17 November 2009

SVSE negotiating with A's over Diridon

December's Forbes magazine has a feature piece on the Sharks and Silicon Valley Sports & Entertainment, the umbrella organization that owns the team and runs HP Pavilion. The magazine praises SVSE for keeping debt manageable while expanding its holdings, making the company not beholden to a single income source.
Of SVSE's revenue of $155 million, NHL hockey brings in $84 million. The rest comes from things like a chain of ice rinks, three professional tennis tournaments, a mixed martial arts circuit and an apparel company. Last year the team's hockey operations lost $5 million, but the profits from the other businesses cut that loss to an estimated $2 million. Gregory Jamison, a Sharks co-owner who's in charge of day-to-day operations, sees the combined businesses turning a profit in two to three years.
Much has been made over the NHL's floundering expansion ventures in the Sun Belt, especially the efforts in Phoenix, Atlanta, and the state of Florida. The Sharks/SVSE have defied the Sun Belt pattern of attendance and cash flow problems, partly by controlling its own venue. It has also stayed out of the scandal-ridden front pages, something that can't be said for ownership in Anaheim, Phoenix, and Nashville.

The article also touches briefly on SVSE's other major sports dealings:
The Sharks' owners have been pursuing a National Basketball Association franchise for years, too. San Jose Mayor Chuck R. Reed tells FORBES that the arena lease will be amended this month to outline contingencies in case their efforts are successful. The group is also in discussions with the owners of baseball's Oakland A's to find common ground on a proposed ballpark in the area and to possibly buy into their Major League Soccer team, the San Jose Earthquakes. Even without these acquisitions SVSE officials expect the nonhockey side of the business to surpass the hockey side next year.
In the past I described the "common ground" as a deal to run an A's ballpark, creating a monopoly position for SVSE with regards to large venues in the South Bay. Considering how tight many of the SVSE players and members of A's ownership have been historically, the next logical step may be for the A's to sell a minority position to SVSE, say 10-20%. Such a deal could be consummated fairly easily and would make sense in the long run, since there's a precedent given that venue monster AEG operates in a similar fashion. For now, the discussions are probably more about how to figure out parking and develop the six blocks between the ballpark site and the arena, but it's not a stretch to think that the talks may be even deeper. It's a far cry from when the original ballpark EIR came out in 2006. At the time, the Sharks expressed disapproval over the concept due to parking concerns. Now that the team is no longer "hypothetical" and includes political and business friends, SVSE is looking for ways to take advantage of the situation.

All of this can be summed up in three simple words: Follow the money.