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A’s move to Vegas reveals MLB’s MO: Shake down taxpayers for owners’ benefit
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Terrence Clay
Aug 24, 2023, 2:37:32 AM8/24/23
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https://www.sfchronicle.com/sports/ostler/article/a-s-las-vegas-move-shows-mlb-s-mo-shake-18327301.php?utm_campaign=CMS%20Sharing%20Tools%20(Premium)&utm_source=t.co&utm_medium=referral
Scott Ostler
Aug. 23, 2023
Updated: Aug. 23, 2023 3:50 p.m.
Oakland might have lost its beloved Athletics, but in doing so, the Town took one for the team.
Unfortunately for Oakland, the “team” for which it took one is the billionaire MLB owners.
Currently, at least six major-league teams are issuing threats to leave town unless city and state governments pony up for new ballparks or massive taxpayer-funded upgrades on existing stadiums. The teams with their hands out are the Tampa Bay Rays, Arizona Diamondbacks, Milwaukee Brewers, Chicago White Sox, Baltimore Orioles and Kansas City Royals.
Commissioner Rob Manfred now can point to the A’s and say to those six stubborn cities (and others), “See what happens when you don’t play ball?”
It’s almost as if Major League Baseball has launched a mass taxpayer shakedown, with Manfred as attack dog, shaming cities for their reluctance to pony up. His attacks lack nuance and fact-checking, but …
“All evidence continues to be that Manfred is very bad at this, but also that he doesn’t have to be very good at it to be successful,” said Neil deMause, whose fieldofschemes.com website throws shade on pro sports teams raiding public coffers.
Case in point: Manfred kept warning Oakland to step up or lose the A’s. His talking points were often specious, yet here we are, the A’s are on the verge of moving to Las Vegas.
So Oakland is the poster city for “You snooze, you lose.”
With the A’s pending move, and taxpayer-money-extortion demands in multiple cities, the picture comes into clear focus: The mission of MLB is not to serve the glorious game and its loyal fans, but to serve the wallets of owners, including the A’s John Fisher.
Since Fisher bought the team in 2005, with then-partner Lew Wolff, his goal has been to use the team as a means to a mega real-estate development. One plan after another failed, until the grand finale: Howard Terminal — a ballpark surrounded by acres of development — retail, commercial, residential. From the start, the plan was a Vegas-esque long shot, with immense challenges, but Fisher and A’s President Dave Kaval had a plan. Hurdles, schmurdles. Just give us money.
“The Howard Terminal private development piece was always kind of a black box, with no clear sense of what Fisher’s business plan was, other than, ‘Get a pile of infrastructure money from Oakland and the state, and hope everything else pencils out,’ ” deMause said.
He added that the Howard Terminal project, along with the A’s pending Vegas plans, “both look like situations where an owner was more invested in what he could get as tribute from the local government than whether the project made any damn sense in the first place. Which is classic failson thinking.”
(I had to look it up. Failson: An incompetent, unsuccessful upper-class man protected from economic duress by his family’s wealth.)
Why is this newspaper concerned about a team with one-and-a-half feet out the door? Because the A’s haven’t left yet, and they don’t know when they will. The team’s lease on the Oakland Coliseum runs through next season, and they might try to extend that lease another two or three years. Plus, the A’s ballpark plans in Vegas seem as solid as your uncle Fred’s blackjack system.
So it’s at least possible that the A’s will crap out and come back to Oakland.
That might be why the A’s are continuing their purchase of Alameda County’s 50% interest in the Coliseum site, a half-ownership that opens a can of worms. Even if the A’s do settle in Las Vegas, the team’s interest in the Coliseum land could create rally-killing complications for any development projects at the Coliseum, which one real estate expert calls “a home-run site.”
The possibility of a U-turn by the A’s if the Vegas deal cools took a hit Tuesday. I heard that the A’s had fired their entire negotiating/development team, so I queried the team. The response: “As we shifted our focus from Oakland to Las Vegas, we restructured our internal real estate development efforts, which resulted in a reduction in front office headcount.” Five folks got fired, the A’s said.
Meanwhile, Las Vegas is discovering what Oakland has known for years, that when it comes to master planning, the A’s are less than masterful. Much of their business in Vegas has been slapdash improv, with a hint of desperation, including:
• The sudden lunge from deep negotiations with Oakland, to a “binding agreement” to buy a 49-acre parcel in Vegas, with the ballpark expected to open in 2027.
• Two weeks later, the sudden lunge from that binding agreement to a deal to buy a nine-acre plot where the Tropicana now stands, with a ballpark expected to open in 2028.
• The rushed artist rendering of a ballpark on the Tropicana lot, a ballpark so out of scale it looked like a two-car garage plopped down on the foundation for a doghouse.
• The use of that same comical artist rendering with the A’s recent announcement that they hired a developmental firm.
• Manfred’s petulant defense of the A’s move, using alarmingly inaccurate and incomplete info. This prompted Oakland Mayor Sheng Thao to hand-deliver to Manfred a detailed report of what the city had offered. Thao brought along enough copies for all the owners, to help them make an informed vote on the A’s proposed move.
On Tuesday, Thao’s office said the mayor had received no feedback or acknowledgement from any of the MLB owners, but, “We have heard through the grapevine that some owners have concerns about the Las Vegas project and the expectation of continued revenue sharing if a move happens.”
• The eye-popping risk of conflict of interest taken by the A’s, who hired two Las Vegas government officials to present their plans to the state legislature when that body was considering taxpayer subsidies to the A’s. Jeremy Aguero and Steve Hill were both working for the A’s and for local government entities when they led and cheerleaded the team’s sales pitch.
• The lack of clarity on the proposed stadium itself. Sliding roof, fixed roof, or no roof? That’s an important detail in Las Vegas, which apparently is located in the middle of a desert.
• The media-shy Kaval’s recent interview with the Wall Street Journal, in which he explained that the A’s will start paying a big-league-level payroll once the team drops into Vegas. The Journal didn’t bother to ask Kaval the chicken/egg question: What if the A’s grandiose and highly questionable revenue projections fall short in Vegas?
Kaval’s reach-out to WSJ, and Fisher’s rare-as-a-unicorn interview this week with the Las Vegas Review-Journal, seem to be part of the A’s desperation initiative to get a deal finalized. The clock is ticking. The A’s have until Jan. 15 to reach a “binding agreement” on a new stadium, or lose their small-market-team revenue sharing, which will be about $33 million next year (per Forbes) and about $44 million per year after that.
To move, the A’s need a 75% vote by the team owners. Those folks might be weary of the A’s Groundhog Day-style stadium quest, and wary of further degradation of the MLB product by Fisher’s ever-shrinking, low-roller player payroll, but most experts seem to believe the owners will hold their collective nose and vote to approve.
“The other owners are there to support Fisher in getting whatever he decides he wants this week,” deMause said, “if only because they want the A’s situation resolved so they can move ahead with taking bids for $2 billion or so for expansion franchises. If Fisher doesn’t move forward with something in the next few months, they may get impatient and pressure him to make a damn decision, but there’s a strong predisposition among sports owners not to tell each other how to run their businesses, because they don’t want anyone to tell them how to run theirs.”
If the A’s are imitating a headless chicken, it might be partially because of conditions beyond their control. When the A’s proposed their HT project in 2018, it featured vast commercial office space. Back then, Oakland was the hottest commercial real-estate market in the nation, but there has been a dramatic cooling. In addition, Fisher’s stock in the family company, the Gap Inc., has been in steep decline.
There is one scenario experts tell me that is plausible: Banks considering loans to Fisher for the Howard Terminal project noted the real-estate cool-down and the Gap stock drop, and saw an increasing risk for the project. They informed Fisher he would have to back all loans with his own money, rather than taking the loans through a corporation that could declare bankruptcy if the project flopped. Suddenly, Fisher was faced with putting his own ass(ets) on the line.
“That’s common in construction,” said John Protopappas, president and CEO of Madison Park Financial Corporation. “The banks say they want a ‘live body,’ they want someone that’s paying attention, so that the money is invested wisely.”
Protopappas said he and a partner recently bought a large building in Oakland and were required to personally guarantee the loan, including backing it with their own living trusts.
Some of the risks at Howard Terminal, Protopappas pointed out, were well known. He once served as a Oakland port commissioner and is aware of the toxic-soil issues at Howard Terminal. There’s tons of bad goo down there that would have to be removed, and nobody is exactly sure how much.
Did Protopappas consider the HT project to be high risk?
“Yes, definitely high risk,” he said. “Primarily the environmental issues, from my perspective.”
Those issues include Schnitzer Steel.
“Imagine you’re sitting in the bleachers, you’re having a beer, there’s a fire (at Schnitzer). All of a sudden, you’re looking at your beer and there’s a sheen on it. ‘What particulate matter am I ingesting? ’ ”
Fisher might face financing challenges in Vegas, even with the vastly downscaled project. The Nevada Independent reported Aug. 15 that Fisher would seek a loan that would be paid back partially by selling off part of his 100% team ownership stake. Fisher is working with Goldman Sachs, and one former MLB insider said that’s a red flag.
David Samson, former Miami Marlins president, said on a recent “Nothing Personal” podcast that Goldman Sachs probably was not Fisher’s first choice, because it would charge a higher interest rate and higher fees than many other lenders.
“The reason why a team would be willing to go with Goldman Sachs is because they don’t have another lead bank,” Sampson said. “It’s because (other banks have) looked at the numbers, they’ve looked at the projections and said, ‘No, we don’t believe this.’ ”
Though the A’s seem to be making it up as they go, it’s working. And once they pull off their move, and the Rays either move or get a new ballpark, MLB will proceed with expansion by one or two teams, thus greatly enriching the fraternity.
One challenge will be finding one or two more cities capable of supporting a big-league expansion club. Vegas, the top candidate, is now off the table. Others, like Nashville and Portland, are risky.
If only there was a big city out there, a vibrant, urban town with fine weather and tons of fans, and a big plot of shovel-ready land, and available public infrastructure money. You know, a place where a real big-league team could put down its roots.
Scott Ostler
Aug. 23, 2023
Updated: Aug. 23, 2023 3:50 p.m.
Oakland might have lost its beloved Athletics, but in doing so, the Town took one for the team.
Unfortunately for Oakland, the “team” for which it took one is the billionaire MLB owners.
Currently, at least six major-league teams are issuing threats to leave town unless city and state governments pony up for new ballparks or massive taxpayer-funded upgrades on existing stadiums. The teams with their hands out are the Tampa Bay Rays, Arizona Diamondbacks, Milwaukee Brewers, Chicago White Sox, Baltimore Orioles and Kansas City Royals.
Commissioner Rob Manfred now can point to the A’s and say to those six stubborn cities (and others), “See what happens when you don’t play ball?”
It’s almost as if Major League Baseball has launched a mass taxpayer shakedown, with Manfred as attack dog, shaming cities for their reluctance to pony up. His attacks lack nuance and fact-checking, but …
“All evidence continues to be that Manfred is very bad at this, but also that he doesn’t have to be very good at it to be successful,” said Neil deMause, whose fieldofschemes.com website throws shade on pro sports teams raiding public coffers.
Case in point: Manfred kept warning Oakland to step up or lose the A’s. His talking points were often specious, yet here we are, the A’s are on the verge of moving to Las Vegas.
So Oakland is the poster city for “You snooze, you lose.”
With the A’s pending move, and taxpayer-money-extortion demands in multiple cities, the picture comes into clear focus: The mission of MLB is not to serve the glorious game and its loyal fans, but to serve the wallets of owners, including the A’s John Fisher.
Since Fisher bought the team in 2005, with then-partner Lew Wolff, his goal has been to use the team as a means to a mega real-estate development. One plan after another failed, until the grand finale: Howard Terminal — a ballpark surrounded by acres of development — retail, commercial, residential. From the start, the plan was a Vegas-esque long shot, with immense challenges, but Fisher and A’s President Dave Kaval had a plan. Hurdles, schmurdles. Just give us money.
“The Howard Terminal private development piece was always kind of a black box, with no clear sense of what Fisher’s business plan was, other than, ‘Get a pile of infrastructure money from Oakland and the state, and hope everything else pencils out,’ ” deMause said.
He added that the Howard Terminal project, along with the A’s pending Vegas plans, “both look like situations where an owner was more invested in what he could get as tribute from the local government than whether the project made any damn sense in the first place. Which is classic failson thinking.”
(I had to look it up. Failson: An incompetent, unsuccessful upper-class man protected from economic duress by his family’s wealth.)
Why is this newspaper concerned about a team with one-and-a-half feet out the door? Because the A’s haven’t left yet, and they don’t know when they will. The team’s lease on the Oakland Coliseum runs through next season, and they might try to extend that lease another two or three years. Plus, the A’s ballpark plans in Vegas seem as solid as your uncle Fred’s blackjack system.
So it’s at least possible that the A’s will crap out and come back to Oakland.
That might be why the A’s are continuing their purchase of Alameda County’s 50% interest in the Coliseum site, a half-ownership that opens a can of worms. Even if the A’s do settle in Las Vegas, the team’s interest in the Coliseum land could create rally-killing complications for any development projects at the Coliseum, which one real estate expert calls “a home-run site.”
The possibility of a U-turn by the A’s if the Vegas deal cools took a hit Tuesday. I heard that the A’s had fired their entire negotiating/development team, so I queried the team. The response: “As we shifted our focus from Oakland to Las Vegas, we restructured our internal real estate development efforts, which resulted in a reduction in front office headcount.” Five folks got fired, the A’s said.
Meanwhile, Las Vegas is discovering what Oakland has known for years, that when it comes to master planning, the A’s are less than masterful. Much of their business in Vegas has been slapdash improv, with a hint of desperation, including:
• The sudden lunge from deep negotiations with Oakland, to a “binding agreement” to buy a 49-acre parcel in Vegas, with the ballpark expected to open in 2027.
• Two weeks later, the sudden lunge from that binding agreement to a deal to buy a nine-acre plot where the Tropicana now stands, with a ballpark expected to open in 2028.
• The rushed artist rendering of a ballpark on the Tropicana lot, a ballpark so out of scale it looked like a two-car garage plopped down on the foundation for a doghouse.
• The use of that same comical artist rendering with the A’s recent announcement that they hired a developmental firm.
• Manfred’s petulant defense of the A’s move, using alarmingly inaccurate and incomplete info. This prompted Oakland Mayor Sheng Thao to hand-deliver to Manfred a detailed report of what the city had offered. Thao brought along enough copies for all the owners, to help them make an informed vote on the A’s proposed move.
On Tuesday, Thao’s office said the mayor had received no feedback or acknowledgement from any of the MLB owners, but, “We have heard through the grapevine that some owners have concerns about the Las Vegas project and the expectation of continued revenue sharing if a move happens.”
• The eye-popping risk of conflict of interest taken by the A’s, who hired two Las Vegas government officials to present their plans to the state legislature when that body was considering taxpayer subsidies to the A’s. Jeremy Aguero and Steve Hill were both working for the A’s and for local government entities when they led and cheerleaded the team’s sales pitch.
• The lack of clarity on the proposed stadium itself. Sliding roof, fixed roof, or no roof? That’s an important detail in Las Vegas, which apparently is located in the middle of a desert.
• The media-shy Kaval’s recent interview with the Wall Street Journal, in which he explained that the A’s will start paying a big-league-level payroll once the team drops into Vegas. The Journal didn’t bother to ask Kaval the chicken/egg question: What if the A’s grandiose and highly questionable revenue projections fall short in Vegas?
Kaval’s reach-out to WSJ, and Fisher’s rare-as-a-unicorn interview this week with the Las Vegas Review-Journal, seem to be part of the A’s desperation initiative to get a deal finalized. The clock is ticking. The A’s have until Jan. 15 to reach a “binding agreement” on a new stadium, or lose their small-market-team revenue sharing, which will be about $33 million next year (per Forbes) and about $44 million per year after that.
To move, the A’s need a 75% vote by the team owners. Those folks might be weary of the A’s Groundhog Day-style stadium quest, and wary of further degradation of the MLB product by Fisher’s ever-shrinking, low-roller player payroll, but most experts seem to believe the owners will hold their collective nose and vote to approve.
“The other owners are there to support Fisher in getting whatever he decides he wants this week,” deMause said, “if only because they want the A’s situation resolved so they can move ahead with taking bids for $2 billion or so for expansion franchises. If Fisher doesn’t move forward with something in the next few months, they may get impatient and pressure him to make a damn decision, but there’s a strong predisposition among sports owners not to tell each other how to run their businesses, because they don’t want anyone to tell them how to run theirs.”
If the A’s are imitating a headless chicken, it might be partially because of conditions beyond their control. When the A’s proposed their HT project in 2018, it featured vast commercial office space. Back then, Oakland was the hottest commercial real-estate market in the nation, but there has been a dramatic cooling. In addition, Fisher’s stock in the family company, the Gap Inc., has been in steep decline.
There is one scenario experts tell me that is plausible: Banks considering loans to Fisher for the Howard Terminal project noted the real-estate cool-down and the Gap stock drop, and saw an increasing risk for the project. They informed Fisher he would have to back all loans with his own money, rather than taking the loans through a corporation that could declare bankruptcy if the project flopped. Suddenly, Fisher was faced with putting his own ass(ets) on the line.
“That’s common in construction,” said John Protopappas, president and CEO of Madison Park Financial Corporation. “The banks say they want a ‘live body,’ they want someone that’s paying attention, so that the money is invested wisely.”
Protopappas said he and a partner recently bought a large building in Oakland and were required to personally guarantee the loan, including backing it with their own living trusts.
Some of the risks at Howard Terminal, Protopappas pointed out, were well known. He once served as a Oakland port commissioner and is aware of the toxic-soil issues at Howard Terminal. There’s tons of bad goo down there that would have to be removed, and nobody is exactly sure how much.
Did Protopappas consider the HT project to be high risk?
“Yes, definitely high risk,” he said. “Primarily the environmental issues, from my perspective.”
Those issues include Schnitzer Steel.
“Imagine you’re sitting in the bleachers, you’re having a beer, there’s a fire (at Schnitzer). All of a sudden, you’re looking at your beer and there’s a sheen on it. ‘What particulate matter am I ingesting? ’ ”
Fisher might face financing challenges in Vegas, even with the vastly downscaled project. The Nevada Independent reported Aug. 15 that Fisher would seek a loan that would be paid back partially by selling off part of his 100% team ownership stake. Fisher is working with Goldman Sachs, and one former MLB insider said that’s a red flag.
David Samson, former Miami Marlins president, said on a recent “Nothing Personal” podcast that Goldman Sachs probably was not Fisher’s first choice, because it would charge a higher interest rate and higher fees than many other lenders.
“The reason why a team would be willing to go with Goldman Sachs is because they don’t have another lead bank,” Sampson said. “It’s because (other banks have) looked at the numbers, they’ve looked at the projections and said, ‘No, we don’t believe this.’ ”
Though the A’s seem to be making it up as they go, it’s working. And once they pull off their move, and the Rays either move or get a new ballpark, MLB will proceed with expansion by one or two teams, thus greatly enriching the fraternity.
One challenge will be finding one or two more cities capable of supporting a big-league expansion club. Vegas, the top candidate, is now off the table. Others, like Nashville and Portland, are risky.
If only there was a big city out there, a vibrant, urban town with fine weather and tons of fans, and a big plot of shovel-ready land, and available public infrastructure money. You know, a place where a real big-league team could put down its roots.
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