06.02.11
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Poole accuses Wolff/Fisher of being “slumlords”

Cue the weekly flamefest in the comments. In the Trib, Monte Poole writes:

They have become a wealthy guy (Wolff) and an obscenely wealthy guy (Fisher) who acquired a valuable property, neglected it outright and continue to reap profits. It’s the slumlord model.

At this point in the Wolff/Fisher tenure, perception tends to be reality. Local perception is that the team is neglected by ownership. National perception is that the team is stuck thanks to a bad stadium. Both are equally true. As much as Lew Wolff will point out the need for revenues, fans in general don’t care. They want marquee players. They want Billy Beane to swindle another GM before the non-waiver trade deadline every year. Fans also don’t care that the A’s payroll is $67 million and should’ve been close to $80 million if they had signed Adrian Beltre as desired. It’s about results. It’s about scoreboard.

The inconvenient truth is that the revenue problem does matter. Wolff/Fisher may be the 4th richest ownership in baseball, but if team revenues are near the bottom every year even when a handsome revenue sharing check is included, they can’t do anything other than operate the team within its means. That means the payroll will rarely be higher than $70 million and never beyond $90 million as long as this economic state lingers. When you’re getting swept by the 3X payroll Yankees, it’s not comforting. The worst part is that even if the tarps were ripped off the third deck and attendance rose to 2.5 million, the A’s would still need some $5-10 million in revenue sharing every year.

In the past we’ve discussed contention windows and how brief and sensitive they are for low revenue teams. Beane gambled on Eric Chavez and lost, and we suffered as a result. No position player in the organization has that franchise cornerstone look or appeal. The other poor, bad stadium team is Tampa Bay, and they have a franchise player in Evan Longoria who, fortunately for the Rays and Rays fans, did not break his back in the playoffs. They’ve had time to figure out whether a previous phenom like B.J. Upton is worth a big future contract (so far, no), and while they’re at it they might throw money at Matt Joyce instead when the time comes.

A's and Rays financials for the past dozen years. Data from Forbes.

In the chart above, the percentage of player expenses as part of revenue only rises above 60% once. That was the 2005 Athletics, another example of when a clearly overpaid journeyman lineup repeatedly failed to support a brilliant young pitching staff. The Rays shed so much payroll during the recent offseason that (unlike Forbes’ numbers above) they have a lower payroll than the A’s. They can do that because Longoria isn’t hamstringing the team fiscally as Chavez did and they didn’t lock up Upton, giving them flexibility. They’ve been able to play the rent-a-slugger game effectively, the same way the A’s did 5-10 years ago. Even with their recent success, the Rays aren’t taking any major risks, and have put themselves in the position to delay those kinds of decisions for at least another couple of years. Same risk-averse money strategy, different results, thanks to whomever is on the team.

Unfortunately, history is repeating itself regarding the A’s hitters. The notable exception is free agent-to-be Josh Willingham, who is, as I pointed out to Jeffrey the other day, 2nd on the West Coast in home runs. (In this era that has to be an achievement of sorts.) As long as the A’s have that severe pitching-hitting imbalance on the roster, and none of the pitchers is a 200 K/year flamethrower, there’ll be little to provide buzz for the media or casual fans.

There is a Cahill Street outside Diridon Station that ends at what would be the third base gate for Cisco Field. It’s not like Wolff and his marketing people don’t see the great marketing opportunity that awaits if they can get a ballpark in San Jose. Curiously, Trevor Cahill was signed through the 2015 season, with reasonable options for 2016 and 2017. Cisco Field can’t open before 2015. Beyond the value of a good young pitcher with cost controls in place, there is a definite effort to cultivate a star, and a uniquely Californian one at that. The thing is that ground balls aren’t sexy.

What does that have to do with Wolff and Fisher being slumlords? Nothing, because it’s a bad comparison. It’s not like Beane and David Forst aren’t trying to draft, trade for, and develop great hitters the same way a slumlord won’t fix the heating or plumbing in an apartment building. People often point to the Carlos Gonzalez trade debacle, but we’re nearly three years removed from that and we still don’t know who the real CarGo is, or if he can really hit a breaking pitch at sea level (kind of important at the Coliseum). Now we can point to what appears to be a systemic failure to develop hitters over the last several years, and that goes straight to the top. That may be incompetent, but not necessarily negligent. Does anyone honestly think that a guy of Billy’s reputation and ego doesn’t want to go out there and compete? Come on now. And I’ll go out on a limb and guess that no one within the organization was counting on the amount of regression shown by the A’s hitters collectively this season.

Are Wolff and Beane doing everything possible to win? Of course not. Are they doing everything within their means? I’d say so, for better or worse. For Sunday’s game, none of the concession stands on the plaza level other than the club area were open. It felt like a ghost town. Yet the stands elsewhere else weren’t busy enough to warrant staffing another stand. Just because the landlord isn’t gifting a granite and maple kitchen with stainless steel appliances to his tenants doesn’t mean he’s a slumlord. He’s working within his limitations. It’s not his fault the location sucks. Oh, and if you want those amenities, guess what? You’ll need to move into another building. He’s got one of those if you’re interested…

05.31.11
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Winnipeg’s drive to 13,000

Before True North’s press conference devolved into a lengthy sales pitch for season tickets, there was an air of justice and patriotism in the crowd. I really sensed that a wrong was being righted, similar to the way a wrongly convicted man was getting his release. Of course, it’s borderline ludicrous to compare the two, but that’s the passion in Winnipeg right now. They’re getting NHL hockey back in town. Whether it remains there depends on how they sell out. And by selling out, I mean season tickets. 13,000 to be exact in a 15,000-seat arena. If True North can feed on this passion, MTS Centre will be the toughest ticket in Canada for years to come.

Notice how there's no team name? They haven't picked one yet. Um, Jets?

True North kicked off the sales campaign by launching a website, Driveto13.com. It describes the pricing plans, sales dates, and terms. There’s even a toteboard for fans and media to keep track of progress, and True North will be sending out a press release every afternoon with an update.

Winnipeg is a tiny market, with only 700,000 within its metro. It’s actually smaller than San Mateo County. Despite the passion for hockey in Winnipeg and throughout Manitoba, the NHL is most concerned with whether that passion can properly counterbalance that size problem. To assuage Gary Bettman’s concerns, True North is putting a few terms on ticket purchasers which should, if successful, address the franchise’s long-term viability in Winnipeg.

Prices are reasonable, we swear

These prices are consistent with those of other Canadian teams. However there is a catch.

A three-day presale will be afforded to season ticket holders for the Manitoba Moose AHL team, who were brought in when the Jets left for Phoenix. These ticket holders should be prepared for some sticker shock, as the highest priced seat package for the NHL team will be 3.5x the price of the same seats for the Moose. After the presale period ends the general sale begins, and that’s when it’ll get interesting. The NHL Board of Governors has to approve the move. Rest assured that they and Bettman will be looking at the toteboard with a critical eye.

Locking the fans in

To head off concerns about viability, True North is attempting to lock in season ticket buyers for up to 5 years.

An interesting tack being taken by True North is a mandate of multiyear commitments for season tickets. This is where the rubber meets the road, as it will demonstrate how far Winnipeggers’ passion will stretch. A median-priced seat in the lower bowl end or corner will require an outlay of over $14,000 over four years. The best seats will cost twice as much over five years. Only the worst season ticket pricing levels will have the option for half-season plans. To make the price easier to swallow, True North is also advertising monthly payment plans, which for the purposes of comparison amounts to the cost of a car payment (depending on how luxurious the car). Nominal deposts will also be required. One thing not part of the conversation is the dreaded personal seat license, which is a good move given the stigma associated with PSLs.

These are aggressive moves and goals for True North and Winnipeg. We’ll see soon see if the fan response translates into chopping away into the 13,000 goal over the summer. As for the team name, I hope the Jets are available. If not, I have a suggestion.

(BTW, I don’t really care for the name “Polar Bears”. I needed an excuse to insert the clip.)

There are also some potentially good takeaways for the A’s, and especially ballpark supporters in Oakland, a city that has limitations like Winnipeg (though not as severe). If a goal can be set, perhaps 15,000 season tickets, with 3-5 year commitments, that would go a long way towards convincing Bud Selig and the owners that Oakland is viable. The same could also go for San Jose, in that it would prove that the T-rights battle is worth it. In any case, though it’s tough to see hockey leave Atlanta a second (and final) time, it’s nice to see that hockey is back in Winnipeg, where it belongs. Good luck, Manitobans.

05.31.11
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FiveThirtyEight and Yelp’s Stadium Survey: Coliseum ranks 29th

Nate Silver’s plenty busy writing about politics year round, but occasionally he’s able to write about baseball in some capacity. In a blog post at FiveThirtyEight, Silver ranks all 30 MLB ballparks and 4 other previous ballparks via Yelp’s ratings system. The Coliseum ranks next-to-last among active venues with a 3.13 rating. Upon reading several pages of “reviews”, I had to conclude that at least for the Coliseum the rating is flawed. Numerous people based their review on the stadium as a football venue. Others rated based on attending both Raiders and A’s games. More than a few mistakenly rated Oracle Arena next door, instead of the stadium. I’d go through the trouble of parsing the reviews to get a better contextual sample, but not even I’m that patient with Yelp.

That’s not to say that the methodology is flawed for all venues. Most ballparks are getting reviews for being single-purpose baseball facilities, so there’s no contamination with most ratings as there is with the Coliseum. No, this is not a particularly scientific study, but as Silver notes, it’s more comprehensive than a single writer’s opinion as he takes an all-expenses paid trip all over North America to review venues. Silver also lists the standard deviation, which for the Coliseum is among the highest (1.21). All that means in laymen’s terms is that the ratings for the Coli were all over the place, whereas the ratings for PNC Park (st. dev.: 0.49) were uniformly excellent.

05.28.11
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Getting desperate in the big city

Two items left out of yesterday’s news post have to do with the ongoing financial struggles of the Mets and Dodgers, or rather their ownership groups.

  • Hedge fund mover and shaker David Einhorn has dropped $200 million for a 1/3 share of the Mets, which may be enough to rescue Fred Wilpon. Or is it? According to ESPN and the New York Times, Einhorn has an option to acquire up to 60% (and controlling) interest in the team from Wilpon, should the beleaguered owner not be able to pay back the $200 million. If the Madoff trustee case ends with Wilpon having to liquidate much of his real estate holdings or other investments, he may not be able to pay back Einhorn, setting the stage for a takeover. Einhorn is no stranger to playing hardball, having called for Microsoft CEO Steve Ballmer’s ouster earlier in the week. Einhorn’s Greenlight Capital owns more than 9 million shares of MSFT. No matter how you slice it, the deal is not the safe one many expected Wilpon to make.
  • Reports came in over the last couple of days showing that Dodgers owner Frank McCourt will in fact make payroll in time for the end of the month. By taking certain future payments up front to cover the May 31 payroll, McCourt has ensured that MLB won’t be able to pull the trigger on a takeover of the team. In doing this McCourt has written off that revenue for later in the season, and he merely pushes the deadline back two weeks. The next payroll deadline is June 15, and it is unknown what tricks McCourt has left up his sleeve to take care of business then. Combine that with flagging attendance, a lawsuit against the team and owner filed by the family of beating victim Bryan Stow, and the fact that another round of divorce settlement talks ended earlier in the week with no movement, and it’s clear that it’s only a matter of time before McCourt loses the team completely. The only thing up for debate is how delusional McCourt is to keep this charade up.

One interesting arena tidbit. Arena operators will be scrambling this summer to fill dates in anticipation of what may be a lengthy NBA lockout. A quote from Orlando executive director of venues:

Johnson said he can book a popular artist to replace a Magic game with a notice of 30 days. He said Taylor Swift’s concert next Saturday sold out in three minutes.

And that’s an arena is more lucrative to run than any outdoor stadium. It also reminds me of George Vukasin Sr.’s anecdote about Bill Graham getting The Grateful Dead to help the Coliseum Commission on occasion by booking a weeklong “residency.” It’s almost inconceivable to think that a local band could quickly and easily sign on for one or several dates just to help out an arena operator or city these days.

05.27.11
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News for 5/27/11

Sacramento has the feasibility study for its new arena at the its website, along with additional renderings. Besides the lack of financing plan that would have to be determined by the end of the “100 Day Plan,” I noticed one other thing. As part of the effort to cut costs, there is no separate club level. Instead, the club seats are largely confined to one side of the arena and courtside sidelines, with the club lounge taking up part of the main concourse.

Angle view of ICON Taylor arena interior. Club seats are colored blue-violet. Arena is designed to host a hockey team as well as the Kings.

While the Maloofs continue to maintain that the Kings are not for sale, as many as three groups have surfaced that could buy the franchise if it were available. Ron Burkle continues to be the popular choice, with the “mystery Nevada businessman” being second. Now a group fronted by former King Chris Webber has surfaced, and its chief moneyman is a Filipino businessman named Manny V. Pangilinan, or as he’s known in Manila, “MVP.” With frequent talk of Chinese interests getting a controlling piece of a NBA franchise, it would be somewhat poetic to have a Filipino be the first Asian to do so. FWIW, there are three national sports in The Philippines: basketball, boxing, and cockfighting. It’s not going to make me anymore a Kings fan than Erik Spoelstra (who is half-Filipino) being the head coach of the Miami Heat makes me a Heat fan, but it’s something to be proud of.

Another week, another arena proposal. This time it’s in Baltimore, a city whose 50-year old arena hasn’t fielded a major franchise in nearly 40 years. 92-year-old construction magnate Willard Hackerman is willing to pay for the arena as part of an elaborate redevelopment plan along the Inner Harbor. Like Sprint Center in Kansas City, the arena would be built on spec, without a major pro tenant. Baltimore has been without an indoor sports franchise for so long that it’s hard to know if one would be successful there. It appears that Hackerman is willing to give it shot. Hackerman’s company, Whiting-Turner, built M&T Bank Stadium, home of the Baltimore Ravens.

ESPN’s Jim Caple came out with his “official” MLB owner’s rankings. Lew Wolff placed 17th, higher than I would’ve expected. Must be the national media bias.

Here on the blog, 980 Park concept originator Bryan Grunwald received word from the City of Oakland that his concept will in fact be part of the Victory Court EIR, hopefully as a full alternative. Unfortunately, Grunwald also was informed that there is no schedule for the release of the EIR. With MLB moving glacially and putting the A’s on the backburner, I suppose it affords the City time to be thorough. Weren’t they supposed to have the whole thing done (and certified) in around a year?

On the redevelopment tip, there are now three bills working more-or-less in conjunction to provide a less wasteful alternative to the current scheme, which is enshrined in the California Constitution. A fourth bill works against redevelopment, as wished by Governor Jerry Brown. Here’s the list:

  • SB 286 would restrict how projects are funded. Currently redevelopment dollars are a free-for-all as long as they can be applied to a “blighted” area. If this bill passes money for stadiums and arenas would require a public vote in the affected municipalities.
  • SB 450 seeks to rein in waste by capping administrative costs, while pushing the requirement that 20% of funds be spent on affordable housing, to the forefront.
  • SB 214 would allow the creation of new infrastructure districts whose purpose would be to finance infrastructure projects (roads, highways, sewers, etc.).
  • AB 101 is the aforementioned anti-redevelopment bill. Should any municipality’s RDA have any surpluses after obligations are met, those surpluses would vest with the municipality instead of being sandboxed for redevelopment purposes.

The University of Michigan wants to expand The Big House to 120,000 seats. Might want to fix the football program first.

If you wear a “Yankees Suck” T-shirt at the O.co Liseum next week, will you get thrown out as this lawyer did at the Trop last week?

Added 2:15 PM – The Minnesota legislative session ended with no action on stadiums for the Minnesota Vikings and St. Paul Saints. A deal would have to be done in a special session.

05.26.11
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Keeping the Kings commands a princely sum

NBA Confidential and SI.com writer Sam Amick snagged a copy of ICON Venue Group’s presentation to the City of Sacramento detailing the options for a new arena. Sadly, the copy is a scanned version of a black-and-white printout so it doesn’t look pretty, but it does have the numbers and the important details.

The arena, designed by Populous, looks like a scaled down version of Amway Center or Staples Center. Arena capacity is pegged at 18,594 seats, with the cost being $387 million. Here are the vital stats:

The reduction in square footage helps keep costs down, otherwise the price tag would soar to $500 million or more. Other amenities aren’t as plentiful, such as elevators or specialty bars. The ratio of standard suites (12+ attendees) to mini suites (4-6) is also interesting in that it’s an indicator of where the suite-buying market’s interests are. The full mix of premium seating options (in green) shows just how many ways teams and arena operators can squeeze out maximum dollars out of a venue, and how ARCO Arena/Power Balance Pavilion was devoid of those options.

Populous took pains to place the arena at two possible sites. One is the south end of the existing arena’s parking lot. The other is the downtown railyards site. Site prep costs for the two are very similar, separated by only $3+ million. Soft costs are not included. The question, then, becomes a matter of figuring out the financing piece. To that end, the preso outlines a “100 Day Plan” that would allow the City and other parties to figure out the financing model for the publicly owned arena. If that can be identified, the EIR process can start in September and funding sources can be secured by next March’s NBA relocation deadline. If all goes according to plan, construction would start in January 2013 with a May 2015 opening date, after the 2014-15 regular season is over. Accelerating the schedule to finish by the start of the season would incur some unknown additional costs.

Last week the Maloof brothers sent Mayor Kevin Johnson to Secaucus, NJ to be its draft lottery representative, which was a great gesture. Unfortunately for the Kings, they did not win the lottery and were stuck with the #7 pick. If the Maloofs and KJ really want this to happen, they’re going to need a little more luck when it comes time to complete that 100 Day Plan.

05.24.11
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Want a franchise? Empty your wallet

Just as the stock and housing markets have experienced bubbles, MLB appears to be in a bubble of its own when it comes to buying and selling franchises. Last week, Drayton McLane and Jim Crane came to a surprisingly high price of $680 million for the Astros. That follows up the auction-boosted $593 million paid by Nolan Ryan’s group for the Texas Rangers. In both cases the final sale prices were a combined $348 million more than Forbes’ valuations at the times of those sales. Prior to the two Texas teams, the Padres and Cubs pulled $100+ million premiums over Forbes.

* - Debt may not include all debt for related companies. ** - Astros sale is not yet final.

It’s not only MLB. Last year the Warriors were sold for a NBA record sale price of $450 million. Again, this was around $100 million more than expected for the team. Compare these recent sales to those of a few years ago in the table above. In those cases the disparities weren’t nearly as vast and could be easily explained. Nowadays it’s hard to say. The Astros reportedly fetched a higher price due to projected higher revenues from a new regional sports network. Yet the Rangers’ premium price didn’t even include all of the parking lots surrounding the stadium, and it’s possible that a future sale of the Dodgers will have similar limitations. I have a few hunches as to why this bubble is occurring:

  • Money has been sitting on the sidelines of the broader market for so long that interested buyers are willing to pay premiums for sports properties.
  • Local TV revenue is starting go through the roof for more than the big market teams, which is encouraging investors to buy into teams with long, locked-in TV contracts.
  • MLB’s CBA in particular looks attractive to investors because cost controls are inherent for each team and there’s little worry about labor strife.
  • Someone (who?) may be priming the pump on franchises.

That last bit is complete speculation with no basis in fact, but how else can you explain it?

The next franchise likely to be sold will be the Braves (again), who were sold in 2007 as part of tax-free, debt-free equity swap between Ted Turner and John Malone’s Liberty Media. Those tax breaks expire next year, which means the clock is ticking for the Braves. I’m curious to see what price they fetch – and whether having zero debt load makes any difference.

As long as franchises continue to be sold for premium prices, the market creates yet another obstacle for Oakland. Let’s say the Wolff gives up on the Bay Area and announces he wants to sell with Fisher. Bidding could easily grow to over $400 million with no guarantee of a hometown discount. The best hope for the pro-Oakland crowd would be if Fisher could be convinced to stay on as silent majority partner and another managing partner were brought in, much the same way Bill Neukom was brought into the Giants. But if you’re Fisher, how do you sign on without guarantees you’re getting real returns? By real returns, I mean a ballpark that more than pays for itself. If I knew the answer, perhaps I wouldn’t be so skeptical about Oakland’s chances.

05.23.11
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A’s change Twitter name from @OaklandAs to @Athletics

I’m not sure if I ever explained this before, so forgive me if I’m being repetitive. When I set about moving this blog from Blogger to a self-hosted WordPress installation, I looked far and wide for a unique, succinct domain name. The obvious choice, newballpark.com, was already registered to MLB. The reason? It was purchased well over a decade ago by the Red Sox, who at the time were run by John Harrington. Harrington was in the throes of a campaign to replace Fenway Park with a newer, more modern version of the yard next door. After the Montreal Expos were contracted and reborn as the Washington Nationals, Harrington and the Yawkey Trust were out and John Henry, who had until then owned the Florida Marlins, took over the Sox. Henry chose to renovate instead of replace Fenway, and the rest is history. Ironically, the domain newballpark.com remains with the Sox despite the 180-degree turn. I could have chosen newballpark.net (which is available to my knowledge) or newballpark.org. Since I wanted to run the blog as a clearly non-commercial entity, I chose the latter. And here we are. So it’s with some amusement that I found out that the A’s changed their official Twitter feed from @OaklandAs to @Athletics. Immediately there was some worry that this was yet another slight of Oakland, and that the change was an indicator that they were out the door. Athletics After Dark‘s Dale Tafoya got the word from straight from the A’s. twitter-tafoya-rose

It makes sense. The A’s were always going to be in this awkward situation regarding naming, especially on social media. Should they use OaklandAs, OaklandAthletics, Athletics, or OaklandAs? Isn’t “Athletics” synonymous with what Americans call “track and field?” Not having the apostrophe available on Twitter might lead to misinterpretation. In the end, when A’s fans posted on Twitter, they customarily used the hashtag #Athletics, so naturally the team might want to pursue the name. The baseball Giants weren’t first to claim either the domain name or Twitter account named “Giants” with both going to the New York Football Giants instead. The domain name athletics.com belongs to Selliquest, a purveyor of web-based sales and marketing tools for the pharmaceutical industry. The product in question is called Net Athletics, though the second word is emphasized. Selliquest owns both athletics.com and netathletics.com. Would they be willing to part with athletics.com for the right price? If it goes according to form, the company will probably ask too much for the domain if the A’s come calling. One more thing: #FIREGERENNOW

05.22.11
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The Neukom Doctrine

In the mid-90’s, Microsoft was at the top of the world. With unmitigated dominance over the computer operating system market, smaller competitors were crying foul as Microsoft used its stature to enter new markets and take them over. Often MSFT did this by bundling features into Windows for free, such as its Internet Explorer browser. This strategy was called “embrace and extend” though it really meant “embrace, extend and extinguish” to competitors, as Microsoft frequently added features that would lock out competitors.

Giants managing partner Bill Neukom is no stranger to this strategy, as he defended Microsoft’s practice of it during his tenure as general counsel until he left the company in 2002. Initially he and Microsoft lost the landmark antitrust case against the Department of Justice in 1999, only to have the decision overturned by an appellate court. The company and the government eventually settled out of court, which allowed the company to stay intact (DoJ was seeking to break it up). Historically, the decision for Microsoft is viewed as a somewhat pyrrhic victory, as it has struggled to innovate in the face of Google, Apple, and smaller upstarts over the past decade, resulting in flat stock performance during that period.

By building AT&T Park, Peter Magowan initiated his own form of “embrace and extend” with the fanbase by choosing a more attractable, accessible location for the Giants than the windy, transit-poor Candlestick Park. Suddenly it became much easier to bring in fans from throughout the city proper, plus well-heeled fans in Marin County (via ferry) and the Peninsula (via train). The Giants got the added bonus of tons of fans coming from the East Bay via ferry and BART. Many of those fans were ex-SF residents who moved out to warmer, cheaper suburbs like Concord and Pleasanton. In doing so, they struck at a huge part of the A’s East Bay fanbase, and while many of the hardcore A’s fans would stay allied with Oakland, the A’s lost one very important demographic: Giants fans who could frequently go to A’s games as a more accessible substitute.

Since then-A’s-owner Steve Schott couldn’t object based on the fact that the Giants were building within city limits, all he could do was to deal with it and look to improve the A’s stadium situation, which he tried with Lew Wolff at the HomeBase site and in Santa Clara. The former was declined by Coliseum officials, the latter by Santa Clara officials when rumors of Schott wanting to sell arose. Schott also infamously didn’t show for a presentation on Oakland’s Uptown site, which is the very least he should’ve done – even though Jerry Brown was never going to let an Uptown ballpark happen on his watch.

Neukom further extended Magowan’s strategy by acquiring the San Jose Giants. He also had the World Series trophy paraded all over the East Bay – though not Oakland, obviously. Now, he’s preparing to make an interesting choice regarding the Giants’ future.

Since the beginning of his tenure as managing partner, Neukom has been steadfast about the Giants’ territorial rights to Santa Clara County. The argument goes that the value of those rights was baked into the financing of AT&T Park, which means they’re also baked into the franchise’s value. As such, they’re sacrosanct and not up for negotiation. Naturally, being steadfast is not the only option that he has since Bud Selig may choose to nudge him in one direction or another. With that in mind, it appears that Neukom and the rest of his ownership group have three distinct options moving forward.

  • Don’t budge, let the A’s leave the Bay Area. The Giants have said publicly that they “hope” that the A’s are able to work out a ballpark deal in the East Bay, since it would respect the existing six-counties-to-two distribution of territories in the Bay Area. Secretly, they have to be hoping the A’s fail completely in the Bay Area and are forced to look elsewhere. The only really advanced threat of building in either Alameda or Contra Costa Counties was when Pacific Commons was in the planning stages. It concerned Magowan and Giants President Larry Baer enough that they scouted the location to see how close it was to Santa Clara County. With Fremont a bust and many outside Oakland skeptical that a privately financed ballpark deal can be done in Oakland, the Giants have to be licking their chops at the thought of a Bay Area completely to themselves. While there don’t appear to be any good relocation markets for the A’s at the moment, there’s no certainty that will remain so five or ten years down the road. Should the A’s leave the Bay Area, they would be compensated by the Giants for ceding the East Bay. The interesting thing about such a transaction is that like the Giants ceding Santa Clara County, it would place a price tag on a territory. If the argument among the big market teams is that they don’t want to see such a precedent, then they don’t want either outcome to happen. Strange, huh? It would get even more complex if the A’s were to move to Sacramento as Baer has suggested, because the A’s could lobby MLB hard to split up Northern California to gain exclusivity over much of the region up to the Oregon border and Northern Nevada, the same way Warriors and Kings TV territories are split. The split would be damaging to the the value of the Giants’ TV rights since they’d give up millions of households every game. The result is ultimate dominance over the Bay Area for the Giants, but a huge loss throughout their broader territory. From a bottom line revenues standpoint, it’s hard to say how much this helps the Giants. If the A’s move out of state, the Giants pay nine figures upfront. If the A’s move to Sacramento, the Giants lose money on an annual basis. There have been rumors about the the Giants being willing to pay off the A’s to leave, so it’s not like both teams haven’t thought about it.
  • Don’t budge, keep status quo. This option assumes many events occurring in sequence. First, Lew Wolff (or whoever the owner is if Wolff sells) would have to stay in the Coliseum several more years past the existing end of the lease while working out the details of a ballpark in Oakland. It also assumes that MLB absolutely believes that a privately financed ballpark deal can be and is being done in Oakland. The Giants would be fine with this as it maintains regional hegemony. It might not work quite as well for MLB. If the A’s have trouble filling the ballpark due to poor performance, high priced tickets, or both, the A’s will have an extremely bad debt position for MLB to deal with. As long as the A’s struggle (whether in old or new digs), the Giants will continue to essentially pay part of their revenue sharing payment directly across the Bay to the A’s, which could be $20 million or more in coming years. Remember that the Bay Area is the only market where one team effectively subsidizes the other. That’s another situation that has to give MLB and Giants ownership pause.
  • Allow the A’s to move to San Jose. Again, Neukom has been steadfast about not allowing this. How bad would the Giants be damaged? Once you remove TV money and other Bay Area local revenue, I figure that Santa Clara County alone is worth at least $25 million per year in revenue to the Giants (back of napkin guess). That’s a lot. That pays off AT&T Park all by itself and then some. Neukom’s argument is that they’d lose that revenue. Wolff and South Bay proponents counter that hardcore Giants fans will remain that way and the Giants’ losses won’t be so deep. In particular, Wolff has argued that the league should look at compensation for T-rights on an annual basis, where a threshold is set and the A’s pay for the gap that doesn’t meet that threshold. Whatever the compensation model, I don’t think the Giants would lose $25 million annually. They’d probably lose 50% of that number since many of the fans are casual and both fans and sponsors can be replaced by East Bay fans. Years ago Magowan floated a number like $100 million for Santa Clara County, while Roger Noll estimates that the actual value is around to $20-30 million. If you’re Neukom and his partners, how do you attack this? A one-time payoff, even $100 million, dissipates within 7-10 years and doesn’t do much for franchise value (currently $563 million). Noll’s number is a mere pittance to them. Even if the A’s come off revenue sharing, it doesn’t mean the Giants won’t stop paying in – they most assuredly will continue to pay, though a few million less every year. The best thing for them may be to simply shut up. But that sets up the possibility that Selig will name the price for them.

No matter what Neukom decides, it looks like he’ll have to pay. He either keeps paying to keep the A’s in their stadium rut, he pays them to leave, or he gets less revenue if he cedes the South Bay. With the aura of the World Series and record revenues pouring in, such a possibility seems extremely remote. When the time comes to figure out how all of this should work out, that glow will be the furthest thing from his mind. By no means am I sympathetic to either Neukom or Selig for dragging this out for more than two years, but this is a thumbnail sketch of the dilemma and it took 1,600 words. What price hegemony? It’s definitely not cheap. Or easy.

05.20.11
by

News for 5/21/11 (Rapture Day)

KNBR update man Dan Dibley announced Friday that he was leaving the station for 95.7 Sports Radio, where it appears he will have similar (perhaps expanded) duties. He’s a quality guy who’s from the Bay Area and knows the local sports scene (including the Quakes), which for KBWF is half the battle.

Speaking of 95.7, does anyone know where Chris Townsend is? His Twitter feed has been silent for 24 hours. Maybe he’s just getting a day or weekend off. He has worked pretty much every day without a break since the station switched formats on Opening Day, so he deserves a rest. I hope everything’s alright otherwise.

Marcos Breton and Ann Killion both have profiles of the A’s as the team labors in in relative anonymity across the Bay from the World Champs. Such is life.

San Jose’s redevelopment king, Harry Mavrogenes, announced that he’s stepping down in a month. SJRA has been cutting staff and running on fumes for a year now, making Mavrogenes’ departure more symbolic than anything. The agency has been dying for a while, and for better or worse, will never be the same. With land acquisition and development powers transferred to the San Jose Diridon Development Authority (of which Mavrogenes was a signatory), his capacity as SJRA head was no longer needed to finish the ballpark work.

Did you know that the headquarters of Family Radio (whose leader Harold Camping is predicting The Rapture on Saturday) is on Hegenberger, just across the Nimitz from the Coliseum? There is a tangential relation to the A’s besides proximity. Family Radio bought KFRC-610 from CBS in 2005, creating a very uncomfortable combination of God talk and A’s talk/games during the 2005 season.

SFGate/Chronicle blogger Peter Hartlaub has a couple of great posts showing what BART could’ve been like if vision didn’t give way to politics and construction photos including the Transbay Tube.

Jamie McCourt wants an immediate sale of the Dodgers so that she can cash out while she can. Which would be awesome for Dodgers fans who want to turn the page, A’s fans who want the team taken off the backburner, and pretty much everyone else except for Angels and Giants fans who are experiencing some deep schadenfreude.

The athletic facilities at Stanford are going to turn into one gigantic WiFi hotspot, thanks to AT&T. You know, it’d be nice if Verizon did the same for the Coliseum, seeing as they’re the telecom sponsor there.

Added 5/21 9:30 AM- John Fisher has to be taking it in the shorts this weekend as the GAP dove 17% in trading yesterday after it reset annual earnings expectations down 22%.