When does 120 minutes equal several days?
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Check back here Monday to find out.
New NFL CBA outlines “stadium credits”
While the mad scramble to cut, sign, and trade players happens this week, a clearer picture of stadium financing has also emerged. Last week, Tim Kawakami wrote about so-called stadium credits that would be available for cities that embarked on building new venues. Now, thanks to further digging by the Chronicle’s Kevin Lynch and by Niners Nation, the mechanism makes a lot more sense.
In the previous CBA, owners took $1 billion off the top for stadium expenses. This time, the players wanted a piece of the whole pie. To make that happen, they had to agree to share the burden of stadium construction costs. That means cutting their share of the new revenue pie from 50% to 47-48%. Up to 1.5% of total revenue will be set aside as a credit for new stadia. If the total revenue for the 2011 season were $9 billion, the credit would be worth around $135 million per year.
The credit is much like a tax credit a person would get for buying an electric car. It’s only available once the vehicle is purchased. Along those lines, the stadium credit would only be available once a stadium broke ground.
It’s important to note that the credit is league-wide. It’s also meant to cover loans much like the G-3 program did under the past CBAs. For the 49ers, the credit reflects basically the expected amount they’d get from a league loan. A similar amount would also be available to the Raiders. While it’s a big, reassuring step for the 49ers, all it really does is erase the uncertainty surrounding stadium financing going into the CBA negotiations. There’s still a big gap that needs to be covered, and I don’t think it gets covered without the Raiders being as committed to Santa Clara as they can possibly be.
Update 12:39 PM – Tim Kawakami has more from a discussion with Jed York.
CBA Talk: The impact of the NFL CBA on MLB
While the media has been vigilant in its reporting of the NFL collective bargaining travails (sometimes to its detriment), reporting on the NBA has been scarce for the first month of the hoops lockout. And unless you asked around, you’d have every right to think that MLB’s own CBA was not expiring after this season ends.
All of the leagues and players unions like to think they have the best deals for their constituents, and are generally immune to effects from the deals struck by rival leagues. However, it’s clear now that the NHL CBA, struck in 2005 after the loss of an entire season, has shifted the landscape for the NFL and will do so in even an greater fashion to the NBA. Salary rollbacks and harder salary caps are the rule of the day now, with the economic downturn providing significant ammunition to the leagues. The pendulum has swung back, though it’s thought that when the NHL redoes its CBA after next season, a market correction towards labor will be due.
MLB remains on a different plane due to its lack of a salary cap and extensive revenue sharing. The “guaranteed share” measuring stick used by the other three leagues to determine what is fair for the players doesn’t exist in baseball, and it’s safe to say that it won’t for a long time. As long as the biggest stars keep getting nine-figure deals in free agency, MLBPA is perfectly content with the cost controls currently in place (service time + arbitration for young players).
That brings the comparison between the NFL and MLB down to one key item: the length of the agreement. MLB has usually done 4-6 year deals to allow for economic shifts – especially among individual teams. The NFL just blazed a trail by putting together a 10-year deal with no early opt-out by either signatory. Will Selig or the owners push for a longer deal? MLB is not as dependent on national TV money as the other leagues. Yet all of the network deals (Fox, ESPN, TBS) expire after the 2013 season. With networks pushing for more “sure things” in terms of programming, it’s not hard to see MLB trying to get up to 10 years out of each contract if they can.
Generally, leagues try to have some amount of overlap among the agreements with players, networks, merchandisers, etc. That way they don’t have to follow up one length negotiation with another. If MLB/Selig are influenced to push things out a little, it could mean that the next CBA could end anywhere from 2018 to 2021. If not, the CBA will probably expire in 2016 or 2017. Either way, there should be some kind of resolution to the A’s and Rays’ stadium situations. If not, well, I give up.
Dublin looks for its own independent league team
Brian Clark, the former Virgin America exec who is seeking to bring a North American League franchise to San Rafael, is about to embark on a quest to bring a franchise to Dublin. According to the CoCo Times’ Robert Jordan, Clark is working at adding four NAL franchises to the Bay Area, though he hasn’t identified the other two cities.
Independent leagues tend to be more volatile than affiliated minor leagues under the MLB umbrella. However, going Clark’s route may be the only way to sidestep the effect of territorial rights on the Bay Area. As Chris Lee found out in his efforts in Windsor, nothing is happening in the North Bay without the Giants’ approval – even if Lee were interested in a franchise not affiliated with the Giants (which he is).
One effect of this movement is that if Clark got four franchises going in the Bay Area, the appetite for minor league baseball could be somewhat depressed due to a similar product at a similar price point being in place. By this I don’t mean the Giants, per se, I mean the appetite for moving the Giants to another community if the cost is too high or if someone like Lee wanted to bring in a second Cal League team. I think the Bay Area’s small enough that pro baseball as a whole could be oversaturated in the Bay Area. Obviously we have no data to prove this given the historically low number of minor league and independent league franchises in the Bay Area, but it’s something to think about. For many games on the schedule, NAL teams could compete with the A’s on price alone. And really, if the quality of the product matters less than the family experience, the A’s might have to look over their shoulder.
If Clark were to try to find a place for a franchise on the Peninsula, it could get even more interesting. The biggest hindrance there is the lack of available land. It’s not beyond the realm of possibility, and if they can pull it off, more baseball is better than less. The Giants are too much of a premium product to be materially affected, but there is room on the Peninsula for a value-oriented product. I’m all for it, Mr. Clark. Let’s see what you can come up with.
News for 7/23/11
A judgment in a Delaware bankruptcy court will force Frank McCourt to accept a $150 million loan from MLB instead of hedge fund Highbridge. The judge may have been swayed by the revelation that McCourt would have to pay $5.25 million to Highbridge if that loan wasn’t approved, creating an apparent conflict of interest. The loan will not allow MLB to assume control of the team. Next up: a ruling on whether future TV rights can be auctioned off now instead of 2013, when the current local TV deal with Fox expires. (More from ESPN LA/Dodger Divorce and Biz of Baseball.) On a related note, you can criticize Bud Selig for many things, but his letter rejecting McCourt’s rushed TV deal (PDF) with Fox is pretty well argued.
How out of whack is baseball economics? The Yankees are paying Kei Igawa millions to commute from Manhattan to Trenton (AA) and Scranton/Wilkes-Barre (AAA).
The NFL and players continue to go back and forth, though the media thinks a CBA will be done very soon, perhaps by next week. Sure. A major sticking point is the length of the deal. The league wants it locked in for 10 years, whereas the players may want an opt-out after 7.
The NBA and NBPA released results of an audit on the 2010-11 season. BRI (Basketball Related Income) was up 4.8% year-over-year. Salaries, which are tied to BRI via a 57% guarantee, are up the same percentage. Both sides can point to the numbers as supporting their arguments during CBA negotiations.
Turns out that AEG is not interested in building a downtown LA ballpark.
Just as in Minnesota, watching a ballpark being built in Miami is starting to turn locals away from the fact that the public financing was not a good deal.
As usual, no news on an A’s ballpark or the cities. Redevelopment awaits the California Supreme Court. I’m off to a pool party!
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Almost a decade later, the game remains unfair.
49ers, Raiders put heads together on stadium
The Chronicle’s Raiders beat writer Vittorio Tafur has a pretty big scoop: the Raiders and 49ers have been in talks about sharing a future Bay Area stadium. Tafur goes on to mention where the Niners are regarding the Santa Clara stadium concept, but mentions nothing about the new Coliseum proposal for the Raiders. At this point it makes the most sense to consider Santa Clara Plan A simply due to the work that has already been done to date. The Coliseum is still in its initial study phase. Speaking of which, as much as I harp on Oakland rushing through the Victory Court EIR process, the new Coliseum was supposed to have its EIR completed in as little as 15 months. Yet here we are, about 9-10 months in, and not a peep.
Fortunately for both teams, the NFL has taken their situations into account and may be ready to lend them a hand. Tim Kawakami notes that as part of the new CBA, the Bay Area has been identified as a place that could receive a loan from the NFL for stadium building.
It’s complicated, though. The CBA designates “stadium credits” for three locations — Los Angeles and presumably the Bay Area are two of them — but not specific teams, the source said.
The “credits” are a precursor to the NFL setting up a formal stadium-loan program, another league source said Tuesday. So, yes, the Raiders could be involved in anything the 49ers try to do, possibly in a shared-stadium venture, as the NFL has encouraged for years.
That isn’t ideal for the Yorks, of course. But at least they know the money could be there, and that means they can keep churning toward their end goal.
Without the NFL loan option, the churning would have been mostly over right here and now.
Initially, a big sticking point in the CBA negotiations was the NFL’s protection of funds for stadia, previously known as the G-3 loan program. The players wanted a piece of the entire pie. While ratification hasn’t been completed, it looks like the players will get a piece of the entire revenue pie, albeit a smaller percentage than what was prescribed in previous CBAs (60% of a smaller pie). Now that it appears that a successor to G-3 is part of the possibly 10-year deal, the prospects should be looking up for the 49ers in terms of getting their funding.
Now let’s take this a step further. Should Santa Clara be the final site for both teams (with the Raiders signing a long-term lease), that should presumably open up the Coliseum for the A’s, right? Yes and No. True, the tenant that destroyed the Coliseum for the A’s would be gone, but they’d be leaving behind $100 million in debt service for Oakland and Alameda County to pay for. There’s no chance that the A’s or MLB will bite on paying off that debt, yet the city and county would need to figure out a way to service it somehow. That could pave the way for the reuse option I drew up last year, but that’s a risky proposition in and of itself. Any reuse of the old Coliseum would require new revenue bonds from the Authority, and I doubt it would politically popular unless it was true slam dunk proposal. Plus there’d be the stink of the Raiders coming back less than 20 years earlier, not selling the place out as advertised, destroying the Coliseum for the A’s, successfully suing Oakland/Alameda County, then negotiating an early end to their stay and finally leaving again.
Finally, there’s A’s ownership’s role in this. Surely, they’d much rather be in control of their situation instead of picking up other teams’ scraps. Revenue generation will be limited at the Coliseum, and the market for ancillary development around the Coliseum is weak. Moreover, redevelopment’s death takes with it any project money for the area, as noted in Oakland’s declaration of support for the Monday lawsuit. The A’s will be funding a greater percentage of their venue privately than either football team, so they should have more say in where they go. As we’ve seen over the last couple of years, you can’t always get what you want.
Escondido AAA Park may be first redev casualty
Amidst the general uncertainty about the impact of the new redevelopment laws on new projects, Padres owner Jeff Moorad announced that he will sell his recently acquired AAA franchise if a deal to build a ballpark in Escondido doesn’t come to fruition. Moorad stated that he will give the situation “until the end of the season,” a loose timeframe which lines up well with the legal resolution of redevelopment’s fate.
Despite the setbacks, Moorad may have a Plan B in place with an unnamed North San Diego County city:
“We are committed to Escondido at the momentMoorad said. “Nothing has changed there. There is still one other city in the North County being aggressive. We would need the other city to move quickly if Escondido withdrew.”
The Padres’ AAA franchise was based in Portland for years until it was kicked out of its old stadium in favor of the Portland Timbers MLS franchise. At least for this season and the next, the team will play in Tucson. It’ll be interesting to see if a local ownership candidate surfaces in Tucson should the North County ballpark plans fade away. Until recently, Tucson was a AAA and spring training home, and it’s possible that it’ll have neither in the future. Having a AAA franchise in town would be good for Tucson baseball fans, even if it pushes out an independent league team.
Heads I win, tails you lose (redevelopment lawsuit)
I’ve been flipping through the 126-page court filing (warning: 12 MB PDF) for the redevelopment lawsuit, and to be completely honest, I don’t know how lawyers get through all of this stuff. Court filings aren’t page turners – well, unless you’re Frank McCourt. My enjoyment of the literature aside, there are some interesting things in the document.
As I mentioned Monday, the lawsuit is being filed by The League of California Cities, California Redevelopment Association, San Jose, and Union City. Several other cities have posted their declarations of support, including Brentwood and Oakland. Oakland’s declaration was made by Mayor Jean Quan. San Jose’s accompanying declaration was made by Mayor Chuck Reed’s Chief of Staff, Peter J. Furman. Both cities cite their inability to make the “ransom” payments required to continue operating their redevelopment agencies. Both mention how much redevelopment has helped their cities. Neither mentions a ballpark in any way, though that’s to be expected (ballparks are luxury items, which makes them not politically expedient). Furman argues that being forced to pay the state puts them at risk of breach of contract with Santa Clara County. Quan points out that making its payment to the state puts the police/fire retirement funding at risk. She does point out that Oakland could make a payment by making severe cutbacks to ORA, similar to what San Jose did. Although Furman doesn’t say it, San Jose could sell additional land (or have certain payments to SJRA made earlier, such as Lew Wolff’s price for Airport West).
On the other hand, Union City’s declaration was very specific in how it describes its one major redevelopment project, the TOD village east of the Union City BART station, as a potential victim.
What do the cities want?
- A full hearing by the California Supreme Court to debate the twin laws’ constitutionality.
- A stay to prevent major actions that could adversely affect redevelopment until the hearing above is held, preferably by August 15.
The argument by the petitioners is that if the laws – which are already in effect – are allowed to progress with the dismantling of RDAs, there may be nothing left to recover even if a lengthy lawsuit eventually reverses the law. Unfortunately for proponents of redevelopment, the court is not expected to hear the case until September. That puts the various agencies in a really tough spot since dissolution is supposed to start as early as October 1. Any city that decides to pay-to-play has to declare that they will by that date, which makes the dissolution “temporary” until 2012. The first payment is due in January 2012.
When the state budget talks were in its final hours, several legislators pushed hard for promises to accommodate cities so that the eventual payments wouldn’t be so crushing. That caused a several hour delay in getting the budget approved. It’s unclear as to the effectiveness of that tactic, but we will see if it bore fruit over the next few months. Some cities may be looking for a more manageable payment schedule or payment amounts. Others are ready to swallow their medicine right now so that they can continue to operate. The state’s stance that the laws will be upheld in court has not wavered. From a pure fiscal/basic services standpoint, you’d like to think that cities like San Jose and Oakland have backup plans to address their budget problems if redevelopment is killed. So far, they haven’t shared what those plans are. That’s not just scary from an A’s future standpoint. It’s much bigger than that.
News for 7/18/11: Poison pill edition
Update 4:45 PM – The lawsuit has been filed. Heading the suit are the expected lobbying groups, The League of California Cities and California Redevelopment Association, plus the cities of San Jose and Union City. Oakland signed a declaration in support of the lawsuit.
The Merc’s Tracy Seipel reports on the redevelopment lawsuits that are set to happen any day now but for whatever reason haven’t happened yet. Perhaps the reasoning for this is a poison pill inserted into the first bill (ABX1 26) that could prevent any cities who successfully sue the state over redevelopment from issuing additional debt. I have to admit that I didn’t notice the poison pill in my readings of the bills over the last month or so, despite the fact that the language is front and center.
(3) The bill would prohibit a redevelopment agency from issuing new bonds, notes, interim certificates, debentures, or other obligations if any legal challenge to invalidate a provision of this act is successful.
The poison pill may be the trump card forcing cities to pay-to-play for future redevelopment, since the cities have little chance of getting their payments back.
(Assembly Speaker Perez’s spokeman John) Vigna said if the agencies win a court challenge, the provision would force them back to the negotiating table and “continue working on something that satisfies the governor’s concerns, and their concerns.” But the negotiations would only involve those agencies that can make the upfront payment.
Wondering where the money for the last two parcels in San Jose is going? My guess is partly to the county for a prior settlement (which has a lien on some city properties), and partly to the state for the budget. It’s your move, Lew.
Funny that redevelopment wasn’t mentioned once in Dave Newhouse’s glowing interview with Oakland City Councilmember Rebecca Kaplan. While I admire Kaplan’s gusto, her continued pushing of the Coliseum is almost inexplicable. It’s not what MLB wants, it conflicts with what the Raiders are trying to do there, and the aforementioned freeze on redevelopment makes it just as complicated to work out a deal there as the downtown sites (if not more complicated). It’s also disingenuous to start making bold claims about which city doesn’t have money when the fact is that no city has money, and neither Oakland nor San Jose have articulated how they’ll get out of the RDA pickle.
Other tidbits:
June radio ratings are out. 95.7 (KBWF) dropped from 0.6 to 0.5 in the San Francisco-Oakland market, and stayed steady at 0.8 in San Jose.
Frank McCourt’s hubris continues, as he refers to Selig as “the devil” with “an eye jaundiced towards irrational animosity” in today’s court filing. Read this Vanity Fair article chronicling the McCourt divorce and you might think his arguments are a bit rich.
Carmen Policy was profiled in Sunday’s Chronicle (no public link yet, subscribers only) continuing to lobby for a 49ers stadium at Hunters Point. Policy is on master developer Lennar’s payroll to advocate for the stadium, which ironically Lennar no longer has to support and would actually would save $100+ million if they abandoned the stadium part of the project. Policy, ever a SF/Wine Country guy, also takes a shot at Oakland in the process:
“If I were part of a group that somehow wound up owning the Raiders, I would be looking to expand my influence throughout the Bay Area as far as possible, and one sure way of doing that is playing outside of Oakland.”
Is Policy not aware of what the Raiders’ identity is? Baffling.
The NFL and NFLPA may finally be wrapping up their negotiations, with the possibility of a “global settlement” covering all outstanding bargaining items and external lawsuits, such as Brady vs. NFL. Then again, we’ve heard the two sides were close to finalizing a CBA for well over a month.
newballpark.org 