Tuesday, February 01, 2011

A's Owes Giants Big Money If They Want to Move to San Jose

There was a recent column in the San Jose Mercury by Mark Purdy (I would like to link except that they put the article behind a paid wall after a while and I hate links that don't work after a short while) complaining about the Giants blocking the A's proposed move to San Jose by mocking the Giants connection with San Jose. 

One laughable part of the article was that the Giants showed how little they care about San Jose by not bringing any of the San Jose Giants staff to the World Series.  I don't mean to pop any bubbles and illusions, but big corporations don't usually reward every employee they have, it is usually the ones in the main corporation that gets the treats, not the ones in all the various divisions underneath.  And San Jose had nothing to do with this decision, I'm sure that any staff who lived in San Jose got to go too, they weren't left back at home just because they lived in San Jose.

Another laughable statement was that Purdy thought that the Giants owe the San Jose Giants for producing 10 of the Giants players.  FYI, the San Jose Giants did not produce the prospects, the Giants signed them and have been moving them though their Giants minor league affiliates using the Giants hired coaches.  San Jose is just one of the venues at which the Giants had THEIR players play in order to develop.  There is nothing in the San Jose air or water that "produced" our Giants players, except for former Giant Kevin Frandsen, who was born and raised down in the South Bay area, I believe in San Jose.  It would have been more appropriate to invite the parents and coaches of the players because they had more of a hand in producing the players than San Jose the city ever did.

I find that Purdy and the San Jose Mercury staff who have written about baseball in San Jose to be understandably biased towards the A's moving down to San Jose.  Afterall, the Mercury would become THE newspaper for a major league team and just think of the advertising revenues that would rain down on them should the move happen.  And they are particularly civic-minded and thus support initiatives that will bring big business bucks to San Jose.  Still, that is a bias.

But he does hit the nail on the head when he says that the Giants simply want money from the A's, and ultimately for the A's to move away, so why not be open about that.

Giants Thoughts

I agree that the move is about money, but that would be the decision of the owners of the Oakland A's to move because they could always pay the money to the Giants in order to move to San Jose.  Heck from what I gather, and I realize that I only know part of the whole situation, Wolff could have moved the A's to San Jose long ago if he were willing to pay off the Giants to move down to the South Bay.  And that is the Giants right to ask for such a relocation fee, just like in any other business.

A's Can't Give What Wasn't Theirs In First Place

Now there are some who opine that the Giants should not get any money because the A's "gave" them the South Bay territory when the Giants were looking to relocate to Santa Clara, that the Giants don't really own the rights.  Plus they note that Oakland is even closer to SF than San Jose, so any claims by the Giants on that territory is bogus.  But I don't understand that stance, once you look at the whole history of territory ownership in the San Francisco Bay Area.

From what I understand, the Giants owned the whole territory for the San Francisco Bay Area once they moved to San Francisco - much like how Baltimore owned their whole area - which includes the South Bay.  I don't believe that there was any relocation fee paid by the A's when they moved into Oakland and entered the Giants territory, probably because that wasn't important back then.  So bad on the Giants for not asking for a relocation fee back then.  I would bet Charlie O., cheap guy that he was, would have chose one of his various other choices, like Louisville, had he had to pay the Giants any money to relocate to Oakland.

However, later, the A's agreed to the Giants re-taking the South Bay territory.  So bad on the A's for not asking for money then too.

Money, Money, Money:  MONEY!

But as far as I'm concerned, the Giants have a long-term right to the South Bay territory, they owned it when they moved to San Francisco and that right was re-asserted when the A's conceded it to them later.  It was their territory the moment they became the San Francisco Giants.  They only ceded it when the A's entered the territory, but then got it back when the A's ceded it back.  If the A's don't want to pay that, they could instead move to another unclaimed territory and avoid the fee, that is how the MLB relocation game is played today.  

For example, the Nationals gave the Orioles around $50-60M in concessions in order to play in Baltimore's territory.  The Giants can't do anything about Oakland, since they got that territory now, but if the A's want to move down to San Jose, they should pony up similar amounts of money (plus inflation, baseball-style, at roughly 10% per year) for the right to move within the Giants territory once again.  It has been 6 years since that deal was struck, so we are talking about something in the $100M range.

Not Even Close

Purdy ends with the suggestion that it would be better for Giants fans in the South Bay to be able to attend Giants-A's games in San Jose than to visit the World Series Trophy.  Is he crazy?  I would rather visit multiple Trophies than to ever attend a single Giants-A's game in San Jose.  The key, for me, is that if the A's pay the Giants the money they want, then the Giants will be able to afford to win multiple World Series Championship trophies. 

Those young pitchers don't pay for themselves (well, sort of, in that they probably draw bigger crowds on the road and full houses at home, but you know what I mean).  But if the A's give the Giants something in the $100M range, they will be able to afford to keep Lincecum, Cain, Posey, Bumgarner, Sandoval to the latter part of the 2010 decade, which would enable the Giants to possibly win multiple World Series Championship Trophies to add to their 2010 World Series Championship Trophies (never gets old...). 

If the Giants can keep that core together, they will have a chance to add multiple, but that will take money, whether Neukom sells more shares in the Giants to raise money, sell the team to a tech billionaire who can spend a lot of money, or enforce his team's rights to the South Bay area and get a relocation fee from the A's.

Put Up or Shut Up Time

I can understand Purdy's and other San Jose baseball supporters' frustrations with the relocation process.  Wolff, now in his mid-70's truly might not make it to see the move happen.  But it all boils down to money, and the A's, at the moment, are not willing to pay the Giants enough to make them move off their position right now.

Many, like Purdy and others, seem to feel the South Bay should not rightfully be in the Giants possession, but a proper evaluation of the ownership of territory over the history of the Bay Area shows that the Giants should have had ownership of the territory for the entirety of their existence in San Francisco.  For that right, the A's should pay the going rate for such a move, which any other team would have to pay had they decided to do the same; the Nationals give the most recent example of what the going price is.

MLB baseball should be playing the mediator in this case, and work out the money details, like they did in the Orioles-Nationals case, but has been dragging its feet.  Perhaps Selig is still mad at his former college roommate for some slight?  (Wolff and he were college roommates, or something like that)  I had originally thought that relationship would favor Wolff, but if anything, Selig is taking a hands off approach, perhaps to show that he is not playing favorites.  Or maybe Wolff has been opposed to paying any money.

And payback is a bitch, sometimes.  Maybe the Giants don't want to play nicely.  Perhaps the A's should have been nicer to the Giants all those years when they were daunting their rivals with billboards pointing out the San Francisco Giants' lack of World Series championships.  Perhaps they should not have targeted the Giants negatively in their TV commercials ads.  They certainly could have ruffled the feathers of some of the Giants front office with their in-your-face advertising, and if so, the Giants front office would then not mind seeing the A's twist in the wind right now.

In any case, as all things in business, it comes down to Dough-2Give-2Me, and the A's hasn't been singing the right tune yet to the Giants ears.  I bet part of the slowness of the A's to realize this is because they are hoping beyond hope that since the A's "gave" the Giants the South Bay rights, they might be able to just take San Jose without paying anything.  Baseball dragging their feet suggests that this position is folly, and that the Giants rightfully own the territory, and the sooner they come to their senses and start negotiating with the Giants for the rights, the sooner they will call San Jose home.

6 comments:

  1. I did manage to read the Mercury News article, and I think you summarized it well. It was a bit... whiny. But, as the article did concede, and you elaborated on, was that the Giants are holding all the cards.

    One forgets that the A's already DO have a territory - Oakland. And a stadium, that despite its hideousness, that works quite well as a stadium. People can go watch games there and everything.

    When the Giants were faced with a less-than-ideal stadium, they built one. In San Francisco, obviously their territory. If one wants to fault anyone, one can fault Charlie Finley for locating to Oakland in the first place. It's not the Giants' problem that the A's can't find a suitable location for a new stadium.

    I can't see how the A's have inherently more right to San Jose; that argument seems to be built on the excuse of a lack of a viable alternative. It seems obvious to me that the Giants would lose (perhaps sizable) income from the A's setting up shop in San Jose, which also seems to be the reason why there are territorial rights in the first place.

    Baltimore/Washington is an obvious example, but a better one might be NYC. It seems population-wise (and as evidenced by revenues) that New York could support three major league teams. But it seems preposterous that the Mets and especially the Yankees wouldn't expect a fortune in exchange for allowing another team in. A billion? Who knows. But for all the carrying on about the evil empire or the Mets' ability to waste money, they own that territory (and the fortunes) because the Giants and Dodgers left. This was not engineered by the Yankees.

    Reductio ad absurdum, I know, but I've always viewed San Jose as effectively (or potentially) split down the middle for both teams. That the A's cannot produce a comparable product in a more conducive setting does not equal the "right" to take possession of a very large city equidistant from the two current locations without proper compensation. Especially as San Jose would be handing them the land, $100 million doesn't sound like much to me.

    ReplyDelete
  2. Very nice take and understanding of the history of the Giants and A's in the Bay Area. I do however have a couple of points to add. The first is pure business 101 and the second is mainly Politics 101.

    1) The last transfer of territorial rights between the Giants and A's that re-established Santa Clara County as Giants exclusive territory occurred under previous ownership groups before either current ownership group took control. How or why this happened is not relevant to the rights of the current ownership groups. When the current ownership group of the A's purchased the A's the price they paid was for a territory that did not include Santa Clara County. When the current ownership group of the Giants purchased the Giants the price they paid was for a territory that did include Santa Clara County.

    2) Neither the commissioner nor his committee have the power to make a transfer of territorial rights. They have some influence but no power. The power to do this lies with the owners of the 28 non bay area MLB teams. It takes 23 of MLB 30 owners voting in support transfer territorial rights from one team to another. Thus the A's have to get the support of 22 of the 28 non bay area owners since they clearly will not get the support of the Giants. The A's simply do not have the votes and are not likely to get them as the likely loss in revenue to the Giants from such a transfer would result in a loss revenue for the other 15 NL teams that get away revenue from the Giants every year. The A's likely have the votes of the other 13 AL teams but they have to woo 9 of these 15 other NL teams to win the vote.

    I draw a different conclusion from this then you. The A's can not and never will be able to afford to pay the Giants for the rights to Santa Clara County. Silicon Valley is the financial center of the Bay Area and it's corporate dollars are just worth too much to the Giants for the A's to afford the price.

    Therefore as long as the Giants maintain the political support of at least 7 of their fellow NL owners this will never happen. I fully expect the Giants to be able to maintain this minimum level of political support more then long enough to force the A's to choose to give up on moving to San Jose.

    ReplyDelete
  3. Great summary OGC! I don't have anything to add, just a big thumbs up.

    ReplyDelete
  4. It will come down to money as you say.

    Visiting teams will get more from San Jose sell-outs (securing all the AL team votes), and all the small revenue NL teams will vote yes because they will then divvy up the money the A's will no longer receive.

    Furthermore, if NL teams think an A's move to San Jose might hurt the Giants attendance or Luxury Box revenue, it would be in those teams' interest to facilitate the move and hurt the Giants financially.

    ReplyDelete
  5. El, You clearly do not understand business 101. The other NL teams are the giants business partners. The competition is not financial it is on the field only. When it comes to the business of baseball the vote the economic interest and do not compete to hurt each other.

    ReplyDelete
  6. The competition is not financial it is on the field only.

    Really?

    You shouldn't have to look too hard to see that finances affect the product on the field. It will be a happy day for Giants fans when the the other NL teams chip in to help the Giants re-sign Cain and Timmy.

    ReplyDelete

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