August 28, 2013
It's Not About Vanity, It's About Valuation
The proposed Warriors Arena to built upon San Francisco's Pier 30-32 isn't a vanity project, it's a shrewd financial move on the part of the team's ownership.
As a plugged-in reader notes, while the Warriors franchise was purchased for $450 million in 2010, the value of the franchise has skyrocketed since announcing their planned move and new San Francisco arena with a recent deal to sell a minority share of the team to Silicon Valley venture capitalist Mark Stevens implying an $800 million valuation.
Putting aside the issue of whether or not the proposed location is appropriate, the new arena would be a boon to the City of San Francisco, but not nearly as much as to the team. And yet the City seems to have been negotiating with the Warriors from a position of weakness and promoting the project as a near act of charity to clean up the pier.
Okay, so perhaps it is a vanity project, just not on the part of the Warriors.
First Published: August 28, 2013 10:30 AM
Comments from "Plugged In" Readers
Would you expect anything less from Peter Guber and Joe Lacob? These guys know exactly how to make a lot of money.
Posted by: Zig at August 28, 2013 11:12 AM
Vanity. There are at least two other very excellent sites not to mention staying in Oakland. They want the water - period. All vanity. Great column by Ann Killion today. I am one resident who hopes Mayor Lee starts to pause on this.
Posted by: Grace at August 28, 2013 12:07 PM
Who cares? Why is SF so obsessed with figuring out peoples true intentions?
Does SF need an arena? Yes. Are there a small but very vocal bunch of NIMBY luddites that live in the immediate vicinity that are dedicated towards blocking the arena? yes.
Development isnt just a matter of moving things around to best suit the whims of whomever complains. The proposal is for piers 30-32, and thats where the development should go.
These people would be protesting the ferry building if it were proposed today
Posted by: Bob at August 28, 2013 1:55 PM
If the franchise has that much new value then the team can easily pay up the $50 MIL cost overrun on the pier structural work. when this building is built and leased out for 220 days per year the franchise will be worth ANOTHER $500 MIL.
Ego of the team whatever, Mayor Lee and SF do have leverage here, and if the arena doesnt open till 2018, so what? Mayor Lee will serve a second term, so theres plenty of time.
Dont underestimate the opposition to this. It is a mega-project and needs to be done right to succeed, and in SF thats not in a hurry.
Posted by: Louis at August 28, 2013 3:20 PM
…Mayor Lee and SF do have leverage here, and if the arena doesn't open 'till 2018, so what? Mayor Lee will serve a second term, so there's plenty of time.
So what? If the arena doesn't open until 2018, The Warriors have to find someplace else to play, that's what.
From the piece on Sunday:
An unforeseen complication, though, could force the team to play at least another year at Oracle Arena in Oakland or another venue.
That could be tricky for the Warriors, whose lease is up in June 2017 and whose decision to move to San Francisco has displeased East Bay officials.
Renegotiating that lease would involve striking a deal with the Oakland-Alameda County Coliseum Authority, which already wants the Warriors, if they leave as planned, to make up the difference on debt service payments for $140 million in bonds used to upgrade Oracle Arena that still have about $90 million in principal remaining.
If I were a member of the Oakland-Alameda County Coliseum Authority and sufficiently machiavellian, I'd be licking my chops at the opportunity to stick it to the ownership of the Warriors financially, to punish them for their hubris.
If The Warriors ownership can afford to fund a new arena in a new city, I'd be thinking, then they can afford to payoff the relatively puny $90M left in debt service payments on their existing area. Especially if they have to play there for another season after their lease is up.
Posted by: Brahma (incensed renter) at August 28, 2013 3:39 PM
The Warriors could also play in San Jose for a season like they did in the 1996-7 season while the Oakland Coliseum was renovated.
Posted by: Jake at August 28, 2013 4:01 PM
I've decided that by far, the best location in the city for this arena is on a site somewhere next to Moscone. Approach from 4 sides...access to hotels and convention space.
I think the city would gain more revenue, and we could dispense with the BS of it being used only 200 days a year - there would be no limit.
The rush to support the pier site, without even the slightest concession that it may not be ideal, and the summary dismissal of anyone who disagrees, is dismaying. There's a comment above that does just this.
Would be fun to put this on the ballot.
Posted by: Frank C. at August 28, 2013 5:57 PM
^Uh huh. Then the owners say "no thanks"
This is win win. The owners want iconic. The city wants the piers fixed, the fireboat station, the deepwater dock, and the new parkland. And an arena's tax revenue.
You just don't want to see it. Ok. It will happen anyway.
Posted by: Anon at August 28, 2013 6:03 PM
Also, gee, ya think turning a team from a laughingstock into a playoff team marquis free agents target, complete with lots of national media coverage, had anything to do with the higher valuation?
Posted by: Anon at August 28, 2013 6:29 PM
This reminds me of Don Fisher insisting the ONLY place for his museum was at the center of the historic Presidio "Parade". Guess what, we still get the art in a more accessible lication, and the Presidio remains the beautiful historic treasure it is.
There are plenty of locations better suited for the stadium, and I don't think dictating where something MUST be located works in San Francisco.
Posted by: Anon at August 28, 2013 7:03 PM
Why? What in the deal is similar? Other than your distaste for rich guys wanting to make deals they like? This is a "deal," with multiple give and takes. The city gains from the warriors deal. Apples and oranges. Not "This reminds me of what my navel looks like"
Posted by: Anon at August 28, 2013 7:18 PM
And it isn't a "stadium" !! It's an arena. Christmas comes early this website has some yutzes.
Posted by: Anon at August 28, 2013 7:29 PM
@bob... Actually the city does not "need" the arena. This is a nice to have and the city should decide where they are willing to have it. Piers 30 and 32 are not the best location for the city. Actually civic center has been identified as an even better solution. Good transit in an area that really needs to be developed - not as sexy but good for the city. And stop jumping on the NIMBYS...
Posted by: Grace at August 28, 2013 7:34 PM
@anon re: Fisher totally agree! And it is not like these billionaires are putting up all the money for this site. They want the city to pay for it! forget it!
Posted by: Grace at August 28, 2013 7:45 PM
But they are "putting up" the money, Grace. That's THE thing, in this one. Freaking uninformed brainwashed clowns on here man. Yikes..
Posted by: Anon at August 28, 2013 8:16 PM
Really looking forward to seeing Warriors games and concerts in a gorgeous, waterfront arena, and enjoying new, beautifully designed open space on a currently dilapidated set of piers! Count me enthusiastically in the "yes!" column.
As for those suggesting Civic Center, Moscone area, etc., . . . sorry, not being much of a computer game enthusiast myself, I've never played "Sim City," so I won't be joining in this round.
Posted by: Anon at August 28, 2013 9:23 PM
@anon I take exception to being referred to as uninformed. If you look at the finances in this deal the city is funding way too much of this development. I sit on several of the committees and I can assure you I know the details.
Posted by: Grace at August 28, 2013 10:00 PM
That isn't what you said, Grace. You said the billionaires weren't putting up their own money. They are. There's plenty of risk here ...your comment was uninformed. Sorry.
Posted by: Anon at August 28, 2013 10:15 PM
"But they are "putting up" the money, Grace."
They are? Are they compensating commuters for the impact of the loss of productive time that will affect both quality of life and income as a result of this project? I mean people who have to stand on Caltrain instead of sitting down and working on their laptops; people who are delayed by MUNI disruptions; people who will sit in their cars for additional periods in time in traffic jams without being able to do much. If all those people were equitably compensated for loss of productive time, maybe the sponsors of this project could be said to be "putting it up" but that's not likely to be the case. But, hey Anon, in case you think you can swing it, I'm used to about $200/h, but that's just base compensation, so it would probably have to be a bit more than that. Thanks in advance!
BTW, why is it that the most articulate argument any proponent of this project has managed to come up with has been "NIMBY! NIMBY! NIMBY!"? Sort of like coming from a 5-year-old child with the IQ of a 3-year-old.
Posted by: anonanon at August 28, 2013 10:25 PM
I agree ... the City's budget grew by hundreds of millions of dollars this year - not exactly a City like Oakland or San Jose where we're scraping for revenues for Christ's sake.
I doubt that the arena will land at Piers 30-32 because of air pollution/health impacts that will surely be a negative externality of the traffic congestion increases the venue will bring. I doubt Mayor Lee wants to murder me and my 6,000 or so neighbors in order to make these guys happy.
Go watch the July 22, 2013 BOS Land Use Committee meeting about MUNI's $250 million annual operating deficit just to get to a "State of Good Repair" for the current services. At some point, every Ron Conway will say, "This is bullshit and bad for San Francisco."
My question is who is going to run against District 6 Supervisor Jane Kim who will take a firm stand against harming the health of SoMa residents by placing an arena on Piers 30-32?
Go look at the Port's 10-year Capital Plan ... $79 million a couple of years ago projected to totally fix Piers 30-32. I'm guessing it would be $50 million to demolish it .. that's more than twice what it cost to demolish/remove remnants of Piers 34 and Pier 36 and to build the Brannan Street Wharf. Go ahead and put two hotels and a condo tower with some retail on Seawall Lot 330 .... $50 million just from a 2013 assessment of that property, most likely .. and then a decent $2 million or so per year in IFD tax increment ..... heck, you can probably build a little park in place of Piers 30-32.
I totally agree... the City doesn't need this, shouldn't be acting like it is some kinda charity case, and I think the fact that the former head of the Mayor's Office of Economic and Workforce Development Michael Cohen is the guy negotiating the deal for the Warriors - and is negotiating with his former direct report on the side of the City should make everyone uncomfortable just for the appearances of funny business (not to say any funny business is going on.... ) Just sayin'...
Posted by: jamie at August 28, 2013 10:58 PM
I love how Frank C and Grace "have identified" better locations, by stating "Civic Center" and "near Moscone". Give us specifics! Are you saying that the city should use eminent domain to clear some space? Which buildings should they demolish? Do you know that these owners would be willing to sell or at what price? An arena is larger than a single north of Market block, so Grace, are you saying that the city should close a road permanently? Bury the road under the arena?
You two "have identified" the better options, so tell us more!
Posted by: anon at August 29, 2013 8:04 AM
Yeah, that's rich. But anonanon's hypothetical repayment by the city for all the precious working hours he's positive that an arena geared toward evening and weekend events will extract is also comedic gold.
There are plenty of arguments for it other than "anti nimby": rebuilding piers, deepwater dock, fireboat pier, parkland, arena, public space. But it all pales in comparison to the hirror, the horror, of an imagined 18k capacity arena's traffic armageddon. Repay the man! 200/hour!
Posted by: Anon at August 29, 2013 8:45 AM
I'm seriously doubting the arena will get built on the pier. There will be a ballot referendum, which will pass, that stipulates the city won't pay (in the form of credits, tax breaks, etc.) a penny of the ~$250 million in pier repair costs and 13% interest. That is even more true on a proctect with billionaire owners that own a franchise which has increased in value by hundreds of millions of dollars.
And a few years from now we will be in the middle of the next recession and funding will dry up. This is the Pier 30-32 cruise terminal redux.
Posted by: anon at August 29, 2013 9:05 AM
"I doubt Mayor Lee wants to murder me and my 6,000 or so neighbors in order to make these guys happy."
Unbelievable amount of hyperbole and hysterics here.
There is absolutely zero point in engaging with anyone who equates building an arena with "murdering 6k people"
Posted by: Bob at August 29, 2013 9:59 AM
I'm just sorry the Warriors and Giants parted company. Early on they were working on a plan for an arena just south of ATT Park in Parking lot A (in front of Pier 48). There was to be an arena, retail restaurant district and a peewee baseball field plus the renovation of Pier 48 into an exibition hall. Sort of like the entertainment complex around Staples Center in LA. It could have been a great new entertainment/sports complex with ATT Park, and The Arena.
There have been suggestions that the arena be built on Pier 50, on the water like Pier 30/32, but close to Muni, Caltrain stops and in an area less congested than the Pier 30/32 area. If Mayor Lee feels this is his legacy project, he should sit the Warriors and Giants owners down and sell them on a idea that would be a great new entertainment/sports district rather than the boring extension of Mission Bay the Giants are now proposing since they stopped working with the Warriors.....too many big egos that are too greedy to see what's best for themselves or the city
Posted by: e flat at August 29, 2013 10:01 AM
You're so wrong, Bob.
Building an sports arena is *exactly* the same as mass murder.
That being said, I don't really care if it's built. But don't spend a dime of our money on it.
Posted by: SFRealist at August 29, 2013 6:18 PM
There will be a ballot referendum, which will pass, that stipulates the city won't pay (in the form of credits, tax breaks, etc.) a penny of the ~$250 million in pier repair costs and 13% interest.
Right. So the city has a pier which is rotting away, but let's pass a ballot measure to make sure that the city never spends a penny to repair that pier. Because everyone knows that the hallmark of a great city is the degree to which it can leave parts of itself to rot. As long as no one makes any money off it (apart from well-connected contractors, of course), or-- worse yet-- it actually attracts significant numbers of people. Traffic is the worst.
PS: let's tear down Coit Tower. It's creating way too much traffic. Totally unacceptable.
Posted by: Alai at August 29, 2013 11:16 PM