Baseball Crank
Covering the Front and Back Pages of the Newspaper
March 8, 2012
BASEBALL: A's Losing The Real Moneyball

I generally avoid business of baseball stories, but I've covered this one for years and it remains extremely frustrating. Bill Madden and Maury Brown look at how the San Francisco Giants are using their 'territorial' rights to keep the Oakland A's stuck in the dilapidated Coliseum by refusing to let them move to the less economically depressed San Jose following the collapse of their plan (hatched in 2006, seemingly endorsed at the polls in 2008, but abandoned in early 2009) to move to Fremont.

Brown speculates that Bud Selig favors the San Jose move as a way to increase revenues around the league, but lacks the votes among the owners to strip the Giants of their veto power. Madden:

To strip the Giants of their territorial rights to San Jose would require a three-quarters vote of the clubs, and as one baseball lawyer observed: "Clubs would realize what a terrible 'there but for the grace of God go us' precedent that would create in which all of their territorial rights would then be in jeopardy." As an example of that, one can't imagine the Yankees, Mets or Phillies voting to take the Giants' territorial rights to San Jose away when it could conceivably open the doors for a team seeking to re-locate to New Jersey.

Brown echoes this: "If the A's get to relo to San Jose, what's to say that the Rays don't wind up in Northern New Jersey, next?"

This is always a concern about precedent-setting by majority vote, but the situations are not at all comparable, because the A's are already in the Giants' market and are trying to move 35 miles further away. There is simply no fairness or equity argument you can make, in that sense, for the Giants' position. The more sinister implication here is that the Giants are playing a game of brinksmanship in hopes of capturing the ultimate prize: kicking the already-twice-moved A's out of Northern California entirely (and maybe even out of MLB), so the Giants can scoop up their fans. It would be hard to come up with a scenario that makes the territorial-rights concept less sympathetic than that.

On the other hand, the Giants' owners have an entirely reasonable point that they paid for those territorial rights when they bought the team:

The Giants' territorial rights to San Jose are part of the MLB constitution as a result of former A's owner, Levi-Strauss heir Wally Haas agreeing to cede them in 1989 to Giants owner Bob Lurie, who, frustrated in his efforts to get a new stadium in San Francisco, was looking to relocate the team....

Lurie never did try to move the Giants to San Jose, but the fact that he now held those territorial rights to the rich high-tech Silicon Valley enhanced the Giants' value, and was a prime reason why Lurie, who bought the Giants in 1976 for $8 million, was able to sell them for $100 million in 1993 to a group headed by former Safeway magnate Peter Magowan. The San Jose rights were also the reason why Magowan was able to secure financing for the new ballpark in San Francisco, as the Giants now maintain the crux of their constituency - season box and suite holders - is from the Silicon Valley.

The A's note, in a press release quoted by Brown, that this is a case of no good deed going unpunished, and imply that they have some legal basis for challenging the continuance of the Giants' rights after they failed to relocate the team:

Of the four two-team markets in MLB, only the Giants and A's do not share the exact same geographic boundaries. MLB-recorded minutes clearly indicate that the Giants were granted Santa Clara, subject to relocating to the city of Santa Clara. The granting of Santa Clara to the Giants was by agreement with the A's late owner Walter Haas, who approved the request without compensation. The Giants were unable to obtain a vote to move and the return of Santa Clara to its original status was not formally accomplished.

Only baseball's longstanding antitrust exemption permits the existence of territorial rights in the first place; if the A's were mounting some sort of challenge, I assume they'd have to show that the extension of the rights were conditioned on moving the Giants, and given how much Magowan paid for the Giants and the argument that the team's value was significantly enhanced by its territorial rights, I'd be surprised if he didn't do extremely careful due diligence to determine that they were bulletproof.

In a logical universe, Selig would be able to organize a vote to strip the Giants of their veto power over the San Jose move in exchange for arranging financial compensation to the Giants ownership, perhaps to be paid in part by the A's and in part out of the revenue-sharing fund; the league could conceivably even assign a neutral arbitrator to assign a value to the compensation. This doesn't have to be a zero-sum game of chicken between the two Bay Area rivals.

Posted by Baseball Crank at 1:30 PM | Baseball 2012-14 | Comments (5) | TrackBack (0)
Comments

If the Giants were granted the area subject to their moving, it should have reverted back to the A's as soon as the move fell through.

Posted by: maddirishman at March 8, 2012 1:55 PM

The A's should have moved to Denver 30 years ago, but that's a moot point. There really shouldn't be two teams in the Bay area. My job takes me to San Jose on a fairly regular basis. This is by no means an empirical study on my part, but it always seemed to me that the majority of baseball fans in Silicon Valley are Giants fans. In bars and restaurants, people seemed to be paying attention to the game when San Fran was on, but Oakland games garnered little attention. Other than the Bash Bros. era, they've never finished in the top 3rd of league attendance, even when winning division titles. Since 1969, I think only Pittsburgh has drawn worse when winning.
Of course, there really is no where for the A's to move. Portland? Crank tweeted a good article last week discussing that town's "issues," so I think not. Charlotte or Hampton Roads areas perhaps, but neither have plans for a stadium that I'm aware of, let alone an actual MLB ready stadium.

Posted by: Mark D at March 9, 2012 10:59 AM

My two cents as a local guy:

Using Bill Veeck's "The Hustler's Handbook" as my reference, it is noteworthy to look at the contrast between NYC and LA when the Angels and Mets started out.

Since there was no history of an AL team in LA, Walter O"Malley was able to require the Angels to play in a a stadium with a seating capacity of around 22000 (Wrigley Field) in their first year, and then to require them to pay rent to the Dodgers and play only at Dodger Stadium for subsequent years until they got the ballpark in Anaheim built. Well, Walter O'Malley certainly understood finance better then Gene Autrey

Since there was a history of NL teams in NYC, the Yankees got absolutely nothing from the Mets. I am not, and never have been, a fan of anything Yankee, but in 1961 a precedent was set with the Dodgers and Angels. You could make an argument that the Mets' original owner (the sainted Joan Payson) inherits (or bought) territorial rights abandoned by Horace Stoneham and Walter O'Malley when they relocated.

Which brings us to the Giants and A's. Is anyone aware that when Charley Finley moved the A's out here from Kansas City, that Horace Stoneham asked for ZERO compensation even though he could have used O'Malley's deal as justification for a request of that nature? Possibly this lack of business sense could be attributed to due to his prolific drinking habits, but in any event, the A's were welcomed by the Giants at the time. Go figure.

If the Giants were granted SJ in the expectation that they would go there, a case could be made that once they did not exercise the option, it could be reopened for discussion. Obviously, current Giants ownership is far more financially astute than the Horace Stoneham. Also obvious if you live out this way is the clear geographical demarcation between East Bay (A's) and the peninsula (Giants). Take out your map and you'll see that SJ is pretty much close to a dividing line running north south across the bay, so it's hard make a choice either way.

As Mark D noted, outside of the days of the steroidal Bash Brothers, Stewart, Eckersley, Ricky Henderson and Tony La Russa, the A's have been a huge bust with the fans however geographically located. I'll watch them when the Giants are not on, but they've never gotten me very excited, and I'll never understand why. Lots of great baseball, but the Coliseum was destroyed when the raiders returned and Mt. Davis was constructed (destroyed the view of the Oakland Hills, and there is never a breeze at a day game unless you are seated in the upper level which currently is closed to baseball (again, go figure)

Conclusion: NorCal will support only one baseball team. We just like football better. Raiders, 49er's Cal and Stanford resonate in a way that A's rarely have, and the Giants did not do until the new ballpark replaced Candlestick. And...if they ever suck hopelessly for a five year stretch, these fairweather fans will cease setting attendance records.

Posted by: NRA Life Member at March 11, 2012 5:14 PM

If the A's move to San Jose, they must keep the "beer batter". Watching the seats empty out when the count runs to two strikes on the beer batter is great. Zack Wheeler cost the SJ Giants a lot of money last year. I think that's why they traded him. That's Sabean's only real defense.

Posted by: seamus at March 11, 2012 10:34 PM

In reality a place like the Raleigh-Durham area is overdue for a baseball team. The Braves will scream bloody murder but they are the only baseball team between Texas, Florida and DC and thats a massive swath of people who would probably flock to support a team in the Carolinas.

Oakland is a city with a lot going on for it (mostly because so many people are getting priced out of SF) and it happens to be part of the SF-SJ-Oaktown triangle but the A's are never going to be a super viable team because the Giants are the prestige team of Northern California and always will be.

Posted by: Will at March 15, 2012 10:16 PM
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