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.

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