Wednesday, May 23, 2012

East Bay Too Poor for A's, Warriors

What does the Warriors possible move mean for the A's? Plenty. Consider this. The Warriors, despite having some very mediocre at best teams, have been in the top 15 in attendance in the NBA since 2009. There can be no question that the team is supported at the gates.

The Warriors are the eighth most valuable in basketball according to Forbes and has are seventh in operating income.

Meanwhile, the A's have been scraping by at-or-near the very bottom of MLB attendance over the same time period.  According to Forbes, the A's rank dead last in terms of franchise value and 13th in terms of operating income.

The picture of the less-than-half-filled O.co Coliseum juxtaposed with the almost-always-packed Oracle Arena is striking and makes the Warriors desire to bolt that much more callous.

The Warriors have no cover, they want to move for one thing only -- money. They can't say its about butts in the seats. They can't say that people won't come to Oakland.

What they won't say is that the closer to San Francisco and the Peninsula/San Jose, the greater the corporate and personal riches.

The U.S. Bureau of Labor Statistics recently reported that the nation's highest median incomes were in the South Bay and the SF/Peninsula corridors. The East Bay, while trailing these areas, was still in the top 10 nationally.

Median Income -- 2006-2010

San Jose-Sunnyvale-Santa Clara, Calif. -- $69,800 (#1)
San Francisco-San Mateo-Redwood City, Calif. -- $64,820 (#2)
Oakland-Fremont-Hayward, Calif. - $57,000 (#9)

We all know the plethora of tech concerns that dominate San Francisco and Silicon Valley. (While the East Bay has a growing number itself, it honestly does not stack up to these corridors.) Make no mistake, the East Bay certainly has a robust corporate base. But, given the W's free reign over the region, why not be greedy?

Keeping the Status Quo

From a business perspective, positioning an arena in San Francisco makes the Warriors -- arguably -- more accessible to the South Bay, especially in light of the proximity of Caltrain and the pending Transbay Terminal. It also further protects the team from a Larry Ellison-led South Bay NBA invasion. They can employ the Giants argument that a South Bay team would erode the team's corporate base. Have you heard that argument somewhere else?

The Giants/Warriors posturing, while independent of each other, stands to cement the populous South Bay as a suburb of San Francisco, in this case by depriving it of major league teams. The Sharks are an exception of course, but who's to say the Warriors -- in a gleaming and expensive new arena -- don't make a run for them as well?

This current A's ownership, especially in light of comments indicating that Oakland will not be considered, would not be moved even if the Coliseum was as full, in relative terms, as the Oracle Arena is for the Warriors. A packed -- and untarped -- third deck would not produce enough revenue  for ownership to be able to raise payroll significantly and reach whatever arbitrary profit level they have set.

Think about Lew Wolff's recent comments for a minute. Plan B can't be Oakland. The real reason for this is that they are convinced the East Bay has neither the people, nor the big name corporations to make the level of money they desire.

Greed is good. (For team owners)

What About Us

Where do the fans come into these debates? They don't. Both the A's and the Warriors have surely weighed out fans that will be lost and determined that the money they will make from these new locations will more than make up for the revenue sacrified.

Sports are a business, and sometimes fans are just a necessary casualty.

Thursday, May 10, 2012

Lack of Superstar Hampers Attendance

Tonight's game was the debut of "Throwback Thursday" wherein fans get peanuts and a scorecard upon entry. Too bad the game wasn't all that great -- despite a spirited late inning rally.

Throwback Thursday, BART $2 Wednesdays and Free Parking Tuesday's are all excellent ongoing promotions that show the team does want to get folks to the ballpark.

The issue is that casual attendance is an awfully hard sell in some ways. The team is largely uneven on the field and lacks a true superstar. Two of the more recognizable and genuinely likable players -- Andrew Bailey and Gio Gonzalez were traded off this past off season.

The issue with attendance can't be cost. The A's are easily the most affordable professional sports option in the Bay Area. The real rub is that the team has no one to market and when they do, they trade them off. (At present, for a non-hard core fan to name even three A's players is no easy task.) Jemile Weeks is the flavor du jour, but he is hitting below the Mendoza line after a sensational partial season last year. Surely Weeks will bounce back, but how long before he goes too?

Besides Weeks is Cespedes the face? Is Brandon McCarthy (free agent eligible after the season)? Historically, just when you think it is safe to buy a shirsey (shirt-jersey), your favorite player -- even those signed by the team to a long-term contracts-- get traded. One needs to only think of Trevor Cahill, Dan Haren and Nick Swisher. Even with how exciting Cespedes is, you have to really think hard about spending money on a jersey or shirsey. One fan I spotted got the message and sports "PTBNL 00" for player to be named later.

At least when you buy a Catfish Hunter or Reggie Jackson jersey you know the team can't trade them -- again anyway. The A's need a player for fans to love without worrying that they will be gone with the next star-for-prospects cycle.

The stadium is not ideal,  nor is the chilly nighttime air. However, the A's have done a good job of keeping tickets affordable and creating fairly good recurring promotions. Unfortunately, this part of the organization has had a Sisyphus-esque task with the revolving door of fan favorites.

The Road to San Jose for A's Keeps Getting Longer

You gotta stay organized.

One may recall that last year, San Jose created an opportunity for A's owner Lew Wolff to not only help the city acquire needed parcels for a downtown ballpark, but also gain control of critical revenue-generating property (the parking garage) underneath his Fairmont Hotel. The whole situation was enormously stacked in Wolff's favor. However, he submitted a bid for two parcels at once and was disqualified for this as it did not follow the rules.

The situation is similar with respect to San Jose's transfer of then-redevelopment agency (RDA) assets to a RDA-esque entity the Diridion Area Development Authority. This move, which shielded the incomplete set of land that the city has acquired for a potential A's ballpark, is under heavy fire by the state which believes the move may have been illegal. The state is seeking to clawback land transferred in such a manner by cities across the state. The one exception was for land encumbered by contractual agreements. This land seemingly just so happens to have such an agreement in place. In November 2011, the A's and the city entered into an option agreement for the parcels the city has cobbled together. Remember how I mentioned that you have to stay organized? Well, per the state, contractual agreements on land prior to June 28, 2011 were exempt from clawback. Way to mark the calendars.

Meanwhile, up 880 in Oakland, the city is under similar scrutiny for the serious budget shenanigans regarding the Henry Kaiser Convention Center and the $3.5 million being committed to an environmental impact review study for the proposed "Coliseum City" concept.

Both cities had to be creative to shield assets and funds from the long arm of the state. However, both Oakland and San Jose could have paid closer attention to the calendar and avoided some of this scrutiny.

Cause for Concern 

In terms of the A's, the San Jose situation is far more worrying. First, the city has to win in court against the state. The timeline for the case to even begin could be more six months per today's issue of The Wall Street Journal. This puts us at around the beginning of October, assuming the clock started today. Trials do not last a day either, so tack on a few more months and a ballpark project is now pushed out nine months. In this span the A's could, in theory, approach remaining landowners around the in-limbo city land with offers for their property. However, the team has shown no movement in this direction despite promises.

If the city loses, it is anyone's guess as to what happens to those assets now under state control.

Assuming the city prevails, nine months puts us at the end of the current season and the end of the team's lease in Oakland. Yikes. The very favorable terms the team currently enjoys might not be offered again given the moving vans ownership has perpetually on standby. However, the team needs a venue as the actual construction of the stadium (absent CEQA lawsuits) will take upwards of three years.

That is three years from the point where San Jose has not only won against the state but also has floated and passed a referendum on spending public money on stadium related activities (an action deemed necessary by city attorney Rick Doyle) and this assumes a relatively quick surrender by the Giants of their territorial rights for Santa Clara County. (A proposition that will likely involve a high up-front cash payment to the Giants or a guarantee of revenue, meaning direct payments should the G-men's revenue drop below a certain level.)

Now we are four years out. The issue now becomes the league's CBA. The 2016 season is the end, barring an extension, of revenue sharing funds for the team. It is highly conceivable that no stadium could be built by this time and that the team's moneyed owners would be forced to take on an extra $25-$30 million in expenses until such time that a new stadium opens in San Jose, and assuming that it generates the anticipated revenue.

Looking Forward

Look, it is not that Oakland and Alameda County have either the means or the willingness to even partially fund a new stadium. What the city and the county do have is -- again in their assessment -- land at the Coliseum that can be developed more quickly (all the land is there, being already a sports complex removes numerous planning and zoning issues, the territory is unequivocally the A's, the city does not need a ballot referendum) and potentially at a lower cost to develop (no need to acquire parcels from private landowners, no need to compensate the Giants). Oakland also has better (until, and if, BART finally comes to Diridon station) public transportation options for fans.

Like it or not, the revenue may be lower in Oakland (a virtually unverifiable position to assume), but the costs are higher for a San Jose stadium and the procedural hoops keep getting more and more elaborate. The longer the clock ticks without action, the worse the situation gets. Of course, Oakland's biggest stumbling block is an ownership group that has no interest in staying on the city. (Kind of makes you wonder why those road "Oakland" unis haven't been banished.)

Wednesday, May 9, 2012

A's to Oakland: Drop Dead

In Oakland, the situation keeps on getting stranger. It is widely known that the San Francisco Giants have adopted a "no way in hell" policy when it comes to granting the A's the territorial rights to Santa Clara County (which contains San Jose).

Meanwhile, A's ownership is steadfast in its resolve to move to San Jose or bust. Nothing about either of these stances is very remarkable or has changed very much in the last several years. The City of San Jose and the A's have inched towards putting a shovel in the grounds with moves such as the -- now under fire by the state -- transfer of redevelopment assets comprising part of a proposed footprint for a new ballpark (agencies recently killed in California with assets transferred to the state) to a separate entity to protect the city's ownership. The city also granted the A's the option to purchase the land. However, this all means nothing as the Giants own the South Bay and MLB refuses to make a decision on the matter. (Not to mention the fact that they need to buy more land and pass a city ballot referendum.)

This backdrop, while riveting no doubt to many fans has cast a cloud over the A's franchise for years. It also was fingered -- somewhat indirectly -- as the reason for this past season's purging of talent for prospects. (A thought: Perhaps so few people attend games at the O.co Coliseum because they just can't get enough of this procedural excitement!)

Then, on May 3. a group of Oakland-based businesses -- from the old school (Clorox) to the new age (Pandora) -- held a press conference to declare that they are committed to keeping the A's in Oakland. The group also offered that if today's current ownership (Gap heir John Fisher and hotel mogul Lew Wolff) would not be amenable to this idea, that they had identified new owners who would. Don Knauss, CEO of Clorox, even suggested that the company would be the naming sponsor for a new Oakland ballpark.

This new effort has revitalized the largely dormant efforts by Let's Go Oakland! and has breathed a bit of new life into the dialogue. A concerted effort is clearly under way with a full-page ad in the Oakland Tribune urging Fisher to sell and an accompanying petition on Facebook. Oakland mayor Jean Quan is also trying to harness this issue and today published an Op-Ed with Alameda County Supervisor Nate Miley in today's San Francisco Chronicle. Quan and Miley frame two important issues in the piece: preserving and creating jobs in Oakland/Alameda County and the fact that the city and county (at least in their minds) believes that the land is already available at the site of the current stadium.

What do the A's ownership make of all this?

Wolff after the initial press conference by Knauss was quoted as saying:

"We have no plan B. But it can't be in Oakland."

Buzz off Oakland business leaders, we don't want to be here was ownership's message.

As the pro-Oakland campaign has continued, Wolff (who is traveling in Europe presently) had this to say in today's Oakland Tribune per Carl Steward's column:

A's owner Lew Wolff said Tuesday that he would be willing to meet with Don Knauss, the Clorox chief executive officer who is spearheading the latest effort to keep the team in Oakland. But Wolff, who is traveling in Europe, said he would spend most of that meeting outlining his unsuccessful efforts to build an East Bay ballpark.

"If they want to look at all that, I would do that," Wolff said. "I would be delighted to meet with him."


A's to Oakland: Drop Dead.