UTK Special 5/13/21
The Oakland Gambit
I have a friend who’s a very good chess player. Very good, but he’s no Bobby Fischer. Very good, but not master level. He’s easy to beat because he’ll almost always repeat whatever strategy worked last time. He stumbled into a Kasparov defense once and I didn’t know how to answer. I think he played that defense ten more times before he realized I’d looked up how to beat it. Beth Harmon, he is not, but I have a feeling that Rob Manfred would be the same kind of player.
MLB as a corporation or collective has seldom had someone call their bluff, especially when it comes to stadiums. Baseball has long been able to say “build us a stadium or else” and it’s worked, from Commiskey to the minor leagues. The exceptions have been Tampa, where at least five proposals for a Tropicana replacement have come and gone, and Oakland, where the same is true while sewage seeps up and the Raiders left town without even asking for a new place. Greener pastures, peace.
I hesitate to call it a scam, but it’s an extraction mechanism. MLB and the billionaire owner come in with a plan, asking for money, tax breaks, and more, plus infrastructure, disruption, and choices on where to get that money - TIFs, opportunity zones, clawbacks, or even new taxes. That usually gets knocked down, negotiated, and it either dies and we go to Plan B or it dies down, for a while.
Throughout the Selig Era of Big Building, this worked, over and over, in large part because a lot of the stadiums were crappy. Multi-use, no-character ashtrays like Three Rivers became two stadiums for the local teams and cost aside, very few could argue PNC and Heinz aren’t flat out better in every way. But as we move past that era and even see some stadiums replaced before their life span is up, the sell is harder and the cost is higher.
I could give both side on why Texas needed a new stadium. I’ve been there on days where it was 108 degrees, but the “old” park was also one of my favorites in the game, with my near-annual visit to grab a Shiner back when they weren’t so available. There’s very few Selig Era parks that can make the same argument. Rogers/SkyDome didn’t age well but it’s functional. The same is true of Chase in Phoenix, with resistance there leading to some vague threats about a move just a few years back.
However, the move to replace some of these parks won’t be about the park. Most want a whole area - a Ballpark Village, a Texas Live, or at the very least a tailgate paradise like Kansas City or Milwaukee. Parks have tried to become year round, with more events like concerts, movie nights, and even winter spectaculars. That’s not enough for the owners, who want some combination of venue, mall, nightclub, and ATM machine all in one.
Craig Calcaterra rightly points out in his newsletter that .. well, here’s the passage:
He’s exactly right. Owners don’t just want to own a team, their own little fiefdom that elevates them among their billionaire friends. Yachts, art, big house, but do you have a baseball club? Now, even that isn’t enough. Add in a second franchise, or a third as John Fisher has done with the MLS San Jose Earthquakes and then Scottish giant Celtic.
Oakland is one of few clubs with single ownership. Selig’s old college roommate, Lew Wolff, was always a minority owner brought in to push for a stadium deal and once Selig exited, so did Wolff. Fisher stepped forward with his real estate background and started a stronger push. Like Mark Davis of the Raiders, he could move the team just because he wants to.
But does he? Is this a strong bluff or is Fisher really making a bigger push for some scaled down version of the Howard Terminal project? The ridiculous design of that always struck me as the type that would get dumbed down quickly once the real prices started to come in and the realities of overruns started hitting, especially after the massive issues at SoFi downstate.
Howard Terminal would cost an estimated $12 billion. That’s a billion for the stadium, which Fisher generously says he’d pay for, with $11 billion for infrastructure and redevelopment. It’s not clear in the proposal just how that development would benefit Fisher and the A’s, but it is clear that money would have to come back to the team in one form or another, such as tax breaks or a sales tax sweep, which could be significant in Oakland, where the total sales tax is 9.25 percent.
Its not outside the realm of possibilities to think Fisher and the A’s puffed their expected price to be able to say “Can’t do $12? How about $6?” That’s still a big chunk for a city that’s watched two sports teams walk away without appreciable consequences. Oakland does budgets in multi-year blocks. The 19-21 budget was $3.29 billion, per the City of Oakland site. The 21-23 was passed at $3.85 billion. It’s hard to compare apples to apples with a pandemic in the middle, but there’s no appreciable loss of tax income.
There’s also no clear path to pay for something that’s five to six years of a complete city budget, aside from the oh-so-generous private stadium contribution. Bonds don’t directly go to the bottom line all at once, but the interest on similar projects can be significant. Arlington has used variable rate bonds for both of it’s stadiums, while Las Vegas got a 3.94 percent rate on it’s 30-year bonds for the Raiders new Death Star digs.
Don’t think that’s significant? I took the $11b non-stadium number and plugged in the kind of numbers that Arlington got from hotel, car, and sales tax to this calculator and those are big, big numbers. So much so that I think I did something wrong, or hope so, given the $25 billion in interest.
The Ft Worth Star-Telegram detailed how Arlington, Texas was using multiple revenue sources to pay down those bonds:
Before COVID-19 weakened the economy, revenues from the half-cent sales tax had grown steadily to $34 million in 2019, from $22 million in 2006. Annual hotel tax revenue had increased in the same time frame to $2.7 million, from $1.3 million. The rental car tax brought in about $900,000 the last two years. Those taxes have been used for more than a dozen years to pay for the Cowboys’ AT&T Stadium.
In fairness, Arlington was able to pay for AT&T Stadium almost 14 years early, saving much of that interest cost. Part of that was higher than expected revenue from an economic boom and increased stadium activity, from things like the NFL Draft, the NCAA National Championship, and concerts. (The George Strait finale did amazing numbers.)
If Fisher and the Athletics are really looking to stay in Oakland, we should know quickly. They’ve ratcheted the pressure with Manfred’s permission slip to play the field, but if you don’t think they already have, I have a stadium site to sell you. Las Vegas has been in this game a long time and learned from bringing the Raiders over. They have the playbook, but do they have the money?
Never doubt a Las Vegas building boom. There’s several new casinos ready to go, including the recently opened Resorts World that is making its name on its “Stadium Swim” pools and stealing Celine Dion from Caesars, pairing her with Katy Perry and Carrie Underwood on the now-must Vegas residency rotation. MSG is making progress on it’s Sphere arena, something I never thought would get off the ground, let alone break ground.
Rumors of sites have been rumbled for a while. Insiders say that the Rio site, which wouldn’t be available for a couple years, is out, while there’s simply few areas where a baseball field could be put near the strip. South of town, near the fast growing suburb of Henderson? Maybe, but would the need for surrounding infrastructure work there, or could Henderson use it to brand itself the way Arlington has from the rest of the Metroplex? That all remains to be seen, but many of these same questions were asked before the big black stadium was built across the interstate from Mandalay Bay.
As for the rest of the world, Portland, Nashville, Charlotte, and others will be ventured and maybe one of them throws up a desperation play that’s so rich that Fisher can’t say no. At worst, MLB’s owners will get a look at which cities are most willing to play ball when expansion comes up. None have a real chance outside Vegas, but that’s a play that has worked pretty well. I’d say that currently, there’s a 20 percent chance that we have the Las Vegas A’s in the future, but even that gets a bit complex.
There’s currently no workable stadium, so as with the Raiders, the team would have to go into a holding pattern. That worked for the NFL, but that’s eight dates. Even winning, the A’s would take a big hit if they played a couple lame duck seasons in the Coliseum. Then again, it’s not as if the team is out competing for free agents, so I’m not sure what that could even do to the team.
There’s two wild cards here that bear discussion as well. First is that while Las Vegas is the only relocation site that really holds up, there’s a chance that Fisher might follow the Warriors rather than the Raiders. The Giants have been building up the area around their park and about the only way they could increase revenue is more dates. A MetLife/SoFi sharing arrangement is unlikely, absent the Giants selling part of the ownership, but it’s been mentioned at least as a short term solution.
Second is that while the A’s are hoping for bids, it could be Vegas that ends up being pursued. Keep in mind that Ken Kendrick down in Phoenix has been in a stadium dispute with the Chase Field minders and while they’ve tentatively agreed to renovations, he might start thinking that “Las Vegas Diamondbacks” doesn’t have a bad ring to it, even before the A’s elect to stay in Oakland.
This isn’t going to be solved overnight, but Oakland’s response to the polite extortion may come quickly. The artificial deadline of a vote on the A’s Howard Terminal proposal - the $12B dollar one - is likely to come and go, but we’ll see just how antsy the Oakland politicians and business types get.
And if it works? Tampa/St Pete, you’re on deck.