The city of San Jose and Sharks owner Hasso Plattner have agreed to a new lease in which the city would spend $325 million on an upgrade of the team’s arena, in exchange for which the Sharks would keep playing there until 2051.
I know what you all want to know: Is this, you know, bad? The current Sharks lease expired this year, though the team has a series of one-year options for extending it. If we treat this as a 26-year lease extension, though, that’s $12.5 million in taxpayer money per additional year of the Sharks sticking around, which is a bargain compared to some other much pricier deals. But the devil is always in the details with sports leases, so let’s dig into the city memo and see what it spells out:
- The commitment by the Sharks to stay in San Jose through 2051 isn’t actually quite that: The new lease establishes penalties for leaving early, but these will only equal the city’s outstanding debt on the renovations — meaning an equally accurate reading is “New Sharks lease will allow team to move in the 2040s by paying small buyout.”
- On top of the $325 million for renovations, he city will put in another $32 million for future “ongoing capital repairs.” (Plattner will match the $32 million, but will only put in $100 million toward the initial renovations.)
- The renovations are needed, according to the memo, to bring the 32-year-old arena into compliance with “NHL standards.” (One example given: The visiting clubhouse is on the opposite side of the ice from the visiting bench, so the coaching staff has to walk across the ice to get to it.) But it doesn’t appear that an upgraded arena will come with upgraded rent payments — in fact, under the old lease the team owners were expected to pay $4 million a year into a capital reserve fund (they don’t appear to have been paying anything to the actual city treasury), whereas now that figure will fall initially to $500,000 a year before rising eventually to $2 million a year.
- As the city and team have agreed that even a renovated arena will no longer be usable after 2051 (because reasons), there will be a new deadline of September 1, 2027, by which time the city and team will conclude “identifying a Future Arena Location and executing an Arena District Agreement” for the next arena to replace the just-upgraded one.
The memo is largely a PR document — it includes a section on how “reinvesting in the SAP Center is about more than bricks and mortar — it’s about honoring a civic legacy, supporting the next generation of athletes and artists, and reaffirming our place as a destination for world-class entertainment” — so we’ll need to see the actual lease language before attempting to assess how much this will cost San Jose residents in total. But “$357 million plus we reduce your rent plus the year after next we start planning for a whole new arenat” is already heading in a pretty spendy direction.
It’s definitely a proposal ripe for further analysis, so it’s a good thing the San Jose City Council isn’t planning to vote on the deal until — uhhhh, next Tuesday? Six business days, to decide on committing San Jose to rebuilding one arena and committing to build a whole new one, sure, that seems like plenty.
The moving-the-visiting-locker-room idea is too bad. It’s always funny to watch the coaches try to walk on the ice in their dress shoes and not slip. I haven’t seen anyone eat it in person, but I keep hoping.
The problem is that by being built before the wave of late ‘90s arenas, there are some things that harm either its money-making ability. The club seats are the first 16 rows on both sides and one end, many of which are not good seats for hockey because of a lack of elevation and/or glass distortion. And instead of having two levels of suites between the decks, they have one of the levels above the upper deck (which doesn’t go all the way around) which lowers the price they can get for them.
That all makes sense, sure. But if the renovations are being done so that the Sharks owner can charge more for tickets, then they can be paid for with the increased ticket revenue, no? And if the increased ticket revenue isn’t enough to pay for the renovations, then why do the renovations at all?
Maybe if they don’t do them the Sharks will move to Vegas/Sacramento/SaltLake
The Golden Knights and Mammoth might have something to say about two of those options.
well well well. Looks like California does publicly fund sporting venues…as they should. The Sharks are part of the San Jose community… unlike Oakland who thought by trolling and getting political would keep the Raiders and A’s to stay. San Jose actually out up the money. I hope Brodie covers this…maybe not.
When San Jose Arena was originally planned in the late-80s, the Sharks didn’t exist yet. But, when the NHL expansion team went to San Jose, they had to shoehorn a whole section of suites into the nosebleeds at the top of the 2nd deck to make the revenue streams semi-competitive with other teams.
The arena remains a single-concourse building with a low ceiling. As a fan experience, it’s great. Good sightlines, even from the back of the 2nd deck, and that low ceiling ensures that the arena gets loud during games.
Even though I understand the business side of having to have a more cavernous seating bowl with multiple club seat levels, I like going to the actual games at the Shark Tank. It’s one of the last arenas of its kind still standing, and in an NHL player poll a decade ago, San Jose was rated as the 2nd most intimidating building in the league behind only the Bell Centre in Montreal (whose seating bowl was optimized for hockey, without compromises for dual use with basketball).
I’ll be curious to see what the renovations will do to the fan experience (i.e., watching the game, as opposed to adding outside distractions).
It doesn’t sound like they will do a full on excavation and demolition of the existing seating bowl like the Oakland Arena (another single-concourse building, but smaller than San Jose) did in the late-90s. In that renovation, they squeezed every seat into a building shell originally designed for 15k capacity and a single level. Ended up with 19k+ capacity and two suite levels, but the seats are ridiculously tight and the concourses get very narrow in spots. I would not want San Jose to move in that direction.
Do big acts play at the Warriors arena in San Francisco AND at the Sharks arena in San Jose? Without doing a side by side comparison, I am guessing people play at one or the other, which probably means San Jose has to charge less rent on their building to attract acts. Renovations won’t solve that issue, and makes spending billions on a new arena seem like a foolish idea. Where would the Sharks move if they don’t get a new arena?
It’s Greensboro, right? That’s gotta be it… maybe Springfield (pick one)
Typically, the arena touring acts will play either San Francisco, San Jose, or Oakland (and to a lesser extent, the ancient Cow Palace south of San Francisco). And in the summer you add the outdoor amphitheaters in Concord and Mountain View. Touring acts tend not to play more than one of those venues, but they occasionally do. Other events like Disney On Ice will play multiple arenas.
Because Oakland doesn’t have a full-time sports tenant, they have a lot more scheduling flexibility. They already function as the less expensive option for concerts, and they have a larger seating capacity along with a more central location and access.
And no, the Sharks are not going to move (or at least won’t threaten to do so anytime soon). They’re in a large market, and the main pro sports team in the Silicon Valley submarket (unless you count John Fisher’s MLS San Jose Earthquakes, who are already grumbling about the need for renovations to 10-year old Paypal Park).
The ownership group is locally-based and also has full operational control of the arena. I doubt that any credible relocation threat would materialize unless they start bringing out-of-town investors into the ownership group.
The team has always had strong support from the Silicon Valley corporate community, and a loyal fan base (until their more recent woes, the Sharks regularly sold out their home games).
The owner is based in Germany and only sees the team for around 6 weeks a season.
“Hasso Plattner” is a great name for a Batman villain.
Chase Center has emerged as the #1 arena are a in the market, with San Jose and Oakland relatively equal in second place. San Jose usually gets more Hispanic-centric acts, while Oakland gets more urban acts.
For a building supposedly built for hockey, SAP Center has a flawed upper deck. A bad combination of seat pitch and angle mean that if you lean forward you block the view of those behind you. Let’s see if they fix that…
When they rush the vote, just one week, they don’t want people to be informed before they vote so you know it’s a bad deal.
BTW Manfred said today there will be no expansion until he can’t use other cities as leverage to get the A’s and Rays new stadia.
Manfraud is going to need every bit of that leverage, if any exists, because it’s very possible that five years from now, neither the A’s nor the Rays will have a brand-new MLB ballpark.