Matters have been mostly quiet on the Oakland A’s stadium front since this spring, when Lew Wolff’s Fremont plan collapsed and Bud Selig commissioned a three-man team to investigate the team’s remaining options. That all changed on Thursday, when the city of San Jose released its economic impact projections for building a downtown ballpark there, prompting a slew of wild-eyed headlines about the riches that would rain down should the A’s land in San Jose.
A more careful read of the report itself (you can peruse it yourself here) reveals that an A’s stadium in downtown San Jose is projected to be worth about $65 million more (in present dollars) than allowing the site to be developed for other uses. While much of the methodology is murky — the report notes that it got much of its data from the team and MLB, and didn’t attempt to verify it — that doesn’t seem an unreasonable number: Some fans would visit San Jose who would otherwise spend their dollars elsewhere, especially so in a market with as many disparate population centers as the Bay Area.
So, would a San Jose A’s stadium be worth it? That all depends on what “it” is. The current plan is for the city (or the county, or one of the umpteen redevelopment agencies that seem to share jurisdiction in the area) to buy 14 acres of land adjacent to Diridon Station and the Sharks’ arena, and hand it over to the A’s to do with as they please. If the land is worth less than $4.6 million an acre — which is right around its current estimated value — then the city can at least claim it’s breaking even. And as an added bonus, it would help keep the public subsidy per full-time equivalent job at less than $100,000, which while not great, is at least below the level that becomes a totally egregious giveaway.
The bigger question here, to me, is how on earth this is going to work from the A’s perspective. Wolff and his fellow owners would be on the hook for close to $500 million in stadium construction costs, plus whatever money they’d have to slip under the table to get the Giants to give up their territorial rights to Santa Clara County that they got back when they were trying to move there in the Bob Lurie days. Figure that the total cost, construction debt plus indemnification, would be around $50 million a year. That’s just about exactly the difference between the revenue of the A’s and the Los Angeles Angels. Even upping their take by $40 million a year would require the A’s to surpass the Giants in revenues — in a smaller market, in a stadium seating only 32,000. And that’s just to break even — to afford, say, to keep players for more than four months, they’d need tens of millions more.
With that in mind, forgive me for remaining skeptical that even if Selig grants him permission to abscond to the South Bay, Wolff will be able to keep his pledge of building the nation’s first truly privately funded ballpark since Pac Bell Park. I don’t know what he has up his sleeve — whether it’s hidden subsidies like property-tax kickbacks or arm-twisting MLB into helping pay off the Giants in order to get the A’s off the league’s revenue-sharing payee list — but so long as the stadium price tag is half a billion dollars, that’s going to be a tough nut to crack.
Agree with basically everything you said, but you claimed San Jose is a "smaller market" than San Francisco. Not sure how you count the market, but San Jose actually has a larger population than San Francisco. Counting surrounding areas gets tricky because of the overlap. So I'm not really sure that San Jose is really a "smaller market."
I think they should also rename the team "The San Andreas Faults." I agree with mmasnick -- that's not a bad location at all. And a lot of southbayers would more readily commute to SJ than to Oakland to see a game.
Move the A's to Baltimore and send Angelos to North Jersey.
Have MLB take over all the cable rights for NY-NY-NJ and redistribute them. Let Ted Lerner and John Henry over-see the whole thing. As a bonus maybe Wilpon would sell in anger.
That makes sense in the abstract, but given that San Mateo County has a lot more money than Alameda, I'm not sure the Giants would go for it. Anyway, owning "territory" isn't really the main point - the thing the Giants are going to argue is that a San Jose team would cut into their revenue base, and you know Selig's going to consider that in deciding any payoffs.
The real question at the end of the day is: Can South Bay + SF grow the overall pie enough from East Bay + SF to pay for a new stadium, and leave enough left over for the A's to have a real payroll? If yes, they can find a way to shuffle the money around so everyone's happy. If not, it's going to be tough.
What all are you including? JUST interest, principal and "indemnification" (not sure what that means)?
Interest on such a loan will likely be a floating rate based on an index. Probably 300-350 basis points above libor, which puts the interest rate at 350-400 (3.5-4%). Even if the WHOLE $500M was financed (which I seriously doubt) that's a max of $20 million a year. It's probably safe to assume pricipal payments would be fairly light at the beginning, let's say $5 million. That leaves a fairly sizable shortfall to be taken up by "indemnification".
"Indemnification" meaning buying off the Giants. And if bond payments are back-loaded (or Wolff pays a chunk of the costs in cash up-front), that still doesn't change the basic calculus: Over the next three decades the A's would likely need to average $40-50m a year over what they'd be bringing in in Oakland, or a San Jose move doesn't make sense.
Unless you think Wolff is more after this to raise his profile in San Jose and create more development opportunities there, in which case break-even or a small loss might be enough for him. Still, it looks like a pretty risky move.
Selig still has the ultimate call on whether to revoke the territory rights that the Giants magically inherited back in the 90's when they were trying to get a stadium of their own built down there.
The same way that he took it away from the A's back then, he could take it away from the Giants right now and then 'poof' - no more 'indemnification'!
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Agree with basically everything you said, but you claimed San Jose is a "smaller market" than San Francisco. Not sure how you count the market, but San Jose actually has a larger population than San Francisco. Counting surrounding areas gets tricky because of the overlap. So I'm not really sure that San Jose is really a "smaller market."