Oakland A’s Can Privately Finance New Stadium; Raiders, Coliseum JPA Meet Developer

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The Oakland A’s, in the form of John Fisher, the Majority Owner of the Athletics Organization, met with Alameda County Supervisor Scott Haggerty last Wednesday, and according to a friend of mine who was close to the conversation, said to Haggerty that “We don’t need your money,” or words to that effect. But the gist is that the Oakland Atlhletics told Haggerty, the President of The Alameda County Board of Supervisors, and a member of the Oakland-Alameda County Joint Powers Authority, that the A’s have a plan in place to privately finance a new stadium at the Oakland Coliseum.

That should come as good news to Oakland Mayor Libby Schaaf, who wanted to escape this new stadium problem without spending a dime of public money and yet retaining at least the Raiders and the Atlhletics, yet was under the impression that it would take a public subsidy s recently as the last week of September. (Even though I proved that wasn’t the case via the spreadsheet proposal I created for a ‘Coliseum City Reboot’ with A’s and Raiders stadiums and as per Raiders Owner Mark Davis’ request, and argued with her as I asserted she was misinformed.)

While I wasn’t able to reach Scott to have him confirm this on the record, I know my source is 100 percent correct. I also learned that Alameda County has still not received a “good proposal” (as my source put it) from the City of Oakland regarding the proposed sale of the County’s share of the Coliseum. So, as of this writing, the parties, City, County, JPA, are proceeding in their normal way – as before. They’re also waiting for the Raiders to give them a proposal of their own for a new stadium.

Right now, the Silver and Black are in limbo. Regardless of how “crazy” Oakland Raiders President Mark Badain thinks my news that the Raiders were talking to Magic Johnson, the fact is the Raiders have held conversations with persons who could step in as the investor the NFL sorely wants it to have. (And to that end, the Oakland Alameda County Joint Powers Authority and the Raiders held a meeting with a potential developer / investor on Columbus Day. I don’t know the names of the developer / investors as of this writing.)

Magic Johnson and Michael Ovtiz, who has been Johnson’s mentor for decades and almost landed the 32nd NFL franchise that Robert McNair secured to establish the Houston Texans, want back in the NFL game. But they’re not going to do a deal with ease if Carmen Policy and his people have contractual control in the Carson situation. Regardless, the NFL would like to see the Raiders with an investment partner, if not a new owner.

Yes, I did say the NFL. The National Football League has a vested interest in the long term fiscal health of one of its most storied franchises. That boils all the way down to how its managed, and has for some time. That deal will happen, even if the Raiders don’t wind up moving to LA from Oakland. The overall problem right now is a financing gap with the Carson project – one that I estimate to be about $300 million in size and is revealed when the overly high “ask” for PSL’s and club seats is brought down to buyable levels. That’s why the news slipped out that the NFL was talking to the Players Union about helping out with financing – if the deal penciled out, such involvement would not be necessary.

I’m going to avoid a full on analysis of why the Carson deal’s falling apart right now, except to say that the way the developers are structuring it doesn’t leave them with enough robust revenue streams to use against a bond issue to get the proceeded for construction – without the public subsidy that Carson says it can’t afford to pay and doesn’t want to pay. A $1.8 billion NFL stadium would produce an annual debt service in the range of $150 million to $160 million if the bond issue was 40 years in length and depending on the interest rate. Having ran a number of spreadsheets on potential NFL LA Stadiums; given the desire not to use at least 50 percent of naming rights revenue toward construction or use a large hotel complex as part of the stadium design, other monies generated from the stadium have to be of such size and reliability that they can be counted on. Right now, that’s not the case in their deal, and it doesn’t take a rocket scientist to figure that out.

That leaves the Raiders to try and work a deal to stay in Oakland. While some media types point to San Antonio as a destination, I really have to speculate to what degree they understand sports business enough to support that rumor? The Raiders would not just walk away from the 6th largest media market in Oakland to the 37th largest media market in San Antonio, and take a large hit to the team’s total value. And then there’s the factor of cutting into the Houston Texans radio contract money, let alone Texans San Antonio TV money, as the Texans, like the Raiders, are an AFC team. On paper, it just doesn’t add up. I don’t care how much San Antonio wants an NFL team, it’s going to have to deal with the Texans revenue concerns, as that city happens to be a major part of it’s radio market – one that produced one of the largest agreements in sport in 2001.

So that leaves the Raiders to have to deal with Oakland. Whether they know it or not, the County’s unofficial position is to let the team figure out that it has to deal with them.

I’m not sure how smart that strategy is, but I can say it’s worked for them before in the case of the Oakland A’s when Ken Schott and Steve Hoffman were threatening to move the team to Sacramento in 1996, then wound up selling the team. Then, both Oakland Mayor Elihu Harris and Alameda County Supervisor Steve Szalay knew they held all the cards, and just waited. They just got the Raiders back from LA and held a contractual upper hand with the Athletics – the A’s had nowhere to go.

And today, maybe the Raiders don’t either.

Stay in Oakland.

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