An Idea To Save Oakland Coliseum City: Raiders Stadium / Hotel Complex
As of this writing, the Coliseum City Project, at least for the Oakland Raiders, is all but dead. This week, Eric Grubman, President of Business Ventures at the National Football League, visited the Oakland Raiders executives, owner Mark Davis and Raiders President Marc Badain, and members of the Oakland-Alameda County Coliseum Joint Powers Authority, and from what my sources have told me, gave them a stern set of comments that added up to this: this project is behind schedule. Moreover, I was told the talk was for all practical purposes the NFL’s Grubman scolding them in his quiet way. In other words, Grubman told the group on Wednesday what this vlogger said he was going to say in my last vlog on this matter, here.
UPDATE: The new news according to The LA Times, is that Mr. Badain was reported to have given Carson City Councilman Albert Robles, soon to be the new Mayor of Carson, a Raiders lapel pin. That, coupled with the fact that the Raiders helped pay for the slick Carson Stadium video, spells trouble for Oakland. The Raiders are clearly setting up for a move to Los Angeles, even as they tell Oakland their intention is to stay.
The main overall problem is the Coliseum City concept of a set of developments that would be used to finance stadiums for the Oakland A’s, Oakland Raiders, and Golden State Warriors and built on what is now 800 acres of land has been our only plan for the retention of our sports organizations. It started as an idea presented in 2009 to then-Oakland Mayor Ron Dellums’ sports task force (which I sat on) and by the team of Oakland real estate developer Robert Leste and architect Frank Dobson (who has since passed away).
Here is my video from the Dellums Task Force of 2009:
Oakland Councilmember Larry Reid basically adopted Dobson’s idea, and the then-Oakland Redevelopment Agency used it to draw request-for-proposals for a developer to make it a reality.
During that time of working to land a developer, two things happened: first, former Oakland Mayor Jerry Brown became California Governor (for the second time) and worked to terminate California Redevelopment agencies and California Redevelopment Law. Governor Brown believed the action would recover $1 billion in state property tax revenue and help dig California out of its fiscal problems. In point of fact, while the state could have gotten back into the black without such action, it was done. He won.
That action took away a major funding source for Coliseum City, and coupled with the fact that we as a city had no other plan to save our sports facilities, created the situation we’re in today.
Now, Mr. Grubman has said to both San Diego and to Oakland that any project with a development component that calls for financing such that a group of buildings have to be created to finance the stadium is not acceptable. That all but rules out the Oakland Coliseum City plan as it stands today. But there is an alternative: reforming the plan to add hotel rooms.
In other words, the stadium complex would be more than that, it would be a stadium / hotel complex. The quick, NFL-first version I present, was not done to exclude the Oakland A’s, but to make the point that we have viable options; all that has to be done is to increase the number of hotel rooms from 600 to 1,200, and then add the baseball-stadium side. But for this space, the presentation is for the football-side.
I don’t have an architect to make a pretty-picture of this, so work with me here for the moment. The idea is to renovate the current stadium and make it football-only. Thus, the East-Side of the Coliseum stadium would remain intact, and about $7 million to $10 million in upgrades would be applied, and to the objective of more corridor walk space at the 100-level, an added access way at the 50-yard-line for event equipment, and other required improvements. The remainder of the work would come in replacing the current Coliseum Stadium West Side with a structure that mimics the East Side, and is a U-shape, thus replacing the “curve” that exists, and making a more intimate football complex. The capacity objective would be 75,000, or about 17, 000 more seats, making the facility Super Bowl-ready.
The hotel part of the stadium would consist of 600 rooms and be such that it would be integrated into the design of the new West Side, and then “stick” out to the north parking lot, and such that it would imply that it was looking for a second stadium to be connected to: one for baseball and the Oakland A’s. The premium hotel rooms would be part of the north end zone part of the new West Side, and become highly sought after, especially for the Super Bowl.
The Financing Plan: Public Private And With A Model From Cleveland
Here are the particulars: The estimate is for the use of a 30-year lease revenue bond issue. No, this is not an entirely private bond issue as I originally wanted, and calls for a hotel partner to go with the developer, but that’s only because of the existence of what I will call “the Cleveland model” and also the cash throw-off from the hotel part of the complex.
The spreadsheet provides the details, but the basics are the hotel construction cost is assumed to be $510 per square foot (or about $50 over the high end for this) for an average room size of 325 square feet (industry standard), and the stadium cost is pegged at $500 million. I do admit that’s a hypothesis, but again, it does not include the hotel – that’s an additional $101 million. But don’t forget, we’re not talking about building a totally brand-new stadium, but really one-side of the existing one. The total cost is $601 million; the estimated available revenue is $631 million. Thus, with an assumed bond issuance cost of $15 million, we still have $16 million remaining.
Of that revenue, $200 million is an assumed NFL G3 Loan, $70 million from naming rights and sponsorships, a portion from annual concessions revenue, $112 million from seat option revenue, and $246 million from hotel revenue. It’s very important to note that I did not name the Oakland Raiders contribution to this other than the NFL G4 loan. That was deliberate. I want the Raiders to determine what portion of revenue streams at their command they will commit to the project.
Raiders Owner Mark Davis has said to me at the 2014 NFL Spring Owners Meeting, that the team can afford $400 million; I have to believe half of that is the NFL G4 Loan money. But with a total revenue from luxury suits of $1.8 billion over 30 years, there’s a lot of room for the Raiders to contribute $500 million to the project. Or, the team could elect to make a deal with the hotel partner, and in exchange for upfront cash toward the project, share the revenue from the luxury suites with the hotel partner.
An Affordable Personal Seat License Plan
And on the matter of the seat license, I have 35,000 of them priced at $3,200 average each and for life. That price is the among the lowest in the NFL, and just under half the stadium is PSLs. By contrast, PSL’s for the LA stadium have been set at $15,000 and without a market analysis – just silly guesses about assumed Los Angeles wealth. Frankly, the addition of the hotel component makes this lower PSl price possible – and remember, this is an average price, so there will be many that are lower than this. Raiders fans can rejoice!
In my spreadsheet shown here below, the big money generator is from luxury suites: assuming 300 of them at $200,000 each, that’s $1.8 billion over a 30-year bond period. The Raiders could comfortably put in $200 million from that, and give the project more fiscal flexibility. The main difference here, from the norm, is first, that we’re upgrading the existing stadium and not rebuilding the whole deal, second, that we’re adding a hotel component, which expands the number of revenue sources and gives us a more “doable” project.
Now for the “Cleveland model”
In the Cleveland case, the objective is a $272 million hotel and convention center complex. There, Hilton is the partner, and the idea is for the Cleveland-Cuyahoga County Port Authority to own the hotel complex during the 30-year-life of the bond issue, and Cuyahoga County makes debt payments to the Port, which passes them on to the bond trustee. In our case, with the idea I present, the Oakland-Alameda Coliseum Authority is the owner of the land and will hold the 30-year-bond issue. Payments will be made from the Coliseum authority to the bond trustee, with the bonds backed by the City of Oakland and The County of Alameda.
Now at this point one might say it reads like the Raiders deal, and I can understand that. But the major difference is a vast one.
First, the Raiders deal involved a reliance on one primary source of revenue: the personal seat license, or seat option. In that case, the entire deal rested on the sale of $83 million of seat licenses. Instead, we had over $56 million and the project started out in default. That’s because the margin for fiscal failure was too small. In our case, we have the introduction of two other main revenue sources: the NFL/ team, and hotel room revenue.
Plus, we’re not building a whole, brand new stadium, but we’re building off the existing one. That opens a lot of design options that could reduce construction costs. In my spreadsheet, we had $30 million in surplus revenue without the $200 million contribution from the Oakland Raiders, and with the $200 million NFL G4 Loan – with that, we have $231 million in revenue “parked” to guard against revenue fluctuations and cost overruns. The original Raiders deal did not have anywhere near that at all.
That’s my idea to save this effort. And what’s neat is we can up the hotel room number and realize a revenue cash throw-off that allows for a baseball-only stadium on the north lot – one that’s attached to the football stadium via the hotel complex. So, we have a dual purpose stadium complex that looks like two separate ones.
The spreadsheet is below and please share this with fans and friends. This is in direct contrast to the current developer approach, which is to hide financial spreadsheets. Folks, this is not rocket science at all. There’s nothing mysterious going on here, so they should stop hiding. I look forward to your questions and comments. I’m just trying to do something to keep us in the ball game and win it!
Here’s the spreadsheet:
New Coliseum City Stadium Plan For Oakland Raiders by Zennie Abraham