Category Archives: San Jose

01.24.11
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Talking legal actions (again)

A piece by The Bay Citizen’s Zusha Elinson suggests that Oakland may have a legal bullet at its disposal in its efforts to keep the A’s in Oakland. Elinson cites specific language in the original lease that may help Oakland:

“Licensee [A’s] shall not permit or cause to occur any event that may result in the transfer of its Franchise or any of its Home Games to any other city or location or do or fail to do anything which will cause its right to play major league professional baseball in the Stadium to be lost, impaired or transferred to any other city or location.”

I emailed Elinson to figure out where he got this language, as I couldn’t find it in the Seventh Amendment to the Coliseum Lease, which I posted over a year ago. He sent me a 121-page document which, lo and behold, contains the original 1995 lease agreement, the First and Second Amendments, and a bunch of exhibits pertaining to the various improvements that would be made for both the A’s and Raiders. If you’re interested in the grisly details, here’s a link (PDF). The doc has also been added to the Links section on the right. In my rushed reading of it so far, I found it quite illuminating.

Back to Elinson’s article. He spoke to two sides on the SF divide. Jim Hunt represented the Giants in both 1978 and 1992 in their attempted moves to Toronto and Tampa Bay, respectively. Louise Renne was SF City Attorney in 1992 and fought to keep the Giants in town until a new ownership group could be found, effort led by Walter Shorenstein. As would be expected, the two legal eagles don’t agree as to how effective the attempted legal roadblocks were in keeping the team, though it’s likely that at least employing a stall of some kind helped buy the City time in both cases.

Elinson goes on to suggest that Oakland may be able to employ a similar strategy based on similar language in both the Giants’ leases with SF and the A’s lease in Oakland. However, it’s hard to imagine how this would work. Unlike the Giants, the A’s have multiple ways of ending the lease with minimal if any penalty, either by simply staying through the end (2013) or by paying a termination fee if they want to leave anytime in the next three years.

After struggling to find the specific clause in the lease that Elinson cited, I found it in Section 9, titled “LICENSEE’S COVENANTS.” The term licensee refers to the A’s, licensor the Coliseum Authority. The section mostly has to do with keeping the A’s from losing its membership in the American League. As far-fetched as that sounds, it makes sense. If the A’s were routinely going with $10 million payrolls and otherwise making the team look like it wasn’t worthy of being in the majors (some would say this is happening), then Oakland might have just cause. That’s not really here nor there at this point. Section 9.2, which contains the language we’re discussing, is as follows:

9.2 American League Franchise. Licensee shall do all acts required to maintain its membership in good standing in the American League and to comply with all Rules, Bylaws, Regulations and Requirements of Major League Baseball and the American League. Licensee shall notify Licensor promptly after receipt of any information that Licensee is the subject of any action or contemplated action by the American League or any other person or entity that could affect Licensee’s right to continued membership in good standing. No change in the rights and privileges of Licensee as an American League member including the area or exclusivity of the Franchise Territory shall in any way affect Licensee’s obligations under this License. Except as authorized pursuant to Section 3, Section 16 or Section 22, Licensee shall not permit or cause to occur any event that may result in the transfer of its Franchise or any of its Home Games to any other city or location or do or fail to do anything which will cause its right to play major league professional baseball in the Stadium to be lost, impaired or transferred to any other city or location.

Before I do my non-legal (I am not a lawyer or legal expert) reading of this, I must point out that Section 3 has to do with use of the stadium, parking and surroundings, Section 16 has to do with damage done to the stadium due to force majeure (acts of God), and Section 22 deals with condemnation of the stadium (due to deterioration of some kind or eminent domain).

When I first read the part Elinson clipped (in italics), I interpreted it to mean that the A’s can’t do anything to the stadium that would prevent them from playing games there while the lease was in effect. For instance, the Quakes occasionally play games at the Coliseum. The A’s aren’t allowed to cover the baseball diamond with grass for a Quakes game right before an A’s homestand starts, since the time and cost to reconvert the field for baseball use would prevent the A’s from playing there for a lengthy period.

A broader reading of the language could potentially include actions taken by the A’s off the field, such as discussions with San Jose (or even Fremont), which would move the team away from the Coliseum. However, I think this is much too broad an interpretation. If that were correct, it would preclude the A’s from even talking to other cities about future moves even as they terminated the lease by one of the methods described previously. Terms of a lease don’t bind a team any longer than the length of the lease, whatever that is, and most leases have a termination fee. It’s really all a matter of whether or not that fee is too high to stomach (hello, Tampa Bay). Besides, the A’s couldn’t be in San Jose anytime before 2014 due to the lengthy ballpark construction process.

Since I am in no way a legal expert, I can’t say whether or not my take on this matter has any validity. It is clear that from reading the full agreement and the amendments, there are few contractual obligations keeping the A’s in Oakland. Unlike the Giants back then or the Rays today, the A’s aren’t locked in. They’re free agents after a few years at best. If this bit of language is the basis for a lawsuit to keep the A’s in town, things don’t look particularly good for Oakland. Then again, we’ve heard that their strategy is the same as SF’s was: threaten with a lawsuit, stall and hope for a moneybags savior. And we know how that turned out.

01.21.11
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Quick visual study in arena conversions

Last weekend HP Pavilion scheduled one of its occasional day-night event doubleheaders. The Harlem Globetrotters were in town for a 1 PM matinee, followed up by a 7:30 PM Sharks-Blues matchup. The Sharks/SVSE took a time-lapse video of the changeover.

The Globetrotters don’t attract sellout crowds, yet they routinely play in some of the largest, most modern arenas. HP Pavilion’s main tenant is a hockey team, so any arena floor or seating changes have to be done with preserving the rink in mind. In the Globetrotters’ case, there’s no need to pull out the special basketball risers that would be used for a NCAA hoops regional or NBA game. Instead, they use a set of low-rise risers while the end seats at the hockey boards aren’t used. When the big hoops games come, the end seats are retracted and replaced by a different set of risers. The change seen above requires a little less labor, so no big deal. If you tried to sit along the hockey boards at the ends, your view of the court would be obstructed.

At American Airlines Center in Dallas, the end seats are in a dual-rise system which allows for maximum flexibility. The risers are well-pitched for hockey games, but they convert into a more gradual pitch for basketball. The chief benefit of this arrangement is that none of the end basketball seats are on the floor – except for the ones closest to the court. Just about every new dual-sport arena has something like this in place. This one in Dallas or Portland’s Rose Garden or the Verizon Center in DC are perhaps the most extreme.

For perhaps the worst example of how to do this, you don’t need to go much farther than everyone’s favorite whipping boy, Power Balance Pavilion ARCO Arena. There, the floor’s bizarrely unique configuration has its sideline seats retract to create extra floor space. By doing this, all ice shows or hockey games have to played on transversely mounted ice. Since a basketball team is the chief tenant, ice is not a permanent floor feature, so the ice brought in from containers in sheet form and mounted much the same way a floor would.

There may actually be a way to pull this off in a more modern arena with the right technology. Unfortunately, ARCO’s not getting any of that stuff.

01.19.11
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Boras chimes in on Oakland/San Jose

We can now add über-agent Scott Boras to the list of people who hate Oakland, along Lew Wolff, John Fisher, Steve Schott, Ken Hofmann, Guy Saperstein, and just about everyone else in league with A’s ownership over the past 15 years. Ken Rosenthal reports that Boras, well, his words speak for themselves.

“The idea that we’re here, sitting on our hands and not letting this franchise get going is detrimental to the game,” says Boras, who grew up in Elk Grove, Calif., near Sacramento.

“A few franchises need to be evaluated and examined. Oakland can immediately improve and become a success if moved to San Jose. You would then have two well-run and successful franchises in the Bay Area.”

Now, let’s not read anything more into this than Boras’ own self-interest. I doubt he’s out there, rubbing his hands, actively conspiring to destroy Oakland. I doubt he cares for either Oakland or San Jose. What he wants is the ability to have one more suitor who could offer a nice, fat, nine-figure contract, whereby Boras gets his cut. That’s it.

It’s interesting that Boras’ comments were so pointed, when Joe Stiglich reported over the weekend that he talked to two unnamed agents who felt that the Coliseum’s condition being a factor in signing free agents was overblown. Instead free agents were turned off by the organization’s lack of commitment to winning. We’ll see how that equation changes this season and next.

The rest of Rosenthal’s article pretty much rehashes the current situation, though he editorializes quite strongly in favor of San Jose.

The three other AL West clubs — the Rangers, Angels and Mariners — play in terrific markets with terrific parks. The proposed 32,000-seat stadium in San Jose would be the smallest in the majors. But the A’s average home attendance would almost double if they filled the park, and premium seating and luxury suites would provide additional revenue.

It’s time. It’s past time.

“In the end, this is hurting baseball,” Boras says. “It’s depriving baseball players and baseball fans of a successful franchise. That’s wrong. We need to correct that.”

The solution is within reach.

Somewhere, the commissioner is twiddling his thumbs.

(Thanks gojohn10 for the link.)

01.19.11
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SJ RDA Board Special Meeting – Decision coming Tuesday

Update 1/20 12:15 AM – Governor Brown spoke at League of California Cities event, indicating that the recent moves by cities and RDAs to protect and assign redevelopment funds may be illegal.

Brown characterized the difficulty the state faces this way:

“I have to tell you, none of the choices are easy,” Brown said at a hotel across from the Capitol. “We haven’t got the votes on the budget. And you might win on redevelopment.

“But then we take something else away. And then the wheels come off. We don’t know exactly how this is all going to unfold,” the new Democratic governor said. He invited local officials to suggest alternatives.

Wonder if Brown will listen to multiple voices calling for oil severance (drilling) fees.

San Jose’s Redevelopment Agency Board (the City Council/Mayor) have pushed the big item – how to protect RDA funds – out to next Tuesday (1/25). A new co-op agreement to be written by the City Attorney should be available by then, and they will be able to vote on how RDA responsibilities will continue.

RDA head Harry Mavrogenes hinted that the co-op agreement would allow all existing and under contract projects under the control of the RDA would be transferred to the City. He didn’t say anything beyond that. I take that to mean that San Jose will take a page out of Los Angeles’ book and allow for the creation for a successor agency (which Gov. Brown has said would be allowed).

Mayor Reed mentioned that he and the other mayors of the 10 largest cities in the state would meet with Brown on January 26. Whether this means they’d be throwing their weight around or groveling isn’t clear. One person in the crowd mentioned that the City’s lobbyist in the Capitol has been keeping tabs on whether any new legislation that would affect RDAs is in motion. So far no dice, but anything could happen at any time after this week. Whatever bill the legislature and the governor approve could stop RDA activities immediately, it could stop things retroactive to a specific date. They’re that scared. Reed laid out the City’s position:

(The state) Taking money this year and promising to give it back next year is one of the oldest tricks in the budget gimmick book. And I can’t put any faith that if they take redevelopment funds that we’ll ever get a nickel of it back, that Santa Clara County will ever see a nickel of it back, because the legislature doesn’t have a great track record of doing that even though they have promised it.

The upshot is that Tuesday is the day of reckoning and will be followed by the regular City Council hearing to approve the new co-op agreement. So far I so no dissension among the ranks, leading me to believe that it’ll be approved. Tuesday also happens to be the date of the Good Neighbor session, so the Council Chambers should be full of RDA “supporters” and detractors.

As far as the ballpark goes, the RDA and/or City would have to be under contract with the A’s really really soon to be able to escape the raid. As much as the cities are talking about taking legal action to stop the raids, getting an injunction is not exactly a viable short or long term strategy, so they can’t assume that they’ll be able to get a lengthy enough delay to complete certain projects. They need to plan for several years from now.

I wonder how often Selig is getting calls from Wolff about this. Selig is not known for reacting well under pressure.

01.18.11
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Redevelopment Agencies hit DEFCON-1

Last week, Los Angeles took steps to protect nearly $1 Billion in RDA funds from the state. Now it’s everyone else’s turn. Redevelopment agencies all over California are scrambling to come up with strategies to keep themselves intact or insulate themselves from the inevitable raid or shutdown. In Escondido, the RDA is debating whether or not to raise bonds for its $50 million ballpark project early. The Merc’s John Woolfork reports that tomorrow, San Jose has scheduled an emergency meeting of its RDA to figure out its next steps. There’s only one major agenda item:

1.1 In response to the Governor’s proposed State budget package and proposals for FY 2011-12, which include recommending the elimination of redevelopment agencies “to realign the delivery of state services to counties and local governments” and eliminate a projected State deficit of $25.4 billion the City Manager and Agency Executive Director recommend the following actions intended to provide flexibility to fund the Agency’s existing debt obligation and to reaffirm the Agency’s obligations and appropriation of funding for its previously approved FY 2010-11 Operating Budget, its Capital Improvement Plan and other contractual obligations.

Recommendation:

(a) City Council and Agency Board by motion, makes a good faith, reasonable determination by a 2/3 vote of the body that an issue has arisen that must be resolved in less than 4 days. (8 votes required)

(b) Approval of a Cooperation Agreement between the City of San Jose and the San Jose Redevelopment Agency relating to funding certain Redevelopment Agency capital improvements, public improvements and obligations located within currently designated redevelopment project areas.

(c) Adoption of resolutions by the Agency Board, the San Jose Financing Authority Board and the City Council authorizing the Agency Executive Director, the City Manager, the Executive Director of the Financing Authority and the Housing Department Director to negotiate and execute agreements necessary to protect and secure existing obligations and to acquire, construct, develop and implement projects specified in the Agency and City’s approved capital improvement plan and City’s 5 year affordable housing plan as specified herein.

(d) Adoption of a resolution by the City Council making certain findings and determinations as may be necessary.

(e) Authorize the Director of Housing to negotiate and execute agreements in the amount of $1.43 million of Low- and Moderate-Income Housing funds (“20% funds”) to Eden Housing or its affiliate for the Ford & Monterey Special Needs Housing Project (“Project”) in order to meet federal Stimulus (“NSP2”) timeframes; and make a finding that the use of 20% Low- and Moderate-Income Housing Funds outside a redevelopment project area for the affordable housing to be provided by the Project and its Phase II benefits the Agency’s redevelopment project areas.

The RDA Board/City Council is giving themselves until next week to figure all of this stuff out. This includes:

  • $180 million in annual tax increment revenue, which could go away in a few months
  • $54 million from additional sources for the next two fiscal years
  • $200 million in land assets, not including the five properties being sold to cover the remaining Diridon ballpark site acquisition
  • $58 million in cash available at the moment
  • $58 million in planned capital expenditures
  • $200 million in annual debt service
  • $53 million in additional payments and operating costs for this year and the next two fiscal years

I’ll be at the meeting, which is scheduled for 3:30 4 PM at City Hall Council Chambers. It should be messy. I’ll have the audio recorder handy.

Also from Woolfork’s article (via the Argus’ Matthew Artz): Fremont approved $140 million in redevelopment bonds, though with so many cities looking to raise money and the TIF sources being threatened, there’s a legitimate question as to who will buy them with all of the uncertainty.

01.14.11
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Wolff steps up as potential Downtown SJ land buyer

Someone’s eager to wrap things up. And his name is Lew.

Tracy Seipel reports that Lew Wolff has emerged as a potential buyer for some property in downtown San Jose that the RDA just put up for sale. This shouldn’t be a surprise, I hinted at this last Friday. Again, this seems like a form of quid pro quo, with Wolff benefiting in the end as AT&T did with their Santana Row land deal. It’s ugly, and it’s not the way things should be done. However, Wolff himself said he was willing to go to great lengths to make this happen. From October:

While he and agency officials both said no details of a possible land purchase by Wolff had been discussed, the team owner pledged: “Whatever issues we run into, we will figure out how to get them done. We will not let anything stand in the way of getting the ballpark done.”

Noted.

In the last week, the deadline to get everything done for a ballpark deal has shrunk from 18 months to 12 to 9 to 6 and now possibly 2-3 months, which is straight crazy. I’m not going to blame the Giants for this, they did what they felt was in their best interest. It’s the continual, inexplicable delay on Bud Selig’s part that has led the A’s to this being what may be their last chance at a ballpark anywhere in the Bay Area or Northern California. As ever, we have no idea what’s going on within The Lodge. With both Wolff and Mayor Chuck Reed regularly in touch with Selig regarding the rapidly changing redevelopment landscape in California, Selig may finally have the proper impetus to… act. Which sadly fits him to a tee.

With the demise of big city redevelopment near, Merc columnist Scott Herhold took the time to assess how San Jose, with the second largest RDA in the state (behind LA), has fared in its redevelopment initiatives. While he considered it a mixed bag, he felt it was better to be large and audacious with the money than for the city to stagnate and eventually crumble. He also linked to a 2006 pictorial presentation (PDF) made by the RDA, which shows how downtown looked in 1975 (the year I was born) and now. They’ve managed to turn a decaying urban center that was more famous for night cruising by local youths down First Street into a place that has stuff to visit, like fantastic library shared with SJSU, a world class arena, several good museums. Yesterday I was strolling through Paseo de San Antonio (between the Fairmont buildings) and I noticed Sharks fans mingling with attendees at the annual Furries convention. Well, maybe they weren’t actually mingling. At least they were in fairly close proximity. Anyway, who’d ever thought that was even possible in 1975?

Below are two pictures of the Plaza de Cesar Chavez area (Park Ave & Market St), first the 1975 photo and then the 2006 photo.

City Hall was once in the park

The ground level part of the curved building is part of what Lew Wolff may purchase, he already owns the upper floors

San Jose may be forever sleepy, but it has still come a long way.

01.14.11
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News for 1/14/11

I ducked into a Starbucks in downtown San Jose on Thursday afternoon to finish the latest CBA Talk entry. While I was proofreading it (it happens every so often), a gentleman at the next table over caught a glance at my screen and asked me what I was blogging about. I explained to him what this site was and how long I’d been at it. He then introduced himself as Bill Bradley – not that Bill Bradley – the Bill Bradley who formerly labored as the sports editor for the Sacramento Bee. He just launched a sports news site, 27×7.com, only 10 days ago and he’s already quite prolific. Bradley was in town working the Sharks game, and while he’s based out of the Sacramento area, he has expansion plans in the works (the “27” stands for 27 markets). After he headed out to HP Pavilion, it got me thinking about the incredible amount of downsizing in the news industry. Whether it’s columnists getting cut and going cut-rate to cable networks, or entire content providers like AOL Fanhouse going practically belly-up, it’s a rough time to be in the sports news game. Good luck to Bill and all of the others out there, hopefully your hustling will be kept to a minimum. On to the news.

  • Added 11:13 AM – The Merc’s Tracy Seipel reports that San Jose is racing against the clock, with a deadline to complete its work (sans vote) coming as early as March.

    The ballpark plan in particular could become more difficult if Brown shuts down redevelopment. Last week, San Jose’s agency announced it was selling five parcels of land and using the proceeds to buy other properties within the ballpark site near the main rail station.

    City officials said they’re pushing ahead with the plan to assure Major League Baseball they can complete the site regardless of state politics. Redevelopment chief Harry Mavrogenes said the sale of the agency’s parcels should be done by June 30.

    State finance officials, however, said Tuesday that if the Legislature were to vote as early as March to disband the agencies, it could issue an order to halt all agency contracts immediately and not wait until the next fiscal year begins July 1.

    Even if Mavrogenes beats the state’s deadline — and baseball officials agree that the Oakland A’s should be allowed to move south — voters would have to give permission for the city to use the downtown land for a ballpark. It’s an open question whether they’d be as inclined to bless a park if there were fewer limitations on how proceeds from agency land sales could be used.

    Mayor Chuck Reed said the council will fight Brown’s proposal, which state finance officials say will return at least $1.9 billion annually to schools, cities, counties and special districts around the state beginning in 2013.

    This paints a worst case scenario, but it shows how serious the redevelopment collapse is, and how its implications are far-reaching. Brown talked about turning off the tap for projects that weren’t already under contract. San Jose is definitely not there yet. Already, LA has allocated $883 million of its own RDA funds to projects in anticipation of a raid and shutdown. LA has also agreed to convert the current RDA into a city-run non-profit entity after the agency is officially disbanded (there is an allowance for a successor, though what form it would take is unclear). I suspect that Wolff has communicated the gravity of this situation to Selig. Will it matter to Selig and the owners?

  • There are plenty of reasons to dislike Ignacio De La Fuente, such as his being a career machine politician. His DUI arrest on Christmas Day was not the result of a smart decision. That was followed by a lot of bile, people hoping IDLF would lose his job, people wishing the worst on him – mostly because he dared vote against the Oakland City Council’s $750k expenditure for the Victory Court EIR. Well, now he won’t be charged because of a “lack of evidence.” Officially, IDLF didn’t comment on the matter, but I imagine on the inside he was going, “How ya like me now, haterz!”
  • Speaking of the Oakland City Council, Larry Reid was elected Council President. You may not remember that Reid proudly proclaimed that he’d stake his career on the Coliseum North plan. Thankfully for him, when that plan fizzled out Reid’s career was not irreparably damaged. If there’s a person on the City Council who can be described as the most gung-ho about Oakland’s pro sports franchises, it’s Reid. Having Reid lead the charge won’t make up for a loss in redevelopment funds. Can Reid deliver in other ways? We may find out in due course.
  • Lew Wolff took time to shoot down rumors – made up out of whole cloth by Buster Olney – that he might be interested in buying the Dodgers from the legally challenged McCourts. The most interesting exchange regarding this non-news came from the Boston Globe:

    “Lew was in touch with me as soon as he became aware of the rumor that started to circulate a few days ago to make sure that I knew there was nothing to it,” McCourt wrote in a text.

    McCourt saw Wolff at the owners’ meetings in Phoenix and they discussed it again.

    “I have no idea where this one originated,” said Wolff from his cell phone at the owners’ meetings. “It’s completely untrue. We’re right in the middle of trying to get the go-ahead from Commissioner Selig about moving our franchise to San Jose. That’s all I’m thinking about. The Dodgers have an owner.”

    But we like our conspiracy theories, Lew! /s

  • Union Pacific bought 160 acres of land at the north and south ends of NUMMI. Hope all the NIMBYs there like the prospect of a railyard in their backyard. Because if it’s an intermodal hub like in West Oakland, the potential health issues could create a volcano of outrage the size of which will make the ballpark hubbub look like a neighborhood bridge game. Note: South Fremont is home to large warehouse/light industrial area, which makes it prime for such an operation.
  • The not final A’s promotional schedule is out. It includes bobblehead days for Rickey (4/30), MC Hammer (7/17) and Ray Fosse (8/13). Remember when the A’s also did collectable figurines for a spell? Did anyone like those?
  • I expect to renew my Fielders Choice season ticket plan, though I will be moving to the Value Deck.

The rest of the CBA Talk series will be posted throughout the weekend.

01.10.11
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Brown to Redevelopment: Your days are numbered

Governor Brown just finished his press conference, where he explained his budget plans. Brown is pushing for $12.5 Billion in spending cuts, and he is asking the legislature (and the voters) to extend temporary income, sales, and car taxes that are set to expire this year. As for the redevelopment golden goose, Brown said that existing (already bonded) projects are safe. New projects, on the other hand, are in trouble. Brown wants to “phase out” redevelopment agencies and start taking back $1.7 Billion in tax increment annually. What it comes down to is this: If you don’t have your project started and well underway in the next 12-18 months, you are screwed. There continues to be some debate as to how the governor could eliminate RDA’s, with the agencies enshrined in Article 16 in the Constitution and recently passed Prop 22 acting as protection. The governor seems to be saying, “If we get rid of RDA’s, there are no more protections.” Yow. Okay, who would this impact? Let’s put together a list:

  • San Jose Diridon Ballpark – While the City is speeding up land acquisition, what about Autumn Parkway and other mitigations? Will the funds be in place for the rest of the project, or will it get kicked down the road?
  • Oakland Victory Court Ballpark – Oakland already had to deal with a tight schedule based on a 2015 Opening Day. Now, Oakland will have to get its bonds raised and land in place right around the time an EIR is certified, or even before certification. Expect for Oakland to push MLB harder to decide in its favor, even without anything significant in place.
  • 49ers Stadium in Santa Clara – The quasi-public stadium authority would have to get its loans and/or bonds in place in the next 18 months as well.
  • New Raiders Stadium at the Coliseum – A new stadium is practically a nonstarter given the funding questions. Expect the Raiders to look south sooner rather than later.
  • Downtown Los Angeles NFL Stadium – The now $1.5 Billion stadium (+$500 million in the last two weeks) would require $350 million in bonds, which won’t be available if RDA’s go away.
  • City of Industry NFL Stadium – Ed Roski’s plan involves his own land, but much of the stadium cost would be funded by tax increment on the land improvements, thanks to much of the city being one large redevelopment zone. Uncertainty regarding RDAs makes the prospects for building infrastructure for the stadium and ancillary development, murky at best.
  • Sacramento Kings Arena – As Kevin Johnson’s arena task force continues to talk things out, time is running out, especially for an arena at the long dormant Railyards.
  • San Francisco Arena – Land south of AT&T Park could serve as the site for a new arena. Controlled by the Port and with development rights given to the Giants, it’s likely that any dev plan there will require at least the same kind of public outlay that made the ballpark deal work. Proponents would have to find another source for that funding.
redev_cut

Slide captured from the governor’s briefing

The message is abundantly clear: If you want to get something built, get a move on. (BTW, take a look at the counter on the right today. Eerie.)

01.08.11
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San Jose selling $25 million of downtown property for ballpark

So, what was that we were saying about San Jose’s Redevelopment Agency being broke?

Well, it’s true. From an operational standpoint, they’re very close. From an asset standpoint, not really. RDA head Harry Mavrogenes authorized the sale of $25 million of property in the downtown core, or 11% of its land holdings. The Merc’s Tracy Seipel has the details.

Said Mayor Chuck Reed: “A lot of people have been wondering how we’re going to put together the transaction to do the land for a baseball stadium. I think this is an answer. And it’s a message for Major League Baseball — just in case they had any questions.”

In an interview with the Mercury News, Mavrogenes acknowledged that the governor’s proposal to eliminate redevelopment agencies could throw a wrench in the city’s plan to acquire the land for the ballpark.

He and the mayor said Friday that the agency’s land-sale plan has been in the works for at least a month. Reed added that the memo about the plan was prepared in advance of a discussion he has been trying to have with MLB Commissioner Bud Selig about “how we can finish the land deal.”

While the $25 million should cover the land, there’s still the cost of the Autumn Parkway project, which will probably exceed whatever is remaining (depending on how many corners are cut).

Interestingly, two of the properties are adjacent to Lew Wolff’s Fairmont Hotel. One is the parking garage underneath, while another is a small retail strip underneath the hotel’s annex, which has a McCormick & Schmick’s restaurant as one of its tenants. Two others are parking facilities. The final property is an undeveloped lot.

One way to think of how San Jose approaches redevelopment is like what Alan Mulally did with Ford several years ago. In what is now considered a highly prescient move, Mulally arranged for Ford to borrow $23.6 Billion to help aid the company in its restructuring efforts. GM and Chrysler chose to try to tough it out, and the economic collapse killed them both in the process. Instead of having to raise new bonds for every project while dealing with whatever the market conditions are at the time, San Jose has chosen to buy large properties early on with the idea of reselling them down the road – for profit or future project. While there is a legitimate argument as to whether or not this is how the RDA should operate, the fact is that San Jose has been in the position to make key moves when the time was right. Now they have assets they can sell as needed, and unlike Oakland, they don’t have to raise bonds or worry as much about the state impacting their timeline to raise bonds (also Oakland).

Does this mean San Jose is a done deal? Of course not. But it is yet another small yet consequential move that comes from a strategy borne of small yet consequential moves. Judging by the reactions of Wolff and Baseball San Jose head honcho Michael Mulcahy, they’re not small moves in the least.

01.06.11
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The Big Not So Easy

I’m multitasking this evening. On the plasma is basketball, first the Warriors and their furious 4th quarter comeback victory over New Orleans, and then Lakers-Suns. On one LCD monitor I’m watching the Microsoft/Steve Ballmer keynote address at CES. Some graphics are being put together on another screen for this post and a special project I’m working on. I’m watching my Twitter feed regularly, and I’ve got dinner in the oven.

Now, thanks to commenter Vince, I have to follow some new rumor about Larry Ellison’s interest in the NBA-owned Hornets. A blog entry by Forbes sports business guy Mike Ozanian indicates that Ellison could pursue the team with the intent to move it to San Jose. There’s a possible revenge/rivalry angle to the deal, as Ellison failed to buy the Warriors while the Lacob-Guber group put up the winning (and on-time) $450 million bid.

First off, let’s synopsize the Hornets’ situation. The team has struggled to get decent attendance in the post-Katrina era, despite having a decent team, a new arena, and a bona fide superstar in point guard Chris Paul. In three full seasons since returning from Oklahoma City, the team has averaged only 15,402 per game. This season, the Hornets average only 14,086 through 19 home games. Worse, the team has an out clause in its lease at New Orleans Arena in which it can leave the Crescent City if the team averages less than 14,213 during a 13-game stretch from December 1, 2010 through January 17, 2011. So far, the results aren’t inspiring if you want to keep the Hornets in town.

Someone may have to go out of pocket and buy 1,000 seats for each of the next two games to reach the target.

Hornets fans tend to respond to the schedule in a similar way to A’s fans do: show up for “event” games such as the Lakers matchup in the table above. Tonight’s crowd against a mediocre Warriors squad was a poor 13,532. Fans will have to average 15,428 over the next two games to reach the minimum 14,213 over the 13 games. Orlando should bring in a good crowd, Toronto most certainly won’t. Fans have gone as far as putting together 2-for-1 ticket deals to help get the count over the hump.

Last month I described the NBA’s purchase of the team from George Shinn an Expos-style deal. With the team bought for $310 million, the league and the other 29 owners stand to make a serious profit if the team does sell for $400 million or more. The league’s intent is to keep the team in the Crescent City, or at least that’s how it appears. Previous minority owner Gary Chouest was supposed to put together a group to buy the team, but his livelihood may have taken a hit after the BP Deepwater Horizon disaster. If a local buyer can’t be found – a process that probably won’t last more than a year – the Hornets will be up for grabs.

Ozanian’s piece puts the figure to move the Hornets to San Jose at $450 million, though that includes an unspecified amount of compensation to the Warriors for invading their 75-mile radius. The last NBA team to encroach upon another’s territory was the Clippers in 1984, who moved from San Diego after six ho-hum seasons at the Sports Arena. While the Lakers were not adversely affected by the constant cellar dwelling Clippers, there’s no guarantee that the Warriors won’t be affected by a second NBA team in the Bay Area. It would be a shock if Lacob-Guber didn’t level a sizable lawsuit at the league, trying to protect their near half-billion dollar investment. The NBA may have the most hard-nosed commissioner in pro sports in the form of David Stern, but he doesn’t have an leaguewide antitrust protection in his back pocket as Bud Selig does.

And Ellison won’t be the only interested party. The aforementioned Ballmer (whose keynote at CES was not exactly riveting) is Seattle’s Ellison, a man expected to bring the Sonics back to life. Unfortunately for Seattle, the lack of what Stern considers an NBA-quality arena in place is a considerable hurdle for the Emerald City. At this point, Seattle is just as hostile to new public sports venue financing as California is. Kansas City remains a town with an arena but without a white knight to bring a team in.

The upcoming labor situation in the NBA could be a determining factor in terms of when and to whom the team gets sold. Both sides are gearing up for a lockout, and if it proceeds like the one that shortened the 1999 season to 50 games, the timeline could be stretched out a few more months. The league could wait until a new CBA is ratified, as the Hornets could be more valuable with greater cost certainty ingrained in the new agreement. Then again, they could try to sell the team as quickly as possible, though this isn’t a league that is hurting for cash.

All of this leaves San Jose is a strange situation. With the specter of another redevelopment fund raid looming, San Jose has to pick and choose where it spends. The quest for baseball has spanned over five years in this attempt alone and there is still no light at the end of the tunnel. While the land investment for a ballpark would have greater potential (2+ million visitors per year vs. 750k for hoops), an investment in the arena and land for a Hornets practice facility may be a more prudent way to spend RDA funds. Even in better fiscal times, I can’t see San Jose having the resources available to attract both the Hornets and A’s simultaneously unless Ellison or SVSE footed the bill for all necessary HP Pavilion renovations and the practice facility (around 3 acres) as well.

The corners are vacant due to an older, less flexible seating configuration

As for the state of HP Pavilion, I’ve said before that it’s a good arena, but as it stands currently it wouldn’t be in the upper half of venues in the league. The seating bowl ends would need dual-rise seating tiers to maximize capacity and sightlines for basketball. The technology would also help change from hockey/arena football configuration to basketball more quickly. Yes, I said arena football, as the Sabercats are due to return to the AFL this March.

The biggest change may be in the area most fans don’t get to see. NBA standards don’t just include seats and suites, they include locker rooms and related amenities. The arena’s facilities are good, but they’ll have to be expanded just to accommodate an NBA team properly. While the Hornets won’t need everything listed in the plan below due to a degree of overlap, you get an idea how much space is required to house a team.

Note the size difference between the home and visitor locker rooms

It’s hard to say where and how an arena expansion could occur. It’s been 15 years since I was last in the bowels, covering the Warriors as a stringer while the team played its lone season at then San Jose Arena. I fondly remember one preseason game in which press row was placed in the hockey benches for some reason. Anyway, while there is some flex space at event level, it’s unclear whether that would be enough to make all of the necessary renovations.

In the long run, the biggest winner could be San Francisco and the Giants. If the Giants are intent upon building a new arena in SF, they’d be able to play Lacob-Guber and Ellison & Co. against each other in order to get a good deal for themselves, whatever that may be. Of course, by the time they’d get to make the deal they probably won’t have RDA to help with cheap or free land. You can’t win ’em all, I guess.

P.S. I would be remiss if I didn’t note how ironically bizarre it would be for the Ellison to send the Hornets to Oakland to play twice a season at the arena named after his company, while playing home games at the arena named after the company he just blew up publicly.

Also, Ellison has clarified (via the Merc’s Brandon Bailey) what his intent was with the Hornets:

“I did offer $350 million” for the New Orleans Hornets, Ellison told reporters, adding that he was “slightly outbid” by the National Basketball Association when the league bought the bankrupt team last month from owners George Shinn and Gary Chouest.

Ellison’s comments put a damper on the hope floated in a Forbes blog post that he planned to buy the team and move it to San Jose.

The prospect was warmly greeted by San Jose officials, intrigued with the notion of another pro franchise moving to the city, but Ellison flatly said the report was “not true.”

More grist for the mill.

P.P.S. An expansive article by the Merc’s John Woolfork about San Jose’s RDA just became available. The agency, which is the second largest in the state, pulls in $185 million in property tax receipts yearly.