02 November 2005

Sometimes it pays to read...

Surprisingly, there is a blurb in the terms of the agreement between the Raiders and Oakland/Alameda County that has something to do with the A's. The Trib posted a three-page excerpt alongside their story. Here's the text (verbatim):
2g. Subject to the Authority reaching a mutually agreeable agreement with the Oakland Athletics, the Raiders may sell and retain all revenues from specified fixed advertising inventory in the Stadium on a year-round basis. The parties acknowledge that the Authority has made a good faith representation that the Athletics are agreeable to such an arrangement and the Authority will use its best efforts to finalize such an agreement with the Athletics. Additionally, Raiders shall be permitted to sell and retain all revenues from temporary advertising (banners) during football games provided that sponsors do not conflict with current Athletics exclusivity arrangements. The Raiders do not share any advertising revenue received by the EBEs.
In short, the A's won't be receiving revenue from much of, if not most of, the advertising in the Coliseum. From the looks of things, the only revenue they'll get is from the baseball-specific signage: the rotating board behind the plate, tarp covers, dugouts, and the outfield fence. The Coliseum has no dazzling ribbon board on the plaza level facade, and the signage panels next to the scoreboard are smaller than those at other parks. Why would the A's agree to this deal? There are a few possibilities:
  • The revenue the A's realized was fairly inconsequential, and to help the public entities out (and to curry favor with them as well for a future ballpark), they decided to forego the revenue.
  • The A's want to be able to point to the limited advertising revenue as another one of the Coliseum's "deficiencies."
  • Tha A's want to limit revenue, which could mean a lower payment into the revenue sharing structure and higher revenue sharing receipt.
  • The A's were simply being magnanimous.
Since there are no charity cases in these kinds of deals, I think we can dismiss #4 out of hand. #3 is unlikely because the amount probably is inconsequential. So the truth probably lies in both #1 and #2, though there may be other motives at work. In the end, whatever money they don't get can't be blamed on the A's not signing Paul Konerko or Brian Giles. However, it does look like the deal greases the skids for a clean Raiders' departure in 2010. Imagine that scenario: It's 2011, and there are no tenants at the Oakland Coliseum. The thought gives me shivers.

Update (11/3, 11:03 AM): A little historical context is in order. A three-year-old article from the East Bay Business Times covers a lawsuit brought by the Raiders (of course) against the A's for allegedly withholding advertising revenue. Though I haven't seen any news items related to the suit after it was filed, it appears that the A's giving the Raiders the ad money may settle the matter. The baseline revenue the A's had received was $3.9 million per year, with the Raiders and A's splitting money above that amount. It's definitely nothing to sneeze at, but it's also not enough for the A's to score a big-time righty slugger, either.

Raiders kill PSL's - The lessons learned

The Raiders have officially declared their ill-conceived PSL system dead. Unfortunately for Raider fans, they've had to endure 10 years of high prices, walk-up fans that can get seats just as good as the PSL holders without paying for PSL's, and television blackouts that result from poor ticket sales. Under the new arrangement, the Raiders will take over all ticket sales and marketing operations from the Oakland Football Marketing Association, which will now take its rightful place alongside such flops as the Titanic and the Ford Edsel.

This doesn't mean the concept of the seat license is dead. While Lew Wolff has acknowledged the lack of popularity for the maligned PSL, it's still hard to imagine a new stadium being built these days without some kind of sale. Advanced PSL sales can account for roughly 10% of total financing, which is no small number. Combine that with naming rights and other marketing deals, and the upfront share can easily reach $100 million without an owner having to spend a single cent out of pocket. The Cardinals have more than sold out their seat licenses for next year's edition of Busch Stadium, and the Yankees will likely do the same with the new Yankee Stadium. Maybe Wolff can fund the project without having to resort to selling seat licenses, but I'm skeptical.

The real lessons to be learned from the Raiders/OFMA debacle are:
  • Make sure the demand is there.
  • Have the subscriptions be lifetime subscriptions, not renewable ones.
  • Instead, lock in the ticket prices associated with a seat license for a set number of years, then let the consumer decide if he/she wants to renew and lock in price controls again.
  • Make sure the licenses are transferable via sales or bequest.
As painful as this ordeal was for the taxpayers of Alameda County, other cities and teams learned much from the Raiders' cautionary tale, and made sure that their efforts didn't repeat the same mistakes as those committed in Oakland.

Another note - I have reluctantly added the "word verification" feature to comments in order to combat the spam-bots that occasionally make comments on the posts. Not a big fan of it, but sometimes it's necessary.