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01 November 2005

San Jose site acquisition continues

Update (10:50 PM): San Jose City Council is expected to vote on the acquisition next Tuesday (November 8).

The City of San Jose is
set to buy a key property on the proposed Diridon South ballpark site. The property in question is the former Stephen's Meat Products factory, which is distinctive for its "dancing pig" neon sign that greets drivers going south on Montgomery Street. The 1 acre site could cost up to $5.7 million.

Unlike what's happening in DC, the properties at Diridon South are expected to sell for actual market value through negotiations, meaning eminent domain isn't expected to be used. That should also ensure that there are no lengthy legal battles over the value of the land. That issue has ensnared the DC acquisition process enough to cause some waffling over the plan, even putting the projected timeline in jeopardy.

The downside is that the total cost of the land will be high - somewhere in the neighborhood of $60 million. So far, the money has come from the sale of other properties, notably the Brandenburg/North San Pedro site, upon which new residential towers will be built.

Stadium foes such as Kathy Chavez-Napoli have criticized the acquisition because they believe that it violates the city's own laws which dictate that no money can be spent on the building of a sports facility without a vote. The city's redevelopment arm (SJRA) may have an out because the land is being acquired with no specific purpose yet. It could be used for housing (per the Diridon/Arena planning document), a ballpark, or other commercial uses. The city's legal counsel has signed off on the legality of the acquisitions, though it does appear pretty clear what the greater purpose is. Whatever your take is on the subject, San Jose is well on their way to acquiring the site prior to a November 2006 ballot measure.

The leading question is - how is San Jose going to arrange its proposal? Will it offer to sell the land to a developer who can then build the ballpark? Or will it keep the land and arrange a long-term lease for the ballpark developer (the Giants/China Basin deal)? And what of surrounding parcels, some of which are also ripe for development of anything from parking structures to office towers to mixed-use residential development, such as a ballpark village?

23 comments:

Murf said...

This is a safe gamble for the city. If they buy at market value, the stadium proposal falls through or a territorial issues are not resolved, the city is left holding 11 very marketable pieces of property, the sum of which are worth more to developers than they are individually. It should prove to be a profitable move for the city, even if baseball never arrives.
Nit-picking the article, Witt's claim that "Major League Baseball opposes relocation of the A's to San Jose" is a little misleading. MLB has not made a statement as such, only saying that territories won't be unilaterally re-drawn by the current commisioner.

harrold painter said...

That is not true at all. Selig has repeatedly said that Magowan built his ballpark with the idea that the south bay would not be granted to any other franchise. Nit pick all you want, to me this means that he's opposed to any franchise moving to the south bay.

Marine Layer said...

Yes, and we can all sleep better knowing Selig's word on this and other baseball matters is as good as gold, eh?

No one can really say for certain whether Selig's statements are merely a front to gain leverage for Wolff in Oakland or if Selig is taking the right stance in advance of a move to San Jose. The problem is that either argument could be made.

Anonymous said...

Mr. Painter,
Respectfully, having attended the Selig San Jose speech myself, what Selig said was that "Ma Bell" Park was (supposedly) built on the condition that Magowan had exclusive territorial rights to Santa Clara County. You could draw any conclusion you want from that statement, but just like the title to my house, territorial rights aren't sacred and could probably be negotiated under the right conditions/at the right price$. Also, could someone tell kathy Chavez Napoli to move somewhere far away like Los Banos or Paso Robles? She could take her "Small town USA" cause with her. It's bad enough SJ Baseball supporter have to deal with territorial naysayers...San Jose is large enough to provide city services AND pursue Major League Baseball!

harrold painter said...

Mr. Anonymous, you're probably right that they could be negotiated, but my guess (since Magowan has said it's not negotiable at any price) would be about 25% (est portion of fan base from south bay) x 3.2M (attendance) = 800K x $60 (avg bucks per fan incl parking, etc) = $48M per year x 15 (yrs left on lease) = $720M ... i.e., non-negotiable.

Marine Layer said...

$720 million? That's over double the franchise's current value. I'm certain there's some value associated with a portion of the Giants' South Bay fan base, but it can't be assessed with a simple formula. Magowan made the mistake of throwing out a number, $60 million, some years back. Now he's taken the number off the table, and for good reason - he doesn't want to discuss it. But that doesn't mean that he can't be compelled to come to the table.

Anonymous said...

Mr. Painter,
25% of the Giants Fan base comes from Santa Clara County? I'm not disputing your figure, but rather who generated such a figure/percentage in the first place. I have a hard time believing that 11,000 Santa Clara County citizens make there way up 101 and Caltrain during the regular season. Lets assume this number is right...do 11,000 Giants fans all of a sudden abandon their team because one exists in San Jose? In closing Mr. Painter, do you thing Magowan would accept an Orioles/Nationals type deal (gauranteed revenue levels)?

murf said...

Whether or not negotiations will prove feasible is a mute point at the moment. The truth is you'd have to spin Selig's words to reach a tangible conclusion on his opinion either way. All he has said up to now is that the Giants control SCC, and he is not going to single-handedly change that. That certainly doesn't equate to the entity of Major League Baseball opposing potential negotiations, as implied by Mr. Witt.

harrold painter said...

Mr. Magowan has said that no lump sum would be considered since it's the ongoing revenue stream that would be at risk. So a lump sum payment would be nice for the ownership group, it does nothing for the long-term revenue stream of the franchise. Let's remember that Magowan's group purchased the team knowing he had rights to the south bay, upoin which he relied on for financial support in building the ballpark and ongoing patronage - he did this without taxpayer subsidies. Mr. Wolff bought the A's knowing that he did not have rights to the south bay so the rules have not changed for him suddenly and unfairly.

Anonymous said...

"Mr. Magowan has said that no lump sum would be considered since it's the ongoing revenue stream that would be at risk"...so I guess it is possible for Magowan/the Giants to accept an Orioles/Nationals type deal.

harrold painter said...

Anything is possible, but I live in the world of reality. In my mind it's not realistic to think that he'd do this since the Orioles situation is different - they did not own that territory. In my opinion, it's realistic to assume that Selig will not upend territorial rights as he has said numerous times, and it's realistic to assume that Magowan would not accept a nominal one-time payment, or even worse, a deal like the Orioles got whose bargaining position was much weaker. But live in your dreamworld if you want.

Marine Layer said...

Just to clarify, there are two things Peter Angelos got out of the O's-Nats deal. First is the majority share of the new regional cable network. Second is a guarantee on the franchise's sale price. There was talk that Angelos wanted a guarantee on the annual revenue stream - a guarantee that would continue even after he sold the team - but he didn't get it.

Anonymous said...

Mr. Painter,
I'll see ya on opening day 2010 at CISCO PARK AT DIRIDON STATION!!! And the first rounds on me...GO SAN JOSE AND GO A'S!!!

Marine Layer said...

Harrold,

I don't think any of us are qualified enough to make assumptions about anything MLB or the commissioner does. There was an assumption by most media that Angelos would require a huge cash payout or MLB would endure a massive lawsuit. That didn't happen. All of the rules belong to them, and they're free to enforce, change, or bend them however they see fit.

I've said this before and I'll say it again: Selig could've given an unequivocal "No" when he visited San Jose. He didn't do that. He met with the Mayor and booster Larry Stone emceed the event. If the boosters were supposed to come away discouraged by Selig, it didn't work.

Anonymous said...

To expand on your final thought Marinelayer, Mr. Selig didn't even have to come to San Jose in the first place...he could have simply phoned San Jose from back east and said "hell no, the A's won't go!"

Maury Brown said...

"Mr. Magowan has said that no lump sum would be considered since it's the ongoing revenue stream that would be at risk"...so I guess it is possible for Magowan/the Giants to accept an Orioles/Nationals type deal.

No, because the ownership brethren have a collective interest in the Nationals sale, and there is no such incentive for the owners to back the notion of opening up the MLB Constitution for an interest in which 28 others do not gain.

Besides... why would Magowan relent, when the possibility for the A's to relocate out of the Bay Area is still on the table?

I think beyond this, I think it's academic. The odds are long for a referendum to pass for stadium funding even with a team standing at the door. Lurie surely understood that.

Marine Layer said...

Come on, Maury. Don't you think it's a little premature to start throwing dirt on a referendum that hasn't yet seen the light of day? No one knows if it will be structured like the 1992 deal, the 1990 deal, the China Basin deal, something tailored towards Wolff's Oakland concept, etc. Let's wait to appraise it until we've actually seen it.

Anonymous said...

Mr. Brown,
It's absurd to think that the owner of, let's say, the Red Sox would object to the Bay Area teams renegotiating territories because they have "nothing to gain"...ridiculous! If anything, I would think the MLB owners would approve the A's becoming a potential revenue contributor in San Jose rather than a recipient of revenue sharing...John Starks of ESPN backs this notion wholeheartedly, and I have more faith in his word than yours Mr. Brown. Lastly, please don't give us the old line of an A's move to SJ opens the door for teams to move into other defined territories, which quite frankly is a bunch of crap!

Maury Brown said...

Who is John Starks?

Maury Brown said...

Lastly, please don't give us the old line of an A's move to SJ opens the door for teams to move into other defined territories, which quite frankly is a bunch of crap!

Can you please expand on why "this is a bunch of crap?"

Maury Brown said...

Come on, Maury. Don't you think it's a little premature to start throwing dirt on a referendum that hasn't yet seen the light of day? No one knows if it will be structured like the 1992 deal, the 1990 deal, the China Basin deal, something tailored towards Wolff's Oakland concept, etc. Let's wait to appraise it until we've actually seen it.

When was the last public referendum on stadium funding passed?

Marine Layer said...

1996. San Francisco Prop B - $15 million in bonds, and a sweet lease on the land (which I think is how a San Jose deal would be structured). Mayor Gonzales at least has made comments to that effect. A lot of informal polling in San Jose has indicated that a deal similar to the China Basin deal would be amenable to many of San Jose's residents. We'll just have to see what the deal entails. We know that the total value of the Giants deal was closer to $100 million when the land and infrastructure improvements were included.

Or do you think they'd actually push a $400 million ballpark proposal out here? It's possible, but not likely.

Maury Brown said...

I would think that the difference in the China Basin deal and a deal similarly structured in San Jose has one major difference:

The Giants were, more or less, ready to relocate.

This provided a, *ahem*, bit of a blackmail scenario. Yes, I can see that you could say that similar doings could occur with the A's. The key difference is that the Giants were working the deal to stay in their own backyard after the referendums failed in 1990 and 1992, which is why we're in this predicament now: Santa Clara Co. and the Giants.

As for the commentary from Jayson Stark... his position has shifted since the award of the Expos to DC and how Angelos was indemnified.

Coming back around on the possible referendum... It may well be that the voters could support the concept of funding for a stadium in San Jose for the expressed purpose of the Athletics. But, you're talking about passing legislation without knowing whether the team is actually available to move. In DC this was called conditional award. "No team... no funding passed", was the mantra.