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10 November 2008

The future of financing + Holliday trade

Before I get into the credit scene, a word about the Holliday trade. Regardless of what the final outgoing pieces of the trade are, and regardless of how long Holliday stays (unless he's immediately traded), this move can be attributed to one factor: relevance. The A's, despite having been in the ALCS only two years ago, are in danger of becoming irrelevant on both the local and national sports scenes. Having traded away much of its young star core, something needed to be done to excite the fanbase and keep some level of buzz with the team until its next phase, which presumably would be Cisco Field. I don't doubt that the move is being made to make the team competitive - heck, when was the last time the A's had a really good, in-his-prime, righty slugger?

It's also nice to know that the team, according to Ken Rosenthal, might raise payroll considerably. The 2007 payroll was around $78 million, and this year's edition could reach $80 million. That's an indicator that even in the tough economic times, they could field a decent team, with $80 million as the ceiling if - and this is a big if - attendance is good. Of course, the glue that will hold a high-payroll A's team together is its performance. If they're 7+ games behind the Angels in mid-June, the fire sale will likely begin. Until then, we can remain optimistic. Unfortunately, it's been proven time and time again that a good record doesn't automatically correlate with great attendance for the A's. It might take bringing in a great player at the beginning of the season to jumpstart attendance, instead of the usual lag during the first couple of months before bigger crowds in the summer.

In Miami, where pols rammed through a stadium deal and waited out legal wrangling, the Marlins and Miami-Dade County have decided to delay seeking financing for the retractable roof ballpark until next spring. County officials have admitted that the delay is due to the credit crunch and market's inherent instability. In addition, several votes are slated to occur before the end of the year to approve an adjacent parking garage, among other ancillary issues.

Delaying the financing piece puts the Marlins in a bit of a crunch time-wise. Their final season at Dolphin Stadium is 2010, so they have to move into new digs by April 2011. If they get financing in the spring, they'll have less than 24 months to get the ballpark completed - and that includes the retractable roof. To date, no retractable roof ballpark has taken less than 28 months to complete. The Marlins are helped by the fact that the Orange Bowl, which previously sat on the site, has already been demolished, so the site is clear and ready to build. Yet they haven't even released renderings of the stadium, choosing instead to tease the public about the field's new dimensions. If they can get it done in time, more power to them.

Even big market teams are facing the credit crunch. The Yankees just received clearance from the IRS to seek up to $336 million in tax-free bonds. Bruce Ratner's Nets will benefit from the same loophole if they ever get the Barclays Center/Atlantic Yards project off the ground. In the past, tax-free bonds were simply a good way to save money for teams. But for the Yanks , who are in the middle of construction and actually need the funds to complete, government sources are effectively the only source as banks have been stuffing their mattresses.

Jerry Jones' new Taj Mahal of a football stadium may be the bellwether for the industry, according to Sports Business Journal. The Cowboys are looking to get $350 million in new bonds to complete their successor to Texas Stadium, and they want it by December 1. The NFL decided to bankroll themselves to the tune of a $1.4 billion loan, though this may be more related to possible labor strife in 2011. Perhaps only the NFL, with its unified revenue structure, has the ability to insulate themselves in this fashion.

Considering all of the turmoil we've heard about lately, it's not altogether a bad thing that the A's have pushed back their opening date to 2012. They won't have to get financing until spring 2010. That 18 months might be just what the market needs to correct back to real stability.

13 comments:

Tony D. said...

Myself and a co-worker who's a Giants fan are scratching our heads on the Matt Holliday trade. Huhh??? He's also upset because he thought the Giants would make a move for Holliday. I suggested to him that the A's trade Holliday to the Giants for....THE RIGHT TO BUILD A BALLPARK IN DOWNTOWN SAN JOSE! Kind of like that Barry Zito idea of a few years back. He liked the "creative" idea and even went on to say the Giants T-Rights to San Jose were ridiculous...now that speaks volumes. Anyhow, the trade makes no sense to me; oh well, GO A'S!

Georob said...

UGH!! Now that the election is over, it's back to reading Tony's monthly gripes about territorial rights. Rinse and repeat.

Since ML has convinced me(though not entirely)that contraction will never re-surface, another subject to revisit might be potential East Bay stadium/village sites that were initially passed over due to
the fact that they were earmarked for housing.

Assuming that the housing market is on the way to recovery in a couple of years, one has to assume that a lot of projects that are now on the "back burner" may just stay there indefinitely. And by that I mean sites around Oakland, though other East Bay locales could be included.

I still believe Fremont will happen, but I'd feel a lot better if there was a backup in Alameda or Contra Costa

LeAndre said...

couldn't have agreed with you more georob

Jeffrey said...

What are the other potential east bay village sites?

Marine Layer said...

It's not just the housing. It's the whole "lifestyle center" concept. The East Bay already has them in Walnut Creek and Pleasanton, and a less upscale center in Emeryville. Oakland doesn't work economically. Fremont's the last relatively untapped place, and it has the well-heeled residents to support it.

One major housing development in Oakland has already fallen victim to the credit crunch, SunCal's Oak Knoll project. The main financier? Lehman Brothers. SunCal hopes to rebound soon with new financing to continue the project. And no, there's no way a baseball village would work at Oak Knoll given the decidedly residential environs and the inherent NIMBYism.

Georob said...

I know this is not a board to talk trades, but since ML opened the door on Holliday...

I gave up a long time ago trying to figure out Beane's moves. I'm convinced that most of what he does is "under the radar" and are usually pre-emptive moves towards deals he might make later in the off-season, next year, or beyond.

So yeah, Beane may have just bought himself a great trading chip for next summer, and with the surplus of relievers the A's have, the price was undoubtedly right. But again, he can't do the most obvious deals because they're the most expensive.

And yet, sportswriters still will say things like "The A's needs to sign (fill in the latest big free agent)" knowing full well that they can't and won't. Even guys who know better like Marty Lurie fall victim to this.

I suppose an optimist might say that the A's expect the Fremont deal to be in stone by the time Holliday's contract is up and that they'll re-sign him. Don't count on it, for if Holliday has any type of a good year, even the Cisco-bound A's wouldn't pay his price.

The biggest and best impact Cisco Field has is for the A's to retain more of their own talent for longer periods of time. And I think most of us would agree that would be plenty.

LeAndre said...

ML, wasn't the Oakland's Central Station an option once upon a time, why didn't that work out? It seemed like a good option to me, now there's lofts already built, 1,000 more coming, office and retail space, and a possible culinary school...

Last months issue of Oakland Magazine did a future project list, with a few familiar sites, the Oak Knoll project is the only one I've seen that has stopped production, but I could be wrong...

http://www.oaklandmagazine.com/media/Oakland-Magazine/September-October-2008/10-Projects-Reshape-Oakland/

Marine Layer said...

Central Station was not considered AFAIK. The area merited adaptive reuse, and that's a good thing. That makes it less compatible for a lifestyle center concept, which often tends to be done from a blank slate. Besides, I think Nancy Nadel and her constituents played a large part in shepherding the project through. Knowing her mindset, she wasn't going to allow something as corporate as a lifestyle center in there. The area was also too small, just 26 acres. The baseball village is 40 acres and that doesn't even include the ballpark. The depot is also not surrounded by enough disposable income to take that kind of gamble.

Jesse said...

Good news, St Louis just announced their new baseball village plans. If they can do it, so can we. Also, recessions usually only last about 18 months. So, with us being in a regional recession for the past 6 months to a year, I would say the economy should be looking a bit better by spring 2010 maybe much sooner.

But more importantly we have no idea what Wolff's alternate plans are for financing, until we do, we cant speculate.

Jesse said...

Cisco Chairman and CEO John Chambers will appear with Yankees Co-Chairperson Hal Steinbrenner at a Manhattan press conference on Tuesday, according to media advisories released on Monday. The press conference will take place at 11 a.m. Eastern at Cisco's New York offices at One Penn Plaza, the advisories said.

Anonymous said...

what a bore it is to hear delusional people like Tony ramble on and on about SJ and territorial rights ... blah, blah, blah. talk about beating a dead horse!!! what a bunch of crap these lame ideas are he spews forth.

Anonymous said...

What's the latest on Oak-to-Ninth? I've lost track of that project.

Anonymous said...

Holliday - strange move to say the least. Smith and Street are no great loss, but Carlos had real potential. The A's aren't going to be serious contenders this year barring other moves, so maybe it is just to mollify the fanbase for another year.

There is exactly zero chance of resigning him next year, thus I think we'll see the true value of this deal when Beane trades him at the deadline. Hope he gets some good pieces that will help in '10 and '11. Until then, it's difficult to assess this trade.