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.