Wednesday, May 12, 2021

Diamond Dave Kaval's Star Dims as MLB Threatens Oakland

So, that happened...mainly MLB puffing out its sizable, graying chest and issuing an ultimatum: make it work Oakland, the A's will have other options lined up. 

The league giving its *formal and public* blessing to relocation is intended to do what exactly? Motivate the Oakland City Council. Yes. Finalize the sale of the other 50% of the Coliseum to the Athletics? Maybe. Open up viable relocation offers? Also maybe. 

Mainly, it felt like Rob Manfred being Rob Manfred. He's a lawyer by trade and his fandom of baseball as a sport, rather than a business, seems an open question.

A window into Rob Manfred came from an unexpected place and an unexpected voice last summer. As the league was trying to get going while the pandemic raged, The Daily featured New York Times reporter Michael Schmidt (who for years covered the Trump/Russia/Mueller investigation) in conversation with the commissioner, who he met during the 1994 strike. Manfred was an employer-side labor lawyer during the work stoppage. 

Schmidt recalls meeting him in '94:

And he was this pugnacious, in-your-face, takes-no-prisoners lawyer who had the sport’s biggest problem on his desk. And we would just get on the phone. We’d get on speakerphone. He’d put me on speakerphone. And he would scream at me. And I would push back at him. And after a while, a few years of this, I think we both sort of looked down at our hands and realized that our hands were sort of bloodied, but we hadn’t really gotten anything out of it.

Later he compares the previous commissioner, Bud Selig, to Manfred:

Different from Manfred, he’s a baseball romantic. If you get on the phone with Selig, you always have to listen to him regale and tell stories about baseball history. Just a deep-seated love of the game.

The Kavalcade Rolls On

Telling in Dave Kaval's media interviews post-MLB statement are the talking points about the Coliseum site -- not just the current stadium -- not being viable and citing the need to be in a "downtown," "urban" area. It's a sloppy dodge. East Oakland is urban. Is it downtown? No, but neither is Howard Terminal. Both areas are proximate to downtown Oakland. As Jerry Brown seems omnipresent in California's history, his tenure as Oakland mayor -- sandwiched between governorships -- dealt a death blow to then-minority owner/majority mouthpiece Lew Wolff's "Uptown" plan that may have been the team's best chance to move downtown. With Laney College also out of the question, there is no feasible area to build.

Howard Terminal is straight industrial. Your neighbors are a scrap steel mill -- which you are in active litigation with -- and one of the busiest ports in the world, with the truck traffic to prove it. Oh, and you have no public transit, only delusions of gondolas and realities of freight trains.

Here's how I put it in a nutshell after the relocation bombshell:

The "viability" of the Coliseum site is a major red herring. It's eminently transit-accessible. It only needs a cruise terminal and a space port to have all modes in close proximity. It has land. Oceans of parking lots that can trade places with the current Coliseum when the new park rises. What's the real holdup? It's a really hard question to answer as the team/league finds the area deficient for a ballpark but the A's master plan calls for finishing its acquisition and building the area out with retail and housing.

Also, lots of ballparks are in non-downtown areas, including the Braves (new), Dodgers (old, but thriving), Phillies (relatively new) and Rangers (new).

The MLB-issued statement is meant to stop any questions regarding the Coliseum site. But, they are still worth asking.

It's also worth asking Kaval and Fisher (if you can find him) why they have made such a staggering difficult site the do-or-die option and if, presuming they are being honest, its selection was a chess move meant to spur relocation permission.

If you previously bought Kaval's song-and-dance, it's time to reassess. I wonder how "office hours" will go next time?

The "Expiring Lease" Line

Kaval also keeps bringing up that the A's lease only runs through 2024 and, even assuming quick approval, Howard Terminal won't open until 2027. This connection seems to go unquestioned by interviewers, buying the spoon-fed fib that the A's will be without a stadium after 2024. 

Three things: 

1) IF Oakland still owns 50% of the Coliseum, they surely will agree to an extension. Look at what happened with the Raiders, who avoided becoming co-tenants in Santa Clara with a lease extension, even after formally announcing the move to Las Vegas.

2) IF the A's succeed in purchasing the city's 50% share of the Coliseum, they won't need a lease.

3) IF the A's decide to relocate, presumably any stadium project would take until at least 2027 anyway. They will be starting from zero.

The lease issue is a Kaval talking point. He should be pressed on it, but his likable personality papers over some threadbare arguments. 

It's amazing what PR stunts and food trucks will do for you.

Tuesday, March 2, 2021

What Could a 20% Capacity Coliseum Feel Like?

The A's are selling "Flex Tickets," hoping for 20-25% capacity based on state and county restrictions. All-in-all, most games could look and sound almost "normal."

In 2019, the last time fans were able to attend, the team averaged a little more than 20,500 fans. The Coliseum is the sixth-largest MLB stadium by capacity at a listed 47,170 available seats. 20% of that total is 9,434. But, if Mount Davis is opened up, capacity swells to 55,945 with 20% equating to 11,189. Restrictions will likely include teams and stadium personnel in the count, bumping down the fan attendance somewhat. 

Looking at the 2019 gate numbers, 10,000 fans a game is functionally half of an "average" crowd, which is often much smaller -- particularly during the weekdays. The home opener, fireworks and giveaway days will suffer the most. Pods will also dampen enthusiasm and make for strange visuals.

How might it all come together?

The Good

In terms of the ballpark, the A's, at least in this very narrow instance, owe a hat tip to the late Al Davis for his taxpayer-funded centerfield seat mountain. In an age where distance is needed, the Coliseum has plenty -- if it chooses to use them all.

The Foul Territory (Maybe)

This will be an interesting one. Most clubs have a modern ballpark where fans are much closer to the players. The A's large amount of foul territory on either side of the diamond provides a lot of space from the bullpens and players. If an "X" number of rows from the field prohibition on fans is imposed league-wide, A's fans may be unnecessarily restricted.

Food Concessions (Maybe)

Most games, the A's do not open all food concessions -- as there are simply not enough fans. As you get to the cheap seats in the upper deck they get pretty sparse. The team could open more stands and provide more distancing. But, the extra staffing might make this cost-prohibitive. There is also the issue that the "premium" offerings are all found in the lower bowl, potentially creating crowds.

Food Trucks

Outdoors, with space.

The Bad

The BART Bridge

Yikes. After even modestly attended games this can clog up at both sides and in the walkway. Maybe the solution is a crowd control professional to "meter" entrance? Density may also prove tricky for the bridge's vendors.

The BART

BART's key role in funneling fans to the Coliseum leads to packed cars, even for modestly attended games. Fans without cars are particularly at a disadvantage. There is also the issue of platforms, where spacing again will be challenging.

Lower Concourses

Tight and not a lot of air movement. Workers are also basically working in a dungeon, a sharp contrast to the closer-to-the-field/open air concessions at the Giants ballpark.

The Bleachers

The left and right field bleacher fans are awesome and the sections are generally more packed than most areas. The drumming, the signs and the flags are key elements of the "A's" experience. While needed, spacing in these sections will be impactful and pods may be hard to enforce.

The Maybe

The Clubhouse

The team already announced that A's All Access won't be in effect for 2021. The Clubhouse is intended to be a gathering space, with both indoor and outdoor features. It will be curious to see how this space is handled.

The Sad

Beerfest and Root Beer Float Day

Not happening indoors anyway. 

Hopefully Fosse can resume his yearly scooping, albeit this time in the parking lot.

Questions, comments? Email mailbag@smallmarketball.com.

Saturday, February 27, 2021

Dave Kaval Has a Bridge To Sell You

By all public appearances, the A's would seem to be much closer to a new ballpark at Howard Terminal. However, despite Dave Kaval's omni-present smirk smile, appearances can be deceiving. The team is acting as though it has laddered the CEQA review exemption process completely and now is on to the city of Oakland reviewing its environmental impact report. Not so fast: as The Athletic pointed out, the CEQA streamlining process the team considers done-and-dusted isn't: an entirely fresh appeal is going to the California Court of Appeal's First Appellate District. But, classic Kaval the PR machine has been on overdrive. Starting February 26, a flurry of tweets have burst forth touting the city of Oakland's release of the team's draft environmental impact report. A draft that may prove meaningless, should the First Appellate District subject the team to a more rigorous CEQA process. In reality, what progress has been made towards the new stadium: half ownership of a site that they are not planning to build a stadium on (the Coliseum) and a bunch of fancy renderings. For A's fans, the former is new, the latter is old hat: Oak-to-66th, Fremont, San Jose -- lots of great renderings. Heck, Lew Wolff even managed to secure naming rights to a phantom stadium. (You can't say he didn't do anything.)

Kaval is the P.T. Barnum of the A's: all hat and no cattle. This way to the egress! Robbed of his food trucks, flotillas traversing the bay and fan "office hours," his impact is even more clear and more muted. The non-owner mouthpiece does everything he can to make the sale. "Rooted in Oakland!" Right. (So was Marcus Semien, literally.) Food trucks and stunts are really sufficient to take the attention/heat off of Gap hier and owner in absentia John Fisher? The man who seemingly has nothing to say and no money to spend? It's important to see Kaval for what he is: a corporate suit, toeing the company line -- for now -- and ready at the drop of a hat to move on, to Portland, Las Vegas, wherever the money and the plan are. 

Veteran Bay Area sportswriter Tim Kawakami hit the nail right on the head with a recent Twitter thread asking where Fisher is and what the plan is? Of course, Fisher doesn't respond, but Kaval does. "While I own zero percent of the team, let me tell you about our great plans -- larger cupholders for each seat!" Fisher, watching the Gap empire and inherited wealth suffer under fickle consumers stays mum. (Maybe he's just been taking part in a multi-year mindfulness silent retreat?) Eventually, Kaval offers to have a beer with Kawakami (a great idea during a pandemic). Kawakami seemed unmoved.

The Howard Terminal project is the path of most resistance. A) It sits smack next to a body of water that is poised to massive climate change risk, in addition to being on top of a major environmental mess; B) The gondola is a neat idea, but an added expense that also would need its own permitting; and C) Tangling with the Port of Oakland and well-heeled Schnitzer Steel seems foolish, especially when you consider the alternative -- the Coliseum site. Kaval in the above Athletic article also cites other supposed proposals for use of the Coliseum site, specifically an NFL stadium. While an idea, it's a pretty big stretch given the NFL isn't expanding, the 49ers are actively marketing in the East Bay and the last team wasn't exactly selling out in Oakland. But sure Dave. He knows, the city knows and you know that the Coliseum site is nearly shovel ready and incredibly accessible in terms of infrastructure. And, especially given the projected glut of commercial real estate post-pandemic, the A's real estate play at Howard Terminal and the Coliseum is overly ambitious and costly and, at a base level, impractical.

Kaval could wine me, dine me and shower me in "Rooted in Oakland" propaganda and merchandise. (He won't and I'm not asking him to.) I love Oakland. I don't think he does and I don't think Fisher does either. A's fans are being played, to what end I don't know. Maybe Fisher wants to sell. Maybe he wants to move the team. I just don't think a scion of a slowly fading clothes empire with no visible ties to Oakland wakes up thinking how he is "Rooted in Oakland." The way the team is run, both on the field and in terms of the 1,000-year stadium saga, is closer to a hedge fund than a community asset. Consistent profitability is favored over fan relations. Fisher watched Moneyball and drew the wrong conclusion: Schott was too generous. Prove me wrong. Just don't trot smiling Dave out for another PR burst. It's getting tiring and I just think A's fans are too smart for this farce.

Comments: mailbag@smallmarketball.com

Thursday, September 10, 2020

Does Winning Baseball Boost the Bottom Line During a Pandemic?

The Oakland A's are having a great season and boast one of the best records in MLB. However, no one is there to see the action: this begs the question, if a team wins the World Series and no one can come to the games, what does it mean for its financial health and long-term future?

In any other year, A's fans would be reading stories about how winning was translating to some degree of increased attendance at the Coliseum. The A's are drawing well/not drawing well enough are the two usual narrative threads. This year, all teams are tied -- at exactly zero fans. Win all you want, you can't sell more tickets, beer or jerseys (at the stadium stores anyway). While gate attendance is a measure of fan interest, it is a revenue driver -- even if not a huge one.

The financial loss from a shortened, fanless year is unknown. MLB pegged the A's loss in a May report at $115M. However, the report assumed an 82-game season and the final figures did not take into account distributions from the league's national media contracts. We're in the midst of (hopefully) playing 60 regular season games, meaning a greater loss seems likely.

Provided the A's make the playoffs -- extraordinarily easy this year and likely given their current pace -- one can assume that in some way this will be beneficial financially. However, like all items at the intersection of finance and baseball, the league and its teams are virtual "black boxes," revealing little to nothing. 

One aspect of the A's fiscal health that shouldn't be glossed over is who owns the team: John Fisher. Fisher is heir to the Gap fortune and, like much of brick-and-mortar heavy retail, the chain isn't doing well as the pandemic rolls on. The San Francisco-based company since mid-March has closed 200+ stores, including its flagship one in the city. Fisher is a billionaire, but how much of his fortune is tied to Gap's performance and stock value? A downturn at Gap may lessen the already slim tolerance A's ownership has for not being profitable.

Beyond the financial implications of the bizarro year, there are psychological ones to think about as well. The A's have done a better-than-most job of making the empty Coliseum look and sound more normal. But, how is the winning spirit being converted into fan enthusiasm? One measure is TV ratings. The Athletic reported on August 22:

NBC Sports, which owns RSNs that broadcast the Chicago White Sox, Oakland Athletics, San Francisco Giants and Philadelphia Phillies, said ratings are up double-digit percentages in each case.

Good news, right? Actually, increased TV ratings probably don't mean much for the A's. They are great for NBC Sports California and Comcast as they sell ads. The A's have no ownership in the channel (unlike the Giants) and have a set (and modest) annual contract with the network.

If the A's can't sell tickets now, are they trying to sell them for 2021? I haven't noticed a single ad touting A's Access plans for 2021. Other teams -- including the World Champion Nationals -- are not only actively advertising '21 plans, but also offering discounts and credits for new accounts. The A's only overture is providing a 5% discount to '20 All Access members who rollover their plan for tickets in '21. Of course, even if the A's rollout an aggressive '21 strategy, COVID reality or lingering unease may significantly dampen enthusiasm.

The goal, of course, is that an exciting A's team engages the community through winning it all, putting public sentiment squarely in favor of a new ballpark. Being World Champs or AL Champs even significantly raises the team's community profile. It sells tickets, hot dogs, jerseys and the public and its policymakers. With no fans and no parade (or at least traditional one), will winning the World Series materially translate the way the A's want and need it to?

Thursday, October 3, 2019

The A's Troubling TV Rights Dynamic

There are at least 54,005 A's fans in the Bay Area, as evidenced by last night's Wild Card game (of which we shall not speak).

The Coliseum was loud and full. It comes against the backdrop of baseball continuing to suffer league wide attendance declines, as chronicled in a recent New York Times article. The A's were actually up year-over-year with an average of 20,521 fans a game in 2019 versus 19,427 a game in 2018.

One can be skeptical of A's President Dave Kaval's ultimate "rooting" in Oakland (as I am), but it is undeniable that the ballpark is much improved from a fan standpoint in the last five or so years. A's Access, The Treehouse, Championship Plaza, all easy, feel-good moves that make fans feel valued and that they are getting value.

But, as the Times piece points out, butts in the seats may not be worth as much as it is generally assumed.

...league revenue, which topped $10 billion in 2018, is up more than 70 percent from a decade ago, thanks in large part to increasing media rights fees, which reached an all-time high this year.

Those diverging trend lines — fewer fans in the ballpark, but richer media fees and overall revenues — make up an uncomfortable truth about baseball in the 21st century. Ticket sales, long the bread and butter for the sport, are no longer the central driver of the business at a time when the sport’s digital business is ascendant....

Meanwhile, fees from baseball media rights are growing at a much faster rate. That explains how revenue can soar while attendance plummets. Baseball’s new television agreement with Fox included a 39 percent increase over the previous deal.

Also, numerous teams, including the Los Angeles Dodgers, Texas Rangers, Los Angeles Angels, Seattle Mariners and Philadelphia Phillies, have signed long-term, multibillion-dollar deals with regional sports networks in recent years. The Tampa Bay Rays recently signed a new television deal that reportedly quadrupled their average payment.

“You can’t raise the prices of tickets, whether they be suites or regular tickets, anywhere near the value that the media rights are increasing,” [Todd Lindenbaum, chief executive of SuiteHop, an Airbnb-type service for luxury suites] said.

Rays Deal as Harbinger

Lamentable as it may be to old-school baseball purists, but terrestrial radio rights are not very valuable. This is why the A's are partnered with right-wing-low-wattage radio KTRB as their "flagship," but really primarily with the streaming service TuneIn.

As, in my opinion, regrettable it is to have radio bedfellows like Rush Limbaugh on KTRB, the TuneIn channel is excellent and is an ocean of A's content for a fanbase that had been regularly deprived.

Still, when it comes to money, TV is still the name of the game.

The Times excerpt above notes that the similarity "small market" Rays "reportedly quadrupled" their average TV rights payment. A quick Google shows that it may have only been a modest uptick and the Rays partially see the lower amount attributable to increased cord-cutting.

From a Feb. 9, 2019 Tampa Bay Times article:

But it’s not nearly as much as the Rays had once hoped, given a sports industry-wide drop in rights fees as a fallout from cord-cutting and other issues, or that some of their competitors got previously. 

And it’s “well, well, well under” the $82 million annual average over 15 years that was reported last spring (of 2018) by Sports Business Daily, (Rays Principal Owner Stu) Sternberg said, declining now, and likely ever, to reveal what the exact number is, or how much it could boost payroll or help pay for a new stadium. 

 “It’s going to be an increase of where we are,’’ Sternberg said, estimating the new deal would rank about 20th in the majors. “Much of the reason we’ve spent all that we have is because we knew we had some more revenue (coming) off of TV. Unfortunately it’s going to fall reasonably short of what we anticipated four years ago.’’

A's-Comcast Deal: Known Unknowns

The best(?) information on the A's deal with Comcast on NBC Sports California on FanGraphs suggests that the team is receiving between $43-$48M annually in a deal that runs through 2029 and has an opt-out in 2023. (The San Francisco Business Times reported that the deal runs through 2033.) Does anyone have the source info on the deal? It's hidden pretty deep on the web if it exists.

Assuming what has been reported is accurate, the A's are locked out of even a Rays-like windfall for now, all while more and more people drop cable. This could have major, major implications for the team -- especially if we are to believe that media rights (local+national) are more valuable than raw attendance figures.

A bad TV deal also hurts the team's value, should majority owner John Fisher be looking to sell.

The 2023 opt-out is mighty interesting. You may recall that 2023 is the date that the Howard Terminal stadium should be opening, if all goes to plan. If it is approved, it seems likely that the A's would opt out and roll the dice with Comcast on a new deal.

Alternately, although Comcast continues to add broadband subscribers, the dynamics of its video side may be such that -- assuming the opt-out is mutual -- it exercises the option to try and squeeze the A's or cut the annual payout.

The biggest risk of the A's deal is that it has no equity component in NBC Sports California, unlike the Giants deal with sister station NBC Bay Area. This means it has no say on programming and far less leverage. The A's reported deal, given the big Bay Area media market (fifth largest), is modest, at best.

The Digital White Knight?

The A's TuneIn deal was heresy in some respects -- the first MLB team to go essentially streaming first. Why not do the same with TV? DAZN would be an ideal candidate for an overpay.

In 2018 the billionaire-owned streaming service headed by former ESPN head honcho John Skipper paid $300M to MLB to air "Changeup," a nightly clip show. They have lots of money and big ambitions. The second biggest contract in sports, with the highest annual payout is DAZN's deal with boxer Canelo Álvarez -- $365M/5 years. Yikes.

A deal with the A's might break the RSN lock on teams and re-juice the sports TV contract market.

Or...

The other way to get a plum TV deal? Move to a new market where you aren't treated as second-fiddle and you are moving into a gleaming new ballpark as the talk of the town.

Let's hope it doesn't come to that.

Or Even...

The A's could start their own streaming service. But, as the kids say, "A bird in the hand is worth two in the bush." (OK, they don't. But guaranteed cash payouts and pre-built infrastructure is far less risky than DIY.)

Wednesday, October 2, 2019

Wild A's Days -- Lawsuits, Dive Bars and Payrolls

Lawyer Ball, for Real

The A's are set to host the AL Wild Card game, but their front office team feels like it has already lost with a recent, somewhat rogue Oakland lawsuit challenging the pending deal Alameda County has to sell its share of the Coliseum complex to the A's

The lawsuit itself is a little wild, given that the mayor does not support it, but what's more wild is that A's non-equity President Dave Kaval went on "The Build" on A's Cast and basically dumped on the lawsuit and the city to a certain extent. His comments were all middle-of-the-road, but he toned a very irritated Chris Townsend down not at all.

Most companies, as a policy, do not comment on pending litigation. Townsend called the suit a "low blow" and the city's effort to champion different spots for a ballpark as "a mirage." Kaval didn't push back on him.

The presiding judge in the matter may not like Kaval's "transparency" as Townsend calls it. It all begs the question, is Kaval -- the A's seemingly head negotiator and, in title, a member of its executive team, also its designated spokesperson? If so, have the A's lawyers OK'd these types of appearances?

Side Note -- One of the great mysteries of the summer is why, given Kaval's role, "Chairman Emeritus" Lew Wolff was the one to push back on the Raiders in August after Mark Davis vented to the media about how the team made life difficult in the Coliseum for them. The linked to article even calls Wolff the "A's owner." Was the otherwise loquacious Kaval suffering from a throat problem?

Meanwhile, in this trivial matter and in the material Coliseum land lawsuit matter A's majority owner John Fisher remains mute.

A Love Letter to the Last "Dive Bar" in Baseball

New York Times reporter Jack Nicas in today's paper authored the piece "The Beauty of America's Ugliest Ballpark," all about the Coliseum:

Yes, the Coliseum is ugly, but it is cheap, gritty and fun. The spacious confines allow fans to roam around, spread out and enjoy a comprehensive view of the game. And the park’s dinginess fosters a freewheeling atmosphere, where bleacher die-hards bang drums and heckle outfielders, while upper-deck denizens pack picnics and pass joints. 

It all adds up to a baseball experience that stands out in the increasingly homogeneous ballpark landscape. If Marlins Park is the flashy new nightclub, and Fenway Park and Wrigley Field are the historic pubs, the Coliseum is baseball’s last dive bar....

So when I relocated to Oakland four years ago, it came as a surprise that I fell in love with the Coliseum. 

The streets around Fenway and Wrigley are lined with lively bars and restaurants hawking overpriced beers and gourmet sausages. At the Coliseum, fans stream through a caged walkway over an industrial site where vendors sell bacon-wrapped hot dogs and cans of beer for a few bucks. (Prices are negotiable.) 

 While Fenway and Wrigley are cramped and packed, the Coliseum is cavernous and half empty on a good day. Have a large group, or need to take a private phone call? Take a section of the upper deck to yourself. (Smaller crowds also increase your shot at a Jumbotron appearance, which is important for an aggressive mid-inning dancer like me.)

Interesting, Kaval pops up and speaks about the A's need for a new ballpark:

There is an urban renaissance, especially among younger millennials. So that’s one reason we’ve been focused on the downtown waterfront location.

Umm, just to be clear, you are speaking about attracting a monied "urban renaissance" crowd, right? I don't think it was intentional, but Kaval is throwing shade at East Oakland. For a team facing criticism of a sweetheart deal with the county for the Coliseum at the expense of potential affordable housing development, is this the best public messaging?

A's are Cheap, Rays are Cheaper

Think the A's $92M payroll is cheap, think again as it dwarfs the Rays as The Wall Street Journal details in today's paper:

The Rays opened the year with a budget of about $60 million, the lowest in the major leagues. They still managed to finish with 96 wins and earn a spot in the postseason for the first time since 2013, with a matchup in the division series against the Houston Astros on the line.

Other teams have put together brilliant seasons with even lower payrolls. The A’s, for instance, spent less than $60 million to build the roster that claimed the AL West crown in 2012. Back then, however, the average payroll registered at about $100 million. Now, that figure has risen to nearly $134 million, meaning the Rays landed at more than 55% below average.

That almost never happens. In fact, only one team since 2000 has made the playoffs with a payroll that far below league average—and once again, it was the Rays, whose 2011 payroll clocked in at 56% below average.