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Keeping Giants in San Francisco doesn't add up

Published Oct. 12, 2005

Experts agree: Without a new stadium to replace cold, windy Candlestick Park, major-league baseball in San Francisco just won't cut it financially _ not this year, not any year.

The economic future of the Giants has to be a concern of the San Francisco investors, who have been asked to increase their $95-million offer to one closer _ or equal _ to Tampa Bay's $115-million deal. And according to a number of baseball economists who have studied the cross-continental tug-of-war for the franchise, they probably don't like what they see.

"I find it unbelievable that anyone would pay $115-million _ or anything even remotely close to that _ to keep the club in San Francisco without the guarantee of a new ballpark," said Gerald Scully, author of The Business of Major League Baseball (University of Chicago Press, 1989). "And that's only part of (the Giants') problem. There's also the matter of the Oakland A's being out there."

"They simply don't have the support out there," added Dean Baim, associate professor of economics and finance at Pepperdine University. "Whether it's because of that dreadful stadium or their mediocrity or the presence of the Athletics, it's hard to say.

"But Candlestick certainly contributes to the problem and will continue to do so as long as there's no assurance that it will be replaced."

A Tampa Bay group has bid $115-million for the team with the goal of moving it to the Florida Suncoast Dome in St. Petersburg. A San Francisco group has countered with a $95-million offer _ and was told last week that would not be enough. San Francisco's response to that request is expected at a meeting with baseball officials Tuesday in Chicago.

Bud Selig, chairman of baseball's Executive Council, has indicated he favors keeping the team in San Francisco if it is financially feasible. But without a new ballpark, the experts say, San Francisco's numbers can't match Tampa Bay's.

"Anyone who thinks (baseball) is not a business hasn't been watching very closely for the past 25 years, and from a financial point of view, to me it's a very clear decision," said Charles Link, labor economics professor at the University of Delaware.

"It seems absurd to force (Giants owner) Bob Lurie to take a financial bath in order to keep the team in San Francisco," Link said. "And $15-million, even for someone like Lurie, is a lot of money."

The Giants, the Tampa Bay group, even the potential San Francisco investors agree that the team would be worth as much as $15-million more as a Tampa Bay franchise. Scully concurs.

"There's no reason to believe their attendance out there (1,560,998 in 1992) will be any different next year," Scully said. "With an average ticket price of about $10, that's $15-million in revenue. Their local broadcast rights (television, radio and cable) bring in about $6-million and the national TV contracts (with CBS and ESPN) are worth about $14-million. Add in concessions, about $5-million, and throw in another $5-million for everything else and their revenues are about $45-million.

"My guess is that putting a club with similar quality _ and there's no reason to believe it won't be mediocre next year, too _ in Tampa-St. Petersburg will mean about 2.2-million in attendance, conservatively speaking," Scully said. "The local broadcast rights could bring in about $11-million, the national TV contracts are the same ($14-million) and concessions are worth about $8-million. Throw in that extra $5-million for everything else again and you're at $60-million in revenues (in Tampa Bay).

"They're just not worth keeping in San Francisco. It was fine when they were the only game in town, but when the Athletics moved in (in 1968), it destroyed that area for the Giants. It's clear one of those teams has to move," Scully said, noting that the A's, the American League West champions, drew 2,494,160, their fifth consecutive 2-million-plus year, and that the Giants have managed just one 2-million-plus season in their 35 years in San Francisco.

San Francisco Mayor Frank Jordan, in his pitch for a new downtown stadium, has said the Giants are worth $30-million a year to the local economy. Neighborhood opposition groups asked Baim, the Pepperdine professor, to verify Jordan's figures. He said they just didn't add up.

"The way (Jordan) went about calculating it was inaccurate and I'd argue it's a vast overstatement," Baim concluded.

He said a major-league franchise affects the local economy three ways:

Game-day expenses. "People buy tickets, buy beers, buy hot dogs. That's a "replacement' expenditure," Baim said. "If the team's not there, they'll go bowling or to a play; they'll take money from one entertainment and use it for another."

Ancillary spending. "Local people might stay in town after work and eat at a restaurant before going to a ballgame. A team with a regional following might have people staying at hotels for several games. That's big in the Midwest," Baim said. "Try to get a hotel room in downtown Cincinnati when the Reds are in town and everyone's coming in from the provinces. The Giants don't have that kind of regional following _ and the stadium's 15 or so miles down the road in a residential-industrial park area. Not many hotels or restaurants there."

A change in the city's perception. "Becoming "major league' can have an impact on corporate locations, where people want to live," Baim said. "But San Francisco is still going to be a big tourist area and one of the great cultural centers of the West Coast, even if the Giants leave. I don't think too many people visit San Francisco to go to a ballgame."

Baim said Jordan's financial people came up with its $30-million figure this way: They took the Giants payroll, about $26-million, and called it income directly attributable to the Giants. They halved it (half is paid while the players are on the road), "then took that $13-million and did some math with multipliers, saying every dollar is going to be spent two times before it leaves the city, and so on," Baim said.

"But none of the players actually lives in San Francisco. Most live in Palo Alto, the East Bay (Oakland) and (places) like that during the season. (Only a few live in northern California out of baseball season.) So even if Jordan wants to call it "new money,' it leaves town as soon as the club writes the check. What difference does it make whether it's going to San Jose or St. Petersburg. That $30-million _ forget it," Baim said. "It's marginal at best."

Asked what benefit there might be to the Giants' remaining in San Francisco, and in Candlestick Park, Baim offered: "None that I can see of, except for contributing to the stability of the major leagues.

"Consider that over the past number of years the Giants have been rumored going to Toronto, to Denver, to San Jose, now to Tampa-St. Petersburg. That has to have affected team loyalty. Why invest some emotional capital in a team that's threating to leave? A new group of owners in San Francisco committed to the city for 30 years, committed to building a stadium and building a contender, you'd see a pickup (in attendance), at least at the outset. But that's all pure speculation."