Thursday, April 17, 2014

Are the A's Really Interested in a "Long-Term" Lease in Oakland?

The A's and the 10-year Coliseum lease extension talks are an interesting PR/community relations tactic by the team. In theory, signing a long-term lease to stay in Oakland should be great news for those that hope to keep the club in town, and zooming out, those who hope to keep the franchise in the Bay Area. However, the lease talks are really meant to serve as an ultimatum and are a very clever game of "chicken" with the city and Alameda County.

Oakland and Alameda County know that the likelihood that both the A's and the Raiders will stay in town and have new stadiums built -- without public assistance -- is slim. As recently pointed out, the Raiders, unlike the A's, actually have expressed potential interest in building in Oakland. The site they are eyeing, however, just so happens to be where the Coliseum is located.

San Jose Mercury News columnist Mark Purdy recently detailed the Catch-22:

If Oakland agrees to do what the Raiders want and the Coliseum comes down, then the A's would obviously have no place to play. On the flip side, if Oakland agrees to an extended lease with the A's, that would clearly make it impossible to satisfy the football franchise's desires. 

The pro-Oakland line of thinking at this point says that if the A's were forced to vacate the Coliseum, they could temporarily relocate while a new park is built by the waterfront. Setting aside the feasibility temporary accommodations, the Brooklyn Basin proposal is nothing more than a series of beautiful sketches. There is no financing in place to build the park and no will from the current ownership to make the project happen. There is zero chance that the A's are going to privately finance a ballpark to serve as the crown jewel, and a major revenue generator, for an outside group. One can look at what the Giants and Cardinals are doing to see why ancillary development is critical. (Worth noting is that in San Jose Wolff has office and hotel holdings.)

Could the A's owners sell? Possibly, but the league would require an extremely well-capitalized ownership group. Such an group will only materialize when a definitive new stadium path emerges. Only the craziest of crazies could see a long-term future for the A's at the Coliseum. Sure, it has its quirks and a rich history, but the sightlines are often terrible (Mount Davis), the amenities are few and the old-time (Wrigley/Fenway) charm lacking. It is one thing to agitate and commission some CAD drawings, it is quite another to secure upwards of $500 million in financing.

The White Knight Isn't Coming

Let's also be realistic about Warriors owner Joe Lacob. He's not going to buy the A's unless: A) Brooklyn Basin is actually feasible; and b) he is cut in to the project. Signature Development of Oakland, connected both to Doug Boxer's Let's Go Oakland group and the nascent Oakland Waterfront Ballpark LLC (housed in the same building, on the same floor and operating out of the same suite in Oakland) is the real driver of Brooklyn Basin and Lacob, like Wolff/Fisher, isn't going to buy a team without a longterm profitability path. The real question, unanswered and unposed to date by the media, is does the Chinese investor group behind the Brooklyn Basin project, Zarsion Holdings Group Co., have any interest/desire to build a ballpark or buy the team?

Notable in all of this is the role of Doug Boxer. Boxer is helping Lacob's Warriors-to-San Francisco relocation efforts, while spearheading the, occasionally active, stay-in-Oakland group Let's Go Oakland. Could one of Mercury News columnist's Tim Kawakami's "sources" regarding Lacob's interest in the team be Boxer? While it was an interesting story, there is simply no substance to the rumors. Kawakami's quotes from Lacob, for an article posted earlier this month had no context and were drawn from an email exchange last December.

One Last Shot

Matier and Ross' article detailing the A's interest in a long-term lease extension noted a key caveat: the lease will need to contain an escape clause should the Raiders Coliseum-based stadium materialize, leaving the A's homeless.

Wolff noted,"There's a clause (in the proposed lease) that if the Raiders build a new facility, with some notice we will evacuate."

The article also made clear that the Raiders are the priority. Here's Coliseum Authority board member Chris Dobbins, "We want to lock the Raiders in before we make a long-term deal with the A's."

Where might Wolff want to move to in Oakland if we assume the waterfront is out? He told Oakland Tribune reporter Matthew Artz in December, "[The ideal site] would be where we're at right now. On land controlled by (the city and county)." So, in other words, the Coliseum complex.

Sure, the "Coliseum City" concept includes new baseball and football stadiums, but -- again -- you can sketch out anything, financing is another issue. The news and then retraction of the Prince of Dubai's involvement was telling. If a real roster of investors was in place for this massive project, surely this sort of rumor would not emerge.

From Artz's Oakland Tribune article on the 11th:

Appearing on 95.7 The Game, Quan said that the developers working on Coliseum City "are partnered literally with the prince of Dubai, who is next in line to lead Dubai. And they have capital."

And, then, from Artz's follow-up piece later the same day:

Quan refused to discuss her comments Friday, but acknowledged through her spokesman, Sean Maher, that the crown prince had not partnered on the deal. 

Maher said one of the developers does have connections to high-ranking officials in Dubai, "but that the crown prince of Dubai is not involved in the Coliseum project."

Keep in mind, this was the mayor herself, not a "source" or a spokesperson. Such a gaffe necessarily lends doubt to the project's viability.

What Wolff and Fisher really want is one last chance to force relocation to either San Jose or somewhere else. If keeping the Raiders forces the A's out -- either now or years down the line -- Wolff can claim that he has nowhere to go and push once more for San Jose.

Wolff's quote may read like this, "We have literally nowhere to go in Oakland. We tried to stay in the city and, ultimately, keeping the Raiders was their choice."

Monday, December 9, 2013

The A's Were Given Permission to Move to San Jose...and Didn't Do It

In the ongoing saga of the A's quest for a new stadium, the general public has been left with precious few actual facts. Therefore, the revelation that MLB had formally denied the A's request to move to San Jose on June 16 was a significant development. If the key to the Watergate Scandal, as depicted in All the President's Men, was to "Follow the money," than the corollary here is "Follow the timeline."

This blog's previous post (admittedly from a shamefully long time ago) explored this issue. Now that we know there was definitive action on June 16th, let's add some perspective to the issues and do some speculation. (After all, that is all really anyone outside of Bud Selig's inner-circle really has.)

June 16, 2013
A's denied request to relocate to San Jose.
Veracity: FACT

June 16, 2013
Sewer backup occurs at Coliseum. Later blamed on a sweater that had been flushed down the toilet.
Veracity: FACT

June 18, 2013
USA Today's Bob Nightengale reports that MLB had previous given the A's a set of conditions that needed to be met for a move to San Jose. From the article:

Baseball's blue-ribbon task force, formed four years ago, earlier this year presented Wolff with guidelines that could possibly make it work.

Veracity: UNVERIFIED
*Apologies that I erroneously tweeted last night that Nightengale reported this information the day of MLB's denial as opposed to two days later. 

June 18, 2013
San Jose sues MLB over its antitrust exemption, claiming the league is impeding the A's move to the city.
Veracity: FACT

Let's now assume that Nightengale has an inside source and that he has been giving out accurate information. Such a leap of faith makes his tweet from 2011 very interesting:

All signs and top #MLB sources say that the #Athletics will be granted permission by Feb to move to San Jose.

However, nothing came of this news, at least publicly. Enter Bill Madden of the New York Post, who on March 3, 2012 reports that the A's will be denied by MLB.

This was followed by the dueling territorial rights press releases from the Giants and the A's on Mark 7-8 of that year.

A year later, San Jose starts to break its lockstep messaging discipline with Wolff and the A's. City councilman Sam Liccardo on March 4 is quoted as saying that he wants San Jose to file an antitrust lawsuit.

To be clear, no one knows the exact connection of all these items, but the timing seems more than a coincidence. Something happened in early 2012.

MLB's formal denial letter this past June was likely precipitated by both Liccardo's threat and any number of communiques from San Jose (such as mayor Chuck Reed's public request for a meeting). Issuing it before the filing was smart business.

What May Have Happened

It seems highly likely that MLB in early 2012 presented the A's with a list of conditions for a move to San Jose, and the A's failed to satisfy them.

The A's have been explicit about saying that litigation was not the way to San Jose. However, if faced with no tenable options (e.g. crippling revenue guarantees to the Giants or an overwhelming up-front payment) a lawsuit is the last best option in the arsenal as it holds the possibility of: a) an outright win and a possible reduction of costs in the term sheet; or b) forcing MLB to settle as the discovery process would prove too damning (e.g. revealing all the league's financial secrets).

Going Nuclear

To be clear, suing MLB is not a move to be taken lightly. San Jose has crossed Commissioner Bud Selig and the league. Unless the lawsuit's appeal is successful, it would seem that the city's chances have actually diminished.

Perhaps the greatest irony of all, however, is nestled within the aforementioned court filing revealing MLB's denial letter:

Defendants (MLB) assert that this Court should take action based on a June 17, 2013 letter from Defendant Bud Selig. Defendants have failed to provide this letter to Plaintiffs (San Jose) or to this Court.

Even in litigation, MLB continues to keep the truth locked away, and force all of us to trade purely in speculation.

Saturday, June 22, 2013

Do the A's Already Know the Way to San Jose?

The news this week that the City of San Jose had lawyered-up and filed a lawsuit charging MLB of conspiring to keep the A's from moving to San Jose couldn't be called unexpected. While A's Managing Partner (minority owner/majority spokesperson) has steadfastly denied any interest in pursuing litigation, his voice is but one of many.

San Jose City Councilman Sam Liccardo who represents the area downtown where a new ballpark would be located in March hinted that a lawsuit was in the works. He was quoted then as saying:

I'm happy to swing the hammer and pound the nail....The A's ownership wants to find an amicable solution. But for the strong desire of Lew Wolff to play nice, I would be urging my colleagues to file suit right now.

For San Jose's elected officials, luring the A's south is good business sense -- especially if, as the A's ownership has stated, the ballpark's construction is privately financed. The benefits to the A's of a new stadium seem readily apparent. How its location factors in is an emotionally charged debate that is best left for another day.

San Jose previously seemed to work in lock-step with Wolff and, in turn, MLB. The one blip of near impertinence was in 2010 when San Jose Mayor Chuck Reed proposed and then quickly withdrew a ballot measure -- needed per the city's bylaws -- to determine if public funds could be used in any manner towards the construction of a baseball stadium. The proposal, made absent baseball's approval, left MLB Commissioner Bud Selig "disappointed."

Strange Baseball

Just as baseball games get pretty strange after about 13 innings or so, so too did the issue of the A's and San Jose nearly four years in.

Some notable moments:

December 24, 2011 -- USA Today baseball reporter Bob Nightengale tweets that the A's would be granted permission by February 2012 to move to San Jose.

March 3, 2012, Bill Madden of the New York Post, reports that the A's will be denied the right to move to San Jose.

March 7-8, 2012 -- Dueling press releases by the A's and the Giants are issued. The A's deny Madden's report and say that no decision has been made while defending their right to move to San Jose. The Giants, in turn, defend their territorial rights.

February 20, 2013 -- Bill Shaikin of the Los Angeles Times reports that MLB has stipulated the conditions the A's must meet if they want to move to San Jose. MLB and the A's flatly deny the story.

March 4, 2013 -- The aforementioned hint at antitrust litigation by Liccardo occurs.

March 30, 2013 -- The San Jose Mercury News reports that Reed and Wolff spoke.

April 2, 2013 -- Reed requests meeting with MLB Commissioner Bud Selig.

April 11, 2013 -- Selig declines to meet with Reed.

June 12, 2013 -- A meeting between Reed, Wolff and A's President Michael Crowley occurs.

June 16, 2013 -- Sewage backs up into the A's and Mariners clubhouses, forcing teams to shower together in Raiders locker room.

June 18, 2013 -- While reporting on sewage issue at Coliseum, Nightengale makes a passing remark that the A's have been given conditions for moving to San Jose:

Baseball's blue-ribbon task force, formed four years ago, earlier this year presented Wolff with guidelines that could possibly make it work. 

June 18, 2013 -- San Jose sues MLB for impeding A's move to the city.

More Than Meets the Eye

A possibility, however weak or strong it may be, exists that the A's really do have a list of conditions that need to be met in order to move to San Jose. These may include provisions such as an upfront cash payment or future revenue guarantees to the Giants.

Two things to consider about the mystery terms for the A's:

1. They may be onerous enough, in terms of cost, that the team's current ownership has weighed the costs and benefits and does not feel the move is fiscally prudent. The bottom line might be that the A's will simply make more money -- at least in the short-term -- by staying in Oakland and cashing revenue checks.

2. MLB may have purposely crafted the terms to be so difficult so as to incentivize ownership to keep the team in Oakland or find and sell to a group who will.

Both scenarios are lose-lose for the A's:

If #1 is at play, the "crappy" stadium means = low payroll argument is punctured. They expose themselves as being very profitable and lose leverage in the ongoing Coliseum lease extension negotiations.

If #2 is at play, Wolff and majority owner John Fisher need to either change direction and focus on Oakland or sell to a group committed to do so such as the one headed/identified by Clorox CEO Don Knauss. The problems with both these options are readily apparent: a) Goodwill towards the team's ownership in Oakland is near rock-bottom; and b) an unanswered question is how much the rights to San Jose would increase the team's valuation: ownership could be forced to sell the club below what they believe is "true value."

What is the Real Objective?

MLB's response to San Jose's lawsuit will likely be fairly predictable: they will first assert that it is without merit and then note that their "committee" is still hard at work, making comments at this time premature.

Nearly everyone is looking at this suit as a challenge to the league's antitrust exemption, but it may actually be a Trojan Horse designed to bring into the light of day the conditions the A's must meet to move. Such a revelation would be deeply embarrassing for the A's, which makes this move all the more remarkable given the city's previously cozy relationship with the team.

Somewhere someone knows something about this issue. Here's hoping that transparency wins out. 

Sunday, April 28, 2013

The Misleading, Meandering Musings of Lew Wolff

A's Managing Partner Lew Wolff's comments late last month were mainly more of the same -- mainly that the team is not viable long term staying in Oakland and needs to move into a new ballpark in San Jose.

Here is a report from Bay City News from March 21. Two passages stick out.

First:

We are assigned 2.5 million people, the other (the Giants) is assigned 4.2 million people," Wolff said. We have two counties assigned to us, there are six counties assigned to the other team.

This is a familiar line from the A's brass and a highly misleading one.

The only thing the A's are limited to, in terms of operation of the franchise, per the MLB Constitution, is building a stadium in any territory owned by the Giants. The A's are free to erect huge billboards across from AT&T Ballpark and open a merchandise shop in downtown San Jose.

If the A's and Giants were "assigned" territories for marketing purposes, how could the Giants parade the World Series trophy in Hayward, as they did this offseason, and open a merchandise shop in Walnut Creek, as they did in 2011.

All eight assigned counties, and beyond, are available to each team to market to. The A's simply cannot, at present, build a stadium in a county other than Alameda or Contra Costa.

Here is the second remarkable piece of the March report:

Wolff said the A's have turned a profit in Oakland each of his nine years as an owner by sticking to a rule of spending no more than 50 percent of revenue on player salaries, which reached $65 million last year

Unlike the first comment by Wolff, which can readily be challenged and debunked, this one requires a bit more research.

Let's examine how close the team actually comes to hitting the red zone that Wolff has designated (spending more than 50 percent of revenue on player salaries) -- the "Wolff Rule."

MLB teams are private enterprises and do not disclose financial information publicly, but each year Forbes uses every shred of information available to publish projected financial information for each club.

Here is known player salary information as compared to the projected revenue from Forbes for this season and the previous three.

Forbes Revenue for 2012: $173 Million
Opening Day Payroll for 2013: $68, 577,000
Percentage: 39.6%
Plus or Minus Wolff Rule: -10.4%

Forbes Revenue Estimate for 2011: $160 Million
(Hat Tip to New Ballpark who reported Forbes number last year.)
2012 Total Payroll: $59,493,290
Percentage: 37.2%
Plus or Minus Wolff Rule: -12.8%

Forbes Revenue Estimate for 2010: $161 Million
2011 Total Payroll: $70,476,206
Percentage: 43.8%
Plus or Minus Wolff Rule: -6.2%

Forbes Revenue Estimate for 2009: $155 Million
2010 Total Payroll: $61,733,644
Percentage: 39.8%
Plus or Minus Wolff Rule: -10.2%

The reality is that the team has not sniffed 50 percent of revenue devoted to player salaries from the 2010 season onward. The true average has been about 40 percent.

Can the Numbers Be Trusted?

One question, of course, is how accurate are Forbes' numbers? Teams routinely deny these estimates. However, thanks to Deadspin's expose in August 2010 of the several teams' financial statements we can get a better idea of how close the numbers are to reality:

Marlins Actual 2009 Revenue: $135.531 Million
Forbes Revenue Estimate for 2009: $144 Million

Marlins Actual 2008 Revenue: $139.647 Million
Forbes Revenue Estimate: $139 Million

Pirates Actual 2008 Revenue: $145.933
Forbes Revenue Estimate for 2009: $144 Million

Rays Actual 2008 Revenue: $160.961 Million
Forbes Revenue Estimate for 2008: $160 Million

It certainly would appear that the Forbes figures are, in fact, highly accurate.

Things Don't Add Up

The A's profitability, again since the team publishes no information, is largely predicated on the broad statements made by Wolff and the estimates provided by Forbes. However, in the 2011 offseason Wolff provided another breadcrumb in this blog post on the San Francisco Chronicle:

While the A's initially reported a loss in 2011, Wolff revealed they made a slight profit because the World Series extended to seven games. "We made $370,000, and that's after revenue sharing, not before," said Wolff, who confirmed last year's revenue-sharing check was $32 million. "I have to admit, without revenue sharing, we'd have a huge loss, and we don't want revenue sharing. We'd like not to be a receiver if we could.

Bearing this in mind, let's assume the revenue and net income numbers from Forbes are correct:

Forbes Revenue Estimate for 2011: $160 Million
Forbes Operating Income Estimate for 2011: $14.6 Million
2011 Total Payroll: $70,476,206

This means -- provided Wolff is being honest -- if you strip out the $32 million in revenue sharing from Forbes' figures the team should have posted a loss of around $17.4 Million. ( An aside here is that this figure is staggering given that post-2016 the A's  may lose at least some of this funding stream.)

Wolff's 2011 comment seems incongruous with what he said in March.

If the team is "consistently profitable," why would a seventh game of the World Series -- in a season where only 37.2 percent of revenue went to payroll -- be the sole reason the team was in the black?

As they say, if you believe that, then I have a bridge I'd like to sell you.

The A's real profit in 2011 was almost certainly close to the $14.6 million Forbes reported and not the paltry $370K that Wolff reported.

The Vacuum of Information

The nature of the news is such that reporters increasingly are being pushed to crank content out, and misleading statements like these two from Wolff -- somewhat understandably -- get published.

The first comment, regarding what counties the team has "assigned" to it perhaps takes a discerning mind and a real baseball devotee to suss out its accuracy. (You could argue, broadly, that this is the raison d'ĂȘtre of blogs.)

The second comment, while not a lie, is just plain misleading. Part-and-parcel to this is that MLB is more secretive than almost any organization you can fathom. This lack of transparency empowers owners to make broad statements without having anyone challenge their validity as the data points simply do not exist in the public domain.

One-on-one, Wolff should be asked by the press what percent of total revenue is dedicated to player salaries. They should dig further, ask what revenues and profitability actually are.

For any public official, of which Wolff is one, its the job of the press (and one that is greatly needed and appreciated) to demand accuracy and transparency.

Wednesday, March 13, 2013

A's No-Win Corporate Support Position

The A's and the Giants operate in the same market. Say that sentence out loud if you need to, because you would not know this when you look at payroll or how the teams are covered in the media.

The Giants are -- at the very least -- a middle-market team, if not a big-market team. The A's seemingly define "small-market."

The U.S. Census department places San Francisco and Oakland in the San Francisco Bay Area Combined Statistical Area (CSA). This CSA comprises 11 counties and greater than seven million people.

The A's and the Giants play in one big market.

For the Giants, the entire region is unabashedly their domain. They have a team merchandise store in Walnut Creek and recently paraded their World Series trophy in Hayward, both cities squarely in the A's "territory."

The A's meanwhile have twisted themselves into a pretzel in terms of where in the Bay Area they can embrace.

The A's dream -- however quixotic it may sometimes seem -- is to move to San Jose and tap into the rich corporate base of Silicon Valley. The team already has an agreement in place with Cisco for naming rights to a South Bay A's stadium. A's owner and public face Lew Wolff no doubt dreams of a stadium peppered with names like Apple, Adobe, Google, HP and Sandisk and suites filled with executives of these companies.

However, for the foreseeable future the A's are firmly in Oakland -- where one of their primary arguments for needing/wanting to shuttle down 880 is that there simply isn't a robust level of corporate support.

Enter the Catch 22

The A's are in a no-win situation.

If they aggressively court and land South Bay companies while in Oakland, they give fodder to the argument that this is a regional economy and the stadium's location does not necessarily create a direct correlation to corporate support. Consider that Cisco has agreed to be the naming sponsor for a South Bay stadium, but has no sponsorship agreement (at least that is readily apparent) with the club at present.

On the other hand, Oakland's most visible corporate titans -- The Clorox Company and Kaiser Permanente -- either do not sponsor the team at all, or have bare-bones agreements. This is not to say that the A's haven't engaged East Bay companies. For instance, the team has a long-standing relationship with San Ramon-based Chevron.

Kaiser Permanente is likely a casualty of the team's agreement with Fremont-based Washington Hospital Healthcare System. (This was predicated, one would assume, by the thought that A's were moving to Fremont.)

The Clorox situation is particularly puzzling. However, today there is about a zero percent chance that Oakland's sole Fortune 500 company (Kaiser Permanente is private and ineligible for the list) will become a major sponsor as its CEO is the point person for a group of local investors that surfaced last may pressing the team to commit to the city or sell, and then seemingly faded into obscurity.

The team's delicate dance is best embodied by the cash commitments the advocacy group "Let's Go Oakland" has in the bank from the Oakland and greater East Bay business community. Clorox CEO Don Knauss referenced this last May in an interview with KQED-FM:

Two-and-a-half years ago, some 45 companies in the East Bay committed to being corporate sponsors and put over a million dollars in escrow as sort of a down payment on sponsorships -- things like marketing programs, seat licenses, luxury suite commitments. Anything to demonstrate to the current ownership that we as the business community were very committed to keeping the A's here.

The A's seemingly are hand-strung from being aggressive in pursuing East Bay sponsors both because they won't commit to staying in the community, and because they are afraid that if more local companies did sponsor them public perception might shift -- MLB and A's fans might sense that the company does have adequate support and it would only be bolstered by a new park in the city.

A No-Win Situation

Here is how it breaks down:
  • Cisco is committed to sponsoring the A's in the South Bay to the tune of $4 million annually for 30 years, but isn't spending on the team until the move happens.
  • Clorox and 44 other companies are committed to sponsoring the A's only if they commit to staying in Oakland.
What the Fans See

The A's promotional schedule versus the Giants is an interesting contrast when looking at local companies who are sponsoring giveaways:












The Giants pull in tech titans Box, Stubhub (owned by Ebay) and Zynga in addition to longstanding pillars of San Francisco -- Genentech, PG&E and Visa.

The only tech firm sponsoring A's promotions is NetSuite.

The Giants have six S.F.-based sponsors. The A's sole Oakland-based promotional sponsor is the Tribune Tavern -- a restaurant in the Tribune building. Established and emerging Oakland companies Clorox, Kaiser Permanente, Pandora, and Sungevity are all nowhere to be found.

Promotions are one of the most visible ways that the public sees corporate support.

The message the A's send to the public is that they have virtually no connection to the city of Oakland's business community. 

Wednesday, March 6, 2013

Do the A's Really Want to Go to San Jose?

Let's start with a basic assumption: the A's ownership for all the deficiencies they are routinely accused of (being a poor community partner in Oakland, making no real effort to stay in Oakland and routinely "rebuilding" at the expense of the fans who have grown to appreciate players) actually wants to win.

What owners wouldn't? But, at what cost? How high of a priority is making money?

Another assumption: The A's would like a new ballpark.

Of course. However, do they want a fancy stadium at the expense of turning a profit year-after-year?

As hundreds upon hundreds of words have been devoted this off season to the non-story of the A's maybe, possibly, getting some sort of sign that they might get to move down 880 to San Jose, let's explore some utterly pure speculation: The A's ownership knows that San Jose is an impossibility and isn't really interested in building a new ballpark anywhere.

Solidly In the Black

The A's are consistently profitable according to Forbes annual "Business of Baseball" series. In 2011, it is estimated that they took in 14.6 million in profit. Bear in mind, the team finished 74-88 and dead last in terms of attendance. Not a bad profit for a product that was -- at absolute best -- middling. If the numbers are to be trusted (an open question given the dearth of official information), the team was more profitable than numerous big market teams including the Yankees, Phillies and Angels. If you are compare to teams with payrolls closer to the A's, they made more money than the Orioles and the (then) Florida Marlins. Looking at data going farther back, the A's, while not the most profitable, have consistently made money for the current ownership group.

It should be noted that team part-owner and full-time mouthpiece Lew Wolff has refuted that the team is as profitable as reported by Forbes. Here is what he said in January of last year:

"We made $370,000, and that's after revenue sharing, not before," said Wolff, who confirmed last year's revenue-sharing check was $32 million. "I have to admit, without revenue sharing, we'd have a huge loss, and we don't want revenue sharing. We'd like not to be a receiver if we could."

What we don't know is if the $370,000 profit is before or after the owners took their slices.

Still, profitability a central focus for the A's.

Sure, We'll Build a Ballpark

 Wolff, and billionaire majority-owner and true silent partner John Fisher have said they have financing in place for a $400 to $500 million new ballpark in downtown San Jose. The A's are seeking to follow the model of the Giants who built the first privately financed ballpark.

The thing about the Giants stadium is that, while objectively a very nice venue, it has shackled the team to hefty yearly payments of $18 million to retire construction debt. This debt, coupled with high player salaries has led the team to pursue ancillary development.

Here is Giants president and CEO Larry Baer in April 2012 after the team announced plans to develop the Mission Rock area adjacent to AT&T Park:

We've been very open about the fact that for the Giants, we need to create revenue....We've got a fixed number of seats ... and players aren't getting any cheaper.

The Giants aren't alone in seeking ancillary development to help finance their organization. The St Louis Cardinals just broke ground on their $650 million ballpark village concept. The A's themselves sought to pursue this concept in 2007 when the idea of moving to Fremont was still alive.

Before we continue, consider.

1) Lew Wolff is a real estate mogul.
2) A privately financed stadium provides no guarantee of profitability and requires enormous up-front outlays.

When the A's focus shifted to downtown San Jose, talk of ancillary development was roundly denied by Wolff. While his companies own office towers and hotels in the downtown area, there would seem to be no physical opportunity to build a major project next to, or even near, the proposed ballpark.

In April, Wolff was quoted in the San Jose Mercury News as saying:

We have no ancillary real estate we're looking at in San Jose.

Does Anyone Really Believe This?

An organization admittedly utterly dependent on revenue sharing (which will unavailable once the new ballpark goes up), and who seemingly has zero tolerance for being unprofitable will finance and assume debt obligations for a massively expensive, privately financed ballpark on top of likely having to pay the Giants compensation (cash or revenue guarantees) for the right to move to San Jose.

It makes zero sense.

Doomsday is Coming

As previously detailed thanks to the last year's Collective Bargaining Agreement,  the $32 million plus welfare checks may very well come to an abrupt halt.

So, the A's should want to speed away to San Jose, right?

Maybe not. If they can convince the league to continue giving them a carve-out for revenue sharing -- despite being in an objectively "large" market -- than why not stay in Oakland at the Coliseum provided the city and county don't put the screws to them too much during the upcoming lease negotiations?

The A's owners can continue to put the San Jose show on while any number of checkboxes remain to be addressed -- needed land, a San Jose ballot initiative, territorial rights from the Giants and -- possibly -- financing given no ancillary development.

It is one thing to say something, but quite another to actually do it. (Their still-unexecuted land option with San Jose for the smattering of parcels assembled by the city's defunct redevelopment agency is about the only concrete movement the team has taken.)

Wolff and Fisher may very well be content to sit in Oakland, collecting huge revenue checks and waiting for a suitor to make an offer to sell the team that blows them away or for a city to lure the team away with incentives and the promise of a fancy stadium.

This ownership group may very well be fooling us all by being outwardly hell bent on moving south, while internally they know that staying put means a guaranteed profit.

If we are going to devote numerous columns to non-news that could be encapsulated by a tweet, "MLB may have given A's criteria for move to San Jose," we should at least take time to consider that Wolff's and Fisher's motives may not be what they seem.

Thursday, February 21, 2013

Good Grief! The Non-News News of the A's

Here is what we know.

Bill Shakin of the Los Angeles Times is reporting that MLB has laid out a set of conditions the A's must meet for a potential move to San Jose.

Has MLB confirmed these conditions? No. From the article,

"The committee continues to work hard on this very complex, complicated situation," MLB spokesman Pat Courtney said in the statement.

So what do we actually know? Nothing new.

We do get this unsubstantiated tidbit from Shakin:

The commissioner's office has expressed concerns about the viability of the proposed San Jose ballpark site and the financial projections offered by the A's in support of a move, according to people familiar with the discussions. It is unclear if the A's have been asked for guarantees on either score.

What should we take out of all of this? Not much.

Punting Leverage

The A's remain in limbo, yearning to move to San Jose while firmly planted in Oakland. MLB has taken so long to decide on a theoretical San Jose ballpark that it has actually created an opening for the city of Oakland to have some leverage.

Enter the spat between Oakland City Administrator Deanna Santana and A's owner Lew Wolff.

On Dec. 21 of last year, Wolff released to the media and -- as we know know for certain -- sent a letter regarding an extension of the A's lease in Oakland past this season. The team clearly cannot open next season in San Jose as there will be no major-league ready stadium available and the Giants continue to hold territorial rights to Santa Clara County.

Fast forward to Tuesday and Santana tore into Wolff for not sending Joint Powers Authority (City of Oakland and Alameda County mutual governing body for the Coliseum) the letter. From the East Bay Express on Tuesday:

When you saw the recent letter Lew Wolff put out that was highly-covered through the media about his desire to stay and negotiate a lease extension for five years with the city and with the county, what you should know is that letter was never forwarded to the JPA or it was never forwarded to the city and county, it was forwarded to the newspaper. It’s just some of the game-playing we struggle with without them being at the table in good faith in order to have discussions around these negotiations when the media is feed a different impression.

Wolff, furious, responds by firing a trademark ALL CAPS email to Fred Blackwell, Santana deputy. From today's Oakland Tribune (sans caps):

I am surprised that you sought to discredit me....(It) is very sad when someone is devoted to harm someone else's reputation.

And, there goes Oakland punting credibility as a competent city. (It should, however, be noted that the Friday before a Monday Christmas is about the slowest news time of the year. Surely, it was not a coincidence that the team issued a hat-in-hand letter at that time.)

The article concludes by offering this insight into the upcoming  lease negotiations, which were termed as expected to be "grueling":

At Monday's gathering, city officials said they were seeking about $3 million in concessions from the team, including a demand that it turn over more parking tax proceeds collected during game days and share more game day revenue with the Raiders. 

Best Shot?

The reported stipulations the city are seeking are weak.

The other East Bay teams all have more plausible exit strategies they could employ, giving the city a greater incentive to keep the A's. The Warriors are free to go to San Francisco and the Raiders could return to L.A. (assuming league approval) where a new stadium is on the horizon.

The fact is that there is no major league facility in the United States or Canada (Olympic Stadium in Montreal is debatable) that is being built or is not in use for the A's to move to. For the next three-to-seven years the A's best, and possibly only, place to be is Oakland.

Oakland should demand that the team make a good-faith effort to engage in the Coliseum City planning. Despite the recent misunderstanding, Blackwell stood by remarks that the A's ownership refuses to discuss the concept. Again, from the Oakland Tribune:

I am still disappointed that our efforts to meet with the A's to talk about a new site were rebuffed and stand ready to have that conversation.


Stipulate that the A's send a senior official to planning meetings. Make the team produce a report saying why it objects to the plan. Push them.

In the End

Here is what we have learned:

1. MLB may have provided the A's with guidelines for moving to San Jose.
2. Oakland City Administrator Deanna Santana did not see the A's letter regarding a lease extension. (It may be best to send her certified mail from now on.)
3. Lew Wolff either has a broken keyboard or a real anger/etiquette problem (see caps, all).
4. Oakland/JPA is seeking monetary concessions from the A's (some of which will go to the Raiders) in the team's next lease.

Get ready for another season of no news being the news when it comes to the A's off-field issues!