With all the hubbub from Ray Ratto’s and Carl Steward’s columns along with Carolyn Jones’ writeup about the Commonwealth Club speech, it may have been easy to miss the Chronicle’s editorial on both the 49ers and A’s. In assessing the A’s situation, the piece says this:

Wolff is only being realistic. While the A’s have a colorful history and a vibrant fan base in Oakland, there is neither political will nor a plausible site for a new baseball stadium there. The lack of an uproar to Wolff’s remarks should tell him everything he needs to know about the need to focus his energy in Fremont.

Well, there certainly was a mini uproar in the comments section of the Ratto and Jones pieces. Then again, the commenters there tend to rail against anything and everything. In any case, way to tell it like it is, Chron.

Ray Ratto has chimed in with his take on the Commonwealth Club speech/Q&A. He shared the same puzzlement I wrote about earlier regarding the Wolff’s current bargaining position (there isn’t much of one).

He then went on to bring up CEQA, the statute that requires a thorough environmental review before major projects can be built in California. As a developer, Wolff was expected to fire off a couple of shots at the law. After a while it only becomes so much noise. All any developer can do is put together a plan that they hope will satisfy CEQA guidelines while also making a buck in the process. Since those two goals are often diametrically opposed, getting that done is quite a balancing act. While CEQA may be daunting or even hostile to developers, it’s CEQA that’s allowed us regular citizens to enjoy unspoiled beaches, preserved hillsides, and many other uniquely Californian natural attractions that we often take for granted.

There are a couple of things we all should know about CEQA of which I’m sure Wolff is all too familiar:

• CEQA ain’t going away. As this state grows to over 50 million residents, CEQA will become even more important.
• Whatever gets submitted will look different 18 months later. Thanks to the exhaustive and seemingly repetitive review process, there will be plenty of opportunities to pick the whole plan part and make changes. The bigger the project, the more likely changes will occur. You only need to look at the EIR/EIS documents for the High Speed Rail and BART-to-San Jose projects to get a feel for it. Changes can be caused by environmental factors, budget constraints, market conditions, or other variables.

Knowing that change is inevitable, IMHO it would be best to simply submit whatever they have to Fremont and let the two parties crank away. Which brings me to an error in Ratto’s column:

In short, Wolff now is feeling the first real squeeze of his grand plan – the inertia that comes from civic hesitation.

It’s not “civic hesitation” that’s the problem here. The city is champing at the bit! The problem is Wolff and his team. Maybe the whip is getting cracked extra hard on the consultants, or whatever deliverables they were going to put together are woefully behind schedule. Whatever the case, the City of Fremont is entirely blameless. In fact, they’ve been clear from the beginning in their “cautious optimism” stance that they want to work with the A’s to get the best plan available. Now it helps that the A’s put in the $500k dev fee, but time is also money for all concerned.

My advice: Just submit the application already. Everyone will get past this FUD stage and start debating the true merits and problems with the plan, instead of all of this idle speculation. Sadly, one thing that’s getting lost in this is the A’s have already made some major concessions regarding the school site and parking that weren’t in the original concept. Often such concessions don’t get made until after the CEQA review begins. Oh well.

Well, at least Lew Wolff isn’t entertaining the concept of a local bidding war. In what has the most definitive statement to date, Wolff reaffirmed the idea that Fremont is Plan A, there is no Plan B, and Oakland is out of the picture. Wolff’s quote from Carolyn Jones’ Chronicle article:

“We don’t want to move. We don’t want to start pitting cities against each other, but it’s out of the question we’ll stay in Oakland,” he said after a speech at the Commonwealth Club in San Francisco.

Those who have been following this for a while know that this is no fundamental change in Wolff’s stance since the Cisco Field plan was unveiled. Fremont was really the only plan in place. This time, Wolff added what amounts to a complete dismissal of Oakland as a possibility.

As the A’s close their 40th year at the Coliseum, it seems a certainty that the team will not see their 50th year there. I suppose there’s some strategic value in Wolff sending the message so bluntly, but I have to question it. What’s to be gained by going this route? It won’t make Fremont officials move faster. It won’t move the needle on regional support. And it definitely won’t win over any die-hard Oakland-firsters.

As I write this, an old USFL game between the Pittsburgh Maulers and the New Jersey Generals is playing on ESPN Classic. Like the USFL and the Oakland Invaders, the “Oakland Athletics” will soon become a thing of the past.

We’ve discussed at great length the where and how of the ballpark project. I’ve also covered “why” from the perspective of deficiencies at the Coliseum. The main point, which I haven’t covered in significant depth, is money. Ownership stands to make a boatloads of cash from this deal while taking on a good deal of risk in the process. The purpose of this post is to provide a basic understanding how much more money they could make over the current situation. Take a look at the tables and when you’re ready drop a comment.

Disclaimer: Most of the numbers discussed here are based on various media-reported estimates of revenues and costs. They should not be considered anything resembling a thorough accounting of the A’s operations. Estimates take into account rules described in the current CBA.

In an effort to further this discussion, I’ve taken the time to dissect the revenue sharing model, A’s-style. But first some explanations:

• Concessions numbers don’t match ticket sales because concessions sales are based on turnstile count, which runs at about 80% of ticket sales (you can’t sell concessions to no-shows).
• Parking sales numbers are based on 8,000 spaces sold per game over 82 games. This may be generous given actual parking lot usage at the Coliseum.
• Non-game events include tours and other activities outside of game days.
• In-stadium advertising, sponsorships, and broadcast revenues are placeholders for the purpose of fleshing out the model. So are the items listed in “Actual Stadium Expenses.”
• It is not assumed that the new stadium will immediately benefit the A’s in terms of more lucrative local broadcasting deals.
• Revenue sharing contribution is defined as 31% of Net Local Revenue. All teams pay in this percentage, plus luxury tax if applicable.
• “Recovered debt service from dev rights sales” is the “refund” the A’s will get from selling development rights to ~310 housing units per year. It’s this amount that is intended to finance the ballpark debt. That boils down to a $300 million loan, financed at $31 million per year over 15 years. The final loan structure is likely to vary greatly from this.
• “Revenue Sharing Receipt” is the share of the revenue sharing pool the A’s get.
• “Central Revenue” is national and international revenue taken in by MLB. This includes national broadcast contracts from FOX, ESPN, and TBS, plus merchandising sources.

And now for the details. Below is the A’s current revenue/expense model:

A combination of low operations costs and revenue sharing make the A’s a reasonably profitable franchise. That $140 million figure looks tantalizingly large, but don’t be mislead. Lew Wolff has held close to a “guideline” that dictates teams should spend no more than 55% of revenue on payroll, as is done throughout pro sports. Using the 55% rule the A’s payroll should be around $83 million, which is pretty close to this season’s actual payroll. Before we move on, remember the amount of the “Revenue sharing contribution.”

(estimates not adjusted for inflation)
In this model, A’s revenue has risen $25 million. Yet the “Revenue sharing contribution” is almost the same as in the current model. How can this be? The “Actual Stadium Expenses” table totals a whopping $52 million, thanks to stadium debt service and operating costs, which are all deductible from the amount used to determine the contribution. Consider it similar to your annual 1040 form’s “Adjusted Gross Income.” The A’s would service the stadium debt with sales of housing development rights, not stadium income. That would allow the A’s to reclaim all of that debt service and put it towards the team – or ownership partners. Notice that even in this instance the A’s would be receiving some form of revenue sharing receipt. This is because the A’s new revenue streams from the stadium would still place them slightly below the league-wide revenue average, squarely in mid-market territory. This number is smaller because it’s expected that most if not all teams that still are developing ballparks will have theirs open around the same time Cisco Field opens. New stadia for the Yanks, Mets, and ongoing improvements to Dodger Stadium and Fenway Park allow the big market teams to take the same deductions, limiting the amounts they pay into revenue sharing.

Apply the 55% rule to the future revenue model and the payroll grows to $97 million. Is that enough to remain competitive? In spurts. A fantastic diary posted by Taj Adib at Athletics Nation goes in depth on future iterations of the A’s. $97 million isn’t enough for anyone to turn into Brian Cashman. It is enough to invest in more than one franchise-type player while maintaining a young, cheap core of players. The franchise-player investments have inherently high risk, and if those players come through with career years while your young core stays healthy and produces, you might end up like this year’s Rockies or Indians. Gamble and lose, and you get this year’s Orioles or Rangers. 6 or 7-year deals are not easy to trade if a player seriously underperforms, so GM’s won’t have frequent chances to roll the dice. What we could see in the future might be shorter and more frequent rebuilding cycles for the mid-market teams. What we don’t want to see is a situation like the NBA, where GM’s are forced to trade bad contracts instead of trading players based on exchanges of talent. (It’s an ugly system, though for a number-cruncher like me it’s strangely fascinating.) Thanks to the number of roster spots per team, MLB’s salary/trade model is somewhere between the dog-eat-dog tendencies of the NFL and the egregious excesses of the NBA. And that’s a good thing.

A NY Times article (reporter Dan Reed) about Cisco Field has the rather sensationalistic headline, “Oakland’s Dream Stadium, or Traffic Nightmare?”

The article only briefly mentions the traffic problem and gets a quote from long-time fan Erin Hallissy, who I assume lives in Contra Costa County:

“For the loyal fans who live east of Oakland,” said Hallissy, who edits the alumni magazine at Saint Mary’s College, “it would just be too far to go to a game, especially on a workday when we’d be stuck with all the commuter traffic fighting their way home.”

Unfortunately, I saw this article at 7:00 p.m., at the tail end of evening rush hour, which was a bit messy thanks to a light shower and the astounding inability of many Californians to drive in inclement weather. Nevertheless, I immediately went to 511.org and took a snapshot of the traffic map. I queried the drive time from Lafayette to Fremont (Mission Blvd. South/680), which is a bit past the Auto Mall/Durham exit that would lead fans coming from 680 to Cisco Field. Here’s what I plotted (click image for bigger version):

35 minutes. The blue line indicates the route. As I’ve said before, southbound 680 in the evening is often not the nightmare many make it out to be. Much of the ballpark traffic will run opposite commute traffic, plus it will be distributed among 4 separate freeway segments plus some larger area thoroughfares.

But who am I to argue? A spicy headline beats dry analysis for reader attention any day of the week.

Fremont officials have been grumbling louder in recent weeks about the A’s delays in getting the development application in. FWIW I’m glad. They’ve expressed this frustration to any media person who asks – including me. I don’t know if it will get the app in more quickly, but it can’t hurt to put feet to the fire. Both the City and the A’s have remained professional and cordial throughout.

In today’s East Bay Business Times article by David Goll, Lew Wolff admits that the team’s in “the tortoise phase”:

Wolff himself admits he’s in “the tortoise phase” of his plan, anticipating up to 18 months for the city’s planning and review process to unfold once he submits a formal proposal. He also foresees spending $20 million to $30 million for a detailed design for the entire development and, assuming the Fremont City Council gives his plans a green light, about two years for construction of the stadium.

Fremont’s economic development director Daren Fields gave his opinion on when he thinks the ballpark could open: 2012. I think it can still happen in 2011, but if the application isn’t submitted in the next few weeks an April 2011 opening date could certainly be in jeopardy.

Last week two new websites came online for those interested in A’s new ballpark news. First up is the A’s to Fremont Support Group. Currently the only page is a mailing list signup form for interested parties, but this is sure to expand fairly quickly. I am not involved with this particular site as I was with the dormant “Bring the A’s to Fremont” site. That also is subject to change. For now I am replacing the dormant site with the new one on the sidebar.

Next up is MLB’s Ballparks of the Future site, presented by Cisco. It has a video showing Cisco’s vision of the future plus videos for all five in-development ballparks as well as additional galleries for other new and to-be-renovated venues. Check out the Nationals’ stadium tour video to get a glimpse of how crazy the premium seating market has become.

In today’s press release, Cedar Fair has thrown down the gauntlet. The theme park operator “believes that the traffic, parking and other operational problems that would be created by putting the stadium in the middle of Great America’s main parking area are insurmountable and would place the continued operation of the park at risk.”

After making this assessment, Cedar Fair offered to sell the park (remember they don’t own the land, they have a lease through 2039) to the city/49ers so that the 49ers could do what they wanted with it. Talk about hardball, read the stance for yourself:

Cedar Fair has analyzed information provided by the 49ers themselves regarding parking, usage dates, project footprint, and traffic flow. While other parties can weigh in on the fiscal and environmental risks that building a new stadium would bring to the residents of Santa Clara, we oppose the stadium as proposed for three basic reasons specific to the interests of Great America’s guests:

1. Unacceptable parking limitations for Great America visitors.
2. Increased congestion for Great America visitors.
3. Irreconcilable limits on Great America improvement plans.

When Cedar Fair concluded that an amusement park and the stadium as proposed could not successfully coexist, Cedar Fair offered the City and the 49ers the option of redeveloping the entire parcel. The next step will be for the citizens and the City of Santa Clara to decide: should the Great America site be used for a new 49ers’ stadium or should the park continue to operate? If the City and its citizens believe that the best use of this property is for a new stadium, then Cedar Fair is willing to consider selling the remainder of its lease and all of its interest and assets to the City or 49ers for fair market value.

So it’s Great America vs. the 49ers. Reading between the lines, it appears Cedar would prefer that Santa Clara citizens choose between the two. If/when an election is held to decide this, it will difficult issue to pass because it will be hard for the Niners to paint it as something other than a black-and-white scenario. Great America is the incumbent and doesn’t face an uphill battle.

Should the Niners get to the point of actually acquiring the park, there is a question of what “fair market value” is. It comes down to branding and the value of operations at Great America. Close the park and it becomes a sunk cost. They can liquidate the rides and technology there but that sounds like a pennies-on-the-dollar problem.

You may be thinking, “Whew, I’m glad the A’s aren’t dealing with this,” and you’d be right. It could have been this way, however, if the A’s went with the Warm Springs site next to NUMMI. NUMMI felt a similar threat and put up the stop sign immediately. The A’s and Cisco are partners. The 49ers and Cedar Fair? Not so much. Then again, maybe the 49ers really want the land so that it can be redeveloped in an effort to help pay for the stadium, whose cost is upwards of $800 million. It would be rather similar to what the A’s are trying to do, wouldn’t it?

So now it appears that Cedar Fair, the owners of Great America, don’t want to play ball. They’ve come out against the 49ers stadium concept on the lot north of the theme park, a stiffening of their need-more-info stance of a few months ago. Links:

• Chronicle’s Matier & Ross
• Mercury News (Julie Patel)
• SF Examiner (Bonnie Eslinger)

Wire services and others have picked up on an idea that 49ers spokesperson Lisa Lang has put out there: the 49ers may be interested in buying Great America to make the stadium work. Certainly it sounds interesting on the surface, but there probably isn’t much to it. Here’s why:

• Cedar Fair has already said it isn’t interested in selling. The company only bought the portfolio of theme parks from Paramount a little over a year ago. A look at recent press releases shows that the newly acquired parks have underperformed relative to Cedar Fair’s other properties. Cedar Fair notes that they’ve only begun the transition phase to bring the Paramount parks in line with their regular operations model. This is all part of a long-term strategy. You’d think they’d want to give Great America a shot at raising its performance before it gives up on Santa Clara. After all, it is their core competency. Of course, Cedar Fair’s statements are pure PR-speak and should be taken with a grain of salt, but it still makes sense in the end.
• How much would Great America be worth? The Paramount portfolio was acquired for $1.24 billion. That’s 5 parks. One article notes that the land’s assessed value is $114 million but that’s virtually meaningless. The 49ers would be buying the whole kit and caboodle. A more realistic estimate would be 1/5th of the portfolio, or $240 million. But the land is owned by the city, not Cedar Fair, so it could be worth less. So what is a fair price? And then what would happen after it’s sold? The 49ers would have to turn around and have someone operate the park since that’s not what they do. Would they want to develop some portion of the land to recoup their investment? Even if Cedar Fair were playing hardball to secure a good price for their investors, they’re in a position that gives them leverage. They’re not in an apparently desperate position in which they’re hemorrhaging cash. Note: Stock gains from the months following the acquisition have been wiped out as Cedar Fair reported the recent drag on the company’s performance from the Paramount parks.

One good thing may have come out of this: the Niners are now open to building on the overflow lot across from their team headquarters. That lot would be far more compatible for both parties than the planned site. On the other hand, the following item sounds distressing:

Bottom line, Lang says: “There are a number of site configurations (Cedar Fair) could look at if they are serious about wanting to go forward with the project.”

It’s a bad sign when most of the so-called negotiations are occurring through the media. Is the city supposed to shepherd this through? It’s hard to say.

Tomorrow, October 10, Keith Wolff will be making a presentation to the Fremont Unified School District Board at the Fremont City Council Chambers. The presentation is scheduled to begin at 6:30 p.m. There will be a comment period after the presentation.