milestone 3

Milestone 3: Financial Analysis

John Gomez

Sport Management Capstone

Milestone 3: Financial Analysis

SPT 700

Dr. Janet Howes

June 20, 2021

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Milestone 3: Financial Analysis

Team Finances Overview The Oakland A’s are in a unique situation financially. The organization has the third

lowest amount of revenue (as of 2020) in Major League Baseball (MLB) with $104 million. The

team ranks eighth in terms of operating income at -$40 million. While operating at a loss is

expected in professional sports, the team’s lack of income does not compare to the New York

Yankees, whose operating income is -$190 million, though it should be noted that the drastic

reduction in operating income is due to the COVID-19 pandemic [ CITATION The \l 1033 ].

The team has seen $104 million in revenue as of March 2021. Their player expense has

seen a serious decline from 2020’s $111 million to 2021’s $48 million, though this is not

surprising as the A’s have only been above the 25th percentile in baseball salaries four times since

2000 [ CITATION Ray18 \l 1033 ].

The franchise is currently valued at $1.125 billion, tanking them 26th out of the 30 MLB

teams. This figure has been steady since the team’s value increased after the 2017 season

[ CITATION For211 \l 1033 ].

[ CITATION

For211 \l 1033 ]

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Milestone 3: Financial Analysis

Capital Requirement Estimates

The A’s have shared plans for a new, 34,000-seat waterfront stadium to be built at

Oakland’s Howard Terminal. The stadium would be privately financed and include a mix of

housing, offices, restaurants, retail, small business space, parks, and a public gathering space

[ CITATION MLB1 \l 1033 ].

The ideal location in Vancouver for the A’s to build a new ballpark would be the Jericho

Beach area of the city. The Howard Terminal project would fit in this area and allow the team to

retain the plan to have a waterfront ballpark.

In May of 2021, the A’s estimated that, if fully built out, the entire project would cost

around $12 billion. They also estimate the project would create upwards of 35,000 jobs and

generate $7 billion in revenue for the city over the lifetime of the facility [ CITATION Dan21 \l

1033 ].

The team is expected to privately finance the stadium and surrounding development but

would need upwards of $855 million from the City of Vancouver for infrastructure projects like

roads, sidewalks, and transportation improvements [ CITATION Dan21 \l 1033 ]. That money

would likely come from the city’s tax coffers. Generally, cities that provide tax funds for new

stadiums typically pull those funds from their hotel/motel taxes or rental car taxes. While some

opponents would say this money should go elsewhere, like affordable housing, proponents would

say that the money is coming from tourists visiting the city.

The team has also committed to pursue a community benefits agreement that would

address concerns about affordable housing and the effect of displacing residents near the stadium

and development site [ CITATION Dan21 \l 1033 ].

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Milestone 3: Financial Analysis

Odds of Success

The odds of the A’s relocating are higher now than they have ever been. The team been

given the greenlight from MLB to explore moving to another city. While the team has a lease to

play in their current home, RingCentral Coliseum, until 2024, MLB is said to be unhappy with

the progress of negotiations between the A’s and the City of Oakland [ CITATION Ste21 \l

1033 ].

The City of Vancouver has come up in many articles and conversations when the topic of

MLB expansion or relocation is discussed. The city already has a popular Minor League Baseball

(MiLB) team in the Vancouver Canadians, and if the A’s relocate it could lead to the Canadians

team folding or relocating to another city, although they could also become an A’s affiliate club.

There would be about 3 years, while the stadium is constructed, to work out those details.

Economically speaking, there would be a net positive impact on the city. Vancouver has a

large number of Seattle Mariners fans that would likely convert to A’s fans if the team were to

call Vancouver home. Regionally, 142 miles separate Vancouver from Seattle, and with a few

smaller cities in-between, the team would draw interest from potential fans. Those fans would

have a direct impact on the economy of Vancouver as they would travel there specifically for A’s

games. Those fans in the Canadian regions outside of Vancouver would also have a positive

impact on the city’s economy as fans might decide on short notice to attend a game at that shiny,

new ballpark.

MLB teams that build new ballparks see an increase in their team valuations. An

excellent example of this is the Atlanta Braves. Their new ballpark opened in 2017, and since

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Milestone 3: Financial Analysis

then the team’s value has increased 4% from $1.2 billion in 2016 (the year prior to the stadium

opening) to $1.875 billion as of March 2021 [ CITATION For02 \l 1033 ].

The overall effect of the A’s moving to Vancouver would be positive for both the team

and the City of Vancouver. The city would have its sought-after MLB team and the notoriety that

comes with it, the economic windfall, and increase in tourism. The A’s would get their new

stadium and mixed-use development, increased revenue, and a new fanbase.

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Milestone 3: Financial Analysis

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Milestone 3: Financial Analysis

References Forbes.com. (2021, March). #26 Oakland Athletics. Retrieved from Forbes.com:

https://www.forbes.com/teams/oakland-athletics/?sh=4cc2e0926ac8

Forbes.com. (n.d.). The Business Of Baseball. Retrieved from Forbes.com: https://www.forbes.com/mlb-valuations/list/#header:operatingIncome_sortreverse:true

Gardner, S. (2021, May 11). Athletics threatening to leave Oakland if city doesn't approve new MLB stadium. Retrieved from USAToday.com: https://www.usatoday.com/story/sports/mlb/athletics/2021/05/11/mlb-gives-oakland- athletics-permission-explore-relocation/5041589001/

MLB.com. (n.d.). Oakland Ballpark at Jack London Square. Retrieved from mlb.com/athletics: https://www.mlb.com/athletics/oakland-ballpark/project-details

Moran, D. (2021, May 25). Oakland’s Baseball Future Hangs on a Waterfront Stadium Deal. Retrieved from Bloomberg.com: https://www.bloomberg.com/news/articles/2021-05- 25/is-oakland-willing-to-take-a-swing-a-new-ballpark

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Milestone 3: Financial Analysis

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