Post by TheShadow on Oct 28, 2004 15:38:59 GMT -5
www.oaklandtribune.com
County controller paints bleak picture of Oakland venue's financial future
By Paul T. Rosynsky, STAFF WRITER
OAKLAND -- Even if Oakland Raiders fans spend thousands of dollars to repurchase personal seat licenses that expire after next year's football season, the Oakland-Alameda County Coliseum complex would continue to be almost $100 million in debt.
And if the reselling of the licenses is a failure, the complex would end up paying more for interest each year than the principal on the $200 million loan secured in 1995 to bring the team back.
The bleak financial forecast by Alameda Coun ty Controller Pat O'Connell was revealed Wednes day during the Oakland-Alameda County Coliseum Authority's yearly strategic planning session.
And it showed, as many already knew, that the reselling of the unpopular PSLs must be a suc- cess if the city and county want to end their almost $20 million yearly subsidy to the complex. The licenses are required for fans who want to purchase season tickets.
"It is finally clear what the implications of a successful remarketing campaign are," said Oakland City Councilman Danny Wan (Grand Lake-Chinatown), an authority member.
When the Raiders returned to Oakland from Los Angeles in 1995, top city and county leaders suspected fan support would be so overwhelming they could force fans to rebuy their licenses in 10 years for 75 percent of the original cost.
In addition, those projections called for the debt to be completely paid off after the first 10 years. As a result, revenue earned during the remarketing campaign was to be a profit for the city and county.
Unfortunately for the Raiders, government officials and taxpayers, the support failed to materialize. County and city residents were left an almost $20 million annual bill to pay off a loan secured for the refurbishing of the Coliseum.
It resulted in the team not being able to sell out home games and in a $34 million jury verdict against the Coliseum during a trial last year in which the Raiders won the money.
The failure is also playing havoc with the authority and team's attempts to resell those licenses. Fans are realizing it's cheaper to buy single-game tickets to premier games than season-ticket packages, which include games fans are unwilling to watch live.
Changing that attitude and creating a demand for the new PSL, however, is essential for the authority to begin paying down its original debt, authority members said Wednesday.
But attracting other events to the complex is also essential to make the complex the financially profitable venue promised to taxpayers when it was refurbished more than 10 years ago, members said.
In addition to learning of their financial status, authority members discussed how to get more from the Oakland Arena and what financial impact would result if either the Oakland A's or Raiders left their home.
Bringing more events to the Arena would help the authority raise funds since it reaps all the financial benefits from those events.
Unlike events held in connection to the three professional sports tenants, all revenues earned during other events held at the complex go to the authority.
But higher labor costs and other fees placed on promoters who put on shows at the complex make it uncompetitive in the Bay Area, said Mark Kaufman, general manager for the complex and employee of SMG, a company hired to run the venue.
"There is not a mechanism in place to promote other events," Kaufman said. "To make a long story short, we are dealing with challenges that prevent us from booking the (arena) to its potential."
To counter the higher expenses, Kaufman suggested and authority members agreed, to create a $250,000 marketing fund. That money will either come from a $2 million contingency currently in the authority's budget or from the city and the county.
It will be used to either give promoters incentives to host events at the complex and help the authority put on its own events.
"I'm fully supportive of that and I think it solves some of the problems we have around here," said Alameda County Supervisor Scott Haggerty, an authority member.
Added Robert Brown, an authority appointee, "Anything we can do to have more shows at the arena we need to do."
As for having either the A's or Raiders leave the complex, authority members learned it could be a financial benefit.
An analysis conducted by SMG showed the authority would save about $2.7 million in operational costs should the A's leave the complex.
Since the team only pays about $500,000 in rent, the costs for putting on a baseball game at the stadium far outweigh the profits made, the analysis showed.
Some authority members, however, criticized the report since it failed to take into account a naming rights deal. The authority earns more than $500,000 a year or sales taxes generated through the sale of merchandise and concessions during a baseball game.
It also fails to consider jobs created by having baseball in the stadium and advertising revenue earned from giant billboards placed on Coliseum property near Interstate 880.
"I think there should be some caution of coming to a conclusion like this," Wan said. "This is strictly internal operating costs ... but you have to look at the tax revenues, the goodwill, business and all that other stuff."
A similar analysis conducted for a Raiders move out of the Coliseum said there would be about $2.8 million in savings.
However, that analysis failed to take into account money earned through the sale of PSLs, advertising and naming rights.
"This analysis seems to say that we should kick out the A's and the Raiders," authority appointee Sherman Balch said with a laugh.
Wan, however, was more serious.
"I would not draw that conclusion," he said sternly.