23 February 2009

A different perspective

The best take I've seen on the demise of the Fremont plan comes not from the sports page, but from the Examiner's Architecture and Design writer George Calys. His insightful piece de-emphasizes the hot-button issues that seemed to dominate the media of late and gets to the true bottom of the situation: money. Here's a sample:
The residential market is suffering a shut out. What’s that got to do with a ballpark? The proposed ballpark village (like others already constructed or underway) relies on a mix of residential properties to make the project “pencil out”. Without the condos, homes, and apartments that are a part of the development, you don’t have a project. Anyone noticed how the residential market is practically scoreless?
The entire model for delivering Cisco Field and the baseball village completely blew up in a 6-month span. It's bad enough if you're the A's and you've already put up millions to pay for additional real estate, EIR studies, and such. The collapse of virtually every part of private enterprise spelled doom for the plan. Any thoughts of planning anything similar in fashion or scope should be reined in. Some of you have asked whether Site A or Site B can support X amount of ancillary development to support a ballpark. For the time being, it's not even worth projecting because of the economy. If the A's are focused on building a ballpark anytime soon, wherever it is, it will just be that. Nothing more.


lemur's poker said...

ML, are you familiar with how the SFEx manages editorial on its blogs? Specifically, I'm wondering whether the writers (blog model) or the editors (newspaper model) write the headers -- because Calys's piece is entirely nonresponsive to its header ("why the A’s have no plan B").

There's a whole lot on why Plan A ain't happenin' ... but nothing at all on why (or even if) there's no Plan B.

(And, yes, I'm thinking of your remark the other day that the biggest lie Lew's ever told is that there was/is no Plan B.)

Judy said...

So, how does a San Jose stadium get paid for in this economic climate? The SJ partisans seem to feel that it will all magically happen once territorial rights get lifted for a small price.

Don't think for a second that all the tech comparies aren't hurting either. SJ's in the same boat as Oakland and Fremont more than they care to admit

Anonymous said...

demise of the fremont plan?????

but you told us all we were wrong to poke holes in this plan ... it didn't matter that the economy was in the doldroms ... the real estate market woule rebound in a couple of years and all would be well, you said. after all, wolff wouldn't spend millions of his own money and then abandon fremont, you said.

we were wrong, indeed.

Marine Layer said...

Judy - traditional means. Projected revenues from the ballpark, commercialization efforts. That would be the case anywhere in the Bay Area. The question is not "How?" but rather "Where is the best place to look?" SJ is clearly superior to Oakland in that regard, is the premium associated with territorial rights worth it?

Anon - Clearly those who were looking for a less protracted period of market correction, like me, were wrong. My question to you is this: Are you rooting for the economy to remain bad? Because that's the best way for the A's to stay in Oakland. Greener pastures still exist even if they are a ways off.

Anonymous said...

"So, how does a San Jose stadium get paid for in this economic climate? The SJ partisans seem to feel that it will all magically happen once territorial rights get lifted for a small price."

ML you never answered this mentioned how the a's would rule in the awesomenes and superiority over oakland that the glorious south bay has...but never answeared how the ballpark would be paid for other than "traditional means" 90% of the new ballparks built in MLB "traditional means" has been public financing, which is unavailable in the south bay. and in this current economy the tech giants arnt going to write any checks to build stadiums either.

Marine Layer said...

Er, no. Let's suppose that the A's decide to build a ballpark with private financing (because public isn't possible in SJ) and in the process carry a $20 million a year note. Naming rights have already been spoken for.

The challenge is to reduce that $20 million to the point that it doesn't end up being annual drag on payroll and player development. $6 million is neutralized from an accounting standpoint because of the CBA's "actual stadium expenses" revenue sharing deduction.

If this economic crisis continues into the first few years of operation (2013 and later), the A's have to decide how much of this burden they want to carry while the economy recovers. They can make cash calls. Expand the ownership group. Lower payroll. All that while continuing to sell the ballpark.

It's definitely not what they would prefer. Months ago I mentioned that the "baseball village" model was a trial run for a new kind of financing. That's no longer a feasible model. If you're asking what is the preferred choice, having a mortgage but also far more revenue options, as opposed to subsisting on revenue sharing as they're doing now, I'd say the answer is obvious.

Anonymous said...

ML--always appreciate your insight and completely agree with your comments relative to location of a new stadium and how to fund it--
you state the facts and allow others to draw their own conclusions---

Curious, the A's get a $15M or so subsidy as a "small market" team from MLB---do you know how "small market" is defined?
Assume it is based upon revenue streams but not sure--and does this "automatically" go away if a new stadium is built?

Marine Layer said...

I don't think the term "small market" works well in the current era. There are high revenue teams and everyone else. Big market teams never get revenue sharing. Teams in traditionally medium markets can go back and forth between giving and receiving revenue sharing. Small markets tend to receive revenue sharing as a habit. A ballpark is a determining factor.

Anonymous said...

GO san jose athletics.....just in clothing sales...they will finance the stadium!!!!

Jesse said...

MLB has to figure a way to give the Giants REAL value without touching the A's revenue.

They can promise that the Giants team will always be worth a certain amount no matter what. Same as the Orioles. If Giants average 5th highest value (for example) over last ten years, then it always be at least that. Preserving the equity in the Giants will ease the fear of losing equity. Because thats what the Giants should concerned about.

Plus the MLB can step in and sweeten the pot, by offering the Giants Contra Costa County as their own territory and prohibit the A's from marketing there for at least 20 years. In the long term it benefits the Giants. Swap territories, but the A's keep Alameda Cty.

Finally swap AAA affiliates Sacramento is the better of the two. Prohibit the A's from establishing a player development contract with Sacramento unless the Giants have conceded that they want to move on.

I don't want count the potential San Jose A's revenue streams for them, its just my gut feeling saying the A's cant afford to pay for a park the Giants every year.

Jesse said...

I heard Barbieri say today that Radnich will have Lew Wolff on for an interview soon. That should be interesting.

Anonymous said...

Keep in mind SCC terrritorial rights were "given" to the Giants free of charge by Walter Haas and MLB in 1992--what was given free of charge can also be taken away---without having to mortgage the A's future--plenty of creative ways to do this--at the end of the day you have got to ask if SCC is so important to the Giants than why did they move their stadium further away from SCC? Beautiful ballpark but not a wise "business" decision-

Anonymous said...

I hardly think the A's would be allowing all the talk of San Jose happen, if they had no idea how to pay for it. The diridon site is almost too perfect. Plans that have already been approved have this area scheduled to become one of the Largest Transportation Hubs in the Country. Not too mention all the new housing in place. The planned revitalization of the neighborhood sorrouning the "Old Adobe" and San Pedro Square. Doesn't "Mr. San Jose" Tom Mc Enery own a lot of land down there. I'm sure his freinds do. All Star Weekend in a nice sunny San Jose in July. I think there's a lot more money to be made downtown even without a Santana Row. The Economy seems to change faster than a Ballpark gets built. Are we all sure that a referndom involving some public funds is automatically doomed.
The territorial rights were BS to begin with. They were given to the Giants to Enable them to move to S.C. Or Mtn. View, or whatever. MLB will do what is best for MLB. Not just cater to a team that would probably not loose a whole lot anyway. If you grew up in the South Bay, you know the long time Giants Fans aren't going anywhere. The Giants have the same COPERATE motivation as the A's.
Fremont was plan D. WS(planD2) San Jose was always plan A,B,and C. Oakland was probably like plan M. Wasn't that why Wolfe was brought in by Schott in the first place? Doesn't he already have Property in downtown.
Gary Radnich, love that guy. Graduated from Blackford High School.

Gary said...

If San Jose was always "plan A, B, and C", then why wasn't it persued that way to begin with?

I guess the most annoying thing to come from the San Jose posters is this assumption that once you remove territorial rights, then the high tech people in Silicon Valley would open their checkbooks and essentially do anything to make a ballpark happen there.

But if that were the case, don't you think that Selig and the others owners know that? I mean, if Santa Clara County is indeed this huge untapped revenue source for Major League Baseball that so many say it is, then that's all Bud Selig would need to justify moving the A's there.

The truth is that San Jose is a modest improvement over Oakland. No more and no less. The same corporate interests who'd buy luxury boxes in San Jose would do the same anywhere else in the Bay Area. They'd certainly favor a park closer to their campuses and spend more in Santa Clara County than they would in Oakland, but this notion that "It's San Jose or nothing" is just pure bunk.

Where were all the Fortune 500 sisters of Silicon Valley during the recent battles in Fremont? They could have offered some assistance by way of civic "arm twisting" to help get a park built in what is clearly their own back yard.

I'm sure many on this board would say "They'd help if it was San Jose". My only response to that is again...pure bunk.

I agree that San Jose is the best place for the A's to be. But it comes at a steep price(territorial rights) A price that no one has wanted to deal with....

...until now. Plan A, B, and C?
Pure Bunk!

Oakland Si said...

The territorial rights arrangement has long been an issue for me. Other markets with an AL and NL team don't seem to divide their bases geographicaly (ie, NY: Yankees and Mets; Chicago: White Sox and Cubs -- and the Brewers, since Milwaukee is only an hour away). Nobody claims that each team may only consider one section of their market for themselves. The Bay Area has one NL and one AL team, so for me it makes sense that the AL team be located where the most fans can potentially access it both in person and via the media.

I know the story about the territorial rights being divvied up in order to keep the Giants in the Bay Area. But frankly, it still seems strange to me -- and outdated.

Anonymous said...

SJ was pursued to begin with---but came up against the territorial rights wall a few years ago--Fremont than became Plan B--

Not sure where you are coming off that there is an expectation that the hi-tech companies will directly fund to build a stadium--the point being made is that these are the companies that buy the corporate boxes and advertising naming rights etc and the realty is they are all in Silicon Valley/San Jose---in fact the Silicon Valley/San Jose area has more Fortune 1000 companies than both Oakland and SF combined.

Living here in SJ many people I talked to were disappointed about the ballpark having to be located in Fremont--preferring the downtown SJ site next to the Tank where the Sharks have enjoyed enormous success---I can tell you for myself as well as quite a few others having the ballpark in downtown SJ moves me away from attending games in Fremont when I could to buying 4 season tickets and willing to pay the fees for charter seat licenses or whatever equivalent might be required---its the convenience factor and willingness to support the "local" teams.

At the end of the day the economic benefits of Silicon Valley/San Jose cannot be labeled as pure "bunk" when you have more Fortune 1000 companies than SF/Oakland combined, have the second highest per capita income in the US, have a location that will extend the reach of the A's to the Central Valley once HSR is built while still providing access to the East Bay via the Bart line, and your the 5th largest media market in the US. Ever wonder why the '49ers want to move to the South Bay?

Like it or not people in SJ will be more loyal to a team in SJ no different than those in Oakland would be more loyal to a team in Oakland....its the "homer" mentality but it is what it is-

Jeffrey said...

Lew sent out a letter today to let everyone now Fremont is off the map.

We all figured it, but the letter is the final nail.

Anonymous said...

Bunk is what the territorial rights are. Am I the only one who lived here in 1992. When the A's were at the top of their roid fueld greatness, the willingly gave these imaginary rights to the Giants, because they stood to lose exactly what the Giants would lose today. Nothing. I don't remeber a vote, nor did I give my rights as an A's fan away. Bud does what pisses the least ammount of people off. Fremont was a way to make Money, basically being in silicon valley, while being able to say we're still an Alameda County. At the same time not compromising the imaginary territorial rights. I hardly think MLB will continue blocking this because of the Giants objections. The Giants will always make trouble because the A's leaving all together is whats best for them. For some reason they don't seem to carry the same weight they did in MLB about 8 years ago. Remeber what south Fremont, and Milpitas looked like 25 years ago. Hell Fremont might as well be in San Jose now. San Jose Was persued to begin with. Where do you think the EIR came from. This was not just a R. Gonzales pipe dream. Maybe I'm crazy, but Lew didn't get rich by listening to us, or by telling everyone his plans. I garentee the financing is already in the works. They probably already know. You better believe the Territorial rights were holding this up.
The Crash in the Economy will get San Jose their team. You've got to believe the A's are glad it happened sooner than later.
He's going to exagerate the new problems in Fremon, and behold San Jose will be there to rescue the new Stadium. Billionaires know how to make lemonaide from Dog Poop!
ACT, Caltrain, 87,280,680,101,880,HSR, Light Rail, Bus, Mineta, Bart, Capital Corridor, Guadalupe Riverwalk, Los Gatos Creek Trail. I'm sorry, but this is a No Brainer. Except for all the crime around the Tank.

daveinsm said...

I guess the fat lady has finally sung....this is sad news