuation due to its favorable debt position. Keep in mind that Cisco’s $120 million naming rights deal has a present value of $60 million, so the A’s will need much more than that to truly get going.

If Wolff gets a “no” decision from MLB, that leaves Beane with the regular revenue streams to fund the next several seasons’ payroll. It’s easy to see the A’s consistently hovering in that 74-86 win range depending on the team’s health. The team may be good enough to go for the division crown with some luck, and without luck the team would not be bad enough to score a top five first round draft pick. On the other hand, if San Jose is a go the controversial full rebuild could occur, with a key focus being another top ten pick to go along with Michael Choice (2010 #10). Jeffrey’s post from Friday explains the need for any money-challenged team to have a stable of developed top ten picks to serve as franchise cornerstones. This also highlights the importance of reining in debt, as it may be expected that the team run lean should a more aggressively enforced debt rule come into play.

In light of the lessons of Moneyball, it’s crazy to think that the A’s payroll in future seasons could frequently eclipse $100 million. Thanks to a little inflation and a lot of revenue sharing, the A’s are coming along for the ride. That will only take them so far, however. If the A’s are unable to significantly grow their own locally-sourced revenue on a regular basis, they be left behind competitively. With the future threat of multiple teams having $200+ million payrolls, the A’s have no choice. As Brad Pitt’s Beane flippantly says to a defiant Grady Fuson in the film, “Adapt or die.”

10.05.11
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Notes from Wolff-Guardino interview 10/4/11

SVLG President Carl Guardino hosted Lew Wolff on KLIV’s The CEO Show (MP3) again, and it wasn’t some fluff piece. For brevity’s sake I didn’t transcribe all of the interview, only a select few quotes. Listen to the rest and decide for yourself.

Guardino asked about the A’s relationship with Cisco Systems, which seemingly hasn’t budged one bit since the Fremont unveiling in 2006.

GUARDINO: Cisco Systems, of course, is San Jose’s largest employer. They’ve been enthusiastic from the start about partnering with you on a ballpark in downtown San Jose. Are they still involved?

WOLFF: Well absolutely. John Chambers always says to me that we’re partners for life. I hope it’s even longer than that. They’ve been standing up with us. We haven’t really imposed on them too much the last couple of years because it’s up to us to deliver, not them.

Guardino went on to ask about the response to the SVLG 75 CEO letter written a year ago. No response from MLB or Commissioner Selig yet. Then Guardino asked how moving to San Jose would shift the future prospects for the ballclub:

Without question the demographics of San Jose per the number of corporations, which you know, the number of sponsorships, and the fact that we’d have a brand new, really creative venue, will probably almost double our revenues. And that’s on the conservative side. And normally baseball is pretty simple. Depending on your revenues, if your salaries are 40% or 50% of your revenues, you can compete. So if our revenues get up to $230-240 million that totally changes our focus in terms of what we can do.

Stop. At no point in any of my previous projections did I ever have the A’s revenue going past $200 million when Cisco Field opens. If Wolff is thinking $230-240 million, the A’s are suddenly in Giants-Angels territory. That’s a huge development. And it’s one Wolff could regret making as fans may hold him to that.

Wolff also talked about the some of the features in the ballpark we’ve talked about here, such as minisuites and personal signage and advertising. Asked about other features of the ballpark, Wolff describes “that thing in right field”:

Because of the size of the site we have – it’s rather compact – we will have a high wall in right field area. Which will have interesting seating which I won’t get into because I can’t describe it properly… We’re not trying to copy either the retro parks like the Giants have, nor are we trying to copy Wrigley Field or Fenway. We’re trying to do what Silicon Valley and all your members of (SVLG) do. Do something that hasn’t been done before, and not worry about where it hits because it doesn’t have an identical twin somewhere.

Wolff makes the case for sharing the Bay Area again. County Assessor Larry Stone (who had called in during a previous interview) asked to clarify Billy Beane’s statement there may be window for MLB to decide after the end of the World Series. Wolff’s response:

No, he’s not misspoken. Part of what Billy said, and I agree with, I may have even prompted Billy to say it, is that we need an answer, frankly now. While you’re not supposed to make announcements in October… we don’t feel bound that baseball will have to wait until after the World Series.

We’ve reached a point now where being in limbo, like we have been for so long, is not fair to Oakland. It’s not fair to San Jose. It’s not fair to our staff of about 130 people. It’s just not fair to anybody. Even a “No” answer, or “You can’t move to San Jose,” we need to know that. We can no longer – if we have any power – dance around this question.

It’s worth listening to the rest of the interview (MP3). They talk about the Giants and their ownership change, the future A’s roster and payroll, and several other topics.

10.04.11
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San Jose redevelopment set to default after Brown vetoes bill

Bond Buyer reports that a bill written to help the ailing (and largely shuttered) San Jose Redevelopment Agency limp along until its fate was decided by the state Supreme Court in January was vetoed by Governor Brown. Senate Bill X1 8 was designed to extend SJRA’s credit facility past a November 25 deadline. Redevelopment reform bills passed in concurrence with the budget disallowed any new borrowing or even extensions such as the one San Jose (and Rocklin, also in the bill) was asking for.

San Jose wasn’t doing itself any favors by becoming a plaintiff in the League of California Cities/California Redevelopment Agency’s lawsuit against the state and Brown, so no one could expect a favor back from the Governor. San Jose is on the hook for $100 million in redevelopment debt, or rather, JP Morgan is. Buyers of the issued redevelopment bonds are not on the hook according to an earlier Bond Buyer report.

Typically, (Tom Jacobs, Moody’s) said, principal would amortize over three to five years starting a few months after the draw, with interest accruing at an above-market interest rate.

But in this agreement, the San Jose RDA would immediately be obligated to repay the full amount drawn by the trustee — the full $95 million, and the JPMorgan letter says the San Jose RDA will not have the capacity to repay that amount.

It’s unclear what options SJRA will have over the next few weeks, or after the default is triggered. The Diridon ballpark properties have been transferred to San Jose Diridon Development Authority, which should in theory insulate the ballpark project from creditors, but any such speculation is extremely premature at this point. The $100 million at stake is a drop in the bucket compared to SJRA’s $3.5 Billion in total debt. One thing is clear: any new projects San Jose was planning to do in the future will come with extremely high borrowing costs as SJRA’s credit rating (Moody’s: Baa1/Baa2, S&P: BBB+/BBB-) is blown to bits. At this point, SJRA is toast.

10.02.11
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We (and Sid) get a mention in the Merc

Earlier in the week, I received an email from Merc scribe Scott Herhold requesting to excerpt the now infamous bachelor party account by commenter Sid. I obliged and was grateful for the mention. I had been waiting to find out when the story would hit, so you can imagine my joy at seeing the article this morning.

IA couldn’t get a comment from AT&T. But through Kalra’s chief of staff, Joseph Okpaku, the councilman denied the bulk of Sid’s assertions. The councilman said he didn’t say AT&T was being a “pain.” Through his spokesman, Kalra added that he had never said anything about a backdoor deal. “It seems this guy is trying to get his five minutes of fame by making it seem like he has the inside scoop on the A’s situation,” Okpaku wrote (read the back-and-forth at http://www.mercurynews.com/internal-affairs).

I don’t have much else to write about the whole thing, other than as usual, take everything you hear with several grains of salt.

09.29.11
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Who’s staying where?

If you tend to read things too quickly, especially headlines, you could be forgiven for misinterpreting one or more of the following headlines I gathered for the Google:

See, I read the headline from the Stiglich “…Beane says he expects team to remain in Oakland”. Everything we’re hearing is still so fuzzy and noisy, perhaps all headlines require a double take.

Again, there isn’t any legitimately new news, only a shift in tone that we’re detecting. In Slusser’s piece, Beane walks back the moving talk slightly:

“Over the course of the 2 1/2 years we’ve been told it,” Beane said. “So this time, I’m going to believe it.”

The difference between now and the previous 2 1/2 years is that Beane hasn’t spoken out about the decision much, only to say that the A’s need a new ballpark.

Lest you think the organization only hires company men, there is this quote from Bob Melvin (via the AP piece):

“Lew won’t want to hear this, I kind of like the place,” Melvin said. “I grew up here, I went to concerts, it’s well-documented. I know that it’s outdated and we need a new place.”

Then again, if Melvin is still A’s manager come 2015 in a San Jose ballpark, you can expect him to praise the new venue profusely (without dumping on the Coli too much).

09.25.11
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Eminent domain the last hurdle for San Jose

I want to point out something before we begin. Whether it’s this story or the quotes from Susan Slusser’s articles, let’s remember that none of it are statements from the A’s, MLB, or San Jose. As close as they seem to the situation, there’s a lot of conflicting information out there so take all of this with multiple grains of salt.

It’s always been there, lingering in the background. I even wrote about it only six weeks ago. It’s the boogeyman. It’s eminent domain. A frequent commenter has the gory details:

I was at a bachelor party in San Diego this past weekend. A San Jose city council member was part of the group and we discussed the A’s in detail.

What he told me was this:

1. ATT is being a “pain in the ass” and will not move unless forced to by eminent domain. Even re-zoning the land for ATT in West San Jose did not help the cause at all. In fact the city council in hindsight would have never agreed to it had they known ATT would still refuse to leave.

2. The city will not use eminent domain on ATT unless MLB gives the OK that the A’s can move to San Jose. Therefore this is not a “race” between OAK and SJ. San Jose like Oakland is in a holding pattern waiting for MLB to make a decision…..Two cities, same boat.
He told me that they cannot “justify” using eminent domain on ATT without MLB approval to move forward.

3. He stated to me their RDA is pretty much done and he “implied” to me Wolff will have to buy the last 2 parcels himself but would not out right say it when I tried to question him more on it. The city council knows full well that Wolff will pay for it because everyone knows it is a “drop in the ocean” of the overall cost of the stadium. He also mentioned SJ unlike most cities did not misuse their RDA funds and used it for several successful developments across the city.

4. He agrees with me Lew Wolff has some kind of “backdoor” deal with Selig as being a former lawyer he does not understand Wolff’s patience with the situation. The city has brought up an anti-trust lawsuit to Wolff and he has told the city “not to sue” and to let the process play out despite San Jose having an excellent case in anti-trust court, which he agreed with me is “solid”.

5. Without Wolff supporting an anti-trust lawsuit San Jose is stuck in mud and he is very pessimistic the A’s to San Jose will ever occur. Although he is still holding out some hope.

6. He also agreed San Jose is getting the “best ballpark deal” of any city in history of MLB. The city is not paying for anything outside of what they have so far. Diridon will be re-developed regardless of the ball park but not for several years to come. BART or High Speed rail would have to be within 3-5 years of being in San Jose.

I wanted to share this info with everyone as this is first hand info from a SJ city council member that is as recent as yesterday.

AT&T owns the largest remaining property within the Diridon site. Its reluctance to sell will force San Jose to use eminent domain to acquire AT&T’s land (and possibly one other piece) in order to complete the site. There is no way to build a ballpark without the AT&T land.

AT&T land is in blue. Most of the rest has either been acquired or is no longer part of the planned site.

Even though Lew Wolff has expressed a willingness and confidence in the ability to acquire all of the ballpark site, not having a willing seller creates a big time hitch. San Jose can’t force AT&T and the A’s to negotiate on land. Instead, San Jose can acquire the land, then negotiate on the relocation and replacement land costs, then have the A’s reimburse the City. Making things more complicated is the fact that public-to-private exchanges tend to be politically unpopular. That may cause a final step in which the A’s buy the land, then convey it back to San Jose for free so that the site (and maybe the ballpark) are publicly owned. The Quakes stadium site is a publicly owned “island” surrounded by Quakes-owned land. Wolff indicated there are numerous ways this could play out, and these are just a couple different permutations.

Adding to the complications is the still lingering fate of redevelopment, which won’t be decided until January. Right now no agency is allowed to buy anything even though the state Supreme Court granted RDAs a six month stay to operate. San Jose is trying to bypass this roadblock by moving assets to its San Jose Diridon Development Authority, a redevelopment wing thinly disguised as a joint powers body. Keep in mind that San Jose has not made its ransom payment to keep its barebones redevelopment group running, choosing instead to sue Governor Jerry Brown over the new redevelopment laws. For that matter neither has Oakland, and Oakland could require eminent domain on multiple landowners to clear Victory Court.

Despite this major hurdle, all we’ve heard over the last week is a growing confidence in public statements by both Wolff and Billy Beane, indicating Sid’s item #4 may well be in play. If that’s the case, here’s how I see this playing out:

  1. Wolff gets green light during November owners meetings.
  2. San Jose seizes upon this and makes one last offer to AT&T before the end of the year. If AT&T continues to holdout, City notifies that it will start the eminent domain process via SJDDA.
  3. City can’t actually start eminent domain without a referendum, so if it’s required a special election will be held during the early spring (with MLB picking up part of the tab).
  4. City procedes to acquire the land and begin relocation, which should take 3-6 months to complete.
  5. Demolition and site clearing would have to be done throughout the summer and fall of 2012.
  6. Groundbreaking happens in November or December 2012.

It’s important to note that there’s always that final offer. Eminent domain is every bit as much a threat as it is a tool and may be used simply to bring parties to the table. AT&T knows that San Jose is hamstrung by the referendum requirement and other political realities, so it may be playing its own special brand of hardball. A supposed quid pro quo deal between City and AT&T over rezoning an old work site near Santana Row may have been AT&T playing City like a fiddle. The Death Star of telecom is no stranger to strongarm tactics. This is the company that thinks eliminating a wireless carrier by acquiring it will actually bring more competition to the industry.

FWIW, I’ve been consistent in my feeling that no one in the South Bay camp has the stomach for a lengthy antitrust challenge to MLB. As for the “best ballpark deal”, with the A’s on track to pay for everything ($450 million ballpark and up to $100 million in land and improvements), yes, it would be better than the deal for AT&T Park and any other MLB ballpark deal in the last century.

09.25.11
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Willingham signing hinges on stadium resolution

Susan Slusser’s report on Josh Willingham’s status makes my last post look downright prophetic (I swear I had no idea). According to Willingham’s agent, Matt Sosnick, any kind of multiyear deal is completely dependent on whether or not the A’s get the green light to move to San Jose.

“We gave the A’s an idea of where we were, and we were told they have interest in bringing Josh back, but before they did anything, they want to see what happens with the stadium,” Sosnick said. “Josh and I both made it clear he’d like to stay, but at this point, I’m pretty sure he’ll test the free-agent market.

“We talked about a time frame, given that Billy would like Josh back, but it seems like Billy is sort of hamstrung right now.”

Now if you haven’t read the last post on the Moneyball script, read it now. And enjoy the symmetry.

Slusser also notes that if the A’s get that green light, they’ll reduce payroll and go into a full rebuilding mode. That would make sense, since Beane and Wolff/Fisher would probably want to time the opening of Cisco Field with a fully resurgent team, one that could maximize revenue. That probably means trading any or all of the cost-controlled young starters, Kurt Suzuki if he has any value left, and maybe even *gulp* Jemile Weeks. The moves wouldn’t have to happen right away, though I figure that Beane will spend some time trying to find a sucker to take Brian Fuentes’ $5 million for 2012. The moves are one more reason for the pro-Oakland folks to hate ownership, though I have to point out that if they were to build in Oakland they’d go through the same phase. If they were to stay in the Coliseum indefinitely, they’d have to keep payroll at the $70 million level in hopes of attracting more fans at the gate, though $70 million doesn’t get you more than scraps as we’ve seen over the last few years. Want to see how Taylor and Carter look with 500+ PAs? We might finally find out.

Thing is, such a hardline stance may not be necessary since several players may not be expected to re-sign with the A’s, and will have their money come off the books in the offseason. That includes $5.75 million for David DeJesus (despite the strange love affair with the guy) and $4.25 million for Hideki Matsui. Plus there’s the dead money of Kevin Kouzmanoff ($4.75 million) and Conor Jackson ($3.2 million). So even if they re-sign both Willingham and Coco Crisp, they can keep their payroll under $55 million while giving the kids precious playing time.

Without Willingham and Crisp, the payroll would be around $40 million, roughly the same amount as the 2002 Moneyball A’s. It would seem that signing both of those players might make sense in that both of them might yield something better in trade near next season’s trading deadline than the first round/sandwich picks the team would get for letting them walk. Beane’s argument is that without a resolution of the stadium situation, there can be no effective long-range planning, since there would be an endless cycle of building up and selling off. As more of the youngsters hit arbitration eligible years, Beane has to keep that in mind and plan accordingly. It’s a tough spot to be in.

09.15.11
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Unanimity

On March 11, Chuck Greenberg was ousted as Texas Rangers’ managing partner and CEO. Nolan Ryan was named CEO immediately thereafter, with the plan to become the managing partner down the road. Two months later on May 12, Ryan was approved as the Rangers’ managing partner by a 30-0 vote.

Just over six months after Greenberg’s ouster, the Giants were forced to announce managing partner Bill Neukom’s “retirement”. Mark Purdy reported that Larry Baer would be named CEO of the team, with someone else becoming managing partner. Purdy included three names as the possible next managing partner, including Franklin Templeton Chairman Charles Johnson, who appears to be the frontrunner among internal candidates (I’m not aware of any outside money coming in at this point, though Neukom said he will divest his share in the future). The Giants will need to address that hole at the top of the organization, since it’s the managing partner who represents the team on all relevant league matters, and a fairly important league matter is coming up in CBA negotiations. (The CEO title is entirely internal to the team organization.) Based on the lead time for the slam dunk approval for Ryan and the drawn out process for Jim Crane’s purchase of the Astros, approval of the Giants’ new managing partner candidate should take at least two months.

Now we all know how much Bud Selig, who gives the ultimate thumbs up or down on all ownership matters, likes consensus (or at least the appearance of it). He had no trouble rustling up the 30-0 yea for Ryan, since the fireballer has been a known quantity in baseball for over four decades and is not the type to rock the boat. He wants the same thing for the Astros, and he should get it for the Giants. Reservations about Crane’s previous business doings have tripped him up at least in some owners’ eyes. Just as reservations stand in the way for Crane, there could be at least one owner who stands in the way of 30-0 for the Giants: Lew Wolff.

Wolff has signaled on this site that he’s going to go along with whatever the Commissioner decides, so we can’t expect Grandpa Lew to pace outside Bud’s office wearing a sandwich board. Yet he doesn’t even need to formally verbalize his dissatisfaction regarding the Giants’ territorial rights stance in an owner’s meeting – everyone knows what he thinks and the threat he represents. This provides an opportunity – or rather, an excuse – to bring the two teams to the table to work things out. The Giants have the big holdout vote on the A’s moving to San Jose, and the A’s could be the dissenter in approving a new Giants managing partner. Obviously, the two decisions are not even in the same spectrum in terms of impact, but when you have a commissioner who strives for unanimity, even the smallest tensions can upset it. What’s a commissioner who normally sits on his hands to do? The last thing he needs is the appearance of disunity among his ranks, and a stalemate between the two Bay Area teams couldn’t come at a worse time, even if CBA negotiations are not expected to be particularly rancorous. Both the Dodgers and the Mets are on Lady Justice’s clock, which means no quick resolutions for either.

It’s unfortunate that the Giants chose to make this change now, before the season is officially over. They know that the CBA is coming up, they know that Wolff is looking for a crack in the door. They were probably looking to wait until after the big decisions were complete in November-December before they announced Neukom’s departure. Purdy foiled their plan with his reportage, and if it wasn’t for the very professional Giants media relations staff, he’d be persona non grata at AT&T Park. Nevertheless, that’s where we are now, and while it’s a leap to think that Wolff will aggressively pursue a course of action or lobby owners, that crack is there.

I’ll characterize Wolff’s chances at this point at 25-30% of getting what he wants, 50% of at least getting to the table. Considering where we’ve been for the last few years, I think he’ll take the odds every time.

08.20.11
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News for 8/20/11

Though this August may be unseasonably cool, there’s no doubt that it’s the dog days – for a team mired in third place and those of us looking for ballpark news. Nevertheless, there is plenty to discuss that happened this week.

First up is a very good assessment of where various football stadium efforts stand, courtesy of the Merc and Trib (BANG). Naturally, Santa Clara has emerged in the race due to its diligence in getting a deal done, despite the highly questionable finances of the plan. Oakland lags well behind, and potential funding sources has been identified in the process: $105 million in county transit funding, a Chinese investment group. Transit funding for the Raiders? Yikes.

You may have noticed some upheaval around Hegenberger Road this week when going to/from an A’s game. That’s because the infamous Oakland Airport Connector project started construction this week! The $484 million people mover will shuttle riders between the Coliseum/Airport BART station and Oakland International Airport, all for a more-than-reasonable $6 each way. That’s more expensive than it costs to ride from Coliseum/Airport to Millbrae. (To be fair, the enormous cost of the SFO BART extension has caused Millbrae-to-SFO to cost $4 each way thanks to a surcharge.) And it appears that the only reasons the project kept going all this time are that $95 million has already been spent and up to $250 million has already been committed, making it nearly as much of a boondoggle even if it were cancelled. Initially, the only two stations on the OAC will be the terminals at the airport and BART station. A third station could be built at Doolittle and Hegenberger if the funding surfaces. Double yikes.

Former Rangers owner Tom Hicks is being sued over allegations that he took tens of millions from the team to acquire parking lots around Rangers Ballpark. The lawsuit foreshadows future legal wrangling between MLB and Frank McCourt, who reorganized the Dodgers into so many holding companies and dummy corporations that it’s impossible to say how Dodger Stadium and its land could be extricated from McCourt at this point.

A preliminary report on Kings arena funding indicates that much of the burden will be addressed by user fees on everything from tickets to hot dogs. These fees could generate anywhere from $5 million to $20 million per year. While not fan-friendly, it is more general taxpayer-friendly than sales or parcel taxes. A more fleshed out proposal is due September 8.

Silicon Valley Sports & Entertainment, the parent company of the Sharks, announced 19 layoffs from the business side of the company. Included in the layoffs was longtime director of communications Ken Arnold. Executive VP of business ops Malcolm Bordelon characterized this as “pruning for future growth”. He can’t just be talking about the parking garage the team will construct north of the arena as growth. There’s something else to this. That something may be related to former CEO Greg Jamison, who left a year ago and was never formally replaced, perhaps going after the Phoenix Coyotes as early as next week. Should Jamison pursue the Coyotes, he will have to sell his share of the Sharks. It’s not difficult to see Jamison bringing with him trusted lieutenants such as Arnold and sales/marketing head Kent Russell. It would also provide an opening for the A’s, if they were to be extended the opportunity. Lew Wolff (or a surrogate) could potentially get a stake in SVSE and reciprocate by providing a stake in the A’s/Quakes, making the two ownership groups virtually joined at the hip – and more importantly, fully aligned. That would be important in planning for the next 20-30 years around Diridon, as the two parties would be expected to have a major influence on how the area is planned and developed even if those plans are well down the road.

In tangentially related news, HP announced on Thursday that it will cease development of webOS devices such as the recently launched TouchPad tablet line and Pre smartphones. It may also spin off its Personal Systems Group, which includes webOS (Palm) and its industry market share leading computers operation. Should HP spin off PSG or divest it, there would be an interesting sports-related ripple effect down the line: what would happen to HP Pavilion at San Jose? The naming rights deal at the former San Jose Arena expires in 2016, and not coincidentally, the name reflects a line of personal computers HP makes. In between those two names, the name for a year or so was Compaq Center at San Jose. That deal was done by the final Compaq CEO, Michael Capellas, prior to the HP-Compaq merger (done by Carly Fiorina). It’s possible that HP will keep the name, given that enterprise competitor Oracle has the name on Oakland Arena. Then again, Oracle has a similar choice to make that same year because its naming rights deal ran only a decade. Chances are that both companies will drop the naming rights deals for different reasons: HP because it will no longer have the consumer focus to justify the deal, and Oracle because Larry Ellison lost out on owning the Warriors. Often naming rights deals are reflections of companies’ CEOs, and this is no different.

Capping off corporate talk is billionaire Carl Icahn threatening to perform a coup at Clorox (again). Icahn, who is worth $12.5 billion and has his tentacles seemingly everywhere, is the largest shareholder of CLX stock with a 9.4% stake in the company. Earlier in the summer, Icahn attempted a $10.2 billion buyout of Clorox, all in the name of achieving greater shareholder value (his M.O. for everything). Rebuffed in that attempt, Icahn is now trying to replace the company’s entire board of directors with himself and 11 of his own hand-picked people. Something on this front may happen in November, when the annual shareholders meeting will be held. Icahn doesn’t always win, but it is thought in some corners that his power influenced the sale of Motorola to Google for $12.5 billion (coincidence), which was reported on Monday. Why is this important? If Icahn gets his way, it’s likely that Clorox will eventually be sold to the highest bidder, perhaps one of its competitors such as Proctor and Gamble. P&G would be interesting in that they were forced to divest Clorox due to antitrust concerns around the time the A’s moved to Oakland. And if Clorox is bought and/or sold, CEO Donald Knauss, the former Coca-Cola exec who has shown interest in East Bay/Oakland sports to the extent that there are rumors of a possible naming rights deal, is also not long for Clorox either. If Knauss goes, so does that deal. Naming rights deals often reflect companies’ CEOs, remember?