Wednesday, April 27, 2016

Did the Athletics Miss the Broadcast Rights Boom?

Increasingly, the term "Peak Television" is used to describe a landscape in which there is an abundance of original scripted television programs, to the point where it is almost too much choice and too much content to be produced and consumed in a profitable manner. 

At the same time, the buzzsaw that is the cord-cutting phenomenon continues to threaten the cable bundle. For the Athletics, as for any NBA, NHL and MLB team, the demise of the bundle is big trouble. 

For years, teams have extracted mega-rich broadcast rights packages as sports were viewed as the last "must see" element of the bundle. The expression "striking while the iron is hot," while hackneyed, was apt. Teams were wise to sign long-term deals, ensuring cash flow for decades, regardless of the media landscape. 

For instance:

Dodgers - 25 years, reportedly more than $7B
Phillies - 25-years, $2.5B plus equity in broadcast network
Angels - 20 years, roughly $3B

And, perhaps most relevantly for the Athletics, the Giants have a 25 year deal partnership deal in place with Comcast SportsNet (CSN) Bay Area that reportedly provides around 30-33 percent of total revenue every year and started in 2008. Considering that in that time the Giants have won three World Series titles and that the channel also carries the blisteringly-hot world-champion Warriors, it is likely providing a nice chuck of revenue for the team. 

The Athletics bolted from CSN Bay Area to then CSN West and now CSN California starting with the 2009 season. The Athletics deal with CSN California reportedly provides $43-48M a year until 2029, with an opt-out clause in 2023. The team has no equity in the station and does not have a partnership deal like the Giants have with CSN Bay Area. Assuming the Athletics opt out, the contract should bring in about $672M (assuming $43M annually) over the course of the deal. If the same deal was extended to 20 years it would bring in $860M. 

The Athletics deal seems respectable, especially compared to the three "Big Market" examples outlined above, except for two things: 1) the Bay Area, despite the Athletics' spin, is a major market, the 5th biggest TV market in the country; and 2) other "Small Market" teams have cashed in with much richer deals recently. For example: 

Diamondbacks - 20 years, $1.5B+
Padres - 20 years, $1B plus equity in broadcast network

CSN California's owners Comcast are in an interesting predicament. On the one hand, as cable providers, they are acutely aware of the need for the bundle to have compelling content. On the other, they are also content creators and they have paid dearly for sports rights at similar regional sports channels across the country. And, based on ratings, we may have reached the tipping point where teams no longer have the leverage they have enjoyed in recent years -- especially with content that isn't highly-rated.

In a non-baseball example, the NCAA recently re-upped its deal with CBS and Turner Sports for the men's tournament -- despite the original contract not expiring until 2024. The new deal runs through 2032 and is set to pay $8.8B over eight years. This is despite the fact that this year's championship game -- featuring powerhouse UNC and a buzzer-beater by Villanova -- scored the lowest ratings since 2009. While CBS/Turner wanted the content, the NCAA preferred to take the easy route and guaranteed cash in extending, rather than testing the open market where the next logical suitor is a wounded ESPN. Just how wounded? ESPN has lost 7 million subscribers, out of its 100M base, in the past two years.

The reality is that the Athletics will enter a vastly different media market in 2023 or 2029 than the frothy times of a few years ago. Unless regional sports networks like CSN California start entering "Skinny Bundles" (streaming or cable-based) or launch stand-alone options, their reliance on the carriage fees provided by the bundle threaten any future mega broadcast deals with teams. The Athletics may very well be forced to accept similar or worse terms than their current deal offers. 

The above observation may lead to this conclusion: the Athletics should launch their own streaming channel. This would be a very tech-forward move, but its riddled with risk. The Athletics guaranteed cable money comes in regardless of viewership. Beyond a hardcore base, it's doubtful that a meaningful number of subscribers would materialize during a dreadful stretch -- like last season. In addition, the team would assume all costs -- including Ray Fosse's mustache wax. And, asking sports bars and restaurants to maintain a subscription for requesting patrons, in addition to a cable package, is nonsensical. In the future these channels may be the norm, but not in the foreseeable future.

The Athletics stadium saga is still a major concern, but without a long-term lucrative TV deal, they will only fall further behind in the revenue game.

Saturday, June 27, 2015

How MLB Has (Nearly) Ruined Gameday Audio

If you pay any, even passing attention to SMB tweets, you may have been understandably puzzled by irritated comments like this:
The reality is that your scribe, sadly, lives outside of the A's radio network and is at the mercy of MLB's Gameday Audio and AtBat apps.

I listen to a lot of baseball, to the point where I sometimes question why I have tuned-in to a meaningless late-season Padres - Rockies tilt. Until this year, MLB had an outstanding, nearly flawless audio product. In a world of intense money-grubbing, they had done the right thing -- simply stream the radio feeds as is. I could dose off to Ken and Vince and Ray on a late summer afternoon as if I was listening over the airwaves. All of this changed this year. And, it embodies the worst quality of this business masquerading as a public asset that we love so dearly.

During Spring Training KGMZ broadcasts the ads disappeared when listening on a phone/tablet. An uneasy silence bridged innings. Then, once the regular season began, extremely-loud-and-incredibly-repetitive ads polluted audio feeds.

During one game here is what I heard, every single break:

Commercial 1: Home Depot deck products.
Commercial 2: Burger King "Crossain'wich"

Commercial number two, especially heard in repetition, makes any sane person want to jab a chopstick into their eardrum.

On YouTube, 1055thex fairly accurately recreates the sheer aural horror piped into my headphones at a higher decibel than I was listening to the game at:

So, how did a great product become loaded with offensive junk? Well, follow the cash train. In a press release likely read by me and one other person, Triton Digital trumpeted their partnership with MLB.

The spin is wonderful, with emphasis in bold mine:

This agreement with MLB Advanced Media, the interactive media and Internet company of Major League Baseball, will mark the first time targeted audio ads will be inserted into the Gameday Audio feeds, providing listeners with more relevant ads and giving advertisers access to an engaged and valued fan base....

“We selected Triton Digital because of its experience and expertise in the streaming audio space, and are confident Triton’s delivery of targeted and more relevant advertising will help advertisers and enhance the Gameday Audio experiences for our fans,” said Noah Garden, EVP, Business, MLB.

This was the only really honest quote:

“ Gameday Audio is an extremely enticing opportunity for advertisers,” said John Rosso, President, Market Development, Triton Digital.

The Naked Money Grab

Thankfully, minor improvements have been made the ad insertion process, making it just barely tolerable. It remains an uneven (inserted commercials are now too quiet) mess that is the antithesis of quality broadcasting.

The whole situation is a sad example of how the chase for cash is never-ending. Fans can pony up $20.00 for Gameday Audio or even $130.00 for MLB.TV premium and still be monetized further.

If either Triton Digital or MLB Advanced Media want to issue a retort, we'll publish it. However, they are probably too engrossed reading thank you notes from users praising the "more relevant ads" and "enhanced experience."

Tuesday, February 24, 2015

A's Revenue Sharing Funds Could Dry Up After 2016

It seems so long ago, but Major League Baseball's current Collective Bargaining Agreement (CBA) is inching closer to its expiration at the end of the 2016 season. For most fans, this governing document is the inside-baseball of baseball and something that is hardly given a second thought, let alone a first one -- especially in an era of labor peace. However, as discussed here, the CBA contains an expiring provision that greatly impacts the assumedly Coliseum-dwelling Athletics:

The 2012 agreement sunset revenue sharing for "Big Market" clubs, carving out a notable exception for the Athletics. It's worth noting that this was necessary as the Bay Area is objectively not a "Small Market." Those who drafted the CBA were optimistic that the A's would have a new home by 2016. By all indications, the team may be either in the limbo it is in now with the Raiders, or counting down the days until it must vacate the Coliseum for a Raiders-centered "Coliseum City." The third option, that the A's are developers of "Coliseum City" is possible, but seemingly the least likely given ownerships public stance. And a fourth, a move to San Jose, seems highly improbable based on today's outlook.

One other outcome is that the players involved vis-a-vis ownership could shift. However, you don't name a training facility after yourself (as Lew Wolff did) if you are thinking about cashing out.

The Athletics received $32M in revenue sharing in 2011(the latest year data is available) and 2014 team revenue per the annual Forbes "Business of Baseball" report was $187M. This means that fully 17 percent of the club's revenue -- on a very good year attendance-wise -- is tied to funds that may evaporate come the start of the 2017 season.

Looked at another way, Forbes pegged the team's operating profit at $27.4M in 2014, meaning the loss of revenue sharing -- assuming a similar payroll -- would make the team a money-loser at the tune of -$4.6M. As Wolff and Co. have noted that they are only interested in running a profitable ballclub, one can safely assume that payroll would be capped much lower in a world without revenue sharing.

It's a sad state of affairs when a team sitting in the Metropolitan Statistic Area with the highest median household income needs its own personal welfare provision in a billion dollar league. However, that's what you get for a decade plus of studying without action.

Assuming the "A's Stadium Exemption" isn't inserted into the next CBA, the Athletics payroll will likely have a shorter ceiling and may create a non-virtuous revenue cycle:

less money = fewer quality players = more trading, more rebuilding, shorter competitive windows = decreased attendance = less money.

The simple answer is to put the Athletics on a solid path to a new stadium.

Friday, February 20, 2015

Rooting for the LA Raiders

Editor's Preface: I understand the title of this post is inflammatory to Raiders fans. It is my preference that Oakland retain both teams. However, given the current fact set available, this seems unlikely. When faced with the loss of a franchise, as a baseball fan writing on a baseball blog I choose the A's. Here's hoping there's more than we know.

The Raiders are playing chess with Oakland and Alameda County and the A's seem to be waiting their turn at a different table.

Acknowledging the rich history and passionate fans of the Raiders, they have long had a very impulsive family at the helm in the Davises. Al Davis made some very smart decisions and some poor ones -- bound to happen in a long career. The jury is out on his son Mark, but the news that the team had invested real dollars on land in Carson is a bold move.

One of the main sticking points, according to recent reports, is the current debt owed on the Coliseum -- incurred by the city and county with their "renovation" in advance of the Raiders returning in 1995 -- and control of the Coliseum's land and its surrounding parcels.

Floyd Kephart, the city's point person for "Coliseum City" has been grumbling in the past few days that it's Alameda County that is being uncooperative. From the San Francisco Business Times:

"You can't solve for the unknown when the knowns are holding the unknown answers."

How deliciously Rumsfeld-ian.

The avatar-less horse-investor took to Twitter to stress his point:
So, Are the Raiders Serious?

It's trite, but there is credence to adage, "Put your money where your mouth is." It's also clear that the media-imbalance in the NFL is not going to last. There will be a franchise in Los Angeles in the next five years, probably two. There is simply too much money to be made and financing post Great Recession is far easier than it has been in years.

Consider these advantages of Carson/LA:

1. Shared construction cost with Chargers.
2. No responsibility for old Coliseum debt.
3. Mitigates loss of SoCal portion of fanbase.
4. Bigger population pool to draw from.

Again from the San Francisco Business Times. This is reporter Ron Leuty:

Something must happen with the city-county joint ownership of Coliseum land. Something must happen with the $106 million in debt left from the Coliseum redo that wooed the Raiders back to Oakland from Los Angeles 20 years ago. Kephart says those payments are coming out of the city's and county's general funds to the tune of $20 million-plus per year.

All About the Benjamins (Financing)

As much as it pained pro-Oakland Athletics fans, ownership supposedly had private financing secured for a San Jose stadium. Whether the same lenders would support an Oakland stadium years later is unknown.

The Raiders can't reasonably expect cash-strapped Oakland or Alameda County to contribute any public funds to stadium construction beyond minimal infrastructure improvement, and yet they do.

A July 2013 article detailing stadium plans noted the financing, at that stage, looked like this:

$300M - Raiders (Some reports indicate the team has $400M available.)
$200M - NFL
$300M - Presumably from Public Funds

And, in a face-palm moment City Councilman and now Vice Mayor Larry Reid took the bait:

Councilman Larry Reid acknowledged that public money would be needed to help cover stadium construction costs and wouldn't rule out supporting it.

Like 'em or loathe 'em, but the Athletics owners have always prided themselves on not planning to use public money for a private facility.

It's conceivable that the Raiders, whose ownership is not as wealthy as the Athletics (mainly thanks to the weight of Gap scion and billionaire John Fisher), is seeking both public funds for a stadium and partial debt forgiveness for the current Coliseum. If so, it is as bold as drafting a "burner" with bad hands based on a quick 40.

It's even more brash, but they likely also want full control and full revenue from any new facility. In this case, the city and county can help pay for a fancy house they don't even have the keys to.

Back to the San Francisco Business Times:

Kephart said Thursday (February 19) that New City (Kephart's development group) and the Raiders are "90 percent" in agreement on a new stadium in Oakland. The sticking point, he said, are "the unknowns" — the land, the debt — that requires the county's input.

And so, a hat-tip might be in order to Scott Haggerty, president of the Alameda County Board of Supervisors who remarked in the Oakland Tribune:

I don't know why people are insinuating that we are not at the table. Just because you are asking questions doesn't mean you are not at the table.

Millions of questions need to be asked before the city and county lay down again and allow the Raiders to fatten themselves on taxpayer dollars.

Bulldoze the A's

Where does all this leave the Athletics?

Well, for starters A's ownership has no interest in working with Kephart and partnering on development of the Coliseum and its surroundings -- meaning they aren't even at the table. The A's enter when the Raiders exit negotiations, and quite possibly the Bay Area.

Kephart is currently financially motivated to close the deal with the Raiders. Remember, this is a San Diego businessman who chairs a financial advisory board and has no emotional ties to any of the teams involved. It's all about the money.

If the Raiders commit, what's next? As has been hinted at in the past, it could be a wrecking ball for the Coliseum in the near future and a much more expansive search for a new home.

An Abusive Relationship

Faced with the prospect of forking over more money to a regional "asset" that actually loses money, Oakland and Alameda County should take a stance that protects taxpayers and actually forces the team to be a net-positive fiscally.

The Raiders extremely generous previous lease illustrated the depths to which the "die-hards" in power cow-towed to the team. From a 2011 New York Times article whose thrust was that a lockout would actually have been positive for the city and county:

...the Raiders pay just $525,000 a year in rent — a fraction of what the nearby San Francisco 49ers pay to play at Candlestick Park — and leave all stadium maintenance and game-day operating costs to the Coliseum public authority.

All in all, it’s a great deal for the Raiders; for Oakland, not so much. The stadium authority does collect some revenue through concession sales and parking receipts, but not nearly enough to cover its costs.

The bottom line is that the Coliseum authority loses money hosting Raiders games. Ms. McClain (then-interim director of the Oakland-Alameda County Coliseum Authority said the board spends about $5 million a year setting up for the team. A big part of that is for reconfiguring the Coliseum for football and baseball during the late-summer months when the A’s and the Raiders share the field.

 All of that is in addition to the $20 million a year that the city is still paying on the bond debt associated with the 1996 stadium expansion.

The team is currently holding out on signing a new lease.

For Oakland and Alameda County, the "prestige" of the Raiders also came with the privilege of paying $34.2M to owner Al Davis in 2003 after he sued, citing misrepresentation of projected attendance figures.

Here's how the team's attorney reacted to the verdict:

"Do we think that there's adequate compensation for damages? No,'' the Raiders' lawyer, Roger Dreyer, told The Associated Press. ''We're disappointed with the verdict. We're disappointed with the numbers.''

Al Davis wanted a billion dollars to compensate him for leaving Los Angeles.

We're the Pawns

A's fans and Raiders fans are pawns in this chess game, easily replaceable. This really is a battle between rich kids -- teams, developers -- playing with fancy toys we happen to be emotionally connected to.

If only it were as simple as nine innings and four quarters.

Friday, February 13, 2015

Giants Continue War on A's With Proposed Little Giants Stadium

Mark Purdy's recent Mercury News column detailing the San Jose Giants interest in building a ballpark in San Jose pointed to another potential nail in the coffin of the idea of the A's moving to San Jose. When a major league team to move to a territory where a minor league team operates, the MLB team is forced to pay compensation to the displaced team.

One option, which has never been seriously pursued is to allow both franchises to exist. Purdy noted that the Athletics, if granted approval to move to San Jose, might go this route:

Lew Wolff, the A's co-owner, has said several times that he would not force the San Jose Giants to leave town and allow them to continue operations, so he presumably would not object to a new fairgrounds stadium.

The reality is that Wolff and the rest of the Athletics ownership group have not really given a new little Giants ballpark much thought as they likely have realized that their very practical, if emotionally gutting (to some), move down 880 is dead. However, in the mode of "only the paranoid survive" the big Giants are continuing to keep their boot firmly on the Athletics neck.

Purdy noted that the big Giants are majority owners of the little Giants, a shrewd move made several years back by the franchise. The big Giants have two main goals: 1) make a move to San Jose, if possible, as expensive as possible; and 2) squeeze the Athletics fan base down as much as possible. Both goals make sense and both erode the Athletics ability to be relevant.

By ensuring, through investment, that the little Giants are in San Jose, the big Giants add an obstacle for the Athletics to overcome. There is a great documentary on Netflix called The Battered Bastards of Baseball about the Portland Mavericks, the last unaffiliated minor league team. The film concludes by covering litigation between the Mavericks and the Pacific Coast League who displaced the team in 1978 with a AAA franchise and were forced to pay more than $200,000 as compensation when the Mavericks owner took the matter to arbitration. San Jose is a rich city and the big Giants know this fact. They are poised for a mega-payout if the Athletics sought to displace the little Giants. By owning the team, they have also ensured that its affiliation won't flip -- like the River Cats recently did.

It's About Class

The other defensive move the big Giants have done is ensuring that only low-level baseball is played in San Jose, meaning that a AAA club could not swoop in and set up shop -- potentially draining fans away from AT&T. Class A is OK baseball, but the skill level -- while far above the average fan -- pales in comparison to AA or AAA and is lightyears from the majors. The level of baseball in San Jose on par with that being played in Rancho Cucamonga; Jupiter, Fla. and Salem, Mass.

The top 10 largest cities in the U.S., by population combined have 11 MLB teams, one AA team (San Antonio) and one Class A franchise -- San Jose.

The top 20 largest cities in the U.S., again by population, have a combined:

  • 13 MLB Teams
  • 6 AAA Teams
  • 2 AA Teams
  • 1 A Team -- San Jose.

Building a Castle and a Moat

Building a minor league ballpark in San Jose is a masterstroke for the big Giants. It's one thing to have a class A team vacate an older municipal facility. It's quite another to be able to specify real monetary damages should the Athletics or MLB force the minor league club to leave.

The little Giants new home will also ensure that San Jose, should the Athletics be allowed to move, won't be able to simply not renew the team's lease -- forcing a move and saving the Athletics a relocation fee.

In addition, the new stadium serves two PR purposes: 1) it shows the franchise and the Giants in general are committed to San Jose; and 2) it is a fork in the eye of the Athletics, showing that ballparks can be built.

The Giants are in a unique position, with arguably the strongest brand in the Bay Area. Three championships in five years is impressive, no matter how ardent an Athletics fan you might be. On the other hand, three straight first round exits is depressing, no matter how much of an Athletics homer you are.

It's this popularity that led the River Cats to seek a change in affiliation to the Giants, taking the great Johnny Doskow away from Athletics fans.

The Giants have literally sandwiched the Athletics in all directions, if you want to count the Giants Dugout store in Pleasanton. (Admittedly a stretch.)

Running Out of Time and Space

The Athletics are in a more precarious position that most realize or want to admit.

A simple if/then matrix:

IF Oakland agrees to allow the Raiders to serve as principal developer of the current Coliseum Complex.


(1) The Athletics are squeezed out of building ancillary revenue streams (ballpark village -- mixed use development) and are left with almost zero options in Oakland, assuming environmental liabilities and overall feasibility of Howard Terminal continue to render that site unusable.

(2) The Athletics are blocked from San Jose by: a) baseball's ironclad antitrust agreement and overall intractability of the commissioner's office; b) the prohibitively costly nature of such a move (payment for territorial rights, compensation for little G's and little G's stadium); and c) conflict on the timetable between a move to San Jose (including passing a city-required ballot referendum) and construction of a football stadium in Oakland (which, the Raiders have noted, likely necessitates the demolition of the Coliseum sooner rather than later).

(3) The Athletics could -- theoretically -- move to Sacramento. But, now with the club affiliated (although not owned/controlled by the Giants) they would need to "draft" the territory and pay compensation. However, the team would have to buy and develop land from scratch. Raley Field is arguably the best location, but the team would likely need to use it as a "temporary" home -- leaving it with less-than-desirable tracts like the spectral 1/8-built stadium next to the old ARCO arena.

(4) The Athletics could leave town for a period of years while a stadium is built, not exactly a great way to maintain and build a fanbase.

(5) The Athletics could pay the Giants to play at AT&T. This would only happen at the commissioner's behest.

(5) Some weird temporary stadium in Concord or floating at sea could house the team.

IF Oakland has the Athletics serve as principal developer of the Current Coliseum Complex.


(1) The Raiders move to LA, Concord or into Levi's Stadium.


And here is an updated list of things that won't be happening:

(1) Sudden renewed interest by Athletics ownership in Howard Terminal, especially with Signature Development Group poised to gain all ancillary benefits of the team's move.

(2) San Jose's antitrust lawsuit being granted certiorari by the U.S. Supreme Court.

(3) The Athletics and Raiders joining together to build "Coliseum City." Logistical hurdles (again stadium demo) combined with limited land to divvy up (thank Alameda County for exacerbating the problem with its recent purchases) mean that both teams, with historically inconsistent attendance, would be shackled to only marginally improved revenue streams.

(4) Magical money men coming in from abroad or otherwise to build two stadiums. A) The money is probably not there. B) Both Wolff/Fisher and Davis want the money from running a stadium, not to be tenants.

The Giants are Killing the Athletics

If Oakland chooses silver-and-black over green-and-gold, don't blame the Raiders. Blame the Giants. If, for those so feverishly (and admirably) pro-Oakland, you can view the situation objectively, the Athletics greatest chance of moving into a new ballpark and stopping this endless loop of stadium dialogue was a move to San Jose. Emotionally, it might be tough, but consider that this is a team whose last new stadium was Shibe Park on Philadelphia.

The Giants have done a masterful job of ensuring the Athletics moving truck has nowhere to go -- north or south. They have helped set up this "High Noon" dynamic with Athletics fans and Raiders fans -- those who think this through, anyway -- drawn into a deadly duel. The likelihood of the City of Oakland retaining two professional teams with new stadiums is slim. The owners don't want to work together and the city and county are tapped out and still paying off the "renovation" of the current Coliseum.

While the media market and population all indicate the Bay Area can support two MLB teams, the reality is that they both need to have places to play.

Zero hour is here and with San Jose barricaded off, it's Coliseum or bust.

And, bust may very well be relocation.

Sunday, December 21, 2014

Book Review: "The Kansas City Athletics: A Baseball History" -- Part I

The Kansas City Athletics: A Baseball History is an important part of the Athletics historical cannon; however, it is certainly not a beach book. Its length of 352 pages and academic writing style slow the casual reader down. In short, you will conk out a few pages in each night when reading before bed – making its completion a bit of an accomplishment.

One of the striking aspects of the book is that it makes the argument that the Kansas City/Arthur Johnson years were actually not effectively a time when the team served as a farm team for the New York Yankees, despite what many consider to be a series of one-sided trades, including shipping out a young Roger Maris. Author John E. Peterson contends that the swaps were more balanced than the team is given credit for by critics, including Cooperstown, N.Y.'s mayor Jeff Katz who -- in an unofficial capacity -- authored a strong counterpoint with The Kansas City A's and the Wrong Half of the Yankees: How the Yankees Controlled Two of the Eight American League Franchises During the 1950s

The bookends of the book also perhaps the most critical sections – the final years of the Philadelphia incarnation and the birth of the Charlie Finley era. The remainder, a season-by-season recap, is important, but dry material.

(Author’s Note: I read this book on my Kindle, making citing pages virtually impossible.)

Early on, we get a peek into the last burning embers of the once-mighty Philadelphia Athletics. 
This passage, regarding the 1950s finances of the team was telling:

The indebtedness of the team was staggering. The team had not even paid for the uniforms worn by players during the previous season.

A last-ditch attempt to save the Athletics by a group of Philadelphia businessmen, in conjunction with one of Connie Mack’s sons, is mentioned. Curiously, the author suggests that Johnson’s bid was successful thanks to two seemingly non-material issues: 1) he was kind to Connie Mack’s chauffeur – who had been pressed into shuttling the frail Mack to an American League meeting regarding the franchise's fate – and; 2) the Kansas City group showed up for the definitive meeting with Mack one hour earlier than scheduled. Johnson slipped a fifty dollar bill to the chauffeur and was granted access to Mack before the Philadelphia contingent. Of course, the story is more intricate, but this aspect was particularly interesting.

Historical reports laud Johnson as a shrewd financier. Peterson writes:

...he was an individual who could arrange mutually profitable deals involving millions of dollars through the ingenious use of lease-backs, second mortgages, large cash loans and special stock issues without any individual investing much of his own money. 

Regarding the purchase of the Athletics, Peterson summed up the feeling at the time of the deal:

In Chicago financial quarters, the talk was that Johnson swung the Athletics deal without a dollar of fresh money appearing on the table.

In reality, Johnson likely spent slightly more that $570,000, as sums moved in both directions, including payments by the Phillies for Connie Mack Stadium and Kansas City for Johnson's minor league stadium in town.

What seems clear, however, is that Johnson was a savvy businessman who did get a very good deal for the Athletics. (One thing to bear in mind is that if the Philadelphia contingent was successful in gaining control of the team, they would have been on the hook for the mortgage at Connie Mack Stadium and would not have received a pay-out from the Phillies for the facility.)

Six years later Charlie Finely purchased the Athletics for $4 million, a valuation that meant Johnson's Kansas City investor group reaped a 400 percent return on their investment.

When Finley Comes to Town

Of more interest to Oakland Athletics fans are the Charlie Finley origins. Charlie O. always talked a very good game, for instance, after purchasing the team:

"My intentions are to keep the A's permanently in Kansas City and build a winning ballclub....I have no intention of ever moving the franchise. I will spend any reasonable amount of money to get the Athletics into the first division....I believe the Athletics can be built up, but that will take money....I am not interested in capital gains, nor am I a fast-buck man."

Some of Finley's early plans included a sizable direct-mail campaign and offering, then-innovative, nine-game plans.

Much like what unfolded in Oakland, in 1962,, two years after his purchase, Finley was grumbling about attendance and was making eyes with a new city:

Reports indicated that Finely still wanted to move the team to Dallas. Before the season started, city councilman Charles Shafer was told Finfley refused to consider a two-year contract to broadcast the A's games because the team would move to Dallas after the 1962 season.

Finley formally applied to the league to move the team on May 18, 1962, but was denied as the American League meeting called was to discuss plans to aid the minor leagues, not relocation, thus making him out of order. A furious Finley issued his grievance to the media:

"Those goddam club owners think they can keep me from moving the team. I'll show them a thing or two. I've got some tricks I haven't used yet. My lawyers tell me they can't keep me in Kansas City, some kind of antitrust crap."

Beyond attendance, Finley's issues in Kansas City included parking, access roads, and concession problems.

The answer for Finley was a for the city council to submit a general obligation bond issue that would fund a 50,000 seat stadium with 15,000 parking spaces. For Athletics fans, this ultimate by Finley feels timeless:

"Unless Kansas City is willing to start action for a new and modern stadium, its days as a major league city are numbered. The present stadium is the worst in the major leagues in many respects."

Finley's grumblings did not lead to an immediate bond being floated, but did yield action in the form of feasibility (remodeling/parking additions/new stadium) studies and served as the origin

Birth of Green-and-Gold

In 1963, one of the on-the-field developments was that Finley put the lats names of players on jerseys, something that had not happened since the team's inception in 1901. However, this proved to be a one-year fad, with a twist -- Finley printed abbreviated names such as "Cooz" (Wayne Causey) and "Hawk" (Ken Harrelson).

Of greater historical importance, 1963 marked the launch of the Athletics current color scheme -- green-and-gold, The '63 squad donned vests in the "Kelly green"/"Fort Knox gold" variant. Peterson claims these colors were chosen because they were Finely's wife's favorite colors. (Other books have noted that Finley aped the scheme used by his hometown university, Notre Dame.)

Peterson offered this passage regarding the reception of the new duds:

The press ridiculed the uniforms and opposing players taunted the A's with comments like, "Hi there, beautiful."

The Athletics lone "All-Star," Norm Sieburn, did not play in the game as Yankees manager Ralph Houk felt the green-and-gold uniform would embarrass the American League.

The Athletics also changed the start time for games, moving weekday games to 7 p.m. from 8 p.m. and Saturday games to 6 p.m. Finley explained the team's calculus:

"Most of our fans come from 50 miles away. We want them to get to bed at a decent hour."

Enter the Chiefs

In February of 1963, Lamar Hunt announced that he was moving his Dallas Texans to Kansas City. The city gave him a very favorable lease, $1 a year for the first two years with the city taking half of concession sales. After the first two years, provided ticket sales were above $1.1 million, the city would receive five percent of gross receipts. However, should sales not reach the $1.1 million target, rent would revert to $1. In a sign of things to come, Kansas City also remodeled Municipal Stadium to make it more friendly for football.

Finley was inflamed and demanded similar terms. The city council responded that the team's rent was lowered in 1955 and 1956 (to $25,000) -- when the franchise first arrived. However, in comparison, the subsequent years' bills were north of $100,000 -- peaking at $148,000 in 1959 and clocking in at $125,000 in 1963.

Kansas City's then-mayor, H. Roy Bartle, and the outgoing nine-member city council hammered out and offered to Finley a seven year lease similar to what was offered to the Chiefs -- $1 a year for the first two years (regardless of attendance), then five percent of gross receipts if admission exceeded 950,000. If attendance dropped below this level, the rent became $1.

Peterson noted that Finley loved the contract, he was quoted as saying:

"...a wonderful contract. It was so wonderful, in fact, that no one in his right mind would ever have wanted to leave Kansas City."

The long-short, detailed in the book, is that the lease was subsequently ruled invalid and Finley was re-agitated. He telephoned a reporter at the Atlanta Journal and loudly complained. Finley then went to Atlanta and returned with a decision to move the team to that city.

The ever-combustible Finley, upon bumping into Cheifs' coach Hank Stram, informed him that Atlanta had a new stadium in the works and that Lamar Hunt should consider joining the Athletics in decamping from Kansas City:

"This is a horse-shit town. No one will ever do any good here."

By July 1963, Finley's focus had shifted to Oakland as several owners had expressed reservations about supporting a team in Atlanta -- travel costs and leaving the territory open for another club were mentioned.

Much like Atlanta, Oakland had plans to build a new stadium complex -- what would eventually become the Oakland Coliseum and Arena.

Finley's argument to the league for leaving Kansas City was financial: he claimed to have lost $800,000 in 1961 and $600,000 in 1962. At numerous points, Peterson details how Finley was somewhat ham-handed in negotiating broadcast rights. Finley claimed that the team took in only $200,000 in broadcast revenue in 1962, in comparison to $1 million collected by the Yankees.

With Oakland on his mind, and the Coliseum not yet constructed, Finley dialed San Francisco Giants owner Horace Stoneham regarding sharing Candlestick Park until an Athletics stadium was ready. Peterson details:

Stoneham told Finley he would not share the stadium and told the reporters "one of the reasons we (the Giants) moved from New York was that we were assured we would have the Bay Area to ourselves.

However, in a bit of delicious historical irony, the Giants couldn't block the Athletics as Oakland was regarded as "open territory."

Four More Years

The real value of Peterson's text can be found in the juicy details of Finley's squabbles with Kansas City and his flirtations with different locales. Included on this list is Louisville, Kentucky. He even went as far as to sign a conditional two-year contract with the city to use its current AAA stadium. Peterson sums it up perfectly:

Finley had, in effect, moved the team without league approval.

Finley offered:

"I don't expect it to be a bed of roses, but after I have had an opportunity to present all the facts, I am sure they will be appreciative of our problems and definitely give us approval. We have these caps that have KC on the front and we don't want to throw them away, so I think we'll call ourselves the Kentucky Colonels. Or maybe we'll just scrap the caps and call ourselves the Louisville Athletics or maybe the Louisville Sluggers."

American League owners rejected the move by a margin of 9-1 and gave Finley until February 1, 1964 to conclude a lease with Kansas City.

Enter the Finley bluster:

"This is still a free country and I don't believe that anybody can force me to operate my business in a city where I've lost a million dollars in three years. If I'm forced to sign, I'll sue the league..."

Finley pivoted and a plan was hatched to move the team to Oakland, playing on an interim basis at Youell Field. AL owners also rejected this proposal by the same margin, 9-1. (The lone dissenting vote is Finley.)

Attempts to purchase the team by the business community in Kansas City were rebuffed or never considered by Finley and, ultimately, he signed a four-year lease.

Part II: Coming Soon!

There is still a lot of developments to cover, as we explore 1964 to 1968, weigh in on the KC years and examine parallels to today's stadium situation.

Friday, December 12, 2014

"Hope Is Not a Great Strategy"

The popular sentiment, or at least one of the most vocal sentiments, with respect to the Athletics shipping off "All Stars" Josh Donaldson, Brandon Moss and Jeff Samardzija is that ownership -- mainly front man Lew Wolff -- is being "cheap." Accusation of abuse of the fan base are reverberating across the Twittersphere. In particular, this comment stood out on the SMB feed:
While it's understandable and comes from the hearts' of true Athletics fans, it ignores the guiding principles of Moneyball:

  • Buy low, sell high.
  • Don't invest in declining assets.

When heaping praise on he-who-shall-not-be-mentioned, a similar sentiment was expressed. Yoenis Cespedes' stock was sky high thanks to two titanic Home Run Derby performances and some AND-1 mixtape calibre outfield plays. A certain then-Red Sox pitcher was, statistically speaking, having perhaps his peak year. Pain was felt all around with the result, but it was a decision guided by how the Athletics have always operated.

  • Get maximum value relative to where the franchise is in the competitiveness cycle.

The reality is that, injured or not, Moss ended up having an average year and largely was a non-factor down the stretch -- before magically reappearing in the Wild Card game.

Moss' WAR was 2.5 and his average was .234. His best attribute was his attitude, followed by his 25 home runs.  Moss is 31 and arbitration eligible. He is going to command around seven million. Remember, this guy was a scrap-heap pickup. It's better than even odds that Moss' best years were in green-and-gold. Moneyball doesn't pay for past performance.

Donaldson is perhaps the best case A's fans have of ownership "abusing" the fanbase. Not only is he a great story, a converted catcher and fringe prospect in the Rich Harden-Cubs deal, he is a fiery guy who plays hard and posted some amazing numbers. Tyler Kepner of the New York Times even gushed that he was, based on WAR, the best player in the game.

Still, there were cracks in the firmament. Donaldson slumped mightily in 2013 after the All Star break and seemed to peak in 2014 around the time Kepner's article came out. Make no mistake though, Donaldson -- based on his last two years -- is a stud and the A's won't be getting a +6 WAR from Brett Lawrie. (Although, the switch to grass may help him blossom.)

Instead, the Athletics are saving a good amount of money, as Fox's Ken Rosenthal writes:

Donaldson projects to earn $4.5 million in his first year of arbitration, according to Matt Swartz of His salaries after that, assuming normal health and production, could be $7.5 million, $11 million and $16 million, a rival agent said. And those numbers actually might be conservative. So, the savings for the Athletics figure to be in at least the $40 million range.

The prospects are TBD. The Athletics might really regret this trade. But, JD's value was Mike Trout-high and nagging concerns like his leg-kick-timing no doubt entered into the calculus. The other thing to consider is that the Athletics swapped a plus defender at 3B for another plus defender. While WAR  has entered the lexicon, its defensive component can be glossed over. On the offensive side of the ledger, Donaldson only hit .255 last year -- albeit with 29 home runs.

While true that Donaldson may have had his issues with Beane, he himself may have issues without now-Red Sox hitting coach Chili Davis, a man who worked wonders for the Athletics.

Longer-Term Vision

One of the often mentioned words regarding competitive baseball clubs is that there are "windows" in which a team has a decent chance of: a) making the playoffs; and b) winning the World Series. Jonah Keri, a fabulous writer, had serious egg on his face when before the 2012 season he offered that the Athletics had felt their window to compete had closed and that was the motivation behind shipping off Gio Gonzalez, Trevor Cahill and Andrew Bailey.

From the Grantland piece:

Oakland’s trades of Trevor Cahill, Gio Gonzalez, and Andrew Bailey last month signaled a rebuilding process within a rebuilding process.

It turns out Keri, a really, really smart guy, guessed wrong. Beane sold high on each player. With the exception of one very fine season (2012 for Gonzalez), all three have failed to blossom into true "All Stars." Cahill and Bailey are virtually forgotten and Gonzalez is still a 2-3 pitcher, not quite an ace. The only common denomination among the three is that they all received big paydays.

The trades, from a marketing perspective, were disastrous in the short run. (In general, it is best to avoid buying the Athletics yearly calendar.) Fans were upset and similar allegations of no "long term vision" and ownership being cheap were uttered.

Of course, the "prospects" netted in this trade helped propel the team to three great seasons and included two future All Stars -- Derek Norris (2013) and Ryan Cook (2012). A cogent argument could be made that the savings from shedding these players -- or assets as Beane might call them -- also enabled the team to be the high bidder on Cespedes -- also an All Star (2013).

Hearing rumblings that Beane et al. might be looking to add -- now that he has subtracted so much -- sounds heartening and familiar. This is Beane in a piece by Oakland Tribune scribe John Hickey:

"We've collected young players, and we're going to try to redeploy the extra payroll."

A long-term vision should be defined by winning baseball and, no matter how championship-less the club remains, for their budget (real or self-stated) the team continues to excel in the aggregate.

Again from Hickey's piece:

Beane simply doesn't believe in the tear-down-to-bare-ground-and-rebuild philosophy. Since 1997 under Beane, the A's have won at least 74 games every year. The only other major league teams who can make that claim are the Yankees and the Cardinals, two postseason regulars.

Here is some historical perspective on this accomplishment from ESPN's Buster Olney:

The last year they posted fewer than that, Jose Canseco was their designated hitter, Scott Brosius was their third baseman and they had just started to install a young infielder named Miguel Tejada into their everyday lineup. It was 1997, and Oakland finished that season with 65 wins and 97 losses. 

Year after year since, the Athletics have ranked near the bottom of the majors in payroll, given the constraints of their market, and yet year after year, they have tried to win.

In contrast, here's an instance where the Athletics were truly cheap and lacked vision. From the National Baseball Hall of Fame's newsletter Inside Pitch:

On Dec. 10, 1935 – 79 years ago this week – the Philadelphia Athletics traded future Hall of Fame slugger Jimmie Foxx and pitcher Johnny Marcum to the Boston Red Sox in return for Gordon Rhodes, George Savino and $150,000. 

By 1935, Foxx had collected two MVP Awards and crushed 302 home runs. He belted 58 homers in 1932, two shy of Babe Ruth’s record at the time, and won the American League batting Triple Crown in 1933. His natural strength, cultivated as a boy on his family farm in Sudlersville, Md., was so formidable that Hall of Fame pitcher Lefty Gomez declared Foxx “has muscles in his hair.” 

Rhodes, meanwhile, lost 20 games for Philadelphia in 1936 and retired. Savino, a catcher, never made it out of the minor leagues.

The truly cash-strapped Athletics traded one of the greatest sluggers ever to pay the bills.

The modern-day Athletics are frugal, but cheap is a stretch.

The Counter-Narrative

It's human nature to tie events (favorable or unfavorable) to our convictions. To say that Wolff, the bane of large swaths of the fan base for his inability to commit and build a new stadium in Oakland, is orchestrating a concerted effort to dampen fan enthusiasm while enriching his ownership group is a an easy, if emotional-driven, connect.

The initial SMB tweet regarding the team not really caring about the size of the season ticket base is grounded in the fact that, thanks to numerous streams of revenue sharing (luxury tax, MLB Advanced Media, shared merchandise sales) and due to the city and county owning the and taking their cut of the gate, the Athletics financial sheet likely shows that the vast majority of operating income is not attendance driven. The gate is gravy. The proverbial Pepsi machine in Moneyball is always well stocked.

The Athletics due to their perceived status as "small market" have the political cover to make decisions that big market clubs "can't do." However, winning drives these choices.

An interesting aside: All MLB teams will be increasing their digital revenue in the near future, thanks to HBO turning to MLB Advanced Media for streaming.

The fact remains that numerous instances of the Athletics spending money have occurred recently. They don't fit with some fan narratives and depictions of Wolff, Beane, Fisher, et al. and are conveniently glossed-over.

For instance:
  • Extending Sean Doolittle.
  • Extending Coco Crisp.
  • Signing Scott Kazmir.
  • Trading for Jim Johnson (who made $10 million last year).
  • Signing Yoenis Cespedes.
Are the Athletics big-spenders? No. But, fans shouldn't want them to be profligate. The list of big contracts to "big" stars by big market teams that have worked out poorly is long. There are also a lot of players whose value exceeds their production -- Jed Lowrie will soon join the list. The problem is that players are paid based on past performance, and they usually get their best contract after their most productive playing days are over.

Building a Fan Base

By what measures exist (social media, historical gate attendance, merchandise sales), the Athletics fan base is below-average. It really burns one to shell out for a nice custom gold jersey with a player's name on it, only to wake up with a relic as they have been shipped off. It even applies to shirseys, meaning that the average Athletics fans' wardrobe is littered with short-timers and names of years past. This dynamic, the lack of a stable, marketable player, has certainly not helped develop fans. However, in recent years it has been given far too much weight.

The biggest threat the Athletics face is, and has been, the Giants and their shiny trophies. Championships breed passionate fans. Winning the World Series (vicariously through your favorite team) is, for a true baseball fan, the defining moment(s). The Athletics 2012 run was magical, but to paraphrase Beane, "No one remembers you unless you win the last game of the year."

The Giants are a marketing machine and have strategically positioned their minor league teams -- in San Jose and now Sacramento -- such that their Northern California presence is dominating. Before you say, "The Athletics seceded Sacramento," consider that the River Cats really wanted the Giants. From a column by the Sacramento Bee's Marcos Breton in September:

“Our fans were overwhelmingly leaning toward the Giants or they didn’t care which big-league team we were affiliated with,” (River Cats President) Jeff Savage said.

The Athletics badly want to win. It will validate their whole philosophy and bury the ghosts of post-season past. Again, noting human nature wires us to think this way, they may also want to win to gain  greater relevance and political capital for use in a stadium quest.

Just Don't Do It

The only jerseys, shirseys or player-related paraphernalia Athletics fans should purchase is that related to players long-retired and safe from the trading block.

Based on past results and with faith in "the process," only the name on the front matters. The Athletics might truly stink this year (although it's doubtful). However, at the very least the team won't be overly-burdened by big contracts to players in decline; or crippled by inertia.

As Beane noted in Hickey's article:

"Hope is not a great strategy."