04 August 2005

Gems from the AN Interview Part II

"Blez: At least you're getting a lot of walk-ups lately.

Wolff: That's the worst thing that could happen to us.

Blez: Really? Why?

Wolff: Well, let's think it through a little bit. We have the highest walk-ups in Major League Baseball. That is a big black mark against us with the league. Say you're trying to get the vendors ready for the game and you don't know if you're going to have 10,000 people or 20,000. The Giants have the luxury of knowing almost every game where they'll be. This is a serious problem. It's not a plus. Obviously we have a lot of seats because of the Raiders expansion and such. So when people say, "Gee whiz, can you spend more money?", we don't want to gouge anybody but we'd like to be closer to what the Giants are able to do just by way of a neighbor."
  • One of the things that tends to be forgotten in the appreciation of baseball is that there is a business model behind it. Or rather, several. Moneyball is a unique business model for developing and acquiring players. SBC Park and McAfee Coliseum have very different business models for their stadium operations. A team with its own cable network (Yankees, Red Sox) would have a separate business model for selling advertising. It may not be the most interesting thing to discuss, but it's the reality of the modern era.
  • This is not the first time Wolff has expressed his disdain for walk-up attendance. Expect the season ticket advertising push at the beginning of this season to be cranked into high gear in September and throughout the offseason.
"Blez: So, when you talk about 32-35 thousand capacity...

Wolff: That will create some scarcity. Not a lot. We still have some great ideas. We want to cater to families still and we aren't looking for the last dollar. But we'd like to be able to manage the dollars that we have. And we don't know sometimes whether to have 100 people working or 200. You need to probably talk to the people that do that to get more detail. But it's just not good. And by the way, even if the Raiders weren't there, it still wouldn't be good. Without the Raiders, we'd still be looking for a modern venue."
  • The challenge for Wolff will be to sell the added value in a new ballpark. Some of it is inherent: new amenities, better location. Other added value may not be so obvious, such as special perks for season ticket or suite holders. In the end, the best added value comes from a winning team. It is the ultimate end product, after all.
  • Mt. Davis has been almost universally hated by A's faithful, but it's provided some interesting benefits for them. The lease agreement is extremely favorable for the A's, as their yearly payment is slightly less than the cost of salaries for rookies Huston Street and Nick Swisher. They also have one-year options on the lease starting in 2008 and have a cheap buyout clause. Without Mt. Davis, the A's would arguably have less of a case to get a new ballpark. Opponents, including those who would have an emotional attachment to the Coliseum, might be more in favor of renovations to the Coliseum, perhaps similar to those undertaken in Anaheim. The Coliseum now is clearly not a good revenue-generating ballpark model because of the huge capacity and little scarcity.
  • Pricing is another matter altogether. Since a competitor resides in the same market, the A's couldn't make huge across-the-board price hikes without dealing with the ramifications of the demand curve. Wolff has said that the area isn't too keen on seat licences, but seat licenses are a very common part of stadium financing these days. Are seat licenses out of the question, or will they be offered in a limited form? If they are offered, how will they be pitched? What flexibility will be in the partial season ticket plans? What about ticket promotions such as newspaper family packs?
"Blez: Are you strictly focused on Oakland right now? I live in Sacramento, so I selfishly hope you'll come here, but have you explored any place like Sacramento or Las Vegas?

Wolff: We have time to look at Portland and Las Vegas and places that people keep hearing about. Our focus is in our territory, which is really a district. Our district includes, Alameda County, Contra Costa County and I think Monterey too (laughs), we're not moving down there. We don't have Santa Clara because that was somehow shifted over to the Giants. I am focused totally on our district. In order of priority, I would like to be in the city of Oakland, if we could. If not, something to do with the city and county through the JPA, and otherwise, the county."
  • This should get the Portland and Vegas folks talking, but they're just going to have to wait like vultures circling carrion (this goes for San Jose and Sacramento too) for talks in Oakland to collapse. However, Fremont or Dublin may be in play sooner than later. Wolff held firm on intent to not challenge territorial rights in Santa Clara County, which makes it all the more difficult for Baseball San Jose to sell their concept.
"Blez: Anything beyond that?

Wolff: I don't know where to go beyond that (laughing). That's all we have the right to do. Now, Sacramento could probably be an area. But I haven't discussed it in any detail with anybody. Right now, I'm not sure whether that's a good market or not.

Blez: Raley Field was actually built so you could build a second and I think third deck on it to make it into a major league ballpark.

Wolff: We want a ballpark without a third deck. I understand the park is great and a friend of mine owns the team. I haven't actually seen it yet but I'm going down with Billy soon to see it. When you're going to make this type of investment whether it's in Oakland or somewhere else in the area, and I'm talking $300-400 million, you should get the biggest bang out of it. San Diego's done a great job. They've benefitted a lot. But Oakland is a tough city. It's built up."
  • At first, I was surprised with Blez seemingly pimping Sactown. I don't really have an issue with it. Wolff, Fisher and other investors will choose a site and plan based on feasibility, cost, and potential. He's probably heard plenty about Sacramento already, so Blez isn't giving him anything new to think over.
  • As for bang-for-the-buck, there's potentially another issue regarding Sacramento. If a ballpark village were planned for the area around Raley Field, that would mean displacement of many business situated in the warehouse district there. That may not seem like much, but those businesses have a rail line, the river, and a major interstate only steps away from where they hang their shingles.
  • Built-up? This wasn't necessarily an issue only three years ago, when the relative futures of Howard Terminal, Uptown, and Oak-to-9th were in question and all three were open to different development plans. Howard Terminal is now sewn up for the next 30 years. Uptown is belatedly getting all of the pieces in place for the Forest City project, and Signature may have a plan in place for developing the Estuary. This brings up the question of timing. Wolff was brought on solely to work on venue development in 2003, then got an option to buy the team. Then he exercised the option in December, shortly after all three deals were well past initial planning stages. That leaves Oakland with fewer and fewer ideal sites. I'm probably reading too much into this, but it is curious.
I'll end on this note: Not only was it a brilliant interview "get" for Tyler Bleszinski, it was an excellent P.R. move by Wolff. He addressed much of the hardcore fanbase directly, giving them a few details to whet their appetites. Many are now clamoring for site plans, models, renderings, anything to push it forward. It's clear from most of the comments that there is a positive feeling about Wolff, one of guarded optimism. It's a crucial step in convincing the community at large that a ballpark is a good thing for the public.

Gems from the AN Interview Part I

In today's post, I'm going to cherry pick some of Wolff's stadium-related quotes and analyze them. There's much to glean from the interview, so if you haven't read the entire transcript yet, check it out.

Wolff: "We have something like 7,000 season ticket holders and the Giants have 25,000. We have comparable records, comparable division wins and wild cards, but since the new venue was built over in San Francisco-- I'm not a scientist, but I think that does have some factor."
  • Both of the statements are a big deal. The last statement - that was the first I had seen anyone in the A's ownership discuss SBC Park's effect on the A's attendance. That's important, because it acknowledges that the Bay Area is one large market, not a split into SF/Peninsula, East Bay, South Bay, etc., with hard drawn lines.
  • I had been wondering why the A's didn't release the season ticket numbers, and Lew does just that at what is arguably the best venue: AN. 7,000 is a paltry number for a big league franchise. There are good marketing opportunities in the future should they choose to take advantage. One promotion that seems obvious is using the purchase of full season tickets at the Coliseum, and even multiple years' worth, as a way to get better positioning for season tickets at the new ballpark. By establishing a pecking order - established season-ticket holders first, then the aforementioned "transition" ticket-holders, then those who elect to buy full or partial plans when the ballpark opens - demand should be driven up among the fence-sitters, including yours truly. It could yield a good deal of upfront funding without the term "PSL" hanging over it.
Wolff: "Then the size of the market. I think with a great venue and great venue support--and I'm not talking about the city writing me a check for the venue-- I think we could do a lot better. We're the smallest two market team in baseball. And even the White Sox, and my good friend owns the team, suffers attendance in Chicago. You would think Chicago would have more than enough people to be selling out and they're 14 games ahead right now!
  • The experience of the South-Siders should serve as a cautionary tale: Don't site a ballpark just anywhere without further planning in mind. If you don't develop a social community around it (entertainment district or ballpark village concept), the chance that you'll struggle with attendance is higher. It's easy to have such hindsight considering the fact that The Cell was built in 1991, before the Camden Yards boom. Still, the parallels between A's and White Sox' market positions are striking, and are worth noting if only to prevent a repeat of the White Sox' situation.
Wolff: "We have some challenges and I don't think Steve and Ken Hofmann spent a lot of time on that. They were busy trying to make the team work. We need a new venue and we'd like it to be in the city of Oakland. If not, then in Alameda County. One of the things you're going to see in the next few weeks is that as soon as I say I need government help, everybody thinks I'm talking about a bond issue and a check. What I'm really talking about is someone who will say, my God if we can do a new venue here, what can we do to make it work financially for the developer and the owner? How do we clean up the environment and where is the site? So those are the things we're looking for."
  • Wolff is being nice to the previous ownership group. It was Steve Schott, after all, who spent as much, if not more time looking for a site in Santa Clara County as he did in Alameda County. On his way out, Schott admitted that he could have done things differently. His methods, including negotiation through the press, had alienated much of the existing fanbase.
  • Wolff has started to become pretty forceful about defining what he means by "public assistance." It's extremely important to get citizens to think about the project positively, so he's not just avoiding, he's downright denouncing, the idea of the blank check. This is in keeping with his previous statement about having most of the financing come privately, but it doesn't mean there won't be some public share, though that might be more hidden than upfront. Rezoning, partnering on cleanup, easing relocation of existing owners and tenants - these are all hallmarks of large redevelopment projects, and Wolff has done many of those. It wouldn't be a surprise to see Maritz & Wolff or associated companies get options to develop area around the ballpark once it's rezoned. That would pave the way for new residential or hotel development, or even office towers, though Oakland isn't hurting for office space right now. Developers would then get a good deal on land along with promises of less red tape or regulatory issues (ex.: percentages of affordable housing in new projects). It's being done in San Diego, Brooklyn, and to a lesser extent, in Oakland as well (Uptown and Oak-to-9th have both benefited from city help to resolve potentially sticky legal situations).
"Blez: So what you're saying is that you aren't necessarily looking for funds to build the stadium?

Wolff: The answer is this. Cities have things that are better than funds. I'll give you an example. They have the power to clear property. When you look around Oakland, it's a pretty built-up community. And when you look around the 880 corridor, it is not the world's leading aesthetic (laughing). But all kidding aside, it has BART, it has transportation. What we're hoping for down the road is that there will be some leadership on the public side, and when I say that people immediately say, oh, you want them to pay for it and hand it to you, but that's not true. We're going to get a lot of spins soon saying that if I want some city help on zoning or entitlements, meaning zoning, right away people will be writing letters saying that he wants us to do the same thing that we did for others and the schools suffer and so forth which is true. But we need to have as much creativity on the public side as we do on the private side."
  • This is probably as close as A's ownership will get to actually endorsing a mayoral candidate. Wolff's being intentionally coy, but it's not hard to interpret this as a plug for Ignacio De La Fuente, who so far has been the only Oakland official to have regular contact with Wolff. Wolff has been in touch with members of the Coliseum JPA as well, but it's the City (and maybe the Port) of Oakland that are getting first crack, then the JPA, then Alameda County.
  • The comment about zoning and entitlements is surprising in its candor. Wolff deserves credit for acknowledging the controversy surrounding entitlements. Though he doesn't mention it by name, it's quite likely tax increment financing would be used to provide some measure of funding for cleanup, improvements, and land acquisition. It is controversial because it is a redirection of a portion of projected higher property tax revenues to the project, instead of the city's general fund (which means potentially less money for services). TIF tends to be used in blighted or underdeveloped areas that need a jumpstart to promote economic growth. In North Oakland, there is a debate about the merits of having a TIF district in a place that clearly isn't blighted. Depending on where in Oakland a ballpark is located, it could be a sticky situation, since some of the redirected money could instead go towards city services. There is also the threat of eminent domain being used to acquire land, as was done with Uptown.
"Blez: I wanted to ask how your relationship is with Oakland's public officials right now?

Wolff: So far, it's been terrific, including the county too. Right now we're operating under the JPA (Joint Powers Authority). The reason for that is that they're our landlord and it does include both county and city officials. I think everyone is for doing something. We recognize that the area, especially the city of Oakland, has huge and much more important priorities from school systems to safety. But we're still going to need some acreage to build this ballpark and it was in a blighted area. Do we have the resolve to clear out the blight? Even if we pay for it. The problem is that there are too many of these little blip statements and I need somebody to interact with. And we'll find that person or group. There's been a lot of willingness to help and I think it's up to us to say what we would like if we had a magic wand. We'll be doing that very soon.

Blez: Where do you think the process stands right now?

Wolff: Unless there's a change, I'll be giving an update report soon to the JPA which will be a little more specific than it was a few months ago. That's all I really want to get into at this time."

  • The report to the JPA should be interesting, partly because of the nature of the venue development committee's discussions: they are working with the City of Oakland and the Coliseum JPA in parallel. The timetables will probably be different just because the JPA only has the Coliseum under its control, while Oakland has numerous potential sites to offer. The report should clearly indicate what the VDC's assessment regarding Coliseum feasibility really is.
"Blez: (Laughing) At first, the talk of location for the new stadium was the parking lot of the Coliseum, then it was a waterfront location and the latest that I've read is the Coliseum south area.

Wolff: There's a number of possibilities. All require some significant action on the part of the owner and the public body involved. For example, there are some easements and some power lines involved in the Coliseum land itself, which are things we could probably get by, but at the same time the dislocation of parking while we were building a ballpark would not be very fair to the Warriors, assuming they would agree to it. That isn't the point, but we'd have to be very careful on how to do that. So there's a bunch of balancing acts. We'll need to have private development to build just a ballpark and not take advantage of what it could do aesthetically around it. It seems like a lost opportunity to me."
  • The last two sentences together are the biggest indicator of what the A's are intending to do, i.e. a ballpark village concept.
  • Funny that the Warriors' parking issues are being considered, but the Raiders aren't mentioned, even though it's the Raiders' parking requirements that are greater.
I'll cover the walk-up situation and Blez's "Sacramento plug" in the next post.

Wolff Interview on Athletics Nation

Lew Wolff sat down with Tyler Bleszinski of the Athletics Nation blog to discuss Wolff's first few months as an owner, and to talk stadiums. Wolff gave more details, but I'm not going to recap them here. It's best that you see for yourself.