Can’t tell the rumored Warriors arena sites without a scorecard

The Golden State Warriors are looking for a new arena site” rumor mill continues to churn, with the latest unsourced reports being that the team is now looking at multiple backup sites now that the Piers 30-32 site has gotten more expensive and is likely to face a public vote. In addition to the parking lots near the San Francisco Giants‘ stadium, there’s this:

Another option getting initial discussion, sources say, is part of the 14 acres in Mission Bay that Salesforce bought in November 2010 for about $250 million to hold its corporate campus. The San Francisco software giant announced in February 2012 that it was shelving its plan to build there. A portion of the site, bounded by Terry Francois Boulevard and 16th, Third and South streets, across from a bayfront park, could hold an arena…

Despite its proximity to the bay, the site is not on Port of San Francisco property, and therefore it is not subject to the ballot measure that limited-growth advocates qualified for the June ballot.

The Mission Bay site isn’t without its own problems, though, starting with that $250 million that Salesforce paid for it, which they’d presumably want to be paid back — making the land even more expensive than the $180 million  rehab cost that is reportedly making the pier site too spendy. (The San Francisco Chronicle’s John Coté speculates that Salesforce could cut its price if it got naming rights to the arena, but that’s not much of a solution, as then the team wouldn’t get to use naming-rights revenue to pay the rest of the  arena costs.)

In any event, the problem still remains that the Warriors owners were planning on paying off the more than $1 billion cost of an arena by building condo towers on city-controlled land nearby, and none of the alternate sites would make this any easier. If it were all about finding a place to build an arena, after all, the piers are there for the taking — it’s the accompanying apartment building that is danger of running afoul of a June ballot. In the end, the Warriors don’t have a site problem, they have a money problem — and unless they figure out a way to make a San Francisco arena pay, this project is going nowhere.

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6 comments on “Can’t tell the rumored Warriors arena sites without a scorecard

  1. You know, San Francisco really is in need of an arena. If they can figure out a way to 80%+ private financing, the Warriors will end up in SF. AT&T Park is the model for at least this area.

    I’d wager this will get done. I won’t put any money on a particular spot in SF, but I would be willing to wager it’ll be somewhere in or very near to SF (the closer to BART, the better).

  2. @MikeM

    They will move to SF and it will be most likely 100% privately financed. Like you said, the question becomes where. I’m thinking that the waterfront deal will die since the Warriors want to make money off of condos and hotels. The people will vote that down despite there being no tax subsidies. The only thing the Warriors are getting is free land, land that will cost $150 million to repair.

    Most likely, they’ll be across McCovey cove from AT&T Park. Not close to BART but closer to Caltrain than the waterfront arena plus the MUNI train goes right there. You can take BART to Embarcadero then just transfer to a muni train.

    Financing won’t be a problem. The big question becomes on how revenue will be split. An SF arena can be profitable which is why they’re willing to privately finance it. The problem is how much are the Warriors going to put up and how much are the Giants going to put up and then how will the revenue be split.

  3. “An SF arena can be profitable which is why they’re willing to privately finance it.”

    I’m not so sure about that. I agree that SF is a special case where a new arena would do terrific business, but $1 billion in construction costs is a huge nut to pay off. And Oracle Arena would still be there across the bay, setting up a bidding war for concert acts. There may be a reason why the Warriors are so fixated on getting a condo tower as part of the deal, beyond just “because it can’t hurt to ask.”

  4. @Neil

    If I’m not mistaken, the billion dollar figure comes from the cost of constructed the hotels and condos on top of the arena. My math always had it at $150 million for fixing up the piers and $500-600 for the arena. When I’m thinking profitable, I’m estimating a profit of $10-20 million a year so if you’re just building an arena, it’s going to take you 30 to 60 years to make your money back and that doesn’t work for a lot of these owners.

    OTOH, if you build the hotels and condos, your profit margin goes way up to the point where even if you’re laying out a billion, you could potentially make your money back in a time span that is a lot less than 30 to 60 years.

  5. Okay, so that’d require like $50 million a year in gross profits, after operating costs, to pay off the arena bonds and turn a $10-20 profit — and that’s if they get the and for free. That’s certainly more doable in SF than in a lot of places, but still not a slam dunk. A lot’s going to depend on what they can get for naming rights.

  6. @Neil

    Agreed. I’ve always assumed from day 1 that naming rights were going to play a huge role in this. If they could get the same $700 million that Farmer’s would’ve paid AEG had the downtown LA football stadium not failed then this could obviously get done without the condos and hotels.

    If it’s the $200 million that the Nets get from Barclays then you’re probably going to need the condos and hotels. I’m guessing that negotiations have been tough and that’s why there’s been such a push to get the hotels and condos passed through.

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