Monday, June 12, 2023

Joe Sheehan Newsletter, June 12, 2023 -- "Las Vegas Athletics?"

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The Joe Sheehan Newsletter: Las Vegas Athletics
Vol. 15, No. 49
June 12, 2023

We’re going to pause the division pieces for a day to head out to Carson City, Nev., where the Nevada Senate is holding its fourth special session since the official close of business last Monday. Today’s session, and in fact the last three, have all been in consideration of S.B. 1, the proposed funding of a new ballpark on the Las Vegas Strip for use by the Oakland Athletics. Steve Yeager, the speaker of the Legislature, posted an explainer about this process over the weekend.

Also over the weekend, the Las Vegas Review-Journal weighed in with a facts-light editorial encouraging the Legislature to pass the bill. This isn’t a surprise; the benefits of the bill, such as they are, would redound to Las Vegas and Clark County, rather than the state as a whole. Per Neil DeMause at Field of Schemes, the estimated public tab for the park comes to $500 million, though that could change before the bill goes final. That’s a big number for a relatively poor state, one that doesn’t rank highly in education or health care outcomes. Even at $500 million, it will be hard for the public to make its investment back, especially if spending at the new park largely goes to paying off the new park. Ballparks create lousy, part-time, seasonal, ill-paid jobs once construction is over, and almost anything else built on the Tropicana site will produce more revenue, and tax revenue for the state, than the new ballpark will.

With that all said, I have thought for a while that what we’re seeing is play-acting, and that in the end both the Senate and Assembly will pass the bill because it’s the path of least resistance. The votes will likely be close, but there’s a reason these deals are now done through state governments rather than at the polls: It’s easier to move politicians than people, easier to threaten politicians than people.

The thing is, this is not a good deal for the A’s. It leaves them paying a billion dollars for what is planned as the smallest park in the smallest market in baseball. The A’s have $775 million in funding for the Howard Terminal location, though that’s a more expensive project -- John Fisher’s mallpark dream -- that isn’t at the finish line. The city of Oakland is still open to negotiating with the A’s, and, per their site, says that “Oakland’s leadership remains confident that a new Waterfront Ballpark District at Howard Terminal is within reach.” If the A’s stay in Oakland, they split the tenth-largest media market in the country, as opposed to moving to the tiniest. The Bay Area is far wealthier than the Las Vegas area as well. Oakland is not a small market! Las Vegas absolutely is.

The current ugly state of the A’s is treated as immutable, when it’s actually just a moment in time. The A’s have often been the more popular team in the Bay Area. They regularly out-drew the Giants in the 1970s and 1980s, to the point where the Giants tried to move to Toronto (in 1976) and the Tampa Bay area (in 1992). The construction of the Giants’ Oracle Park and John Fisher’s decision to run the A’s into the ground created the current state of affairs. It is hardly etched into stone tablets. There is an upside to the Oakland A’s that is completely inaccessible to the Las Vegas A’s.

That’s locked in by a choice that remains the fatal flaw in the Las Vegas plan -- the size of the ballpark. Now, it’s a bad decision to move from Oakland to Las Vegas, there’s just no getting around that. Building a 30,000-seat park, however, is actually worse.

Think about where baseball teams get their money. National TV and streaming and other deals, money that’s shared equally. That will be the same for the A’s in Las Vegas as it is in Oakland. They get local revenue from TV and radio deals. The A’s current TV deal pays them $41 million a year. Baseball teams in markets closer in size to Las Vegas make as little as half that. I’ve referred to Las Vegas, in a baseball context, as “Hot Milwaukee.” The Brewers’ last TV deal paid them $23 million a year, and their new one pays them “significantly more” without any details I can find. (It’s also a Bally’s deal, so they may end up paid in scrip.) NHL TV and revenue data is harder to find, but this estimate pegged the Las Vegas Golden Knights’ eventual overall revenue in the lower half of the league despite their great attendance. I think we can confidently say that the Las Vegas A’s will have bottom-five, and maybe bottom-one, local-TV revenues.

That leaves the ballpark. If the A’s aren’t going to make money through a big local TV deal, they’ll have to do it by selling tickets and hot dogs and foam fingers to a city filled with potential baseball fans. The A’s Vegas plan addresses this by claiming that 30% of the team’s attendance will be tourists. Off a projected attendance of 27,000 a game, that’s more than 8,000 people from outside of Vegas showing up 81 times a year, every year. Marlins/A’s on a Sunday, when everyone’s flying home? 8,000 tourists. Angels/A’s on a Tuesday in September, both teams out of the race? 8,000 tourists. Giants/A’s in 2035, when the thrill of baseball on the Strip is long gone? 8,000 tourists. It’s a plan that has no basis in reality.

The math is where this fails. If you build a 30,000-seat ballpark, you need to not just average 27,000 tickets sold a night, you damn near have to make that your median. You’ve capped your upside but not limited your downside. If the team is good, you can’t sell a lot more tickets. For the games that might have a lot of outside demand, those first series in 2028 against the Cubs and Dodgers and Red Sox, you can’t sell a lot more tickets. For the World Series, you can’t sell a lot more tickets. The A’s are averaging 8,600 tickets sold this year, but they could fit 54,000 people into the park for a playoff game. The Las Vegas A’s won’t be able to do that.

Just look around the league. The Braves draw very well. They’ve sold anywhere from 28,000 to 43,000 tickets this year. The Orioles are a good example of the kind of mid-market team the Vegas A’s want to be. They’ve ranged from 9,000 to 45,000 this year. Those Brewers I keep referencing? Anywhere from 18,000 to 43,000. Every baseball team has getaway days, bad opponents, playing-out-the-string Septembers, and you make up for that by being able to fill a big building when times are good.

The only way the Las Vegas A’s work is to buck the trend of building smaller ballparks. The era of local-TV money carrying a team’s books is over. Baseball teams around the country are going to become more reliant on attendance, and no more than the team in the smallest TV market in the sport. If the A’s are going to succeed in Las Vegas, they have to take the path the Golden Knights did: Put a great product on the field, embrace being Las Vegas’s baseball team, not some tourist attraction, and try to draw 2.8 million fans a year.

I estimated, based on the Golden Knights’ attendance, that the A’s would draw 22,500 a game. That puts them below the MLB median, but not terribly so. Any chance the A’s have to succeed in Las Vegas hinges on pushing that number up, on getting the Vegas Valley excited about a baseball team that is theirs. The Golden Knights won out of the gate, reaching the Stanley Cup Final in their first season, and around the pandemic they’ve continued to succeed, quite possibly winning the Stanley Cup tonight. T-Mobile Arena seats 17,500, the eighth-smallest building in the NHL, and the Golden Knights played to 103% of capacity this year.

Moving a baseball team from Oakland to Las Vegas is a bad idea. Moving it into a 30,000-seat ballpark is a fatal one. Any Las Vegas ballpark has to be the first to acknowledge the post-RSN model -- attendance is key -- and give the A’s a chance to do what the Knights have done. Their new ballpark, wherever it is, has to seat more than 40,000 people, maybe 45,000, to have any chance to make the A’s more than a corporate-welfare case by 2038.

Truthfully, that may not even be enough. The Golden Knights had a honeymoon period and they used it to damned near win a championship and cement a generation of fans. The A’s honeymoon period will be spent playing outdoors in the suburbs in Las Vegas Ballpark, a Triple-A stadium with a capacity of 10,000. Whatever may happen in 2028, the A’s local revenues from 2024-27, with one year in Oakland and three in Las Vegas, will be the lowest in the sport, and their payroll will follow. (It’s unclear whether a Las Vegas A’s team would be fully eligible for payouts under MLB’s local revenue sharing plan, but its mere existence would distort those calculations in a way that makes me skeptical.)

The 2023 A’s may be the nadir of a rebuilding project, but looking at the organization, we’re a few years from a turnaround. So the A’s “honeymoon” will be spent losing 95 games a year under brutal conditions in a minor-league park, without any stars to connect with. It is very possible that by the time 2028 rolls around, the A’s will have burned off the goodwill their arrival generates.

If it’s going to work at all in the long term, however, it can’t be in a tiny park counting on visiting Tigers and Royals and Astros fans for its success. The Golden Knights are a model, and it’s the one the A’s need to emulate: Be the locals’ team, fill the park, and win.