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Oakland needs big money to build new stadiums

Posted August 4, 2014

By Will Kane - San Francisco Chronicle

All Oakland needs to keep the A's and Raiders in the city is good sportsmanship - and at least $1.75 billion.

While both are hard to come by, another essential piece seems sealed: For the first time in years, both teams appear committed, at least on paper, to building new stadiums to replace the aged O.co Coliseum just east of the Oakland airport that both teams now share.

The A's, after years of having one foot out the door to nowhere, are about to cement a deal to play in Oakland for another 10 years. The agreement requires the team to participate in "good faith negotiations" to build a new ballpark.

The Raiders, despite occasional threats to flee to Concord or San Antonio - most recently last week - are in talks with developers convinced they can build a profitable new football stadium near the old one.

"Things are much better than 3 1/2 years ago," said Oakland Mayor Jean Quan, who is running for re-election in November and has told voters to judge her tenure in part on whether the teams stay in Oakland. "We have a lease extension (for the A's) and we do have the third-largest real estate company in the world," Colony Capital LLC, negotiating with the city to build a Raiders stadium and a surrounding hotel and condo complex.

Daunting task

But Oakland faces a daunting task to build the stadiums. It needs at least four big checks and plenty of cooperation.

Consider:

-- A new Raiders stadium is expected to cost roughly $1 billion. A new A's stadium could run $400 million to $600 million.

-- It will cost at least $150 million to tear up the sprawling O.co Coliseum parking lots to build the new streets, water pipes and sewers needed to lure hotels, condos and restaurants that will help subsidize the stadium.

-- Roughly $100 million is needed to pay off the bond debt still attached to the Coliseum after the city and Alameda County paid for major upgrades in 1995. And everyone in the mix - city officials, county officials and team owners - is fighting with someone. If they don't learn to get along, one or both teams could still leave the city.

What public can pay for

Quan told The Chronicle on Thursday that she would not divert money from police, libraries or potholes to help pay for a new stadium.

"I always knew that the taxpayers would not pay for any new sports stadiums," she said. "I don't think anybody wants to pay ... any money out of the general fund."

But Quan said taxpayers could pay for surrounding amenities - like a parking garage - where revenue would help pay construction costs.

Taxpayers in several other cities - including in Santa Clara, where Levi's Stadium is due to open this season for the San Francisco 49ers - have been stuck with significant portions of the bill for new stadiums.

Santa Clara taxpayers are paying 12 percent of the nearly $1 billion price tag for Levi's through taxes, utility fees and revenue bonds, according to a 2011 report by Convention Sports and Leisure International, a company that helps investors develop sports stadiums.

In Dallas, taxpayers paid 37 percent of the $1.2 billion AT&T Stadium, which opened in 2009, the report said. And in Indianapolis, 86 percent of the $720 million Lucas Oil Stadium, came courtesy of public funding. It opened in 2008.

It isn't yet clear how Oakland and the developers will ensure that both stadiums are built entirely with private funds. Colony Capital has partnered with Rashid Al Malik, a Dubai investor who is also deputy CEO of a multibillion-dollar aerospace firm.

Quan, however, said she would not elaborate on the funding.

"This is not going to be negotiated in public," she said.

In Oakland, passionate fans of both teams clearly want new sites. They say they adore the cheap, plucky spirit of the run-down Coliseum that opened in 1965 - until they have to shove aside fellow fans along the claustrophobic concourse to buy a beer, squint at the ancient scoreboard surrounded by tarped-off seats, or sit yards away from the action in grandstands designed for both football and baseball games.

Tired of Coliseum

The two teams have also made no secret that they're tired of playing ball in O.co Coliseum, the only field in the country where a professional football team and baseball team share turf.

A's infielders have to snag fouls on turf torn up by Raiders' cleats, while punters launch kicks on dirt that serves as the infield for the A's.

With modern, separate stadiums, owners are likely to increase ticket prices and lure corporate sponsors - but also, they hope, draw more fans to home games.

A's co-owner Lew Wolff was coy when pressed for details about how his team will raise the more than $500 million it will need to buy or lease land and build the new ballpark.

"We're studying that right now," he said, alluding to corporate sponsors who might buy naming rights to the future Oakland stadium or place huge ads near home plate.

Wolff insisted he is not looking for public funding. Instead, like other teams, he would aim to fund the entire stadium with private investment.

"I am going to do whatever I can, but I am more interested right now in getting through the season," he said.

Unlike Wolff, who has said he would raise the full amount himselfthe Raiders have pledged to raise just $200 million for a new stadium. The National Football League has pledged another $200 million, leaving the stadium project about $600 million short.

A Raiders spokesman declined to comment. While the team makes noise about leaving Oakland, it isn't clear that other cities want to host the team.

To make up the huge funding shortfall on the Raiders project, Oakland's plan to keep the team calls for large-scale development of hotels, condos and restaurants on the 800 acres surrounding O.co Coliseum.

Private developers would front the money and recoup their investments from profits. The rest would help pay for the stadium, which would be expected to draw people to the restaurants and hotels in the area.

Colony Capital, the developers for the Raiders' stadium, have until October, a year after they started, to reach a draft agreement with the city. Meanwhile, the hardest challenge might be persuading everyone to cooperate.

City, county own the land

The city and Alameda County share ownership of the land, meaning that both must approve any development, though they have a history of bitter disagreement about who should take the lead in negotiating with the sports teams.

And Wolff and Davis, who don't appear to talk to each other, would need to hash out where each team gets to build their stadium on the site.

Wolff has had a strained relationship with Oakland and was adamant that he would not partner with the Raiders or another developer to build a new baseball stadium.

"We're not going to be a tenant of anyone's - period," Wolff said. "That has nothing to do with the Raiders. The only way we can control our fan environment is to control our own destiny."

Quan, however, said she hoped the A's new commitment to stay in Oakland would thaw the relationship between the two teams.

"We've been trying to encourage them to talk to each other for a long time," she said. "I am fully committed to not pit one team against the other. I think people have to just understand that these are pretty complex negotiations."