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The Future of the Raiders Is Tied to Getting a New Stadium

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The Future of the Raiders Is Tied to Getting a New Stadium
USA TODAY Sports
O.co Coliseum

The Raiders moved back to Oakland in 1995 after 13 seasons in Los Angeles, and when they did, they made a deal with the city and county. It’s that deal that is making it even more difficult for the Raiders to get a new stadium—a deal that turned out to be bad for all the parties involved.

There are basically three options for the Raiders now: figure out a way to stay in Oakland, share (or rent) the San Francisco 49ers' new stadium in Santa Clara or move to Los Angeles. All three options have their benefits, but also their own set of challenge and drawbacks.

Naturally, most people tend to look at this issue selfishly. For example, fans in northern California would prefer the team stay in Oakland, and the fans in southern California would prefer if the team moved back to Los Angeles. The owners of the Raiders have an entirely different way of looking at the potential options.

The least preferable option for the fans is sharing the stadium in Santa Clara, but it’s also probably the best option for the team, the owners and the fans.

 

The Situation

O.co Coliseum is one of the oldest facilities in professional football. It was first opened in 1966, and a renovation was done between 1995 and 1996 to add what has become to be known as Mount Davis that blocked a great view of the Oakland hills.

New stadiums bring in additional revenue for the team and drastically increase its value. According to Forbes, the Raiders generated the least amount of revenue of any NFL team last year. The net result of this low revenue was an operating loss of $15.2 million, making the Raiders one of only three teams to lose money last year.

Kirby Lee-USA TODAY Sports
The Black Hole might have to relocate.

The Raiders also lost three times more money last year than the next-lowest team—the Detroit Lions. This all adds up to a team worth only $785 million (30th in the league), which is just $15 million more than the Jacksonville Jaguars.

A new stadium does wonders for a team’s value by drastically increasing revenue. The Raiders have a revenue problem which can’t be sustained long-term. If the Raiders don’t get a new stadium soon, Mark Davis could be forced to cut back on expenses or sell the team.

Cutting back on expenses usually means lower-quality facilities, coaches and even cutting back on player salaries. This is not what anyone wants and has significant impacts on the team’s ability to field a competitive team.

 

A New Stadium in Oakland

According to Bloomberg, the Raiders still owe $124.8 million on loans from the county as part of their relocation back to Oakland. The taxpayers are still repaying the original debt of $145 million, according to the report.

Debt is not a problem if the team, city and county have appropriate revenue to pay it back. That’s not the case right now, and everyone is losing with the current arrangement.

Artist rendering of the proposed site in Oakland. Credit: JRDV Architects

“The 1995 deal didn’t work from a financial perspective for any party to the deal -- city, county or Raiders,” says Amy Trask, chief executive officer of the Raiders (via the Bloomberg report). “That shouldn’t stop us from trying to reach a deal that works for everyone.”

The city entered an interest-rate swap, and there are also other complications, like political resistance, that will make a new stadium in Oakland significantly more complicated than other locations. Basically, any new deal in Oakland will have to fix mistakes of the past.

The current site in Oakland has a lot of potential, as the surrounding area is ripe for development. Bay Area Rapid Transit (BART) and Amtrak both run directly to the stadium, and it’s adjacent to a major freeway. The stadium is also close to the Oakland airport, which could make it an attractive location for a Super Bowl.

Unfortunately, the site would also have to include new homes for the A’s and Warriors, and that only further complicates the process. The Raiders have time and can use Los Angeles as leverage, but that will not always be the case.

A new stadium in Oakland would be the best-case scenario, but it also might be the biggest long shot.

 

Moving to Los Angeles

There is a lot of money to be made in the Los Angeles market, and the league would like to hand-pick the owners of the teams that relocate to the city. The last thing the league wants are resistant owners like Al Davis running what could become the league’s crown jewel franchises.

The city of Los Angeles has already approved a deal with AEG that clears the way for a new stadium to be built next to the Staples Center. AEG is being sold and would be bound by the terms of the deal. According to David Lieberman of deadline.com, owner Philip Anschutz could use money from the sale to purchase whatever NFL team ends up in Los Angeles.

Artist rendering of Farmer's Field Credit: www.farmersfield.com

There are other Los Angeles stadium plans as well that could become viable, but each plan would probably require the Davis family to sell the team. The NFL didn’t want Al Davis to move to Los Angeles the first time around and were unable to prevent him from moving, but circumstances have changed.

The league is more involved with the stadium projects and billionaires that are trying to bring football back to the area and not a single team.  Davis was a football man and not a billionaire, so his son Mark does not have the resources to do much on their own.

Moving to Los Angeles remains an option, but not until the Davis family is ready to sell controlling interest in the team. Obviously, the Davis family would like to try to work something out in Oakland so they can keep the team and also generate big revenue that would come along with the new facility.

Selling the team does not appear to be on the table for the Davis family, but that doesn’t mean they aren’t considering it. A sale and relocation would probably be best for the franchise monetarily, but it may not be in the best interests of the Davis family or a large portion of the fan base.

 

Sharing the Stadium in Santa Clara

The 49ers have broken ground on a new stadium in Santa Clara which is planned to open in 2014. The Raiders missed the opportunity to make it a joint venture and officially share the stadium. Now, the Raiders would merely be renters.

The San Francisco 49ers new stadium in Santa Clara. Credit: www.newsantaclarastadium.com

The Raiders and their fans didn’t like the idea of sharing a stadium with their cross-bay rivals from the start, but it remains the best option for the team. When the Raiders had an opportunity to officially share the stadium, they would have had input on design and assurances that a home game would feel like a home game for each club.

As renters, the Raiders would be second-class citizens in their own home, much the way the New York Jets were second-class in the old Giants Stadium until MetLife Stadium opened in 2010. The Jets had to hang green banners over blue walls and facades to make it feel like home before the new stadium opened.

History tends to repeat itself, and Mark Davis will eventually have to resign himself to renting the stadium in Santa Clara if plans for a new home in Oakland dissolve and he doesn’t want to sell the team.

Sharing is probably the only way for the team to remain the “Oakland” Raiders, get a new stadium and become a profitable team with a value in line with being in the sixth-largest television market in the United States.

As unpalatable as that may seem to the fans, sharing a stadium is better than playing at O.co and consistently dragging along the bottom in team value, revenue and income. It’s also probably the most likely scenario and one that keeps the ownership in the hands of the Davis family.

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