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Separating fact from fiction as Raiders prepare for relocation vote

Separating fact from fiction as Raiders prepare for relocation vote

Last week was a sports business headline grabber in the Bay Area. On Tuesday the Golden State Warriors went all Cirque Du Soleil for a groundbreaking ceremony for Chase Center in Mission Bay. Then, the Oakland Raiders filed their relocation papers on Thursday, making a pair of gut punches for Oakland sports fans.

It’s time to separate the fact from fiction and examie what comes next...

FACT

- The Warriors will be playing in the Chase Center in San Francisco for the 2019-20 NBA season.

- The Raiders officially filed relocation papers on Thursday, Jan. 19 with the NFL for permission to relocate to Las Vegas.

- The Raiders have raised season ticket prices across the board for the 2017 season in Oakland.

- Nevada has $750 million dollars in public money approved for the construction of a $1.9 billion, 65,000-seat domed Raiders stadium in Las Vegas.

- If the relocation is approved, the new home of the Las Vegas Raiders would become the largest taxpayer-subsidized stadium deal in NFL history, more than the $600 million in public money used to build the Atlanta Falcons’ $1.5 billion stadium and $500 million the public is picking up for U.S. Bank Stadium in Minneapolis for the Vikings.

- Sand’s Casino Chairman Sheldon Adelson has pledged $650 million dollars of his own money to help build the Las Vegas stadium. Negotiations with Mark Davis on the details of his investment are ongoing. The Raiders have a deal with global investment bank Goldman Sachs to assist in financing the Las Vegas stadium deal.

- The Raiders plan to be playing in their new Las Vegas stadium by the 2020 NFL season. The Raiders have lease options to continue playing at the Oakland Coliseum in 2017 and 2018. 

- The cost of the Raiders' one-year lease extensions at the Oakland Coliseum is in the area of $3 million a year.

- Oakland and Alameda County still owe a large chunk of the $95 million dollars of debt for the Oakland Coliseum retrofit that brought the Raiders back from Los Angeles.

- NFL owners will next meet in Arizona from March 26 to 29. A vote on the Raiders relocation may take place at that time, or it may be postponed. Davis needs 24 "yes" votes to approve a relocation.

- Rams owner Stan Kroenke paid $550 million dollars to the NFL to relocate from St. Louis to Inglewood.

- The San Diego Chargers will be moving to the new shared stadium in Inglewood scheduled to open in 2019. In the interim they will play in the StubHub Center in Carson. It will be the smallest capacity stadium in the NFL at 27,000 seats.

- Relocation fees for the Raiders and Chargers have not been publicly released.

- The A's continue to review sites in the Oakland area for the building of a new ballpark.

- The Oakland Alameda County Coliseum is the only location in North America that has a MLB and NFL team playing in the same facility.
       
- Las Vegas will have its first NHL team, the Las Vegas Golden Knights, skating next season in the new T-Mobile arena in Paradise. 

FICTION

- The Raiders' request for a relocation vote has been officially added to the NFL owners meetings scheduled in Arizona from March 26-29. 

- The exact location of the Las Vegas domed stadium has been selected.

- Mark Davis has $500 million dollars to put into the Las Vegas stadium deal. 

- Las Vegas is a stronger economic market than Oakland.

- The Raiders have a lease to play in Sam Boyd Stadium, home of UNLV football. 

- The Raiders have announced they will be selling seat licenses for their Las Vegas stadium.

- The Raiders are interested in exploring a remodel of the Coliseum as a football-only facility.

- The A’s are interested in exploring a remodel of the Coliseum as a baseball-only stadium.

- The A’s will move quickly on announcing new stadium plans based on the four-year minimization of MLB revenue sharing money, which begins this season.

- The A’s have selected Howard Terminal as the site of their new ballpark.

- Mark Davis has an interest in selling a major stake in the Raiders to Sheldon Adelson or any other interested billionaire to help him build a new stadium in the Bay Area or Las Vegas.

WHO KNOWS?

- What will happen with the Ronnie Lott/Fortress investment group that is negotiating with Oakland and Alameda County? 

They have no agreement of any kind with the Raiders to play in their proposed $1.25-billion, 55,000-seat stadium.

Three previous third-party investor-backed deals to finance and construct new sports venues in Oakland have failed. Floyd Kephart, Forest City and Colony Capital all struck out.

- What will the NFL charge the Raiders for relocation to Las Vegas and where will that money come from? 

The NFL is a proponent of two teams playing in one stadium in major metro areas, as we have seen work with the Jets and Giants at Met Life and with the Rams and Chargers in Inglewood.

The Raiders have adamantly opposed sharing Levi’s Stadium with the 49ers.

- What legal or business actions will the Oakland authorities pursue against the Raiders and NFL if the team receives approval for a Las Vegas move? 

- Will the Warriors and Raiders pay back tens of millions owed the city and county for the improvements of the Coliseum and Oracle.

- How will the A's use the incredible leverage they will have if they wait until the Warriors and Raiders leave town?

Former A’s partner Lew Wolff said that the A’s won’t require a penny of public money to build a new stadium. Wolff is now out and A’s owner John Fisher could easily change that position.

PLACE YOUR BETS 
 
Oakland has been dealt a bad hand and it doesn’t look like it will get any help from the house. But I do not believe the Raiders will receive relocation approval at the NFL owners meeting in March.

Remember, the momentum was behind the Raiders and Chargers to get a "yes" vote on their proposed move to Carson in January of 2016. Owners instead voted 30-2 to approve the Rams' move to Inglewood. 

If the Raiders do get approval, the A’s and Major League Baseball could have a big surprise for Oakland. As the last team/league standing, they could ask for hundreds of millions in public money to support stadium construction. They could ask for control of all the land around the Coliseum at pennies on the dollar. They could threaten to move to another city with MLB approval.

This sports saga reads like War and Peace, but it's light on the peace and we're only getting started...

Cautionary tale: State-of-the-art arena doesn't guarantee heart and soul

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MANICA Architecture

Cautionary tale: State-of-the-art arena doesn't guarantee heart and soul

Since 2010 there have been many new stadiums, ballparks and arenas opened by professional franchises in North America totalling costs over $15 billion. The race to be the best building in the country is usually accompanied by extremely positive media reviews.

“Most Technologically Advanced Venue in the World”
---NY Times

“The Highest-Tech Stadium in Sports is Pretty Much a Giant Tesla”
---Wired

“The New Arena was Designed with (fill in city here) in Mind”
---Sports Illustrated

Teams, leagues, cities, architects, construction companies and elected officials enjoy the lists of firsts, biggests, bests, coolest in three major areas.

  1. BEST BUILDING: Design, sustainability, connectivity, building materials. 

     2. FAN EXPERIENCE: Food, fan apps, service, HD video boards, VR, pricing, public transportation.   

     3. COMMUNITY: What economic impact -- typically thousands of new jobs and millions in new tax revenue -- will the new construction have on the area? 

STATE-OF-THE-ART CONSTRUCTION DOESN'T GUARANTEE HEART AND SOUL

No matter how much steel, glass, gourmet food, technology, premium seating, VIP space, video magic, planning and logic are injected into into new sports venue, the ultimate challenge for team owners and management is to create a cathedral that captures the heart and soul of the team -- a new town square where all fans feel welcome.

Fans may fall in love with a new facility, as they did with then-Pac Bell Park, or the jury may still be out with multiple questions, as with Levi’s Stadium. It takes time for a sports venue to mature. The most important part of the new venue equation is the fan base that fill the seats with its time, money and passion. 

The Warriors’ San Francisco Arena, Chase Center, will have its groundbreaking ceremony on Jan. 17. The arena is scheduled to open at the start of the 2019-20 NBA season in Mission Bay. Construction costs are said to be in the area of $1 billion.

Plans for a new Warriors arena have been in the works since the Joe Lacob-Peter Guber ownership group took over in 2010. San Francisco was the largest major city in America without a modern multi-purpose arena. The original location, along Piers 30-32, was abandoned based on environmental concerns, increased costs, and potential construction delays caused by regulatory hurdles and lawsuits from the Mission Bay Alliance (MBA).

“We have been looking forward to this day since we first had the vision of building a privately financed state-of-the-art sports and entertainment complex in San Francisco and are excited for what this will bring to the city of San Francisco and the entire Bay Area community,” Warriors president Rick Welts said. “Chase Center and the surrounding area will serve as a destination for the entire community and we will continue to work to make sure it is the best experience possible for everyone to enjoy NBA basketball, concerts, family shows, conventions and more.”

The Warriors' magic carpet ride of success is perfectly timed for marketing their new home. The 49ers could not have written a better script as they ramped up to move from Candlestick to Santa Clara, turning it around from from years of mediocrity to reach the Super Bowl under Jim Harbaugh.

Timing, team performance, branding opportunity and market competition are key drivers toward generating piles of cash with a new sports facility..

Major income streams for financing the Arena will be coming from three main sources.

  1. PREMIUM SEATING: The sale of premium seating composed of suites, courtside seats, club seats and lower bowl seats between the free throw lines. 
     
  2. NAMING RIGHTS: Industry estimates say that JP Morgan Chase is paying the Warriors over $200 million, exceeding what Barclays Bank paid for the Brooklyn Nets' arena. 
     
  3. FOUNDING PARTNERS: The Warriors will generate tens of millions of dollars from the sale of “founding partner” arena sponsorships. These relationships usually include cash, advertising opportunities, business services, philanthropic partnerships and the opportunity to introduce new technologies in the arena. The Warriors' ascent over the past few seasons has solidified a number of their major corporate partners with deals approaching $1 million or more. Those companies are American Express, Kaiser Permanente, City National Bank, Visa, Clorox and Oracle. They have already inked United Airlines and Accenture as Founding Partners for the Chase Center.

THE MULTI MILLION DOLLAR QUESTION

Current and future Warriors season ticket holders, suite owners and single game ticket holders are eagerly waiting to see what the pricing menu will look like for the new building.

The 49ers were extremely successful in the sale of Stadium Builder Licenses (SBLs) for Levi's Stadium based on their winning ways and future promise. If they were just now, ramping up for a new stadium, after a 2-14 season, those sales might be far different. 

Will the Warriors be the first team to sell Venue Builder Licenses (VBLs) for an arena? VBLs would give fans the right to own their seat locations and purchase season tickets over a certain number of years. 

The Warriors believe there's “strength in numbers.” Their fans can’t wait to see just how strong those ticket price numbers will be.

Top 17 Bay Area Biz Ball stories coming our way in 2017

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AP

Top 17 Bay Area Biz Ball stories coming our way in 2017

With the new year underway, Biz Ball Insider Andy Dolich examines the Top 17 Bay Area sports business stories you can expect to read about in 2017...

17. MLB revenue sharing

Baseball has five years of labor peace with the signing of a collective bargaining agreement with its players. The A’s revenue sharing agreement, which brought in over $30 million last year, will be phased out over the next four years. The A’s will have to get used to a new definition of “Moneyball.”  

16. Amazon

Amazon is ramping up its quest to purchase professional sports broadcasting rights. Who will be first to take the cash?

15. Robo-umpires

Former A's sparkplug Eric Byrnes continues his crusade for technological balls and strikes callers. 

14. Cal Athletic Department

The huge, multi-million dollar deficit caused by the Memorial Stadium retrofit may cause cuts for other Golden Bear team sports.

13. Fan safety

The world is a dangerous place. How will authorities effectively create secure fan environments without taking away the openness of our sporting events and venues?

12. Selling Chase Center

The Warriors begin the sales process selling Chase Center to their fans. How much will tickets cost to the best show in the NBA? Will this be the first arena with PSLs?

11. Cord cutting

Many fans are plugging into new methods of sports consumption. Is this generation going to spend more time looking down than up when they go to a live sporting event or will they just bypass the event altogether? The smartphone is well on the way to becoming the ultimate arena in 2017.

10. Los Angeles' Olympic bid
LA's bid to host the 2024 Olympics goes to a vote of the IOC in Lima, Peru on Sept. 13. Budapest and Paris are the competitors. How many billions of dollars will it cost and where -- especially if LA wins the bid -- is the money coming from?

9. Taking a stand

More and more, players and coaches are taking public positions on societal and political issues. From John Carlos and Tommie Smith’s black-gloved protest in the 1968 Olympics to Colin Kaepernick taking a knee during the anthem this year, expect active involvement in social causes to increase significantly in 2017.

8. Donations from Kaepernick/49ers 

What are the programmatic elements and results of the $1 million donations from Colin Kaepernick and the 49ers to groups involved in social change? What will happen if Kaepernick moves to another team?

7. CTE

We're seeing ongoing CTE fallout in all contact sports and football in particular. The basis of sports business is player participation. As the science improves on diagnosing head injuries, every family that is associated with heavy contact sports will be monitoring the risk-reward tradeoff in their children’s participation.

6. Back to winning?

After three Giants parades and a Warriors parade since 2010, will there be at least one championship parade in the Bay Area in 2017?

5. 49ers' dwindling attendance

Empty seats speak louder than any leather-lunged fan. If fans don’t believe their investment in seat licenses are living up to the promise, you’ll see many more listed on secondary ticket sites for resale.

4. 49ers front office changes

What will the 49ers rebuilding strategy and look like? Who will be creating and implementing it?

3. ... Home of the Oakland A's 

Do the A's make a concrete decision in 2017 as to where they will are going to build?

2. Can Warriors reclaim the throne?

Will the Warriors reap the fiscal benefits of another NBA title? Will they beat the Cavs and LeBron in the 2017 NBA finals?

1. Raiders of the Lost Park

Will Team Turnaround be announcing a new home in Oakland, Las Vegas, Inglewood, Santa Clara or a new location in 2017? Without a current viable new stadium plan, Oakland could lose another pro sports franchise. I predict they will be kicking off the 2017 football season at O.Co as NFL owners continue to figure out the Rubik’s Cube that is their relocation puzzle. Be it ever so humble, there’s no place like the Black Hole.