10.20.10
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49ers stadium pushback, Sharks add Citrix

Hot from the Merc’s Howard Mintz is word that the 49ers stadium in Santa Clara may be pushed back a year or more, according team president Jed York. The #1 issue being cited is the uncertainty regarding the NFL’s labor situation (the CBA ends after this season).

York remains confident that the team will be able to secure financing for the project, which calls for a new 68,500-seat stadium to be built on a parking lot adjacent to Great America theme park. Santa Clara voters in June approved the stadium deal, which includes a package of $114 million in public contributions and hundreds of millions of dollars that would be secured through stadium revenues, from luxury boxes to naming rights.

But a large chunk of the nearly $1 billion cost has always been linked to obtaining financing, which some sports economists have said could be difficult in today’s economic climate. The 49ers have retained the investment firm Goldman Sachs to secure lenders willing to finance the project.

We’ve been sounding the horn on this since the beginning, so this is no surprise. In the end, it doesn’t really come down to the 49ers. It comes down to the Raiders. Are the Raiders willing to be tenants of the Niners? And if so, for how long? Those are the questions that need to be answered before anyone on the outside digs into their pockets.

Update 3:00 PM: A Q&A with SacBee’s Matt Barrows and York sheds a little more light on the situation.

(Matt Barrows): When you say, “lynchpin” are you talking about knowing that the 2011 season will occur uninterrupted or securing a loan from the NFL?

JY: Well, I think there’s a combination. Obviously, you have the G3 program of $150 million coming from the league. That fund has obviously been tapped, and there’s nothing there to replace it other than a club seat waiver, which is not as efficient as a G3 financing. Absent a new labor deal that addresses the economic realties of the NFL today, I think it’s going to be very difficult to get that piece.

MB: Do you have any better assurance today that a G3 program or similar program will be part of a new labor deal?

JY: That’s a goal for the NFL. That’s a goal for everyone involved – that we continue to invest in our stadiums, whether that’s building new stadiums or renovating stadiums that already exist. And that’s certainly something the NFL is working on, trying to make sure that’s part of the new labor deal. Obviously, a new stadium is vital to the 49ers and to this area. But without a CBA that adequately recognizes the costs of a new stadium, the capital expenses, it’s going to be very difficult for us to move forward and obtain that financing in the second and third quarter of 2011 absent a big piece of the puzzle.

This is a major issue for the NFL, as the league and the players’ association are far apart on this. The current CBA essentially provides 60% of revenue to players. However, that 60% does not include club seat revenue. The players want a piece of this, but the league is refusing because the G3 program and any future stadium lending initiative is expected to use club seat revenue as one stream to secure the loans. It’s unclear how the two sides can come to a reasonable compromise, since plenty of premium seat revenue for recently built stadiums will have to be grandfathered into the agreement. Yet it’s also hard to see the NFL going beyond the 60% high water mark for regular revenue distributions to players, and that may be the best concession the league can make. This has gotten even more complicated because in the past the union has pledged part of its 60% share to help fund G3. There’s also the matter of the rich franchises (Dallas, Washington, New England, both New York teams) wanting to keep more of their locally generated money. The two sides have historically been better partners (league owners as well) than their counterparts in the other three leagues, but there are limits to how accommodating either side will be.

On the other side of SJC, HP Pavilion have entered sponsorship deal with Citrix which will get the company’s name and logo on the outside of all of the arena’s luxury suites, concierge desks, and some arena walls. The deal is worth $150,000 a year, plus Citrix is ponying up for its own suite. The article (premium subscription required) by SJ/SV Business Journal’s Eli Segall, notes that

The deal, a first for the arena, is part of a growing trend of targeted sports marketing and an indication that athletic sponsorships may be on the rise this year, as analysts have predicted.

…

But Citrix is not aiming its logo at the masses. Instead, the company is targeting pockets of the arena where corporate entertainment is taking place, and where executives who might buy Citrix products might see its brand.

It makes sense for Citrix to do this, considering the number of different products it has and the local companies it often has to compete with (Cisco, VMWare to name two).

10.19.10
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A’s might buy KTRB

Big Vinny reports that the A’s may, in fact, be one of the suitors looking into purchasing KTRB, which is currently in receivership. Lieberman guesses that the station’s asking price could be $12 million, though that’s without the debt previous owners Pappas Broadcasting had amassed.

Assuming that the A’s don’t get drawn into some terrible bidding war for the station and then come out winners, they’ll end up spending eight figures on the station, and millions more to get it the way they’d probably want it. For the time being, getting most of its programming from Sports Byline USA makes sense because it’s a sort of turnkey operation. Sports Byline has a national focus, but operates in San Francisco and can afford to give attention to local teams.

Both Lew Wolff and Ken Pries have shown great interest in operating a station should the opportunity arise. It’ll be interesting to see how involved they’d be with it. Would they do the current hands-off approach with some local programming, a la Sports Byline or Fox Sports Radio? Would they get in bed with ESPN, a network that generally demands a great deal of control for new affiliates? How many other teams besides the A’s and Stanford football would they bring in?

Over the years, the A’s have been a foster kid who has bounced around from home to home. KTRB may be the best chance for the A’s to maintain real stability. It’s funny, though, to see what’s happened to the A’s recent former radio homes.

  • KABL (AM 960) became the Bay Area’s progressive talk outlet, and an affiliate of now-defunct Air America Radio. Since that network’s folding, the station has been rebranded Green 960 and has changed its call letters to KKGN.
  • KIFR (FM 106.9) was known as KYouRadio and Free FM, after which parent company CBS decided to make the station simulcast KCBS to improve its North Bay signal. Apparently KCBS has been the focus for years, to make the all news station the dominant station in the region. That finally happened this year.
  • KYCY (AM 1550), also a CBS property, simulcast A’s games with KIFR for a spell. In 2008, it became the home of the reborn KFRC.
  • KNTS (AM 1220), a newstalk station out of Palo Alto, is now KDOW, a reference to its positioning as a “business” station.
  • KEAR (AM 610) continues to be a very religious station, though ironically its broadcast location may be one of the more irreligious places in the world: Berkeley. Interestingly, I haven’t seen a reference to KEAR in any recent Arbitron lists.

How did these stations end up? You’d think that these corporate radio interests, in their infinite wisdom, deigned to shun the A’s because it was bad for business. Then again, perhaps not. First, recent ratings for these and other stations in the SF/Oakland market.

Next, San Jose ratings.

Perhaps the most interesting thing that comes out of this is that KTRB is very competitive with KTCT (a.k.a. KNBR-1050), which when you really think about it, is just a more expensive (to run) version of KTRB. It has two teams that get shifted around thanks to the Giants, a bunch of syndicated shows, and a block of local programming. Is it possible that with a little care and feeding, KTRB could be eating KTCT’s lunch and then gain on the blowtorch? I think it is.

Unfortunately, what may hinder the A’s is the presence of another blowtorch. No, not KGO. KOA. Where’s that, you ask? KOA-850 AM in Denver. It’s a clear channel station, whose signal can be heard as far north as Canada and as far south as the California-Arizona border, as I experienced when I was driving to Phoenix earlier this summer. KTRB is too close to allow for nighttime interference, so it’s forced to have a directional signal. When Pappas owned KTRB, they were looking at several transmitter locations, in the hope that they’d be able to solve the reception problem locally without causing a ruckus. They ran up debt, ran out of money, and ended up losing the station. My biggest hope is that if the A’s do buy KTRB, they’ll renew this effort so that better East Bay and nighttime reception can be achieved. Otherwise, what’s the point of a baseball team owning a station when much of the audience can’t hear it?

Update 6:50 PM: On a side note, I have to say that I’m really sad that Robert Buan has been let go (along with Steve “Soupy” Sayles). Buan was a good producer, a not-so-good play-by-play guy, a company man, and a nice guy. He’s also Filipino, which basically makes him a cousin of mine. I’m a bit surprised at the move, considering he could’ve had a natural role in an A’s-owned KTRB. Here’s hoping he lands on his feet. Salamat, pare!

10.15.10
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Purdy interview on KNBR

Merc columnist and all-around San Jose booster Mark Purdy was on the Fitz and Brooks show today (podcast MP3). After a few minutes of figuring out where the Niners’ season went wrong, Bob Fitzgerald asked Purdy about the ballpark situation. At no point was there a mention of yesterday’s news about the Redevelopment Agency’s funding shortage. What Purdy revealed was no less interesting, and I can provide a small amount of additional back story.

Asked about the state of the MLB panel’s report, Purdy said this:

What I know is that Lew Wolff did have a meeting a couple, three weeks ago. (He) came out of that meeting feeling optimistic that the report was gonna be issued soon, and optimistic that it was gonna come down in favor of the A’s at least being able to explore the ballpark in San Jose. I know that.

I also know that another source close to that… they are proceeding down only one track at the moment… they’re proceeding down the San Jose track… at the moment. That’s what I know.

As I understand it, Wolff met with Selig twice in September, once in LA during an A’s road trip and again in Milwaukee, Selig’s home turf. Some time after that, I started hearing that South Bay advocates were feeling pretty good about things. I didn’t get any info then about what they were feeling good about. Apparently Purdy did get it.

If true, there are some major takeaways, which combined with some info we know about the Giants, makes the picture much, much clearer.

  • Oakland is not under consideration at this stage, only San Jose is. Note that Purdy did not say that Oakland was completely eliminated, only that it isn’t in the running “at the moment.” If San Jose fails, Oakland becomes a factor again. But only if San Jose fails.
  • Something will happen at the owners meetings. Sure, but which owners meetings? The first set is November 17-18 in Orlando. The next set will be December 6-9 at Lake Buena Vista, which is just outside Orlando. As much as the A’s situation continues to linger, the owners will also spend a good deal of time on the lingering fate of the Tampa Bay Rays, who are based only two hours southwest of Orlando.
  • Ruling that the A’s will be able to explore building a ballpark in San Jose. This is the one I’m most curious about, because if it’s true, it represents a sort of softening on MLB’s part. MLB generally won’t allow a city to get a team unless there is a signed deal in place. They even left DC hanging while lawsuits and eminent domain proceedings threatened the prospects of what would eventually become Nationals Park. This news indicates that San Jose will have a chance, but will need to get the rest of its pieces in place (land, referendum). That could give San Jose no more than a 6-9 month window – 6 months if land proceedings go smoothly or 9+ if eminent domain is required. Plus you can never tell what will happen on the legal front (Giants or surrogates).

Purdy spends the rest of the segment theorizing what might be happening behind the scenes. As much as it sucks to be kept in suspense, I’d much rather the panel take this time to work out all of the details, than to have Selig and the owners make a decision and then clean up the mess afterward. Even then, it’s uncertain what the Giants will do, since they are maintaining a “no-negotiation” stance. I guess when it comes to dealing with any Halloween-colored team owned by a lawyer, things tend to get messy.

10.14.10
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SJ Redevelopment low on funds, Wolff ready to step up

Despite assurances from SJRA officials last month that the agency would have enough funds to take care of the remaining land buys for the Diridon site, it now appears that they are running short. However, even if they do Lew Wolff may be ready to buy the rest of the land, or even the entire site if need be.

“There isn’t a redevelopment agency or city or federal or state government that isn’t in some form of disarray at this point,” Wolff said Thursday of the agency’s struggles.

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

This sets up a number of land acquisition/swap possibilities:

  • It’s possible the A’s could buy the land and give it back to the city. That would set up a situation in which the A’s could pay a discounted lease on the land until the City reimbursed the team.
  • They could also try to buy the existing public parcels and the remaining ones, making the entire thing privately held. There would be a snag if the landowners were unwilling to sell, because a private interest can’t exercise eminent domain as a city can. If the A’s managed to pull this off, it would probably be the biggest political winner, since the perception of a handout by the city, such as it were, would vanish. $20+24 million for a guaranteed electoral victory in March? It’s worth a cost-benefit analysis at the very least.
  • The team could also buy the public parcels, giving SJRA enough cash to buy the remaining parcels and fund the Autumn Parkway project. The land could be given or sold to the agency, with the cash transaction part happening sometime in the distance.

As mayor Chuck Reed said, “There are half a dozen different ways to put together a deal.” The ones listed above are just off the top of my head.

Even with the low funds situation, City officials are putting on a brave face.

“We’re committed as a city to move forward with the stadium, because it’s the most promising economic development project we’ve seen in the last decade,” Councilman Sam Liccardo said.

“I don’t expect the redevelopment agency’s fiscal problems will prevent us from finding a creative solution.”

Offering to help a municipality is not a foreign concept to Wolff. He offered to pay for upgrades to Phoenix Muni, only to get a collective shrug from the city. The Quakes also paid for upgrades to Buck Shaw Stadium in order to make it a (not so) temporary MLS facility.

10.12.10
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Target Field a revenue bonanza

I last wrote about a new ballpark revenue model almost exactly three years ago. Back then, I had estimated that the A’s could net $24 million more per year, after revenue sharing. One thing I did not focus on was the possible gross revenue the team could realize, which would be $44 million more than at the Coliseum. Little did I realize that the delta could become even greater over time.

Minnesota Public Radio called up Forbes and the usual gallery of sports economists to get an idea of how much the Twins have benefited from Year One at Target Field. The answer: $50-70 million more than 2009 at the Metrodome, perhaps more. That figure is based mostly of gross revenues from the stadium, before the team has to hand over its share of revenue sharing and get its piece of the central fund.

Curious about how a similar effect could be applied to the A’s in new digs, I re-ran the numbers. This time, with the 2009-10 drop in revenue, I figured the difference would be vast, but I had no idea how vast. The current model looks like this:

There is some debate as to what the A’s final revenue is. Forbes said that in 2009 it was $160 million, $155 million for 2010. Lew Wolff said that the number for 2009 was $130 million. Lacking a look into the A’s books, I’m splitting the difference for illustrative purposes. That puts final revenue at $149 million and gross local revenue at $86.7 million. Now for the future model:

In this case, the new gross local revenue is a whopping $160 million, while final revenue is slightly higher at $170 million. This is because the A’s will be able to deduct debt service and a host of other expenses as part of the “Actual Stadium Expenses” deduction against revenue sharing allowed in the CBA. Interestingly, it creates a situation where the A’s would continue to be revenue sharing recipients instead of payers, to the tune of $20 million. This is mostly due to rising revenues league-wide, as the average annual revenue per team is approaching $200 million (thanks, Yankees). The best way for the A’s to stop being revenue sharing recipients under the current CBA would be to ink richer TV and radio deals.

It goes to show how the A’s aren’t just being left behind on the revenue front, they’re getting lapped. Repeatedly. Going back to the gross local revenue figure, note the difference between the future and current models: $74 million. And it could be even greater, since the numbers don’t account for in-stadium merchandise sales. Those sales all get counted the same in the long run, but it’s all about when they get counted. Every year the A’s count on their windfall coming in December, after all of the books are closed. The rich teams get their windfalls throughout the year. November when thousands upon thousands of large season ticket deposits are made. Merchandise sales when purchases are made. Millions of advance tickets, often sold well before Game 1 on the schedule. Plus the various sources that come in during the season. There’s a constant, predictable, heavy stream of dollars that makes it much easier to project payroll and operations.

(The next couple of paragraphs are not for the purist A’s fan or Oakland partisan. You have been warned.)

With that in mind, I’m starting to think that if/when the San Jose move is confirmed, in the ramp-up to the ballpark opening the A’s will unveil new alternate uniforms, hats, perhaps even team colors, all with the idea of capturing the San Jose audience dollar while the iron is hot. There’s no official “O” hat for the team now, but you can bet there will be a second “SJ” hat when the time comes. I’m not too keen on this, and I worry that the team will go D-backs crazy while attempting this. I sure hope they rein this in.

Beyond that, I would also expect that once the confirmation is made, the A’s will open up and sell “Oakland” as much as it can in a sort of  “get it while you can” manner. Those nods to history that fans criticize the team for not honoring? You’ll see it. And it will be for sale. It reminds me of the latest episode of Mad Men, in which Don Draper rebounds from losing a major tobacco account by buying a full-page ad in the New York Times. In the ad he swears off tobacco accounts forever, shocking everyone in the office, Madison Avenue, and the public. The motivations for both are anything but altruistic, yet completely shrewd and understandable. They also hold a great risk of backfiring. At least in the case of Mad Men, we’ll pretty much know what happens next Sunday night.

10.09.10
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Coliseum sans Coliseum

Update 10/11 1:20 PM: SFGate’s Raiders blogger Vittorio Tafur has some choice words from Amy Trask, indicating where much of the inspiration for this vision came from:

“There is no short answer. … We’re having ongoing discussions about the stadium opportunities. We’re working very, very cooperatively with the city and with the local officials. We’ve been extolling the virtues of this site for a quite awhile now. It was a year and a half, 18 months, give or take, maybe more, just under, but about a year and a half ago that I started talking about this site and using a new-stadium on this site as an opportunity to revitalize the whole area.

Why not, rather than look simply look at the stadium project, look at how one can use a stadium as an anchor for, or a catalyst for, an urban redevelopment that provides economic stimulus for the whole region? You guys know as well as I do that this site is centrally located, it’s tremendously well-served by public transportation. There are stadiums and facilities all over the country where they’re trying to figure out, how do we get subways or trains to come to our stadium? We’ve got BART. We’ve got Amtrak, the capitol corridor, the ACE train. So, it’s a central location on a freeway, well-served by public transportation.

So, about a year and a half ago, we started proposing and extolling the virtues of proposing the possibility of doing a stadium project on this site. Not as a stand-alone facility but as a catalyst for an urban renovation in the manner in which to bring economic stimulus for the whole region. We have been working very cooperatively with the city and the Joint Powers Authority. You guys understand this region. Right now, fans come to this facility and there’s nowhere for them to spend their money in the area. There’s one or two spots on Hegenbereger, but how about doing something here like was done on the waterfront.”

If the Raiders get a new stadium built in the Coliseum complex, be prepared for the place to look something like this:

You may notice something’s missing. That’s because there’s a large pedestrian plaza where the old Coliseum infield used to be. The finished product includes a $862 million stadium, which includes $144 million in debt remaining on the the original (and to be demolished) Coliseum. A stadium built for two teams would cost $880 million. Either way, costs would be slightly less than the $954 million projected for the 49ers stadium, though likely rising costs haven’t been accounted for in the Oakland model.

These and other facts come from a recent feasibility study (PDF) commissioned by the Coliseum Authority. The analysis was done by CSL, a firm that has done plenty of other similar studies, including the study for the Santa Clara stadium. Not surprisingly, CSLI breaks down the financing for the stadium (minus Coliseum debt) along very similar lines to what was pitched for the Niners:

  • $96 million in public funds (redevelopment)
  • $133 million in personal seat licenses membership equity fees
  • $150 million from the NFL
  • $339 million from the Raiders

If the 49ers and Raiders roomed together at the stadium, the financial picture would be vastly different:

  • $110 million in public funds (redevelopment)
  • $133 million in personal seat licenses membership equity fees from Raiders fans
  • $133 million in personal seat licenses stadium builders licenses from 49ers fans
  • $300 million from the NFL
  • $30 million from the Raiders
  • $30 million from the 49ers

One of these is impossible, whereas the other makes too much sense to actually happen. Keep in mind that the two-team model is the only truly feasible model in either Santa Clara or Oakland. Naming rights could be worth double for a shared stadium. There would be less competition for a bowl game, soccer friendlies, mega concerts – all of these big events would gravitate to one place. It’s just a matter of executing.

While the Niners are well ahead of the Raiders process-wise, the Silver & Black hold the trump card. Ever since the Santa Clara concept was unveiled, I was skeptical that the Niners could do it alone and I remain skeptical. It’s no fault of the team, it’s simply too expensive. It would be one thing if it was the Giants and Jets working together; at least they had a working relationship to help make the deal possible. Nothing like that exists here. And for the Yorks to hope that Al Davis’ wandering eye will somehow cease long enough to pen a long-term deal is, well, not very promising.

The holdup here is that Al could very easily move the Raiders south to Santa Clara. But you can’t expect him to agree to the same kind of 40-year lease to which the Niners are committing. It would be hard to see him commit to anything longer than a decade, hell, even 5 years. The Raiders are going to want to keep all of their options open, whether that means a new stadium in Oakland, or waiting out what happens with the Chargers in San Diego (or LA). Any short-term lease or flexible situation makes it harder to secure important pieces of financing, which will make it harder to get the stadium built. Not to sound callous, but the best thing for both teams – if they want to get something done together – may be for Mr. Davis to slip into a long coma. Or, you know. Then again, maybe Amy Trask’s eye is just as wandering.

Going back to the plan, I think they’re making a mistake. Instead of demolishing the entire Coliseum, they should reuse the East Side stand the way I described in March, transforming it into a convention center. The space is there and there’s plenty of opportunity for integration, whether it’s extra parking through a garage under the facility or a green roof creating a large amount of open space. After all, you’re already talking about a billion dollars, what’s another half-billion among friends? It would allow the employment base to be stabilized, since the low-wage service jobs common with these facilities could easily float between the arena, stadium, and convention center.

Beyond that, it’s clear that any stadium project would need TIF to help it get built, TIF that would come from surrounding development. Various industrial and commercial development projects would be encouraged, along with more sprawling parking across 880 (notice the pedestrian overpass). Not sure what that would mean for tailgating. I’m somewhat curious about the “Live/Work” area occupying the Coliseum North area (thanks Jeff), as it’s a stage that would probably trail the rest of the development.

Is it a pipe dream? Yes. I was somewhat disappointed that the Trib’s panel didn’t raise any questions about the Raiders’ future in Oakland, even though a feasibility study for the Raiders was due and up for review. Certainly, the Coliseum Authority, City, and County don’t want to lose the Raiders, but at what price? Knowing that Raiders could very well want only short-term deal in the South Bay, the Authority may be best served by waiting the Santa Clara process out – for if that fails, an East Bay stadium sounds like a decent fallback (though not as cost-efficient as a rebuilt Coliseum).

Other notes from the presentation:

The cited population figures are strange. They completely omit Sonoma, Napa, and Solano counties, which indicates they did a fairly lazy CSA lookup-and-add to derive the numbers.

I hadn’t seen a corporation count in one of these studies until now. Even with the omitted counties, the Bay Area would place third (fourth if LA had a team and was included in the comparison).

I took the corporation count further by making a before/after comparison. If a new football stadium were built along with a new ballpark for the A’s, there’d be a visible shift in the amount of premium options available to interested parties. There could even be some oversaturation of the premium product, especially club seats. The suite numbers look the same, but should be treated differently because the future total includes “minisuites,” which are smaller and more affordable than typical luxury suites. The oversaturation phenomenon is evident in New York, where the old stadium only had 500 club seats (2X teams) and the new one has 10,000 (also 2X teams).

I’m sure that many of you South Bay partisans will quickly say that the market can support the jump. I’m not so sure. Good thing club seats aren’t counted as part of the TV blackout quota.

It’s also not clear what the effects on the Warriors would be. BTW, the team currently owes $10.7 million in back rent and expenses to the Coliseum Authority, a likely goodbye present from outgoing owner Chris Cohan. The drive to rename the Warriors won’t go anywhere as long as there is this tension regarding financials between W’s and the Authority.

10.06.10
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Trib Editorial Board asks mayoral candidates about A’s, Warriors

Blog fave Dave Newhouse reports on a panel held for the four leading Oakland mayoral candidates about two major sports issues affecting Oakland. The one with the most ink is the matter of whether the Golden State Warriors will finally adopt the Oakland moniker. I suspect the answer for incoming W’s owners Joe Lacob and Peter Guber lies in money. Chris Cohan hinted a long time ago that some amount of relief from the team’s lease might do it. It’s not clear whether the same thing would satisfy the new owners. There is also some question as to what value each designation has. Is “Oakland Warriors” more or less valuable as a brand than “Golden State Warriors?” Some sports marketing folks out there know the answer to that better than I do.

Following that question of pride was a question about a pending fall. All four were asked to address the A’s situation:

(Jean) Quan: “I think this (city) is the soul of Major League Baseball — great diversity, ethnically and income-wise. I met Lew Wolff after I got elected. He didn’t say ‘girlie,’ but almost. There’s not a transit-rich (baseball) site that’s more ready to go in the entire Bay Area than ‘Victory Court’ (in Jack London Square). We own most of it, and could develop it as an entertainment (center).”

(Rebecca) Kaplan: “I love the A’s. Lew Wolff felt (Mayor) Jerry Brown didn’t care. The A’s could succeed here very well. I believe we could have a football and baseball stadium on the Coliseum site. We own the land. San Jose is not a done deal. They have a local law that requires a ballot measure, and they did not put it on the November ballot. So there’s a window of opportunity here.”

(Joe) Tuman: “I’ll be blunt. In professional sports, it’s ‘show me the money.’ … I won’t spend a dime of public money on keeping the Oakland Athletics here when I can’t pay for police officers or keep the streets safe. I’m not saying it can’t work, but let’s be objective.”

(Don) Perata: “I probably know a little more about this stuff than most people. I was part of two Raider deals that both failed. We got held up; we really did — by both (the A’s and Raiders). We got rid of the Coliseum board and then politicized it. … In retrospect, it was a disaster. I don’t think the A’s are going to stay here. We can’t play in this game, putting up the money. We haven’t been smart with our franchises.”

So from this, we can gather that one candidate backs Victory Court, another backs a Coliseum-sited ballpark, another won’t put up a dime, and the frontrunner has given up. Well, no one can ever say Oakland lacks diversity, and that goes for sports politics too.

According to this DIY poll by TellFi (via The Oakbook), Perata is garnering 34% of the vote, with Quan at 27%, Kaplan at 16%, and Tuman at 10%. If Perata and his rather brutally honest mindset prevails, it’s probably curtains for MLB in Oakland. Absent a simple majority, Perata would have to win via the instant runoff that would occur on election day.

Strangely, Newhouse follows up Perata’s comment by writing, “But we’ve been smart enough to keep them.” I’m not sure that smart is the operative word, Dave.

(Thanks, Ed)

Quick postscript: I wonder how linusalf will spin this Newhouse article? Update 10/8: He finally did, and it doesn’t say much. Also, supposedly Lowell Cohn was on Ken Dito’s show this morning and is no longer opposing a move south because of Oakland’s inaction. Wonders never cease.

10.04.10
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More end of season tidbits

Let’s roll it out, shall we?

  • New Twitter update (and article) from A’s beat writer extraordinaire Susan Slusser (@susanslusser): Beane feels optimistic about prospects for new stadium. He says team expects news sooner than later.  #Athletics. More on this from MLB.com’s Jane Lee.
  • The Quakes named David Kaval as its new President. Kaval replaces Michael Crowley (the one who owns a piece of the A’s, not the journalist), who will be bumped up to Managing Director. Kaval’s previous gig was at the independent Golden Baseball League. Quick analysis: the Quakes need to make more headway with sponsorships, and Kaval’s experience indicates he knows the angles.
  • –
  • Target Field ended the regular season with the 3rd worst home run rate (1.35 HR/game) of any MLB ballpark, just behind Safeco Field (1.22) and yes, the venerable Oakland-Alameda County Coliseum (1.33). Some of that may be attributable to the half-season absence of Justin Morneau and Joe Mauer‘s almost inexplicable power dropoff, from 28 to 9 HR in one year. Mauer should be able to adjust, as David Wright did at Citi Field (10 to 29 HR from 2009 to 2010).
  • The Twins are criticizing the T-Wolves for placing a large ad sign at Target Center that will be visible from Target Field and Target Plaza. Seriously?
  • Home runs are down slightly at New Yankee Stadium, but it’s still the most HR-producing park in the majors.
  • MLB instituted new sky ground rules at Tropicana Field for the playoffs. The upper “A” and “B” compression rings/catwalks that hold up the dome are no longer in play, as balls that hit the rings are now automatic dead balls. Previously, balls that hit the rings were in play, and were ruled fair or foul based on where they landed. The lower “C” and “D” rings are home runs if balls hit them in fair territory.
  • Matier and Ross report that the 49ers are getting ready to open a sales office for their planned Santa Clara Stadium. The office will be in the Tech Center, which is adjacent to the Santa Clara Convention Center, which itself is across the street from the stadium site. No seat license prices yet, of course.
  • Mesa, AZ voters are mulling over Prop 420, a proposal to replace HoHoKam Park with a new city-owned ballpark complex with a bunch of ancillary development to help pay for it. If you’ve ever been to HoHoKam, you’ll know that the only thing ancillary to the park right now is a cemetery.
  • Firing up stogies in the clubhouse to celebrate the Reds’ first division crown since they opened their new ballpark is apparently verboten.
  • The nonprofit group that runs the Memphis Redbirds (AAA, Cardinals) has been struggling financially, causing them to consolidate a bunch of debt in an effort to stay afloat. What hurt them? The arrival of the Memphis Grizzlies, a blip of excitement for U of Memphis basketball when John Calipari was there, and bad projections for attendance at AutoZone Park. The team and ballpark will probably be sold in the near future.
  • The Giants are getting the late game slots (6:37 PM PT) for their first two home NLDS games, which is great for West Coast viewers, not so great if you’re a young Braves fan who has to go to school Friday morning. The Rangers are getting the crappy day slots that we as A’s fans have been rather familiar with.
  • Attendance at yesterday’s Raiders-Texans game was a scant 32,218. There are often comments about how whether or not the Bay Area is a two-team baseball market; are we sure it holds up as a two-team football market? They could’ve saved some money and left the tarps on!

Update: Tonight’s fresh articles by Susan Slusser and Jane Lee have done a better job of clarifying where management’s position is going forward than the quotes Slusser got from Lew Wolff last week. From Lee’s article:

“I was talking to one free agent last year, trying to tell him to concentrate on the field, that we had the best playing facility in the league, the best groundskeeper in the league. He said, ‘You’re right — until August.'”

…

“I think we’re going to be planning a new stadium at some point soon,” Beane said. “That’s just my own gut feeling. We have to at some point. I’m an optimist.

“I think it will allow us to start to plan around some of these guys here from a long-term standpoint. Hopefully, it’s not a revolving door, like it’s been the last decade. Hopefully, we could do some long-term planning, which we really haven’t been able to do. I think it would be pretty invigorating for everybody involved, and I think everybody would sort of be relieved having a direction for the franchise.”

Thing is, if MLB rules in Oakland’s favor, there’s an immediate quandary because I don’t think the owners have been planning on staying in Oakland.

09.30.10
by

(Insert Name Here) Kings

As reported by Field of Schemes, it appears we are going to find out the answer to Marine Layer’s recent post and poll question.

The Sacramento Bee has the story and the money quote:

“On the heels of the disappointing – but not surprising – action (or inaction) of the state and Cal Expo board, it is fair to say that the NBA has ceased its activities on the Sacramento arena front,” league representative John Moag said in an e-mail to The Bee. “However, we will continue to monitor and respond to the activities and options of others that might reasonably ensure the competitiveness and viability of the Kings’ franchise.”

Not much in-between line reading to do with that one, now is there?

Mayor Kevin Johnson is proposing an Arco remodel. The Kings and the NBA are flat out rejecting that idea. The NBA is ceasing any activities related to a new arena in Sacramento but looking for a way to reasonably ensure competitiveness of the Kings franchise.

The only question that seems to remain… Will the NBA go for an already built modern facility, like the one in Kansas City, or will they go to a temporary solution, like HP Pavilion or Key Arena, with promises of future renovations? We have a whole season to watch the answer evolve.

For an in-depth analysis on the inadequacies at ARCO, check out this article (PDF).

09.29.10
by

The debt rule and you

When the current CBA was ratified in 2006, it was largely seen as little more than extension to the 2002 CBA. That is, except for one pretty important detail. Prior to 2006, all MLB teams had to conform to what was called the 60/40 debt rule (assets/liabilities). Enforcement of the rule was at best lax, allowing teams to make some really bizarre long term contracts without batting an eye. With the new CBA, the debt rule had radically changed. Instead of pinning available debt to franchise value under the 60/40 rule, debt was to be capped based on earnings. Here’s the initial language of the rule:

DEBT SERVICE RULE
Section 1.    The Rule. No Club may maintain more Total Club Debt than can reasonably be supported by its EBITDA. A Club’s Total Club Debt cannot reasonably be supported by its EBITDA if Total Club Debt exceeds the product of the average of that Club’s EBITDA over the most recent two years multiplied by the Cash Flow Multiplier applicable to that Club; provided, however, that a Club may elect, on or before April 1, 2007, to utilize, in both 2007 and 2008, the average of its EBITDA over the most recent three years.

To illustrate this, let’s look at Forbes’ 2010 financial profile of the A’s. In it, operating income (EBITDA) came out to $22.1 million. For 2009, it was $26 million. Averaged, it’s $24 million. To get the Total Club Debt ceiling, multiply that last figure by 10, and you get $240 million in debt ceiling. Also in the profile, the A’s have a 30% debt/value ratio, putting the team’s applicable current debt at $88.5 million. Every team gets a debt exemption of $36.5 million. Factored in, that puts the A’s debt at $52 million. That leaves $188 million under the team’s cap.

According to the listed definitions of what constitutes debt, just about anything that is borrowed or to be paid later falls in. This includes loans from MLB or third parties such as banks, non-player deferred compensation, stadium debt (only when the stadium opens), loans from related parties (ex.: partly or wholly owned regional sports networks), and any other debt except for a player compensation and an initial $36.5 million deduction (like the standard income tax deduction).

The 10x multiplier changes to 15x when a new stadium opens. This is important, because, as Jeffrey pointed out two weeks ago, MLB is ready to provide a loan of up to $150 million for construction. Assuming that EBITDA stays fairly constant, the A’s debt ceiling will move to $360 million. In the meantime, the A’s would likely pay down existing debt (either from annual profits or by bringing in additional partners) to get itself in the right position to get the stadium financing.

The kicker here is that while player compensation is not supposed to be part of the calculus, it is no doubt a considering factor. Selig has a mandate for mid/small market teams to get their houses in order prior to opening a new ballpark. Any number of punitive measures can be taken against a club if they go over their debt cap, including restrictions against future borrowing and even limits to new player contracts. If anything, this is the true spirit of the debt rule: to keep teams living within their means. (Big market teams such as the Dodgers and the Rangers under Tom Hicks benefited from selective enforcement.)

To understand how this affects the A’s moving forward, let’s take a look at where the teams stands in terms of payroll as of the end of the season:

Now let’s assume that certain housekeeping moves are made. Trevor Cahill is locked up through his arb years in a similar deal to what Brett Anderson received, plus Daric Barton is also secured. In addition, Mark Ellis is brought back, as well as Kevin Kouzmanoff. Jack Cust is gone, while Michael Taylor starts the season in RF. Gio Gonzalez, Dallas Braden, and Andrew Bailey are also back through short-term/non-arb deals. No one of note is traded, but a free agent slugger is brought in for a 2-year, $20 million deal with a third year team option. Here’s what that would look like:

If you’re Selig and you’re looking at the two tables, you’re thinking “That’s it. Give me your credit card.” It doesn’t matter that this kind of debt technically doesn’t count toward’s the CBA definition, it’s still debt. Salaries weren’t supposed to count under the old 60/40 rule either, but they did. It’s a terribly unfair way to run a competitive league, but them’s the breaks. By 2013, the payroll will head into the $80 million territory because of the normally occurring raises. As a team that is not yet fully capable of carrying its own weight, the A’s have their own de facto salary cap. Most of it is due to circumstance. Type A free agents aren’t going to sign 2-3 year deals here unless they have a problem that makes other teams balk at giving them 5-6 year deals (injury history, age, consistency). Yet that 2-3 year window is exactly what the team should exercise while costs are contained. Lew Wolff mentioned recently that the one-year rental idea doesn’t work that well, which is true at least historically. So what’s the best way to fill in the holes in the lineup? More Coco Crisps? Trade one or more of the pitchers for a bat?

Most importantly, how does this affect how you view the A’s future, or the league in general?

Note: If you’re wondering how the Yankees operate within the rules even though they’ve accrued billions of dollars of debt, the answer is simple. The team doesn’t “own” most of the debt. Its related parties do.