Post by TheShadow on Dec 16, 2004 17:07:16 GMT -5
www.sfgate.com
Oakland, Alameda County face bigger debt
Glenn D ickey, Chronicle Staff Writer
In the final year for the original Personal Seat Licenses -- sold in 1995 to finance changes to the Oakland Coliseum sought by the homecoming Raiders -- city and county politicians are scrambling to keep the debt from rising even higher.
Oakland and Alameda County now split a $20 million annual debt service. Documents produced by Stephens McCarthy Kuntzel for city and county officials and investment bankers called for an additional $54 million to be raised by re- selling the PSLs, but that's not likely to happen.
"I think PSLs are a very tough sell right now," Warriors President Robert Rowell said. "You can sell them only if you're moving into a new building or you're trying to lure a team from another area. The Giants could sell them because they were moving into a completely new park in an area where there was nothing much before.
"We decided not to do that (when the Warriors remodeled the Arena) because people driving by could only see the same shell of a building and didn't know what was going on inside."
It wasn't supposed to happen this way. In the euphoria over the Raiders' return in 1995, the crafters of the deal to bring them back thought they could issue PSLs for 10 years and then realize a windfall profit by re-selling them for the final six years of the Raiders' lease, which runs through 2011, at 75 percent of the original price. The PSLs ranged from $250 for an upper-deck corner seat to $4,000 for a 50-yard-line seat. Club seats were even more expensive: $10,000 for a seat on the 40, $16,000 for a seat on the 50. The only way to buy season tickets was to buy a PSL first.
The deal was overhyped, though, causing fans to send in multiple applications. One such fan was Mike Crowley, now the president of the A's but then working in San Jose.
"I had three buddies who went in with me on season tickets for the Sharks, and then we divided up the games," Crowley said. "We thought we'd do the same with the Raiders, but everything we read was that we had very little chance of getting season tickets. All four of us sent in applications, hoping one of them would go through. All four did, so we took one and discarded the other three."
When the Oakland Football Marketing Association (OFMA) workers started tabulating the PSL applications, they thought that the 63,132-seat stadium would be sold out. When all the duplicate applications and rejected credit- card authorizations were discarded, the total was only a little more than 31, 000. The break-even point to pay off the loan was $84 million, which would have been produced by 44,000 PSLs. Instead, the program brought in $56 million.
Now, the economy is down and the team is struggling, but the biggest barrier to re-selling the PSLs is that fans know they don't have to buy season tickets because tickets are available for every game, even the biggest ones; though the Broncos-Raiders game was a sellout, tickets were available until the day before the game.
Yet, interest in the team remains high in the East Bay, where vehicles frequently display Raiders stickers, and the Raiders last year sold more team merchandise nationally than any other NFL team.
Ann Haley, executive director of the Coliseum, previously worked with the Boston Celtics and with a marketing firm that worked with the New York Yankees, and she compared the Raiders to those two clubs.
"The Celtics and Yankees are 'brand names,' and so are the Raiders," she said. "There's a passion among Raider fans. I heard of one couple with the last name of Black who named their daughter 'Silver And.' I don't know how many Raiders fans are out there but I'm sure there are enough to sell out the stadium. We just have to find ways to do that."
"We need to be creative in our approach," said Gail Steele, chairman of the Alameda County Board of Supervisors and a member of the Joint Powers Authority (JPA). "We'll listen to any new ideas. The old ones don't seem to be working very well."
Any changes in the original plan would have to be approved by the city and county, as well as by the OFMA board, which basically means the Raiders, because they have four representatives on the seven-member board.
One new idea has come from Zenon Abraham, who prepared a massive documentation of the Raiders' deal while working in the office of then-Oakland Mayor Elihu Harris in 1995, and who now runs the Sports Business simulation business, www.sbs-world.com.
Rather than trying to re-sell the PSLs, Abraham would put a surcharge on ticket prices to Raiders games and a lesser one to other events at the Coliseum and Arena, including A's and Warriors game.
"The PSLs are a financial barrier to buying season tickets," argues Abraham. "This would spread the cost over a larger base.''
Abraham's proposal would put a surcharge of from $2 to $40 a ticket for Raiders games, based on the price of the ticket. There also would be a sliding scale for surcharges on Warriors tickets and Arena concerts, with the average at $7. Surcharges on A's tickets would be added only for the biggest games, such as when the Yankees or Red Sox come to town.
The A's and Warriors also would get money back, for marketing or, in the A's case, for a new ballpark if they need it under this plan, but Rowell and Crowley made it clear their teams would not go for the proposal.
"It's preposterous," Rowell said. "Our tickets already have a surcharge for arena improvements. We're not going to add another."
Crowley's language wasn't so strong, but he was just as adamant that the A's would not agree to surcharges on their tickets.
"The important thing for us is pricing our tickets right," he said. "I just think that this is such a competitive market, you can't afford to give anybody a reason not to buy a ticket."
(The Raiders would not comment on advice of their legal counsel because they are in litigation with Oakland and Alameda County.)
Even if the A's and Warriors are dropped from the surcharge plan and only the Raiders and other Coliseum events are taxed, Abraham's proposal is a good starting point for discussions on a plan that would drop the PSLs.
Mark Kaufman, who acts as general manager for the Coliseum as an employee for SMG, which operates the facility, says there are more than 260 events a year at the Coliseum and Arena; A's, Warriors and Raiders games account for roughly half that. The facility keeps all the revenue from the nonsports events, after deducting expenses and fees to entertainers.
At the yearly strategic-planning meeting of the Coliseum Authority, Kaufman said those events could be increased with the help of a $250,000 marketing budget. The proposal subsequently was approved by the JPA at its last meeting. "There wasn't anybody who didn't like the idea," Steele said.
Those discussing what changes need to be made in the approach to selling Raiders tickets repeatedly have talked of the Raiders selling their own tickets, though Steele said, "Every time this has come up in the past, the Raiders have said they don't want to do it." The Raiders are apparently the only professional team in the country that does not sell its tickets. The OFMA was given that responsibility with the '95 contract.
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