20 April 2007

A's file something with Fremont, Quakes-SJSU deal dies

On Wednesday, the A's rather quietly filed " 'an application to negotiate a development agreement,' Fremont Economic Development Director Daren Fields said." What Fremont mayor Bob Wasserman terms "a double, not a home run" is more like sacrifice bunt made to move a runner into scoring position. So far this season, the A's have had only one player who has shown the ability to lay that bunt down. But I digress.

The A's also dropped off $500K with the application. It falls short of what I've been looking for (the application, not the money), but it's a start. The abrupt nature and timing of the application makes me wonder if there is something to my thought that the San Jose and Fremont development plans are somehow tied. There are plenty of factors in the Fremont deal alone that need to be addressed. An externality like San Jose would severely complicate matters. I'd like to think that the Fremont deal is completely standalone, but maybe it isn't and Wolff is scrambling in light of the recent news in San Jose.

Speaking of San Jose, the shared stadium concept for the Spartans and Quakes has died as neither side could come to an agreement on revenue splits. After looking over the details of the deal, I've come to the conclusion that both sides were right not to budge.

From SJSU's standpoint, Don Kassing had little desire to cede control over a large piece of property to a private party. While it's true that SJSU would not have had to pay for any of the construction, the land itself has significant value despite its mostly deteriorating condition. On the other hand, Earthquakes Soccer, LLC was paying for construction of everything, all they wanted was a cheap land lease to keep overhead low.

The Quakes were willing to pay $1 million guaranteed per year, plus a split of revenue based on the events held. SJSU would get revenue from Spartan events. The Quakes would get revenue from Quakes games. The two parties would split revenue from other events such as concerts.

That $1 million offered per year is essentially a lease payment. If you're the Quakes you think this is a good deal considering the circumstances, and especially in light of other stadium deals in which the team not only doesn't pay for the stadium, but also doesn't pay for anything else like a land lease. If the Quakes have to pay $6 million, that payment severely cuts into the split you were planning with SVS+E, the likely stadium operator. If you're Kassing, you're thinking that $1 million for the Quakes to lease several dozen acres of public/university land is not getting bang for the buck. That may sound like more of a philosophical stand than a hard numbers stand, but Kassing has every right to do it.

In the end the deal has to pencil out for both parties. It obviously didn't in this case, so they both walked away. The Quakes are tied to San Jose if they want to finance the venue since the Edenvale property is the apparent key. There are other site possibilities, but land costs now have to be a concern.