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01 September 2007

What's it worth to you?

The commish traveled to Miami and the Twin Cities this week to visit stadium projects in two very different stages. On Tuesday he talked sites with Miami pols. The Orange Bowl appears to be the main candidate because it's now available with the coming departure of the Hurricanes. A downtown site, if it can be acquired, may be preferable. Sun-Sentinel columnist Dave Hyde suggested that the Marlins use the revenue sharing money they're pocketing to bridge the financing gap, an idea I put forth many moons ago. Yesterday, Selig attended the Twins' groundbreaking ceremony. There's even a nice feel good photo of Selig and Twins owner Carl Pohlad clutching hands. I wonder if they were laughing about that $3 million loan Selig received from Pohlad many many moons ago.

In both of these cases, someone - pols, voters, or both - decided that it would be worthwhile to use public money to finance a large portion of the project. In California, we've recently shown that we have a hardline position when it concerns stadium financing. Because of this we've had a few facilities built largely if not entirely with private funds (AT&T Park, Staples Center, Stanford Stadium) and a few more that are outmoded and need to be either replaced or torn down (Monster Park, McAfee Coliseum, San Diego Sports Arena)

Numerous journalists and economists have praised California's privately-financed projects as responsible and potentially trendsetting. While AT&T Park hasn't resulted in a spate of privately-financed venues, at least some markets have responded by getting better deals for themselves, often with municipalities providing only infrastructure changes (Gillette Stadium) or less public funds (New Busch Stadium). The ballpark and ancillary development at Cisco Field are to be privately financed but additional infrastructure costs are unknown.

We in the Bay Area can pat ourselves on the back for being steadfast, but conversely does our lack of willingness to fund these projects indicate that we are somehow lesser sports fans? In the Houston and Philadelphia markets, broad legislation was passed to build billions of dollars worth of new venues. No amount of hearty Bronx activism could stop the new Yankee Stadium from getting tax-free bonds and from devouring public parkland. Those markets are generally considered more sports-crazy than ours. Some would phrase our stance as "having our priorities straight," which is mostly true. But doesn't that undervalue what it means to have a major sports franchise in your town?

The A's annual revenue is around $150 million. That isn't much compared to other local businesses, even in the city of Fremont alone:
  • SYNNEX: $6 billion
  • Logitech: $2 billion
  • Lam Research: $1.6 billion
  • Wal-Mart (2 Fremont stores only): estimated $110 million
  • Costco: estimated $115 million per store
  • Fremont Bank (private): $45 million
  • Typical chain supermarket: $14 million
  • AuctionDrop: $6 million
In addition, NUMMI produces some 400,000 cars per year or about $8 billion worth of vehicles, plus parts and other manufacturing operations. So it's not as if the A's are turning Fremont into an economic powerhouse, Fremont already was in its own modest way.

Then again, not too many focus on a single store's performance when analyzing a company, so why should the A's be treated differently? The Oakland Athletics Baseball Company is merely part of a $5 billion enterprise. The team is guaranteed to get coverage for at least 45 seconds in every local late newscast. Local papers devote impressive amounts of resources to team coverage. Dedicated websites give the team enviable amounts of coverage. Charitable endeavors from the team and individual players tend to be more impressive and high-profile than those from "similarly sized" companies.

The impact the A's make on the community is much larger than what a $150 million (revenue) company would make, but smaller than a multibillion dollar, industry-leading plant. How, then, can we quantify what the A's mean to their home city? Marketing consultants try to paint it in terms of the amount of positive exposure a team gives to its city. Economists use multiplier effects to map out investment and consumption associated with teams. None of these things properly account for the average fan who, during an A's road trip, rushes home to catch a 4:05 PM (7:05 PM ET) game on TV with a cold one in hand. That fan may not live in the team's city, could be hundreds if not thousands of miles away. But that fan, in his love of the team, could be curious about the city the team calls home. He might decide, "I'd like to visit this place" or "Maybe I'll go to school near there." Or he may already live there and decide that all other things being equal, he'd like to raise his family there and take his kids to games. All because of a ball team. All for the love of a game. That bond falls into the "quality of life" category. A price can't be placed on it.

30 comments:

Jeffrey said...

I read some of the impacts you put in this piece and I almost laugh. would someone really move to Fremont because the A's are there?

Well, I actually considered moving to Fremont because the A's are. I recently accepted a job in San Jose and I moved my family from Sacramento (Elk Grove actually) to Pleasanton.

As we looked at houses to rent my wife focused on Pleasanton and I focused on Fremont. Eventually, she won because the school district in Pleasanton is amazing and our girls deserve good schools. It made it easier to find a house knowing that each house we looked at was in the area of a great school.

But had we found a house we liked in the vicinity of a great school in Fremont first... And the only reason we were looking there was because the A's were too. Ha!

Don't tell my wife

Anonymous said...

kudos to the folks in California (I live in Wisconsin) for not giving in to the sports syndrome and letting the owners finance their own stadia. There is no economic justification to use public money for these projects and there certainly is no moral justification for it either. The A's aren't going anywhere whether or not they get a new playpen. Think about this: if every mayor and governor in the United States got together twenty years ago and decided that no public money would ever be used for sporting venues, do you think the NFL and MLB would have ceased to exist? Of course not, they would have just set their payroll according to their revenues. Just think what communities could have done with all that money....

Jeff P. said...

I don't necessarily agree that limited public financing for stadia is always a negative. There are legitimate governmental incentives in helping teams finance venues, depending on circumstances. There are places in cities where no one is going to take the initiative to build on a large scale because the adjacent area is blighted. Cities that are trying to rehabilitate area's are often well served by investing in stadia to a certain degree. It attracts other economic development, enhances the quality of life for the residents, and eventually results in increased tax revenue. It's often true that the owners are more savvy than city politicians and take shameful advantage, but on the other hand some cities have managed to come out ahead. Despite the fact that the Orioles suck, I don't think anyone in Baltimore thinks Camden Yards was a bad idea. As far as government goes, it's a zero sum game. They are not for profit organizations, so any revenue that comes in is going to be spent one way or another. At least in wise stadia investment, there is something of a return to the shareholders. Having said all that, I think that governments would be wise to limit their participation to tax breaks, code changes, and infrastructure development.

gojohn10 said...

I'm currently live in LA but am moving back to the Bay Area in about a year. I'll be looking for a house in Fremont, and like Jeffery, I'd be lying if I didn't admit that being close to the new stadium is playing a part in the decision to focus on the Fremont.

Anonymous said...

jeff p- you do make a cogent argument (I made the second post). Let me amend my point somewhat. Public subsidies are not so objectionable to me when the stadiums are built in depressed areas of cities that badly need a boost of any kind. Parks like Baltimore, Detroit, Denver, and Cleveland come to mind. What is completely wrong was a park like Arlington, TX built in the middle of nowhere and didn't do a thing for a downtown. So a targeted subsudy that can be at least superficially justified as needed investment in a depressed area I don't have such a huge problem with.

anthony dominguez said...

Happy Labor Day all!
Here's my problem with those opposed to public subsidies for stadiums. Back in 92 the city of San Jose had a chance to bring the SF Giants down 101 to play in the South Bay (at a site near Zanker and Brokaw Rd.s). The catch was voter approval of a new tax on utility's...which would have cost the average SJ taxpayer an extra $35 per year (which equates to $2.91 per month and less than an extra penny per day). The stadium/utility tax measure was barely defeated at the polls thanks to anti-stadium/anti-tax advocates, who scared a majority of voters into not subsidizing millionaires. So the anti-stadium/tax zealots saved my family less than a penny a day, and now San Jose doesn't (and will never) have Major League Baseball within its city limits...thanks for nothing Kathy Chavez-Napoli! In all those city's that have publicly financed stadiums (and arenas for that matter), you'll be hard pressed to find anyone who went from comfortable middle-class straight into poverty because of a new ballpark/sports venue.

Anonymous said...

But Gee Anthony, I DONT WANT to subsidize these guys one thin dime. My utility bills are high enough here in SJ.

Infrastructure is one thing, but not financing a stadium. NOPE. Not then, not now, NEVER. And look what the Giants did...they got a privately financed JEWELL of a stadium that could NEVER come close to being duplicated down here in SJ. Lew Wolf is going about it the right way, the only way here in california...

anthony dominguez said...

"They (Giants) got a privately financed jewell of a stadium that could never come close to being duplicated down here in SJ." Wrong Anon! It could have happened in DSJ. Think Edenvale/FMC rezoning for profit/for ballpark...just as Lew Wolff is doing in Fremont. It's just that San Jose is now banned from ever attaining a Major League franchise. The Giants T-rights have been beaten to death on this blog, so I won't even get into it.

Anonymous said...

If you're going to say that you can't put a price on the intangible benefits of having a stadium, please keep in mind that the intangible benefits you speak of are only benefits to baseball fans. Do you think that accounts for enough of the population to outweigh the intangible penalties imposed on everyone else in the community? For the baseball fans to get their stadium, everyone else has to put up with the traffic nightmare that the A's are bringing to Fremont. The new stadium won't be readily accessible by public transit (there's nothing they can do at the new site to match the current stadium, with its own BART station), so there's a negative impact on the environment and local air quality as well. Increased smog and traffic so a few baseball fans can feel good about themselves? You'd be better off focusing on tangible benefits (which have been inadequately substantiated so far).

Marine Layer said...

Intangibles only for baseball fans? A new upscale shopping district with amenities not seen previously in Fremont. New public spaces that several community groups are just itching to use. Greater tax revenues to pay for the project's ongoing costs to the city and then some - which I have described in detail. A project that will effectively act as a downtown for a city that has never had one in its history and without requiring billions of public dollars for redevelopment. If you don't think that's not benefiting the community, then frankly you're not giving it a fair shake. Of course there will be increased traffic. I'd rather debate the topic based on a traffic study than some glittering generalities.

When talking about so-called gridlock let's remember two things. First, the reduced size of the ballpark corresponds directly with the potential loss of fans coming via BART. So it's effectively the same amount of cars coming from various directions. Is that negative impact for the region? If so, prove it. Second, the land is already entitled for 4 million square feet of office space, which translates to 16,000 new workers, most of whom would come and leave at normal commute hours and drive solo, not carpool. That's 12,000 cars at the very least. So what's that about the project being an environmental disaster again?

Anonymous said...

seems the tone of the author here has become more and more defensive

... parking and traffic a problem? Prove it!!!

... why should non-baseball fans subsidize a ballpark? Because I say so!!

... exactly how is this a good deal for Fremont or the east bay? If you don't understand that you're not giving it a fair shake!!

... what about public transportation? the ballpark is smaller than in oakland so the exact same people who take bart today will not be going to the fremont park so the exact same amount of cars will clog 880!! (this is my favorite one!)

Yes, it seems that this ill-conceived park and village is far from a done deal, and certain folks have become quite testy and defensive. I wonder why there has been so little news or progress on the stadium? I wonder why the development application hasn't even been filed? I've heard from many in the real estate business that give this village absolutely zero chance of actually coming to fruition.

Marine Layer said...

Anon - Do you read this site? If you did I don't think you'd make such comments. I'm open to debate on anything I've posted or commented on within this site. But you don't really want to do that, do you?

Tell you what. I'd like for you to post anonymously with the handle "La La." Why? Because you seem like a kid who just plugs his ears and screams "LA-LA-LA-LA" when someone's trying to explain something to him. You've intentionally or unintentionally ignored much of what I've written here. If it keeps you sane, I suppose...

BTW, the dev app is being submitted in the next two weeks. Or did you miss the post I made about that?

FC said...

Anon 3:31,

Interested to hear why your real estate contacts feel the village has zero chance of being built.

Anonymous said...

First, you have multiple anonymous commenters (the comments marked 5:50pm are mine, the others are not).

My comments were directly in response to you touting intangible benefits of interest only to baseball fans (that last paragraph where you talk about the team raising the quality of life for Fremont residents just by being there). Your response cites tangible aspects of the project (tax revenues, for example), so it seems like a bit of a non-sequitur. I also think claims of those tangible benefits haven't been substantiated yet.

I'm unconvinced that this will be financially beneficial to Fremont and Fremont residents. Have you considered what the sudden appearance of a large amount of housing does to property values? Supply and demand suggests that a sudden increase in supply will lead to a decline in prices. Will a nearby shopping center increase property values enough to offset that? Tax revenue is of particular interest, since it sounds like Wolff is going to try to use joint ownership with the city to duck out on his property taxes.

I find your suggestion that this will turn into Downtown Fremont a bit strange. "Downtown" tends to mean more than a gated community and a Pottery Barn. This area is basically isolated from the rest of Fremont. Try going for a bike ride through there, or taking public transit there so you can walk around and look at it -- it's isolated in ways that a true downtown area is not. I think of downtown areas as being diverse, accessible, and walkable in ways this area is unlikely to be. Instead it seems likely to be difficult to reach by public transit, with large segments gated for residents only, and with shiny new retail...that will soon fade like so many other area malls (have you been to Newpark lately? That was a very different place ten years ago.)

The traffic impact needs serious study which we haven't seen yet, and I'm skeptical. My commute takes me through there on a daily basis, and I would not be surprised if ballpark traffic was all it took to drive many residents out of the area. It's a common topic of conversation nearby.

I don't think the comparison to 4 million square feet of office space is meaningful. Sure, it's zoned for it, but nobody in their right mind would build it in the near future. Have you shopped for office space nearby recently? I have. There's a glut of it available. There's a big chunk of land at nearby McCarthy Ranch similarly zoned with no takers. Many of the office parks there were begun during the dot com boom, some of them were reduced in size as they were being constructed during the collapse, and many are now sitting there vacant. Tens of thousands of cars that *will* show up for all those games have a more substantive impact. There's plenty of empty space in the office builds on either side of the freeway around mission. There's plenty of land zoned for office parks that has been sitting there with "build to suit -- call now!" signs that have been there for a decade.

I still think you're better of sticking to tangible economic benefits, like tax revenue. I'd really like to see something compelling to substantiate claims of tangible benefits, but I haven't seen it here yet.

Anonymous said...

"Wrong Anon! It could have happened in DSJ. Think Edenvale/FMC rezoning for profit/for ballpark..."

Anthony, I think what the poster was trying to say with regards to where the Giants ballpark eventually ended up would be impossible to duplicate in San Jose. I know SJ has many beautiful spots, heck I was there this past weekend and enjoyed the Tapestry arts show downtown.

That being said, there is no place in SJ that could duplicate the world class waterfront ballpark in SF - I am sure you could build a beautiful park in SJ, you just wouldnt be able to have it be as unique as the one on the waterfront...of course thats just my opinion ;-)

Anonymous said...

"certain folks have become quite testy and defensive"

Ahhh, 9:31, you must read oaklandfans.com quite a bit...thats where most if not all the testy and defensive folks like diamond shril are...

your talking points come straight from their blog...zero chance of succeeding...lol...

Anonymous said...

Hey, what's Wolff going to do about the stench coming from the Fremont Dump next door? Also, has the chemical plant nearby been relocated?

Maybe the A's can handout free gas masks for san franCISCO field for opening day.

Marine Layer said...

anon 5:14 - The dump closed at the end of June. Sorry to disappoint you. As for Scott Gas, they will move eventually. There's a lot of money in it for them and for Wolff so it will get done.

anon 4:43 - We are in a down cycle right now in terms of real estate. It should bounce back well in the next decade as it's usually cyclical. Office space in the area is typical 20+ years old and is outmoded, so it's getting replaced by newer, taller buildings. Pacific Commons was originally pegged as a major warehousing and distribution center but that's evolving as well. It's up to developers to respond to market changes appropriately. You can't look at market conditions now and project them to occur 5-10 years down the road. To make a fair comparison you have to project both alternatives as likely and worst-case scenarios. Fremont is not Flint, MI.

As for housing, let's keep in mind that the units being developed will spread out over a decade. That's right, a decade. 300-400 units per year is not going to cause the market to sag, and the units won't be for sale until at least 2011, at which point we should have emerged to some degree from the housing slump.

That brings us to traffic. Tens of thousands of cars sounds like a bit of a stretch. Maybe 20,000 at peak levels including residents. The frequency of the peak traffic is the key. Just from looking at a prototype 2008 schedule, the A's would have 43 weeknight games. On other weeknights that traffic would be cut by 50-80%. Traffic from an office park would occur on every weeknight, around 250 per year when holidays are subtracted. That's a major difference, don't you think?

I didn't say that the village would become downtown. It will effectively act as one. Fremont has no downtown right now and as such lacks a magnet to draw residents and visitors. The ballpark village would do just that. It may end up a bit too commercialized for many tastes. That's entirely subjective, and considering Fremont's prospects for a real entertainment district without the ballpark village, it's a welcome sight. They are trying to prevent leakage of that entertainment dollar to surrounding cities. I fully expect that the city's own economic impact study will bring that particular aspect to light. Some may claim that Fremont doesn't need that kind of new tax revenue, in which case it's worth asking what alternatives are available that don't require massive redevelopment funds.

anthony dominguez said...

R.M.,
I've read some of these posts, and playing devil's advocate, I can see why some chastise your views on Fremont/Pac Commons. "Cisco Field at Pac Commons is 100% perfect...a plan with absolutely no flaws that will be completed with absolutely no problems." Don't get me wrong R.M., I'm on your side, but this thing is far from a lock and far from perfect. And as someone stated in an earlier post, the Patriots were once destined for Hartford, CT. Again, I support the A's moving to Fremont, but as I've said before and I'll problably say again...until those golden shovels are staked for Cisco Field's groundbreaking, anything's possible!

Jonclaude4 said...

ML,

Any chance you could post that "prototype 2008 schedule"?

Marine Layer said...

JC - that schedule was in my realignment post from a couple weeks ago. It reflects realignment so it's not good for projecting next year's actual schedule but the basic methodology is the same.

Tony - I'm an advocate for the project and I won't apologize for that. Nowhere have I said that the plan is perfect, in fact I've been consistent with the notion that it's a compromise plan for everyone involved, and that there are serious issues that need to be addressed. If some choose to believe that I'm an all-out sycophantic cheerleader there isn't much I can say other than they're not reading the whole site.

Anonymous said...

Using San Jose as an example , many with families hang out at Santana Row/Valley Faire on weekends . althogh it's not " downtown". Look at Irvine - the Irvine Spectrum Center is so busy at times with shopping and entertainment you can't find parking , but it's not " downtown".Lou sites Santana Row as a comparison to what he wants to put at Pacific Commons, but that's only because he's speaking to a NorCal audience. What he really has in mind is probably closer to the Irvine Spectrum Center . Look it up on a web search to see what I'm talking about.

Anonymous said...

Also, reason there is no real/original/older Fremont " downtown " is that there was no " Fremont " before 1956. It was formed from the combination of the distinct "cow" towns of Niles, Warm Springs, Irvington and Centerville . The latter , I believe , is where Clark Kent ( aka Superman) grew up !

gojohn10 said...

Any chance we can do away with anonymous posting? I'm all for letting these opinions be heard, but when there are 3-4 anonymous posters, it is impossible to keep track of which anonymous is which. Is it that difficult to enter some kind of identifier?

anthony dominguez said...

anon 1:05,
Thanks for the history lesson regarding Fremont. I've always wondered why Fremont didn't have a "downtown" like Mt. View, Campbell, or Los Gatos. Heck, even Morgan Hill and Gilroy have downtowns.

FC said...

I second that motion gojohn10.

BTW, Anon 9:31, still haven't read a reponse as to why your real estate contacts feel the village will never come to fruition.

anon-a-mouse said...

Anon #254 (or whatever) missed one of Fremont's five original towns: Mission San Jose. In reality, Fremont has four downtowns (Warm Springs never had one). Only MSJ's and Niles' are more than a block or two, and Niles' in particular is rather quaint. But there is no central downtown that represents the whole city.

Anonymous said...

I'll be surprised if Fremont can support an upscale shopping center along the lines of Santana Row. The sort of businesses on Santana Row would already be in Fremont if they thought the population would patronize them enough for it to make business sense, but they know better. Remember when Emporium went out of business a few years ago, and the only company that was interested in taking the vacant anchor position in Newpark was...Target (eventually)? Target's doing fine. Walmart has opened two stores in Fremont. Brooks Brothers, Pottery Barn, Z Gallerie, Crate & Barrel, Tommy Bahama, Left Bank, Sur La Table, Williams Sonoma, Straits Cafe, Gucci, BCBG, Burberry -- does anybody imagine that these are companies that would find sufficient demand in Fremont?

Zonis said...

For those wondering why the 'residents' of the blog are a bit testy, its because over the last... um... forever... we've been flooded with trolls making claim after claim against the move to Fremont and Cisco Field. Some have been genuine and backed up, most have been just trash that equates to a school kid losing an argument, but continuing it by saying "well you're a poo-poo head!" over and over until they win (IE: the other side gets tired of arguing and gives up).

And thus, its become that, like many other forums on the internet, any argument turns into a pissing match.

But remember the rules of the internet. Specifically, that arguing on the internet is like running in the special olympics-even if you win, you're still retarded.

James said...

Anon 12:47 --

If your point is that because Fremont has two WalMart's, it can't support a Santana Row-like project, I would argue that San Jose has two WalMart's and Santana Row is doing just fine.

Your Emporium example is a bit misleading and disingenuous. First, Emporium didn't go out of business in the typical way an establishment does; it's parent company discontinued the entire chain because it competed with its Macy's brand. I would note that regional chains similar to Emporium are being bought and closed simply to eliminate Macy's competition.

Years ago, the argument could have been made that Emergville couldn't support the types of establishments you cite as examples. However, Bay Street, like Santana Row are sometimes referred to as "destination centers." The retail mix tends to include establishments which support one other. It is common for retail customers to patronize the restaurants and bars. It is similarly common for theatre patrons in destination centers to make retail purchases and dine in the restaurants.

The added benefit to the lifestyle center, and one that can't be repeated anywhere in the bay area, is the ballpark. We will probably see many, many instances where, for example, two guys might go to an A's game while their wives shop, take in a movie, or grab a cocktail. After the game, they could meet up at one of the restaurants.

I think the ballpark village will be hugely successful.