Oakland’s war of the five kings is turning out just like you’d expect it to

As promised, I’ve written up a longer analysis of Friday’s Oakland A’s lease talks train wreck today. It’s not here, though, but rather at Sports on Earth. You can read the whole thing there, replete with Game of Thrones riffs, but here’s the key paragraph:

So long as San Jose remains off the table, the East Bay is by far the best option for the A’s, something [A’s owner Lew] Wolff has to know — he and his partners didn’t spend $180 million on the team, which sounds like a pittance in the post-Ballmer era but was a lot in 2005, in order to end up owning the Charlotte A’s or the Louisville Sluggers. (For Davis, who is inclined to care less about city size since he’d get a cut of NFL national TV checks regardless, it’s more about Oakland being his best option for extorting a generous stadium deal.) And for Oakland city officials, who want to keep both Wolff and [Raiders owner Mark] Davis happy while also not breaking the bank, stalling as long as possible may seem their best hope.

In other words, everyone has good reason to be behaving like morons, because there’s no easy resolution to the A’s situation that will benefit Wolff, Davis, Oakland, and MLB. Or as I put it in SoE, this is “an insanely complicated multilateral game of chicken,” so don’t hold your breath waiting for everyone to figure out who’s holding who hostage.

And now we direct you to your regularly scheduled comment war…


29 comments on “Oakland’s war of the five kings is turning out just like you’d expect it to

  1. (continuing from previous A’s discussion)

    It turns out that short of a new baseball-only ballpark, the A’s are in the best place they could be – as sad as that is. There is no other city that is as attractive for major league baseball as Oakland is right now (again without some other municipality building a new ballpark). The wildcard in this is how long will the Oakland (I know o.co) Coliseum still stand?

    At the point the A’s get notified that the Coliseum is coming down, only then does another city start looking good and maybe that other city is San Fran with MLB forcing the A’s to play there (more like forcing the Giants to accept the A’s on good terms). That might certainly change the Giants opinion about letting the A’s move into the South Bay area.

    The Raiders continue to be the forcing function for moving the A’s out of Oakland. I have to believe the A’s management knows this and is expecting the Raiders to take a stand once the new lease is (finally) approved. Then if the Raiders win, the A’s move southward. If the A’s win, they get the Coliseum to themselves and can work on a new Oakland ballpark. It’s a win-win situation for the A’s. The only way the A’s don’t win is if the city and county continue to do nothing.

  2. The city can also tell the Raiders, “Sorry, but if you want to build on the Coliseum site, you need to build to one side to leave room for an A’s stadium.” Just because Davis says he wants something doesn’t mean he has to get it.

  3. Adding a little gray (reality) to Neil’s black and white world:

    Prior to 1992, Santa Clara County (and by extension, San Jose) was the exclusive territory of…NO ONE! It was subsequently assigned to the SF Giants (with the blessing of then A’s ownership) for the sole purpose of them relocating to San Jose. The relocation obviously never happened, as AT&T Park was built 45 miles north of downtown San Jose. But those exclusive “rights” remain and are the key impediment of our current A’s finding a proper home in the Bay Area; shared between both teams since 1968.

    The day you and the rest of the media start holding Giants ownerships feet to the fire is the day this sad saga may finally come to an end. Are you up to the task Neil?

  4. I’ll happily tell MLB that its internal bylaws are morally indefensible, as soon as I finish with this brick wall that I’m yelling at.

  5. If the Raiders play in the Los Angeles Coliseum instead of the Oakland Coliseum in 2015, their franchise value will jump by several hundred million dollars overnight. It’s true that market size has a less pronounced effect on NFL franchise values compared to other sports, but it still has a bigger effect than the local stadium. Even in a new stadium in Oakland, the Raiders would likely remain one of the NFL’s least valuable teams.

  6. Ben: If it were that simple, then half the teams in the NFL would announce they want to move to LA tomorrow.

    Obviously, it’s not. The days of teams hauling all their gear into moving trucks and setting off for another city in the middle of the night are over.

  7. Ben’s data holds more true in the NBA, MLB and NHL than it does for the NFL but the Raider value would go up if they were in LA as opposed to Oakland. While tv money is dispersed evenly throughout the NFL due to nobody having a local tv deal since all games are on national tv, there is the issue of corporate sponsorships, naming rights, ticket prices and so on. I could see the value of the Raiders jumping at least $100 to $200 million but not several hundred million.

    In the NBA, MLB and NHL, it all comes down to the local tv deal. The Dodgers and Lakers get over $150 million per season while small markets can get as low as $10 million so it makes a big difference. If it didn’t, Ballmer would be making a bee line to Seattle with the Clippers right now. As it stands now, he can get roughly $60 to $70 million on a new LA Clipper deal while Seattle would net him at best somewhere in the $30 million range.

  8. Have you seen what real estate is selling for in SF these days? People are bankrupting themselves to move there.

    It was only a matter of time before that started to spread, and predictably enough, it has. A 15 minute BART ride from Oakland, you’re in SF.

    Oakland is about to take off in a really big way. San Jose did that a couple decades ago. I’m not convinced that between these two, the A’s can make an awful decision. What a difference a couple years makes.

  9. The LA Coliseum may be needed for a hypothetical first year, but this thing http://www.aegworldwide.com/facilities/stadiums/farmersfield is getting built in LA and the NFL wants a team playing there in the near future. The Raiders already play in AEG’s O.co Coliseum in Oakland so would have an existing working relationship with AEG right now. If the Raiders don’t jump at increasing the value of their franchise in the LA market and want to play at state of the art Farmers Field, another franchise will beat them to it (Rams?). My guess is that after the A’s announcement of staying at O.co Coliseum, is that Davis’ hand has been forced to move to LA, but won’t show his cards until the last minute to save political face with the Oakland fans.

  10. Tony D: Why do you insist that territorial rights didn’t exist for either the A’s or the Giants in 1992 when by your own admission Santa Clara County was only given to the Giants “with the blessing of then A’s ownership” (meaning that each team had an already parameter-based option to claim that territory)? Wouldn’t that prove Neil’s point that every team has to buy/extort from each other just to move wherever they want?

  11. Joe: All signs are that that thing is not in fact getting built anytime soon:

    http://www.fieldofschemes.com/2014/02/18/6841/aeg-still-insisting-it-may-build-l-a-stadium-someday-maybe/

  12. I’d agree that the Raiders value would increase if they were playing in LA, but ‘by how much?’ is a legitimate question to pose… It’s not as simple as it sounds to pick up and move to LA either.

    This is not just because of the NFL’s post-1994 bylaws designed to prevent just such an eventuality: The Coliseum is no longer the ‘free territory’ it was last time the Raiders laid claim to it. USC has significantly more say over what goes on there than they did in 1982. Added to that, the NFL will be less than enthused at the prospect of a club moving from a “heavily renovated in 1995″ stadium to one that lacks even the modest amenities of the Oakland Alameda coliseum. While money has been spent on the LA coliseum in recent years, it’s further from a state of the art NFL stadium than it was in 1982 or 1995, and considerably further from same than the Raiders present home is.

    When someone actually builds an NFL calibre stadium in the LA basin, there will be at least one team there. But they’ll have to do it without much (or any) public funding. While that is risky, it is significantly less risky than doing so absent an ownership stake in the team that is going to play there… faced with a choice between the two, you want to own a piece of the team, not the stadium – even in LA.

  13. I want to see the looks on the fans in Oakland when Marky Bowlcut gives them the middle finger he inherited from daddy.

  14. The most clear proof is the Forbes list:

    http://www.forbes.com/nfl-valuations/list/

    For example, Houston’s current team is worth $400M more than Houston’s former team because the former team in in Nashville. The Nashville stadium is publicly funded, only three years older than Houston’s and has sold out of season tickets (even though PSLs are required) for it’s entire 15 year life.

    Teams don’t just relocate to LA or New York because it would involve a court battle with the other owners and because things change. Twenty years ago what Neil wrote about the market size being less important that the stadium was absolutely true.

  15. The Forbes list isn’t all that conclusive, actually. A regression analysis of team value vs. Nielsen market size show a correlation of 0.44, which means somewhat less than half of team value is due to market size.

    Running a linear regression tells us that moving a team from the Bay Area to L.A. would expect to result in a gain of $269 million in value. That’s giving Oakland credit for all of the Bay Area’s TV households, though — if we cut that in one-third, say, then we get more like a $400 million jump.

    The problem is that even then, Davis would have to pay a *lot* more than $400 million to get a stadium built in L.A. Would it be $400 million more than he’d pay in Oakland? Very possibly, which is undoubtedly why he’s not jumping at the chance to go to L.A.

    (All numbers here *very* approximate, and rely on Forbes’ valuations being correct, Nielsen being a good gauge of market size, etc.)

  16. The corresponding correlation for MLB, incidentally, is 0.68. And if Wolff could move the A’s to Los Angeles, they’d gain $500-800m in value.

  17. And the A’s moving to LA isn’t happening just like Farmer’s Field isn’t happening anytime soon. At the same time, Steve Ballmer could move the Clippers to Seattle if he wanted to do so because Seattle has been without a basketball team for half a decade now. The Clippers could lose money in the short term, but a new arena, a TV deal in the first season, and a championship could help him break even. Keep in mind that the Clippers share the Staples Center with the Lakers.

    As for the A’s situation, it is bad, but they could be the Rays. You have to consider Tropicana Field which is located in extreme southern St. Petersburg Florida. It truly is located in an out of the way area from their fanbase because Tampa and Clearwater are over 10 miles away from the stadium. As a result, the A’s situation in Orlando could be much better than you think.

    As for Memphis, they do have a Major League ready park, but the A’s wouldn’t have to share that territory with any other team.

  18. The valuation of the franchise only “counts” if you are ready to sell or at least sell shares (in the case of the Mets). If you are planning to hold onto the team, then all the valuation is good for is bragging rights at the next lodge event. I may have read the two Oakland team owners wrong, but I don’t think either is ready to sell.

    And, yes, the Rays have it worse than the A’s. If you go to a Rays game and decide to stay near the Tampa, then you get to drive 1/2 an hour (or more) across a land bridge to St. Pete. Then you take an interstate south for about 20 minutes. Then you park in the main parking lot which is behind the main centerfield entrance, You walk into the centerfield entrance, go up some stairs, walk around to the home plate area (usually there are so few fans you can always get tickets behind home plate) and then walk down to your seat. The one advantage is parking is free (at least it was last time I was there).

    It’s also indoors with a translucent roof and, of course, catwalks. Many catwalks. About a third of the seats in the upper deck are blocked by catwalks. The roof is angled so that the outfield side is lower than the home plate side. Therefore the catwalks are also angled so they are lower in the outfield than behind home plate. It makes for the appearance that someone didn’t have a level when the catwalks were installed.

    From a Rays standpoint, the worst thing about Tropicana Field is the lease their founder signed back in 1997. The language in that lease should be copied by every city that is worried about their owner bolting one day.

    Anyway, the Oakland Coliseum is a crown jewel compared to Tropicana Field but that only makes it the second worse of the current baseball stadiums.

  19. @AC 1 day ago:
    No. (That was easy)
    @Neil,
    So you’re not up to the task. No problem. In your world you can never be wrong, regardless of how many facts or doses of common sense are thrown at you. Peace and tell the brick wall I said hi…

  20. BTW Neil,
    Read up on Murray Chass’ take on the A’s debacle. You could learn a thing or two…

  21. When I was in high school, my social studies class played a role-playing frontier game where we were each assigned a role: farmer, railroad owner, banker, maybe a couple of others. Our teacher set down the rules, then said it was up to us to decide how to go about building an economy.

    It was a really interesting exercise in an unregulated market. In one class, there weren’t enough kids to have multiple bankers, and the sole banker insisted on a crazy-high interest rate, driving the entire game into an economic depression. In ours, we managed to establish a system of loans, but the negotiations were pretty contentious.

    The one incident I remember best was that one banker, named Mike, loaned money to a farmer, also named Mike, for an agreed-on interest rate. After a couple of “years” of game time, Banker Mike tried to demand his principal back from Farmer Mike. Farmer Mike said since they hadn’t agreed on terms of when the loan had to be paid back, he didn’t need to pay it back at any time.

    Banker Mike went to our teacher to appeal. She listened, then said, sorry, if you wanted him to pay the principal back at a certain time, you should have specified it in the contract.

    Did Banker Mike have a point? Of course. Would it have been “fairer” for Farmer Mike to pay back his loan in a reasonable amount of time? Arguably, though Farmer Mike made the deal not expecting to have a deadline. Should Banker Mike have expected a ruling from on high to grant him what he thought he deserved but never spelled out? Good luck with that.

  22. Dan

    It is Autozone Park, home of the Cardinals Triple A team. The A’s, or anybody looking to move out of their current digs, could sign a lease to start in 2016 with expansion taking place in 2015. The only real advantage the A’s currently have is the fact that they don’t have to share their TV territory with the Giants and with them pretty much owning all of California’s Central Valley. Regardless, both teams compete in the same area regardless of TV rights and vice versa.

    If the A’s move to Orlando, San Antonio, or Memphis, they can own their own territory in almost all regards except for San Antonio though the distance from that city to the Metroplex is roughly the distance from Minneapolis to Chicago. Meanwhile, the distance between San Antonio and Houston is roughly the distance from Fargo North Dakota to Minneapolis.

    Lew Wolff is looking into other plans. Sure they may not be the same as the population resource that includes Oakland, but he has to let the City of Oakland know that he is serious as well as the Raiders. That is the only way this will be resolved with both teams remaining in their present city.

  23. Tony D: Yes, it does. How else do you explain the fact that even then when neither team had exclusive rights to the Bay Area, the Giants still had to get written permission from the A’s to carve out their own piece. That explains why Wolff is stalling to get Oakland to give him more favorable lease terms: He doesn’t want to pay the Giants’ price.

  24. Looks like this week’s train wreck has been scheduled for Thursday, July 3rd. No word in the article about whether the city agrees with the latest attempt at a lease agreement. However, there are now some details of the lease in the article.

    http://www.sfgate.com/athletics/article/Details-of-new-A-s-stadium-lease-revealed-5593994.php

    Let’s see, it the lease averages $1.5M per year for 10 years, then buying out the lease would be approximately $15M for all 10 years. But, the A’s have to give at least two years notice and the lease amount starts at $1.75M per year and then falls to $1.25M at the end. So, two first years at $1.75M is $3.5M. Therefore the absolute worst the A’s would have to buy-out to get out of the lease is $11.5M.

    I don’t have that loose change underneath the couch cushions, but compared to the cost of (fill in your destination city here) financing a new ballpark, $11.5M seems cheap and not too much of an incentive to stay in Oakland unless you have nowhere else to go.

  25. Well here we go again. Oakland is going to vote down the lease tomorrow and counter with their own plan (which undoubtedly Wolff and MLB will balk at).

    http://www.insidebayarea.com/news/ci_26072013/oakland-again-reject-lease-make-competing-offer

    Maybe we’re finally at the point where Oakland’s own obstinate nature will finally force MLB to make some kind of decision about the A’s.

  26. Time to get the popcorn…

    http://www.sfgate.com/bayarea/article/Oakland-having-second-thoughts-about-A-s-lease-5595461.php

    Wolff said he won’t be renegotiating the lease if the city rejects it tomorrow.

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