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.