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August 15, 2005

The Next White Elephant?

Another Try in Oakland

by Neil deMause

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Consider the other white shoe dropped. Lew Wolff, the Los Angeles real-estate magnate who is the public face of the Oakland A's new ownership group, revealed details of his plans for a new stadium at a Friday meeting with the county coliseum authority, tantalizing A's fans who've been raised on tales of how Mount Davis is the reason why Billy Beane can't have a free-agent budget.

From a design standpoint, Wolff's vision is certainly, uh, interesting. Condo apartment blocks rise in left and center field, there's a giant video screen where you'd expect the batter's eye, and...oh, just look at the pictures. Wolff's stadium designers--I haven't been able to find out who's behind these renderings, though I suspect the involvement of someone at Sony--have shoehorned in "quirky" elements from a bunch of existing stadiums, from a triangular bleacher section (Fenway) to seating on a building roof in left field (Petco, though the A's building would be built anew rather than incorporating an existing historic structure). And if it's hard to feel much affection for the quirky when it's this contrived--had any warm fuzzies about Houston's imitation of Duffy's Cliff lately?--well, that's postmodernism for you.

In any case, it's pointless to take the designs too seriously at this point. The final product, if it ever gets built, isn't likely to much resemble the initial renderings. If renderings were destiny, Petco Park would have a free picnic area in center field, the Phillies would be playing in Chinatown, and the Metrodome would be rubble.

No, the interesting part here for A's rooters, Oakland residents and concerned baseball fans alike is what Wolff didn't reveal: who will pay for it all. The A's press office has refused to release any details of the plans beyond an exceptionally hand-waving Wolff press release (sample English-like text: "A visionary leadership from all parties associated with this project who believe the A's are a community asset is required to help us reach our objective in creating one of the most exciting venues in all of sports"). Wolff himself, when asked about financing on Friday, told reporters to stay offa his damn lawn, insisting, "We're not ready to discuss that and we're certainly not going to discuss it to the press."

Until Wolff breaks his vow of silence then, or someone files a Freedom of Information Act request, it's hard to say who the winners and losers would be from a new A's stadium. What is apparent, though, is that the A's plan bears all the hallmarks of what's becoming recognizable as 21st-century stadium planning. We have entered a new era, and the playbook has changed subtly:

  • Think small. Whereas the first wave of modern ballparks--SkyDome, Camden Yards, new Comiskey--were built to hold 50,000 and up, owners have learned that they can make more money by scaling back on seating and reaping the benefits of artificial ticket scarcity. As the Boston Red Sox have learned, a small ballpark means that not only can you jack up prices, but that fans have to rush to buy tickets in January or face being shut out. As a result, your team doesn't have to worry about no one showing up for games if the weather (or the team) is lousy, since the tickets are already pre-sold. As an added benefit, you can furlough half your box-office employees for 11 months out of the year.

  • Eschew cash. Taxpayers hate spending public money on stadiums, but they tend to get less uppity if instead of cash you ask for tax breaks--even though economists consider these to be "tax expenditures" with an identical effect on the public purse. If you play your cards right, breaks on property taxes, sales taxes, rent, land and so on can amount to hundreds of millions of dollars, yet you can still claim to be building a "privately funded" ballpark. Early reports have the A's taking advantage of just these sorts of subsidies, with tax incentives and a new BART station taking the place of direct public spending on the stadium itself.

  • Throw in the kitchen sink. Voters may balk at putting public money into a ballpark, but make it a "ballpark village" and that's a fuzzier issue. Tack on a bunch of housing and commercial development to your stadium plans, and you can hopefully muddy the waters enough that no one will be able to understand the finances, much less oppose them. Also, these development projects often come with their own tax breaks, so that the stadium effectively can operate as a loss leader to obtain non-sports subsidies.

  • Bill your fellow owners. The sea change in stadium financing since 2002, when MLB began allowing construction costs to be deducted from revenue-sharing monies, has been nothing short of incredible: Where before the public was expected to kick in the lion's share of the cost, now you have the Cardinals paying for two-thirds of their new stadium, the Marlins proposing to go halfsies, and the Yankees and Mets offering to foot the entire bill (less property tax breaks, land costs, etc.) themselves. (Only Carl Pohlad, it seems, didn't get the memo.) Some of this is in response to voter distaste for public funding, but the prospect of getting fellow owners to pick up 40 percent of the tab has clearly helped pry open owners' wallets.

This last trend is potentially good for taxpayers, just as the NFL's G-3 stadium fund helped cut back on public stadium subsidies in that sport--though the benefits are mitigated by the new emphasis on free land and tax breaks. (There's been some interesting research of late on the rise of hidden stadium costs; watch this space for more on this in the near future.) But it could end up being bad for baseball's faltering attempts at leveling the playing field between its high-revenue and low-revenue teams.

Contrary to popular belief, you don't have to be a rich team--one of those writing revenue-sharing checks, that is, not collecting them--to take advantage of the stadium deduction. For one thing, any team with a new stadium is likely to rake in enough revenue to be launched into the "payer" category, at least for the first year or two. In any case, even using the deduction to increase the red ink on your MLB ledger just means bigger checks arriving from the league.

What you do need, though, is the ability to generate enough revenues from your new facility to make back your remaining costs after the revenue-sharing break has been factored in. If you're George Steinbrenner, or even Lew Wolff, the combination of naming rights, corporate-suite sales, and other new money can go a long way toward pushing a project into the black. If you're David Glass, though, the Kansas City condo market isn't likely to provide you with enough cash to pay off your stadium bills, even at a 40-percent discount.

So far, there hasn't been a peep from Glass or his fellow small-market--and here I do mean small-market, not low-revenue--owners about the fact that they're looking at chipping in millions a year apiece to pay for their competitors' new homes. Speculation is that this is because the revenue-sharing break was a prearranged deal: A quid pro quo to George Steinbrenner, in particular, in exchange for him agreeing not to sue MLB's collective butts over implementing the Yankee-killer luxury tax.

Whether the silence will remain unbroken once Billy Beane uses recouped revenue-sharing cash to sign Zack Greinke in 2010 remains to be seen. Of course, baseball's entire Collective Bargaining Agreement comes up for renewal after next year, at which point there's nothing stopping the league from removing or diluting the revenue-sharing break. Too bad there's no way to file a FOIA request for the inside of Bud Selig's brain.

Neil deMause is an author of Baseball Prospectus. 
Click here to see Neil's other articles. You can contact Neil by clicking here

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