A couple of news items from this weekend that could have unexpected consequences for the Oakland A’s stadium plans. First off, Hyphenated Republic spent more time watching Tuesday’s Alameda County board meeting than I did, and spotted this revelation:
The meeting was also the first public discussion of the Schaaf administration’s plan for assuming public debt to cover off-site infrastructure critical to the construction of the stadium. Schaaf told the body that the City is seeking state and federal sources to cover over $351 MM in off-site infrastructure necessary for the project. But even if the City were to receive the funding, she admitted, there would still be an estimated $150 MM patch required. Schaaf said on Tuesday she intends to cover the gap with a “limited obligation bond” serviced with anticipated increased taxes directly from the project.
“Today we have a conservative estimate that the total cost of the improvements will be $352 million. We anticipate that that will be increased with further due diligence, so the $150 million limited obligation bond will be a portion of meeting that obligation,” Schaaf told the BOS.
To recap briefly: A’s owner John Fisher’s initial request was for $855 million in public money to pay for infrastructure improvements to turn his proposed stadium site from an inaccessible yard of shipping containers to a neighborhood people might want to visit and live in (and not drown in after sea-level rise). The city of Oakland chopped that down to $495 million in tax kickbacks, in part because that would let them approve the plan with the vote of only one single landowner, the local port authority. The rest of the money, it was rumored, would come from a state infrastructure fund, or possibly from Joe Biden’s long-awaited federal infrastructure bill.
Schaaf’s testimony confirms that she plans to seek state or federal funding for the missing $351 million — but that the price tag is expected to go up, by so much that an additional $150 million in city bonds will be needed to pay even “a portion” of the overruns. That would push the total infrastructure subsidy to more than $1 billion, which, as the saying goes, is starting to run into real money.
The other thing about limited obligation bonds — which in California can be any bonds not paid off from property taxes, so the revenue source for these is extremely TBD — is that they require a two-thirds public vote to approve, and that’s a vote of city residents, not of landowners. (A city spokesperson confirmed to Hyphenated Republic that Schaaf’s proposed $150 million bond would require voter approval. [UPDATE: Hyphenated Republic’s proprietor writes in to say that the city spokesperson now says it wouldn’t require voter approval, just council approval. Still trying to confirm this independently.]) That, frankly, is not too likely to happen for a contentious project like the A’s stadium — at least, not if it’s presented to voters up front. Could Schaaf and the county and Fisher agree to the rest of the funding, then put the additional $150 million up to a public vote once the project is a fait accompli, arguing, “We’re already going to do this, let’s spend enough to make it nice”? And what happens if the $150 million is only enough to pay for part of the overruns, as Schaaf is already predicting? Could $855 million in public cost end up looking cheap in retrospect?
And speaking of looking cheap, Fisher may have just thrown another wrench into the works by allowing A’s manager Bob Melvin to leave to become manager of the San Diego Padres on Friday, demanding no compensation even though Melvin was in the middle of his contract. It’s widely believed that this is the precursor to yet another fire sale of the team’s best players — something that was already being rumored — to avoid having to pay big contracts as they enter their arbitration years, assuming arbitration years even stay the same under whatever the new union agreement turns out to be.
Rebuilding for, say, 2026, when a new stadium might be open and you can recoup your costs by charging through the nose for tickets, makes some sense from a cold-eyed bean-counting perspective. But it also comes with a risk.
There are two main strategies for using a team’s on-field performance to gain public support for a stadium campaign: Have a real good team that gets people excited about it (and fearful of losing it), or have a real bad team and argue that it will never be any good unless it gets a new stadium. The latter tack, frankly, has never worked nearly as well as the former, if only because Let’s pay up to ensure we can keep watching the team for years to come isn’t a great argument when it can be answered with Who would want to watch these schmoes anyway?
So tearing down the team right when you’re trying to win a billion dollars or more in public money is, let’s just say, not a good look. On the other hand, spending a ton of money on players who will likely be gone by the time the expensive seats come on line is a bad investment if you can get away with tanking until then. And maybe beyond then, if it turns out that the economics of running the Bay Area’s second-favorite ballclub in a new stadium aren’t that different from in the old one? Whole lotta dice-rolling going on, and a lot may end up turning on how big a Matt Olson fan Schaaf turns out to be.
“…have a real bad team and argue that it will never be any good unless it gets a new stadium. The latter tack, frankly, has never worked nearly as well as the former, if only because Let’s pay up to ensure we can keep watching the team for years to come isn’t a great argument when it can be answered with Who would want to watch these schmoes anyway?”
Or, in other words, the Shad “Rachel Phelps” Khan scheme.
Easily will be $1 BILLION (+) in infrastructure costs! Amazing that a city like Oakland, with a myriad of economic/social problems, went from “no taxes for sports teams!” to this. Not sure if it has any relevance to the supposed $495 million from the HT IFD, but language was also edited to say something to the likes of “a portion of the county’s property taxes” instead of ALL the county’s property taxes of the proposed district.
That was certainly the number kicked around by pundits when the HT site was first proposed by the city… as I recall, the suggestion then was that the total price to accommodate a $500m stadium (as it would have been then, maybe) would have been in the $2Bn range.
Quite why anyone would be willing to build to suit a tenant who has made it clear up front they won’t pay any rent or make payments in lieu of property taxes, I don’t know. But professional sports properties exist in a non rational number universe, so attempting to make standard business plans apply to same is never going to work.
“the land is not being used effectively and generates only modest revenue”
Solution: “let’s spend $1Bn+ in taxpayer funds on it and hand it to a billionaire failson while exempting it from property taxes permanently”.
Ahhh, Lorianomics rears it’s ugly head yet again.
Fisher probably sees this as a no lose proposition. Either Oakland/AC cough up an unknown and possibly unknowable number (even for ‘shared overruns’, which can be calculated in many ways…) or they don’t.
If they don’t, having a triple A talent level (if that) could help him record a significant drop in attendance and oil the wheels for a move. Despite the A’s front office lack of spending and best efforts to keep them away, fans still turn up in more or less the same numbers they always have (20-22k, with bumps to 26-27k in really competitive years).
He still has the problem of where to move to, of course. But there has never been a shortage of stupid politicians wanting their name in the paper no matter how much it will cost the people they are supposedly representing.
Really no downside for Fisher on this. He blackmails Oakland or he blackmails someone else. He knows that somebody somewhere will hand him a billion or so, and he has his lackeys Manfred & Kaval ready to mumble the right (or possibly wrong) words when needed to help that happen.
Don’t let anyone tell you that being a billionaire isn’t a lot of hard work. Even when you inherit it.
I don’t know that I would agree there’s no downside to Fisher here. He’s as close as he’s ever gotten to a $1B payday, and now he’s risking city and county officials, not to mention potentially Oakland city voters, seeing him as a cheapskate. Another year of Bob Melvin seems like it would have been a reasonable investment to nail that down, but then, I’m not a billionaire failson, or even successson.
Nor am I… sadly. Maybe then I’d understand it all better. But they way he has operated the A’s doesn’t suggest to me he cares whether anyone considers him a cheapskate.
As for putting the $1Bn in corporate welfare at risk, well, I don’t think that hinges on whether Oakland officials or fans think he’s a swell guy. And given the way this thing has been structured thus far, it certainly won’t depend on what taxpaying voters think of him or the project. They won’t get a vote… at least not one that actually counts.
That was the plot of Major League, as I recall.
Also Star Trek:
https://memory-alpha.fandom.com/wiki/Baseball
If I recall, before Mt Davis there was a pretty nice view looking over the outfield wall. I don’t know what it looks like today. I believe a new ball park on the Coliseum site would work. The nice view looking out, public transportation already in place, room for a ballpark village if there is a desire to have one. Look at all of the millions you can save. Oh I get it. It’s not their money, but tax payer money so to them cost savings is not important.
With the possible dismantling of the team, we will get Oakland cannot support an MLB team when attendance stars dropping to the low 10,000 or below 10,000 level. The team’s way of passing the blame to the people of Oakland if the team moves vs the team does not want to pay for the bulk of their new ballpark.
There’s a fairly recent precedent for that strategy in Montreal, though I don’t think the A’s situation will ever get to the point where MLB ends up seizing the franchise (as was the case with the Ex-Spos). Either way, I can def see the team and/or the league teasing out the idea that, maybe, the Bay Area isn’t capable of supporting two MLB clubs anymore.
And fwiw, it seems like the Rays are also running a modified version of this scheme, except theirs is, “We would like to make this team even better, except our lack of a fanbase and resources won’t allow us.”
What’s the benefit of claiming that the Bay Area can’t support two teams, though? If Fisher wants to move, whether to Vegas or elsewhere, it doesn’t seem likely his fellow owners are going to turn him down; and burning his bridges in the East Bay would just cost him leverage to get another city to cough up lots of stadium money, not to mention that’s going to be harder to extract if the A’s best player is Tony Kemp. It’s an odd strategy all around.
But the Bay Area IS capable of supporting two MLB franchises. But IDEALLY, you’d want both franchises located in the largest and richest cities (SF and $J), separated by 40 miles. Perhaps Oakland isn’t capable of support a MLB franchise; I’d agree with that idea.
This “our exclusive territory is whatever we say it is” thing is a real hindrance to getting professional teams in front of the fans that actually want to see them.
Same in hockey. There could be (should be?) another team in the Golden Horseshoe of Ontario. Everyone knows this. But the only way it could ever happen is if Buffalo moves to Hamilton somehow or if the NHL expands to 40 teams. The Leafs and Sabres can and have blocked it.