Category Archives: San Jose

03.03.13
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Pumping up the antitrust threat

Today’s Merc has a column by Mark Purdy which talks up the possibility of San Jose filing an antitrust lawsuit against the Giants (and perhaps by extension, MLB) to force the team to come to the table regarding territorial rights.

Leading the charge is San Jose District 3 Councilman Sam Liccardo, who also happens to be a leading candidate in the city’s 2014 mayoral race. Liccardo has sounded the alarm before and has now provided a peek into the City’s potential legal strategy. The question is one of whether San Jose has standing in a case against the Giants. Liccardo argues that it does based on taxes that can never be collected because the privately-financed ballpark wasn’t built. Assuming the City wins and is awarded treble damages, the City could be awarded $90 million.

The clever thing about this argument is that it’s essentially the same one the City of San Francisco has used in defense of the Giants’ territorial rights: the Port/SF are at fiscal risk in terms of reduced rent and tax payments if T-rights are given up. The difference is that the Giants-SF arrangement is contractual, while the A’s-San Jose arrangement is a projection based on its negotiating principles and a 2009 economic impact report. How seriously should a court take economic projections? When I dissected the report in 2009, I found that the projections of tax revenue were realistic, even conservative, whereas the projections of economic growth via multipliers were far less credible. That aside, if the tenets of the Giants’ and A’s arguments are essentially the same, and SF’s argument has merit because of a contractual obligation, should SJ’s argument also have merit due to restraint of trade? Again, I’m not a legal expert, and those I’ve talked to haven’t found a precedent for this kind of case, but on the surface there could be something to it. From what I’ve heard, the City has been exploring different avenues to pursue a lawsuit for over a year, so it’s not as if they haven’t done their homework.

This is different from attacking the sacrosanct nature of territorial rights, which is probably a more difficult task. If they’re using “direct economic impact” as a narrow framework for the case, MLB and the owners may be less inclined to worry about T-rights as an institution being threatened as opposed to the Giants having to fight their own battle. On the other hand, the case could set a precedent for other cities trying to lure teams, but in their case they’d also have to have the combination of a willing ownership group and a ballpark deal basically set, compared to a purely speculative matter. Besides, in many other cities’ cases they’re offering up large loans and other public funds, which upends the argument of a City making money from the deal.

Of course, the flipside of pursuing a case in this manner is that it more-or-less names the price for Santa Clara County: $30 million over 30 years or $40 million over 50 years. When you think about the financial impact to the Giants, that’s extremely cheap. If a hypothetical lawsuit were to proceed to trial, what’s to stop the Giants from whipping out their checkbook to simply pay for San Jose? For San Jose that would be a terrible outcome because then T-rights would become a matter contract between the Giants and the City for very little money. On the other hand, MLB owners might frown upon that because doing that would actually name a price for a territory, when the owners have thrived over the past few decades from not having a price named on any specific territory.

General Fund projections for a San Jose ballpark

General Fund projections for a San Jose ballpark

One of the frequent arguments against the lawsuit is that it would cost taxpayers money. If Liccardo’s right, a very prominent trial lawyer (not Skadden’s Allen Ruby, someone else) would take the case on contingency, in which case it wouldn’t cost the City anything unless the City won or forced a settlement. Such an arrangement would eliminate the concerns about taxpayer funds, though it should be pointed out that Mayor Chuck Reed, himself a lawyer, hasn’t been shy about going to court (Measure B pension reform, redevelopment, City vs. County) in the last year. I figure that Reed’s and Lew Wolff’s restraint in pushing the case with Bud Selig have prevailed over more aggressive maneuvers. If Liccardo won the 2014 Mayor’s race or if Reed suddenly felt less gunshy, this whispered threat could transform into a real threat very quickly, especially if MLB were named in the suit. Now, that’s no way to make friends in MLB, but forces in Tampa Bay sued and they eventually got a team out of it. Strange then, that all these legal problems were precipitated by a move by the Giants. They don’t call it hardball for nothing.

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Bonus reading: While doing research for this post, I came across two old Chronicle articles about the development of AT&T Park. First is an article titled “How Will Team Pay Off Debt” by Edward Iwata and Lance Williams (yes, that Lance Williams) and “Giants’ Pricey New Park May Lower Team Quality” by Jon Swartz. The second article includes quotes from the late Walter Shorenstein, who split from the Giants’ ownership group when he felt that AT&T Park was considered too risky.

02.28.13
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Playing the FUD game

Earlier today, a report from an Orlando sports talk show cast doubt on the Seattle Hansen-Ballmer bid, because according to the report, the $30 million nonrefundable deposit was never paid by the February 1 deadline. The “news” created a minor kerfuffle as fans and media in Seattle and Sacramento tried to make sense of it.

A few hours later, outgoing Kings co-owner Joe Maloof chimed in with his first statement to the media in months: The $30 million deposit was, in fact, paid.

The Orlando talk show host, David Baumann, hasn’t updated his story or tweeted any kind of response to this clarification. By the end of business Wednesday, the focus was on Sacramento Mayor Kevin Johnson’s State of the City speech on Thursday, during which he is expected to reveal names from the local ownership group (a.k.a “whales”).

Wednesday’s histrionics were a classic example of FUD (Fear, Uncertainty, Doubt). Someone misreports something or leaks info that could prove damaging to a competitor. The same thing happened last week with Deanna Santana’s gaffe regarding Lew Wolff’s Coliseum extension letter. Misinformation grabs headlines and spreads throughout the country and industry quickly. Timed strategically in an ongoing campaign, FUD can generate enough negative attention to sink many projects and initiatives.

That brings us to Andy Dolich, who has taken on the role of Comcast Sportsnet Bay Area’s “Business Insider”. As an experienced executive in the NFL, NBA, and MLB, Dolich is well-positioned to speak authoritatively on such matters. He’s seen it all – teams thriving (80’s A’s) and floundering (49ers, Vancouver-Memphis Grizzlies), franchise moves (Grizzlies again), and new venue development (also Grizzlies). He’s extremely well-connected and is still well-networked in the Bay Area, where he maintains his office in Los Altos.

At CSN, Dolich has taken on the role of Doubting Thomas regarding two of his former employers that are seeking new homes in different cities. The Warriors are planning their San Francisco waterfront arena, going so far as to ask for state legislation to help ease some of the red tape they’ll inevitably face on the road to a new venue. The A’s continue to be stuck in Lew Wolff’s quest to move the team to San Jose, dogged by the Giants territorial rights and uncertainty regarding the team’s (and city’s) ability to take all of the necessary steps to make the move. Time and time again, Dolich trots out claims that both projects, just like the 49ers stadium, will be too expensive, too fraught with legal booby traps, too difficult to pull off. He’s probably not intentionally doing this under some unsaid agenda, but what he’s doing right now is spreading FUD. It’s FUD that provides a glimmer of hope to Oakland fans and politicians hoping to keep teams at the Coliseum. Absent any real details for Coliseum City, it’s not difficult to see why some would latch onto negative notions of competing visions as hope.

For years, Dolich has been upfront in his desire to see teams stay in their cities, whether we’re talking about the Bay Area teams or the Sacramento Kings. Strangely, while he willingly presents a case for why a move can’t happen due to various obstacles, he nearly glosses over reasons why a team could stay long-term. Sure, Cisco Field could cost $600 million or more when factoring in all of the prep work. But an Oakland ballpark won’t? Howard Terminal’s costs will be huge and could spiral out of control just like Victory Court. A ballpark at Coliseum City, even if it’s by itself with no other tenants, will have to factor in the $100 million albatross of Mt. Davis debt. That’s not FUD. That’s reality. FUD comes from a vacuum of information related to any particular situation. Dolich even makes the mistaken claim that Cisco Field would require an EIR, even though one has been certified twice by San Jose to cover different capacities and use cases. That heavy lifting is over, with only an addendum required to address the actual stadium in finished form.

Going back to the money issue, that’s where we on this site frequently bang the drum against Oakland. It’s no secret that Oakland itself is an economic weak link compared to the powerhouses in San Francisco and the South Bay. When we talk about the uphill battle Oakland faces, that can be interpreted as FUD. Even so, it’s a consensus view that has been confirmed by city staff as recently as last week. Locals know it, the national media knows it, everyone knows it. It’s incumbent upon Oakland and its supporters to change that perspective – not by talking up the city, but by taking real actions to make people believe in the city. In the end, team owners need to figure out how to pay for their privately funded facilities. To cast doubt on Oakland may seem unfair, but it’s not as if it comes from a position of naïveté. Down in San Jose, we’ve talked about the challenges for some time: redevelopment, lack of city funds for infrastructure, territorial rights, land remaining to be acquired. Daunting as those may seem, they can be overcome via procedural means and nominal investment. That’s different from Oakland, where economic concerns make investors skittish about the market. It all boils down to a simple question: If you’re going to spend $500+ million on a stadium and you can’t depend on a public subsidy, wouldn’t you want to put the stadium in a place where you can ensure you can pay it off? If MLB has concerns about Wolff hitting projections on a San Jose ballpark, what must they think about the prospects of a ballpark in Oakland?

As long as we don’t see ground broken on a ballpark for the A’s, the war of words and FUD will continue. When San Jose Arena was built, the FUD surrounding the project quickly died. Same thing for AT&T Park and now the 49ers stadium in Santa Clara. The only way to kill FUD is to prove that that it’s baseless. By working. By thriving. By building.

02.20.13
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Shaikin stirs it up again

Amidst all of the Lettergate hubbub (credit to Mike @muppet151 for the term), now comes an article from LA Times writer Bill Shaikin called MLB gives tentative guidelines for potential move to San Jose. There’s nothing revelatory in the article, and nothing to indicate that anything would happen soon. Yet the headline, much like this headline, seems aimed to inflame or at the very least act as clickbait.

Then again, the information seems to back many of the assertions I made when I wrote about the territorial rights saga last month. Whether there’s real fire to this smoke or this is part of an ongoing misinformation campaign (also exercised by the other side), we won’t know for certain until it’s all over.

This got me thinking about how much compensation should cost. Shaikin notes that determination of any compensation award would be entirely within the purview of the commissioner’s office. Then it occurred to me that when Lew Wolff presented the San Jose concept, it was thought that the A’s might move to San Jose after the current Coliseum lease expires, or the 2014 season. With the A’s unlikely to be able to move until 2018, that’s four full seasons of forgone revenue at Cisco Field, while the Giants continue to lap it up at AT&T Park. That “opportunity cost” is offset somewhat by ongoing revenue sharing in Oakland, which would go away after the new ballpark opened.

With the Giants able to maximize their hegemony over the region and the A’s continuing to limp on at the Coliseum, any thought of the A’s being any kind of financial threat to the Giants has evaporated. And that, right there, may well be the compensation in a sort of unstated, off-the-books form. An extra $40 million to the A’s via San Jose doesn’t necessarily mean it’s $40 million less for the Giants. But it does mean that no money moves in the current situation, which is just fine with the Giants. $160 million for those four years, without Bud Selig having to make the tough decision? Sounds like how baseball would work.

What would happen in 2018? That would be up to whoever is the commissioner, probably not Bud Selig. Maybe there’s some nominal amount of compensation. My argument for a while has been that there won’t be, not because of what Wally Haas did for the Giants 20 years ago, but because MLB and the owners don’t want to set a price for a territory. Doing so would set a precedent for future moves into other territories. In the Giants-A’s case, the situation is unique enough to be difficult to duplicate, and by not setting a real price for Santa Clara County, the owners don’t create a market.

I’m not the only person who thinks compensation will be a trivial matter:

 

This is one of those times I wish I had a time machine so I could tell you how it works out. For now we wait. Forever we wait.

02.08.13
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Quakes to start building February 26

The San Jose Earthquakes are set to start building their 18,000-seat, $60 million soccer specific stadium on February 26, according to the Silicon Valley Business Journal’s Lauren Hepler. That comes four months after the venue’s world record groundbreaking ceremony.

Shovels set in the dirt prior to the October groundbreaking ceremony

The timing of the start of construction will give the Quakes roughly one year to complete the stadium. Major League Soccer’s regular season runs from the beginning of March until the end of December. The Quakes will want to do at least one preseason game that attracts as large a crowd as possible and another smaller event that it can use as a dry run. Plus there are those always fun “group flushing” tests and other tasks that need to be completed to properly test the facility’s readiness. A web cam will be placed at the site for fans to monitor construction progress.

Some smaller minor league ballparks have been built in a year or less, so it’s possible that the Quakes stadium can be finished in a year. By doing the bulk of the major work during the dry months, the last three winter months should be fine for buttoning up the building. Devcon, the same company working on the 49ers stadium in Santa Clara (along with Turner Construction), has long been tied to this project. If the progress in Santa Clara is any indicator, the Quakes’ new digs should proceed at a rapid pace. By comparison, Houston’s 22,000-seat BBVA Compass Stadium took 15 months to build, forcing the zombie-Quakes/Dynamo to play on the road for two months.

It’s funny that a stadium that will be about one-quarter the size of the 49ers’ stadium will also take 40% of the time to build. The Quakes stadium will be a far less complex building, with a single ground level concourse underneath the seating bowl. A long wait for the inordinately patient Earthquakes fanbase is nearing its end.

01.23.13
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Baer softens stance, new San Jose rumor emerges

Earlier today, Giants CEO Larry Baer was on the MLB Network show Clubhouse Confidential, reflecting on World Championships and Barry Bonds, when he spoke briefly about the A’s and their continuing ballpark problem. A couple of sharp observers were watching closely, including KCBS’s Joe Salvatore.

Fangraphs’ Wendy Thurm also picked up on this, and I was quick to reply:

I later qualified things:

So here’s what I know. Remember how Bud Selig imposed a gag order on both ownership groups going back over a year ago? That went part and parcel with the Commish bringing (forcing?) both parties to the table. Over the past couple of weeks I’ve heard from multiple sources that Selig apparently has other team owners lined up and ready to approve a move to San Jose. The remaining issue is, naturally, compensation to the Giants. Effectively, we can consider the battle half over for the pro-San Jose forces. Getting Giants ownership to back down from their no-negotiation stance is a major development. That said, determining proper compensation for the rights to the South Bay is not expected to be a picnic. Prior to this latest set of rumors, I had heard that the Giants were seeking $200 million or more to cede San Jose. In keeping with the A’s giving away the South Bay in the first place 20 years ago, A’s ownership wanted to keep the payment as close to $0 as possible. With such a huge gap, it’s hard to know what number would be mutually acceptable for both parties. They may be subject to binding arbitration, which is sometimes the case when settling team-team or team-league disputes.

The remaining issue is one of timing. Lew Wolff has been pushing out a San Jose ballpark opening date, first to 2016 and now 2018. Unless there’s some newfound sense of urgency on his part, he’s probably in no hurry to pay money for something he won’t be able to claim for several years. He’s probably not willing to make a huge lump sum payment for the privilege either. Then there’s this upcoming season, which is the last at the Coliseum without a new lease extension, and there have been no real talks about an extension to date other than Wolff’s request for a five-year deal. So there has to be determination of when to make an announcement that doesn’t impact the A’s finances and their status in Oakland in the interim. For those and related reasons, no one should expect an announcement anytime soon. Chronicle beat writer Susan Slusser checked in with Lew Wolff and another source, and got this out of the owner:

If it happens for real, we won’t hear about it until it’s all done, approved by the owners and Selig. Until then, keep dreaming.

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Added: A transcribed snippet of the Larry Baer-Brian Kenny interview:

KENNY: What’s the club’s view on the Oakland A’s attempt to go to San Jose?

BAER: Our view is that it’s really up to the commissioner and the baseball processes. We’re not involved talking about it. It’s really something that the commissioner has to sort out. Obviously the A’s need a new ballpark and we hope that they get one.

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Note: Clubhouse Confidential is on MLB Network today at 4:30 and 9:30 PM.

01.16.13
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George Gund III: 1937-2013

I never met George Gund. I’ve heard quite a few stories about him. He was a character, an iconoclast, a real fan who just happened to be rich. He lived the kind of lifestyle many sports fans would’ve liked to live, jetting off to tournaments and film festivals and pretty much doing whatever he wanted. To appreciate the man, read these four articles about Gund:

What I’d like to do is tie his career into the fabric of the Bay Area sports world. First, we have to start in Cleveland. Gund was what we’d now call a trust fund baby. He loved sports, film, and classical music. In keeping with those passions, he bought two hockey franchises, married a filmmaker, and sat on the board of an orchestra. He partnered with his brother, Gordon Gund, to buy the Cleveland Cavaliers. George was always the hockey fanatic while Gordon was the basketball junkie. It worked out pretty well for both in the end.

The journey, however, was long and at times quite difficult for the Gunds. After George Gund permanently moved out to San Francisco, he took a minority stake in the California Golden Seals NHL franchise. The Golden Seals were sold by Charlie Finley, who tried and failed to establish his “branding” on the hockey club (green and gold colors, white skates). Gund partnered with Mel Swig, who owned the Fairmont in SF (like someone we know). For various reasons, running the Seals wasn’t working out at the Coliseum Arena. Swig tried to put together an arena deal in SF, but that fell through. The Gund brothers bought the team from Swig and relocated it to their childhood home of Cleveland.

Except that the team, now named the Cleveland Barons, played out in the sticks at the Richfield Coliseum, about halfway between Cleveland and Akron. The idea was to leverage the fanbase from both markets, and it failed miserably. With the Barons and the Minnesota North Stars in danger of folding and the NHL still struggling against the rival WHA, the league decided to merge the two teams. The franchise remained the Minnesota North Stars and would have a good deal of stability for the next decade, including a Stanley Cup Finals appearance in 1981 (a loss to the juggernaut NY Islanders). The Cavs stuck it out in Richfield for over a decade before moving back to downtown Cleveland. The new home was named Gund Arena.

In 1991, George saw his opportunity to bring a team to the Bay Area. The NHL was starting its Sun Belt expansion phase, and it seemed a good time to put a team in the Bay Area. Howard Baldwin, who was already known as a sort of serial franchise owner, was pushing hard for the franchise to be in San Jose. George Gund stepped in to swap the North Stars for the rights to the expansion franchise, which eventually became known as the San Jose Sharks.

The Sharks played its first two seasons at the aging Cow Palace, an arena that was already outdated for both the Warriors and Golden Seals by the mid-70’s. A new, hockey-focused arena deal was in the works in San Jose, with recent transplant and future Sharks play-by-play man Randy Hahn playing a key organizing role. Gund had the opportunity to try the Oakland experiment again even though the Coliseum was small and poorly set up for hockey, or try to get an arena built in SF. He found willing partners in San Jose in Mayor Tom McEnery and numerous business leaders, all of whom were willing to do what it took to put San Jose “on the map”.

With two major franchise moves under his belt, George Gund could’ve been considered a carpetbagger. He didn’t live in San Jose, choosing to stay in SF and build an apartment inside San Jose Arena. (Frankly, I’d do it if I was asked to contribute.) Yet his legacy stands as a key figure who made San Jose major league and cultivated a great, appreciative fanbase – even though the Sharks mostly sucked during the Gund era.

Gund’s story as an owner is similar to that of Wally Haas, Jr. Both were scions of very wealthy families. Both were revered by their respective team’s fans. Both made great efforts to make their teams successful, business of the game running secondary to winning. Both were well known as philanthropists. Both bought teams from Charlie Finley. The biggest difference between the two was the state of their leagues – while MLB was still clearly the national pastime during the 80’s, the NHL had major competition, growing pains, and difficulty carving out a niche as the fourth major North American pro sports league. Haas was 20 years older than Gund and part of the established SF gentry, so I can’t imagine they ran in the same circles. But I imagine that when Gund took the elevator upstairs over the weekend, he was greeted by Haas and Franklin Mieuli. Mieuli handed Gund a cigar and the beverage of his choice, while Haas showed him the way to the lounge. They could talk about how the Warriors and A’s are resurgent, and that Gund got there just in time to watch his beloved Sharks start their new season. You’re home now, George. Relax and enjoy the game.

12.22.12
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“Temporary”

So what does “temporary” mean anyway?

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

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

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

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

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

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

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

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

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

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

12.12.12
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Gameplan: San Jose

Wait.

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.

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Then wait some more.

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Keep waiting.

For what?

Bud Selig. The State of California. The San Francisco Giants. Irwin Raij. Bob Starkey. Corey Busch. AT&T.

It’s a terrible feeling being helpless. Unable to control one’s destiny. At the mercy of other governments and governing bodies. That’s San Jose’s lot when it comes to bringing in the A’s. There isn’t much they can do about it. Sue MLB or the Giants and it would take years to resolve. Suing the state over the ballpark land deal would also take time. The best and most San Jose can do now is make sure the Earthquakes stadium gets built on time. The City needs to a productive example to the community that it can in turn use to sell to the public prior to a referendum. Consider it a feather in the City’s cap than a must-have.

One thing that could become a factor is the status of the A’s at the Coliseum past 2013. Though it’s expected that the A’s will sign some kind of short-term lease extension (likely brokered by MLB), San Jose should be ready to act if the A’s/MLB/Coliseum Authority can’t come to a deal. That may mean pulling some strings to make way for a temporary facility. If that’s what it takes, so be it. Aces Ballpark in Reno took a year to build. West Sacramento’s Raley Field took less than nine months and was planned to take only six months. San Jose should be prepared to act quickly on an MLB ruling, not the City’s strong suit.

11.15.12
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Did anything happen at the owners meetings today (11/15)?

Yes.

Selig also had this quote:

“I know people say ‘Gee, it should be easy to do,'” Selig said. “Well, the more they’ve gotten into it, the more complicated it’s gotten. But we’re headed for resolution.”

Ever the charmer and problem-sover, Allan H. “Bud” Selig.

10.26.12
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Tenuous grip

Athletics Nation honcho Tyler Bleszinski (a.k.a. Blez) put up his annual Billy Beane interview yesterday, and as usual it’s a treat. Fortunately, this offseason’s conversation was more occupied by what the team did instead of looking to the future. It’s a good read.

Once you’re done with that, contrast that conversation with one held with Mark “not Rincon” Shapiro and conducted by Fox Sports Ohio’s Pat McManaman. The 2012 edition of the Indians spent the first half of the season at or a few games within first place, only to sink like they wore cement shoes after the All Star Break. Their last winning season was in 2007, when the team went to the ALCS and squandered a 3-1 series lead to the Red Sox. Back then the team was well-stocked with quality youth in the field (Grady Sizemore, Jhonny Peralta, Victor Martinez, Ryan Garko, Franklin Gutierrez) and studs on the mound (C.C. Sabathia, Cliff Lee, Fausto Carmona Roberto Hernandez, Jake Westbrook). If the team could get over the hump, the malaise of the early 2000’s would give way to a resurgence, perhaps reminiscent of the mid-90’s clubs that dominated the AL Central. Instead, the team traded both Sabathia and Lee as they neared free agency, later traded Gutierrez, Martinez and Peralta while Sizemore and Hernandez were beset with injuries. It’s not a unique script. The A’s fortunes during that period played out much the same way, with Eric Chavez and Justin Duchscherer constantly rotating between the DL and the active roster, and Bobby Crosby simply not panning out after a RoY season. Poor yields on trades kept both teams from successfully rebuilding. It’s a script all revenue-poor teams have to follow, often with a boom season being illusory instead of trendsetting. Poor teams can afford to make fewer mistakes. Rich teams can afford to have Barry Zito suck for more than half of his contract until he redeems himself as a 4th starter. In Cleveland or Oakland, Zito’s contract is a pair of cement shoes.

That the Indians haven’t won the Series since the Truman administration is well-known. Not even a successful movie franchise has lifted the curse or healed the Cleveland fan’s psyche. No, it’s not as long as the Cubs’ endless suffering, but at least Chicago’s had other teams win in the meantime. The annual disappointment properly frames a snippet of the discussion between McManaman and Shapiro, as they talk about lagging attendance and the business side of the Indians. Shapiro was promoted to Indians president after the 2010 season, so he has his hands in more than just personnel work, now the task of GM Mark Antonetti.

Q: Is there a perception problem in town?

A: The biggest perception issue is probably the simplest one, which is we’re still to some extent always viewed in the backdrop of those ‘90s teams, when in reality that was a completely different business model. Those (Indians) teams were literally the Red Sox, the Cubs, the Dodgers. We were top five in payroll, as high as three. And our revenues generated that.

So I think there’s that general public sentiment that, ‘Hey if you win enough people will come.’ But that’s not necessarily true. We had a unique set of circumstances.

There was a new ballpark. That’s a huge multiplier. We hadn’t won in 40 years. That’s a multiplier. There was no football team in town. That magnified our revenues. The one that gets overlooked a lot is the industry was coming off a strike, so all of our revenues were amplified because all the other teams’ revenues were significantly tamped down at that point. So ours were amplified. Our spending power was amplified on the free agent market. And the city was economically in a better place. There were four Fortune 500 companies that were here that are no longer here.

Sounds familiar, doesn’t it? While the A’s didn’t have a new ballpark, they and the Coliseum Commission teamed up to make improvements to the Coliseum that made it arguably the best ballpark in the majors in the late 80’s. They were able to do this because the Raiders fled the stadium for Los Angeles. Wally Haas had the immediately competitive BillyBall teams of the early 80’s, then a rebuilding period, followed by the powerhouse Bash Brothers teams, during which Haas was a profligate spender. Dick Jacobs didn’t time the Indians’ rise to occur with Art Modell moving the Browns to Baltimore, but he sure took advantage of it. The Indians cashed in big by not having a major sport competitor in their midst other than the somewhat interesting Cavaliers. Like the A’s Moneyball era, the Indians’ run lasted about seven years. Among the Once the Browns were reconstituted via expansion, the novelty at Jacobs Field started to wear off and the more Clevelanders could turn their attention to an expansion team that, by nature of expansion, was doomed to struggle for several years. Like Haas, Jacobs and his brother David sold the Indians as the era was ending, and as a football team returned. In the twelve years since, the Indians have been above .500 three times and went to the playoffs once, that 2007 season. As long as Mike Ilitch and Jerry Reinsdorf own rivals in the division, they’ll always have more revenue and spend more than the Indians, just as the Rangers and Angels will in the West.

Shapiro then delved into what it means to spend more.

Q: That was a decade and a half ago, really. Fifteen years. Do you think people, the general populace still judges in those terms?

A: I think it frames that very guttural reaction, like, “Hey, if you win it’s already been shown people will come.” That’s what you hear all the time.

Q: Do you believe that?

A: I think more people will come. But the challenge is 2.2 million instead of 1.6 million doesn’t change the way we operate. Even that extra 500,000, 600,000 people, even if that’s $10-to-15 more million in revenue a year . . . one win in free agency is $9 million. So you’re not going to change the context. Again, I don’t think people want to intellectualize baseball, and I don’t believe you should have to intellectualize baseball . . . and we’ve made a conscious decision in most of our interviews not to get into these topics and just stay positive and talk about what our aspirations are.

But that revenue swing between 1.5 million in attendance and 2.2 million in attendance . . . meaningful dollars but not dollars that will have us plan dramatically different.

Q: It wouldn’t change the amount of money spent?

A: It would change the amount of spent to 15 million dollars a year. What does that buy you in free agency? Very little. One and a half wins.

The A’s pulled in 1.6 million in attendance in 2012. At $25 per head, a rise to 2.2 million puts the A’s at an extra $15 million in revenue, the top range of Shapiro’s estimate – and that doesn’t account for costs so it will surely be lower than $15 million. While Shapiro doesn’t want to go too deep into the numbers, he knows what every front office knows: that the poor teams are hurt doubly by the current economic system. Aspiring to an $80 million payroll is great, yet it provides zero guarantees, enormous risk, and the cost per win in free agency (at least with WAR as the leading statistic) is so out of scale that it’s absolutely prudent to spend wisely in the short and long-term. It also puts the lie to the idea that if the A’s just win fans will come out, and that will save the team in Oakland. Something more fundamental has to change for the A’s to get to the point that they are no longer poor. As much as many in the pro-Oakland group want to believe that can happen in Oakland, I remain skeptical that it can. Just look at Bud Selig’s throwaway line when he was questioned by Bill Shaikin the other day.

Q: Do you believe a new ballpark in Oakland is feasible?

A: I don’t know. That is one of the things we are checking.

Oakland boosters have had three years to make the case that Oakland is feasible. I know the obstacles facing San Jose: the Giants’ territorial rights and a referendum. In Oakland, the challenge is much deeper and just as impossible to ignore. How much can revenues be expected to rise? $40 million? $60 million? What will make the franchise turn the corner in that city? How much is enough to compete regularly? After three years, Selig remains as unsure about Oakland as ever. After three years, you’d think he’d have the confidence to hammer out a deal the way David Stern did with Sacramento by bypassing ownership, or by having Bob DuPuy deal directly with a municipality as was done in Miami. The fact that Selig hasn’t should tell you something, and that something is not good. Selig claims that he’ll be guided by the “best interests in baseball”. From an emotional standpoint that should mean saving baseball in Oakland. Unfortunately, emotion and business generally aren’t compatible.

The A’s 2013 doesn’t look like the Indians’ 2008. They don’t have a bunch of pitchers that are about hit their sixth year. The roster is pretty well cost-controlled through 2015, allowing for flexibility in terms of offseason and midseason trades along with free agent signings. For the collective A’s fans’ sake, I hope that the team doesn’t regress as so many others have done. Otherwise Beane’s interview this time next year won’t read like this year’s, it’ll read like Shapiro’s.