Raiders deal is still a sore thumb for Oakland taxpayers
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Article Last Updated: Friday, May 23, 2003 - 4:17:52 AM PST
Raiders deal taps another $20M
East Bay taxpayers forced to subsidize loses mostly attributed to the team's return
By Robert Gammon, STAFF WRITER
OAKLAND -- East Bay taxpayers will have to cough up another $20 million next year to bail out the Oakland-Alameda County Coliseum complex, pushing the total public subsidy for the debt-plagued facility to $173.5 million since the Oakland Raiders returned in 1995.
The $20 million will be plucked directly from the general funds of the city of Oakland and Alameda County, delivering another blow to the public agencies, which both have staggering budget deficits of their own.
However, not all of the financial news provided Thursday by county Auditor/Controller Pat O'Connell to the Oakland-Alameda County Coliseum Authority was dismal. The $20 million subsidy for fiscal year 2003-04 is $2.5 million less than this year, O'Connell said.
In addition, the original bond debt generated when the Coliseum was built in the 1960s finally has been retired, O'Connell said. As a result, the annual subsidy the city and county give the Coliseum will decrease by $1.5 million.
But the $350 million in bonds floated by the city and county in 1995 and 1996 to renovate the Coliseum for the Raiders and the Arena for the Golden State Warriors are still years from being paid off.
Taxpayers were told in the mid-1990s the Coliseum and Arena would generate enough profit to pay off those bonds and there would be no need for public subsidies. Annual revenues have fallen far short of the mark, however, primarily be-cause of the ill-fated Raiders deal.
Next year's lower public subsidy is due primarily to rock-bottom interest rates on the bonds.
Although the Authority got an economic shot in the arm earlier this year when the Warriors paid $22.7 million in what amounted to back rent, those funds will not lower the public subsidy because most were used to repay a loan from the county. O'Connell recommended the rest of the Warriors' payment be set aside as a contingency should continuing financial and legal negotiations with the Warriors fail.
In the plus column, the Coliseum will receive an estimated $950,000 in new revenue next year, O'Connell said. Of that total, $500,000 will come from the lease agreement signed last year with the Oakland A's. About $450,000 will be generated from ad sales on the new giant billboards erected on the Coliseum parking lot.
Those new revenues will be more than offset by skyrocketing insurance costs in the aftermath of the Sept. 11, 2001, terrorist attacks. Annual insurance premiums on the Coliseum complex have jumped from $370,000 before the attacks to more than $2 million, O'Connell said.
Oakland City Council President Ignacio De La Fuente (San Antonio-Fruitvale), who is also chairman of the Authority, questioned whether the city and county should shoulder all of the increased insurance costs while local sports teams pay nothing.
Credit card fees
In addition, the Authority learned the city and county will have to pay about $528,000 in credit card fees next year for the sale of Raiders tickets and personal seat licenses (PSLs). The Raiders do not share in those costs.
"The question for me is, who should be responsible for the credit card fees? More than one-half a million dollars is coming out of our budget, when the Raiders get the majority of revenue from ticket sales," De La Fuente said. "Should we also be responsible for the outrageous increases in insurance?"
When asked whether it would make sense to stop taking credit cards, Authority Executive Director Ann Haley said such a move would hurt Raiders ticket and PSL sales. As a result, the public subsidy for the Coliseum would worsen.
Haley also said Authority staff is reviewing the insurance costs, along with the contracts with the Warriors, A's and Raiders.
O'Connell's analysis of the Authority's budget reveals a significant cost factor for the city and county in recent years has been legal fees. Litigation with the Raiders, Warriors and the A's has cost the city and county $14.1 million since 1999.
And that total does not include up-to-date attorneys fees from the current $1.1 billion fraud trial against the Raiders in Sacramento. April's legal fees alone from the Raiders trial will cost taxpayers $900,000, O'Connell said. The trial is expected to last until July, he added. Next year's legal fees are estimated to amount to $4.5 million.
Further analysis of the Authority's budget also shows the Coliseum -- not the Arena -- is the big money loser each year. Most of those losses can be attributed to the deal that brought the Raiders back from Los Angeles in 1995.
Of next year's $20 million subsidy from the city and county, the Coliseum will take $18 million and the Arena just $2 million. The Authority's total expenses for both facilities are estimated to be $40.2 million next year.
PSL sales increase
On the positive side, the Oakland Football Marketing Association, which is in charge of Raiders' PSL and season-ticket sales, said the number of PSL holders increased slightly to 30,600, up from29,500 last year.
Still, the number of PSL holders remains far short of what's needed to significantly lessen the public subsidy. PSLs -- the high-priced fees fans pay for the right to purchase Raiders season tickets -- were supposed to pay the lion's share of the bond debt.
| By eyleenn on Saturday, May 24, 2003 - 06:49 pm:|
Highlights (or lowlights) of the above article:
Annual revenues have fallen far short of the mark, however, primarily be-cause of the ill-fated Raiders deal.
...the Coliseum -- not the Arena -- is the big money loser each year. Most of those losses can be attributed to the deal that brought the Raiders back from Los Angeles in 1995.
...the number of PSL holders remains far short of what's needed to significantly lessen the public subsidy. PSLs -- the high-priced fees fans pay for the right to purchase Raiders season tickets -- were supposed to pay the lion's share of the bond debt.
I know that Raider fans love him but as long as Al Davis owns that team, the threat of the the Raiders leaving again is still in the minds of fans who still don't go to the games. I know money is a big issue but just like the A's, when you got an owner who doesn't want to be here and threatens or ponders about leaving, the fans won't be giving money to an org that isn't loyal to the city.
I know that I will never root for the Raiders until Davis keels over or sells the team which I don't see happening anytime soon. I'm proud to be an Oaklander and my dislike of Davis had me rooting against the Raiders in this year's super bowl even if it gave the city something to be proud of. My dislike of Davis so great even Oakland getting great news wasn't good enough. Having Davis getting egg on his face as Gruden and the Bucs kicked the Raiders' ass made me crack a smile. I can't root for a team that has a man like Davis up there who no matter what, screwed Oakland by leaving the first time and threatening to move back to LA once this lease deal is done in 2010. The same thing can be said about Schott but Davis is the face of the RAIDERS and if that's what org is all about, I'm not going to cheer for them. Schott will come and go, but Davis will always be there. There's a reason why the Raiders oppose any kind of small deal with the NFL and LA, they want that market back and they'll tell you they'd move out of Oakland in second if LA gets the Rose Bowl renovated like it's proposed.
For the record, I love the Oakland Raiders, but can't stand Al Davis
I can very well sympathize with that...
For the record, I love the Oakland A's, but can't stand Steve Schott.
| By eyleenn on Thursday, May 29, 2003 - 09:11 pm:|