New Warriors home in SF could leave Bay Area with arena glut

As soon as news broke last week that the Golden State Warriors owners were planning to build a new arena in San Francisco entirely with private money, I wondered if having only their old home, Oakland’s Oracle Arena, to compete with would make it easier for them to avoid the fate of, say, Brooklyn’s Barclays Center, which has had to offer discounts to touring acts to beat out Madison Square Garden for concerts. And now the San Jose Mercury News reports that the Bay Area might not be big enough for the both of them:

For now, the Oracle Arena has two things going for it: The Golden State Warriors and the fact that the nearest competitor for major shows is 40 miles away in San Jose.

But that soon will change, and the arena, which already fails to turn a profit, will have to change too if it is to survive, sports facility experts said…

The Warriors accounted for nearly half the 110 events staged at the arena during a recent 12-month period — and even with the team still around, the arena is forecast to post roughly $6 million in operating losses this year and next, according to budget records from the Alameda County-City of Oakland Joint Powers Authority.

A San Francisco arena would definitely have the upper hand in luring acts — it’s the side of the bay where more of the money is — but the competition could end up being bad for both buildings, since promoters could play the two off each other to get the best rates. Which could be bad for Warriors owners Joe Lacob and Peter Guber as far as paying off their construction costs — though, of course, since it’s their own money they’re risking, that’s not our problem.

All this is assuming, of course, that Oakland doesn’t simply pack it in on Oracle and demolish it to make way for a new Raiders or A’s stadium, something arena board chair Nate Miley floated last week, though of course without any details about cost or who’d pay for all this or anything. One complication, according to the Merc News, is that the Warriors apparently have a lease clause that lets them off the hook on $62 million in outstanding Oracle Arena debt if the building ceases operations. Meaning we could be seeing Oakland weighing whether it’s a good idea to keep a money-losing arena in operation just to avoid letting its former tenant get out of paying for the arena’s last renovation. I really can’t say it often enough: Get somebody to read these leases before you sign them, people.

9 comments on “New Warriors home in SF could leave Bay Area with arena glut

  1. Or “entirely with private money,” as I meant to type. Thanks, fixed now.

  2. I am not sure why you assume that “San Francisco arena would definitely have the upper hand in luring acts” when the SAP Center in San Jose is debt-free (or near debt-free) and would be in a better position to offer discounted rates. Furthermore, the SAP Center is a hockey arena, which may offer the preferred floor space for most contemporary arena productions. Both of the lucrative Katy Perry and Lady Gaga tours are going to SAP Center this summer, and both require large amounts of space for their stages (links to images):

  3. Arena debt is a sunk cost, not a marginal cost — you don’t owe more if you stage more shows — so I don’t see why it should affect arena rates. (It would affect arena *profits*, but that’s a different matter.)

    And Barclays is a non-hockey-sized arena, even if the Islanders refuse to admit it, and getting plenty of business. So I doubt that’s an issue for 90% of acts.

  4. They’ll get competition from Sacramento, too.

    If there’s a new arena in Sac, a new one in SF, and a pretty nice one in SJ, Oracle will be the odd-arena out. Acts aren’t going to hit all 4 of those venues. Oracle will also be debt-free, and this will not matter at all.

    Oh, and 3 huge outdoor venues in the immediate area, too (Shoreline, Concord, Cal).

    I think Oracle’s future involves a wrecking ball, probably without the Miley.

  5. It would be stupid to tear down Oracle Arena. It’s a perfectly fine arena. It can compete with a new arena. Back in the good old days the Coliseum Arena and the Cow Palace existed together and people loved both venues…And before somebody points out that both of those are old. I’d ask what the hell does a shiny new building have to do with going and watching a band play. I certainly don’t care. Oracle could maybe attract an AHL or ECHL Hockey team also after the Warriors leave plus the Concerts. I don’t think the Arena would be in the footprint of a possible new A’s or Raiders stadium, which I believe may only be built for one of those teams if at all.. So just leave the Arena up, at least for the foreseeable future.

  6. Of course a new ‘Frisco facility as well as the San Who-say arena will blow away an Oak competitor, the market does not have enough $$$’s to keep all these places going.

  7. It turns out any pronouncements of Oracle’s demise are premature.

    $62M in outstanding debt that won’t be paid off until 2027. But it wouldn’t surprise me if the Warriors are on solid legal ground here. Read the terms and conditions before you vote, people.

  8. Most likely, it would be in Oakland’s best interest to tear down the Arena/Coliseum complex and create transit oriented housing. That is a component which is sorely lacking in the Bay Area, where the cost of housing is already the highest in the nation. The airport is nearby, while there is an already existing BART station to couple with easy freeway access. The City of Oakland can earn quite a bit of revenue by selling the land to a developer who will follow such a guideline.