In a move that comes as no surprise to anyone anywhere, the Oakland city council and Alameda County board of supervisors have jointly agreed not to renew developer Floyd Kephart’s exclusive deal to build a new stadium for the Raiders after it turned out he didn’t have any better idea how to pay for one than anyone else did. Not that Oakland has any better ideas either, but now at least they aren’t stuck with Kephart’s non-ideas, like they have been for the last year.
Oakland can now seek to partner with other developers, if anyone thinks that’s a good idea, or try to come up with a stadium finance plan on their own, if someone has a way to make money grow on trees. The underlying problem here, as it is in most stadium deals, is that Raiders owner Mark Davis wants a new building but doesn’t want to be the one to pay for it, and there’s no way for a city to agree to that without taking a several hundred million dollar loss. So we get a years-long stalemate until somebody blinks and agrees to get out their wallets, and it’s never the team owner, because where’s the upside for him in that?
Anyway, the Raiders aren’t any closer to getting a new stadium today, but then they weren’t very close last week either, so. Also, they’re no closer to moving to L.A. than they were last week. This is officially becoming the most slow-moving game of chicken ever.
This game of chicken reminds me of George Costanza’s Rascal race.
There’s a better chance that the Raiders get a new stadium stay in Oakland than there has been in years. I credit John Madden. I think when he said that the Raiders need to tell Oakland/Alameda what they want that it struck a chord. The Rams are essentially in LA and I think the owners want to keep that second spot open to give Spanos leverage. But I think a new Raiders stadium at the current site is going to happen.
^ I have an idea. You should keep ignoring the $400+ million funding gap that has no foreseeable way of being closed: no team money to close it, no public money to close it, and no third party financier to close it. Because ignoring reality is a realistic way of looking at things…
@Ben. I think its a stretch to credit John Madden. Not sure who is he striking a chord with except the local media to fill up column space.
I think the slow-moving game of chicken is the best outcome for the city and taxpayers. Either: A) The Raiders move to LA (or St. Louis or wherever), or B) come begging, instead of threatening, to the city.
I can’t see how the city can justify another $400M on top of the $100M they still owe on the current stadium, and pay out the county’s half. That would be some magical financing (but not anything cities haven’t tried before.)
I think Madden holds sway with Davis. It’s only a $20M/year gap. That’s not peanuts, but it’s hardly worth leaving over. At some point the facts that the market is great and the site is absolutely perfect for a football stadium are going to win out.
If you want to keep telling yourself that despite the concrete evidence suggesting you’re wrong, that’s on you.
JC: Very true.
Another issue for them is that they have two sports owners trying to extract subsidies from them, and that there might be some billionaire welfare to fork over, but not enough for two billionaire welfare recipients surely.
It’s sad to say for the sports fans of Oakland, but they really only have the ability to support one professional sports team. Perhaps the city will refuse to subsidize either MLB or the NFL. But it does look like they are trying to pick one and use what they have to put a deal together (which may or may not be possible).
IMO, it’s a better (ok, less bad…) deal for the city to pay the A’s to play as opposed to the Raiders (simply because the facility costs less for baseball and is used more frequently, so any legitimate revenue streams that might accrue to the city are more likely to be generated by the baseball team on balance).
I also believe Madden has some credibility with the NFL. And he appears to have the ear of Mark Davis. Davis will have to bring in a wealthy 3rd party to build his stadium in Oakland (Larry Ellison? He bid on the Warriors) in much the same way Modell brought in a wealthy 3rd party when he move the Browns to Baltimore.
John: Also, so far as we know Wolff is just asking for land, not $400 million in cash as well.
Dean: Modell’s wealthy partner was the state of Maryland, which instituted two new sports lotteries and gave him all the money for stadium construction. Why would Larry Ellison want to sink $400m into a Raiders stadium? Even if he got equity, he’d just be buying debt.
@Ben. Where are getting $20M from? From a taxpayer standpoint, its $500M ($400M the raiders expect the city/county to fork over + $100M left over from the first boondoggle). The city, as far as I have read, hasn’t committed to anything. And up to this point, seemed to want the gap filled by mixed use development, rather than bonds paid off by magical beans (hence the agreement with Gephart and others).
Its possible that Madden has sway with Davis and the NFL, but it is doubtful that they would give in to anything to increase their part of the bill. That would set a bad precedent for other owners/stadium-seekers.
I think they should just put Solar panels on top of Mount Davis to help pay off the debt ! That would be a good start to get some help with some new stadium funding.
The issue here is Oakland/Alameda County/Mark Davis unwilling to raise the money needed.
Look at the 49ers, they were able to raise the money and went over their projections. The City/County are crying about 1995 and how they still owe but they are too dumb to realize this is 2015.
In 1995, the Raiders fan base had dwindled in Nor Cal after being gone for 13 years and the 49ers winning 4 Super Bowls. In 2015, they have organically grown the fan base back over 20 years and if you ask Raiders fans they are willing to buy SBLs, as long as they are lifetime and not as expensive as the 49ers which they do not need to be.
Floyd Kephart I feel bad for because his job was to develop “Coliseum City” with the stadiums as components. He was never brought in just to build the stadiums but the entire vision.
He laid out parameters for negotiation and the City/County refused to use them to bring Mark Davis to the table, it shows they cannot be trusted and were not operating in good faith.
Direct negotiations are not going to do anything because neither party wants to raise the money. Someone like Kephart (who is smarter) needs to come in and make it happen.
I have done the math on this, 900M, 55k person stadium can be done in Oakland mostly with private money. The City/County pays 150M for tear down and infrastructure upgrades and the team with someone smart (Like Jed York) can raise the rest through naming rights, SBLs, suite sales, and sponsorships.
The Bay Area is the wealthiest market in the US and it can support 2 stadiums. But Davis and the City/County deserve each other. Neither willing to raise the money or step up and show the balls to get this done.
Two realistic options for Mark Davis. Santa Clara or a Coliseum retrofit.
Anonymous,
So, your definition of evidence is, “what I think”?
JC,
$20M/year is the cost of paying off $400M in bonds over thirty years.
All,
PSLs are already accounted for as part of that $500M that Davis has offered from the Raiders/NFL. The $20M/year would have to come from the Raiders paying rent or some other source. Perhaps the Raiders could convince the League to cover half of it from the Chargers’ relocation fee.
The biggest issue in my mind will always really be that there is no true resolution over the A’s and Warriors futures as this debate is happening. If the A’s and Warriors either already had deals to stay or go, then we would know what the true future of the Raiders in Oakland was as a result; because those teams dont have new deals with any city, no one really knows whats going to happen. It seems like Oakland, due to the financial issues + all 3 teams being free to go dont want to make a sweetheart deal to any of the three teams because 1. it could make the other two teams have an excuse to immediately bolt when they dont get the same equivalent deal (like we just saw in Atlanta when the Braves didnt get what the Falcons did), and 2. they still might see that team pass on the deal anyway, leaving them with no teams (similar to how Hartford let the Whalers go to make a big bid for the Patriots, only for the Patriots to stay where they were, leaving Hartford with no teams at all).
In all honesty, the shoes for all 3 teams won’t actually start to drop until 1 actually signs a deal with a city and begins construction; then at that point the other teams futures will actually begin to move forward, though what the end result will be is a question mark (though I’d be astounded if all 3 left; no way NFL, MLB and NBA would pass on having Oakland all to themselves, especially with the likelihood that the Oakland fans would be angry at the other teams leaving + loving the one team who stays)
Ryan, but we do have a resolution on the Warriors, they’re leaving. Their arena plans in SF are advancing nicely with broad support from residents and the city government. Hell even the neighboring hospital has publicly put their support behind the project even if one of their big developers is being a pain in the butt.
As for the A’s, there won’t be a resolution for the A’s until after the Raiders figure out what they’re doing. So if the Raiders are waiting to figure out what the A’s are doing they’ll be waiting a while…
Dan;
Not sure it’s really a case of Oakland priorities with the A’s “on hold” (if that is what you meant?). The A’s really don’t have anywhere to go, so they are patiently waiting (and perhaps regretting the “no Oakland option” mantra they kept repeating 6-8 years ago or so).
If Oakland plays footsie with the Raiders too long, it might cost them the A’s as well (I don’t think the Raiders are staying no matter what is offered, do you?).
They could lock in the baseball team for less than half the cost of the football team right now. It’s a better deal for them in virtually every way. If they can afford it, of course.
@Ben:
Your statement below is exactly where my fundamental issue lies with this:
“The $20M/year would have to come from the Raiders paying rent or some other source. Perhaps the Raiders could convince the League to cover half of it from the Chargers’ relocation fee.”
The Raiders’ rent, if they pay rent at all, will be a pittance (maybe $1M if the city is lucky). If they could pay that kind of rent, why are they asking the city to foot the bill?
The League (and specifically the owners who get shares of the relocation fee as compensation), will never agree to share that relocation windfall. The league will commit some $ from its stadium fund (or whatever it’s called) to the raiders, but that’s it. They could well afford to pay for the stadium given the hordes of cash they earn, but if they can extract the bulk from the cities, why would they?
So that brings us to “some other source.”
Where is the city going to find $20M/year on top of what they are paying for the $100M liability they have on the books for the unused Davis Deck?
Whereas the Raiders insist they get to use generally predictable, direct revenues—all revenues from all stadium activities, not just football–the city is on the hook to find ways to fund their part from indirect, unpredictable and and mostly non-materializing sources (such as TIFs) which are equivalent to magic beans.
The Raiders won’t pay property taxes and will attempt to negotiate out of construction taxes, ticket/event taxes, etc. The city wanted to fund their part by developing part of the land, but the Raiders don’t want that b/c they want huge tailgating parking lots, not parking garages.
So, “some other source” is likely to ultimately become the city’s general fund that then impacts the city budget and ability to fund other, better public goods and services.
Given the choice between spending $20M/yr on a stadium that is only used 15-20 times by only those who can afford it and benefits someone (and league) who really has the money to pay for it, OR spend it on parks, libraries, community centers, schools, etc that can be used nearly 365 days a year by the entire community and will make Oakland a much better place to be, I would choose the latter.
I’m with JC on this: If Davis had been willing to put $20m a year into this in the first place, he wouldn’t need the talcum powder.
Neil, Steve Bisciotti, while not initially involved when the Browns moved to Baltimore, did purchase a minority position in the Ravens only a few years after the move. Bisciotti went on to purchase the remaining interest in the team. Why can’t a similar arrangement be had with Ellison and the Davis family? The NFL forced Modell to sell – I can see a similar situation developing with the Davis family. You can call it whatever you want (debt, equity, etc) but it would give Ellison more than a foot in the NFL door.
Sure, Ellison can buy whatever he wants. But why would he then also want to put his own money into building a new stadium? Or, if you mean Davis using Ellison’s purchase price on a stadium, why would Davis want to give up equity and get nothing in return except money toward building a stadium for a team he would now own less of?
Many people seem to be of the misunderstanding that the problem in funding a stadium is finding money. It isn’t — if any of these guys need money, they can go to a bank and borrow it. The problem in funding a stadium is finding *profit*, which is a different story, and not one that the presence or absence of a billionaire or two is going to affect.
Neil, the Raiders have always been a partnership going back to 1960. Heck even Al Davis did not own a controlling interest until the 70’s. But more to the point, would you rather own 80% of a team worth $900M or 55% of team worth $2 billion? Unless you believe Carson will fork over the dough to build a stadium, I don’t see many options for Davis in either Caron or Oakland sans a “deep pocket” unless he will play at Levi’s Stadium (something I believe the NFL is pushing real hard).
Huh? The Raiders aren’t going to double in value by moving to a new stadium in Oakland. If that were the case, they’d have built one eons ago.