Dennis Cruzan came in and spoke to our class yesterday about the PETCO deal. He gave us some insight to Moores and the PETCO deal which was hotly debated by that dude, Bruce Henderson (I had another word in there before I changed it to "dude"). A lot of people thought that the PETCO deal was a really cushy deal for Moores, and maybe it is (was... will be...), but Dennis was able to give us some insight. Some of this might be refresher. Don't quote me on this stuff, because I can't quite read my notes and I may be making it up.
- Padres (Moores, Lucchino, investors) committed $153 million towards ballpark. City commited $206 million. CCDC, $74 million. Port, $21 million.
- Padres ended up paying $200 million.
- In the deal, Moores was given a chunk of warehouse property downtown. Keep in mind, at the time, this was a seriously shitty neighborhood. It's very difficult to look at this Padres deal and compare it to what the Chargers want to do. The land in Mission Valley is diamonds. Before the ballpark, this neighborhood had homeless people literally crapping their pants so that cops wouldn't want to come near them. I kid you not. Dont mix up the East Village pre-PETCO with Mission Valley.
- In exchange for the land, Moores promised a certain amount of hotel, business and residential units be built. I didn't write down the numbers, but it was a lot. Moores was given a 30 month time frame to do it.
- Apparently, Moores and Lucchino hadn't consulted with any real estate experts before signing the deal. When they finally did, they found that the amount of development was way too high to realistically finish in two and a half years.
- Enter Bruce Henderson. Lawsuit. Then another lawsuit. Then a few more. A bunch more. Blessing in disguise as the delay in ballpark construction gives the Padres group enough time to start in and finish most of the development required in the contract.
So by trying to hurt the Padres, Bruce Henderson allowed the Padres to fulfill the contract that wouldn't have been fulfilled, and he actually helped the Padres.
psssst... bruce... you like apples?
WELL SUCK MY ARMPIT!!!
- Cruzan suspects that there are enemies of the Padres who helped fund Bruce Henderson and encouraged him to continue with the lawsuits even though they were getting shot down repeatedly. Who are these enemies of the Padres?
Tommy Lasorda: Plays the nice guy, but is too involved with the Dodgers to not be a total A-hole.
Barry Bonds: Not only was he jealous of McGwire, he was also spiteful towards the Padres as the only team with brown and orange uniforms that he didn't play for.
That one chick who used to cocktail at McGregor's: No Padres in Mission Valley means a cut in tips for her and less opportunity to bed baseball players.
The Pad Squad: Fewer seats means fewer people for them to spread Padres joy to.
- In the end... Moores is about $275-$300 million in as far as money goes towards the ballpark. He may be close to breaking even now on the investment. I still really kinda wonder about these numbers, though I guess it makes some sense. I get the feeling that Moores is able to use those losses for all these years as tax shelter for his other companies so he's actually a little better off now than he was before.
- What the Padres didn't finish was all of the hotel rooms. They were supposed to do 850 and got to 750. Cruzan says that the 850 would have been really tough to do. Moores writes a check every year to cover the estimated tax that's lost from not having those last 100 rooms.
- Redevelopment profits is tough to tell. Moores owns the Omni and Hotel Solimar, but Cruzan wouldn't venture a guess as to their profitability. He thinks most of the value will be in resale of the hotels.
- PETCO Park in the park is "effectively" a city park. I'm not sure what that means. I guess it means that drifters aren't allowed to set up tents among the trees like they do at the actual city parks in and around San Diego.
- Speaking of the homeless. A large number of them were displaced. A ding on the Padres as a community organization for not actively doing more studies on where these people would end up. Dennis mentioned that one of the development partners is working on a discrete housing project which will be homeless shelters and housing.
- Padres are preserving any buildings built before 1930. There was a lawsuit regarding that which was put forth by the unions, which is weird considering it's like they're stalling work that they'd be getting the opportunity to do. Actually, the saving of historical buildings was a guise to get particular wages set for union work as it pertains to the ballpark.
- Finally, Cruzan says that Larry Lucchino is an extremely bright person and that he's very passionate. I happen to feel the same way... About myself, I mean. Lucchino, I don't know from Adam. Myself? Bright and passionate. Unless passionate doesn't mean sexy to you. Man, I got sidetracked.
- John Moores is an extremely giving person. Very giving with high morals. Cruzan really believes Moores came into the Padres deal as a hobbyist.
My notes are really tough to read for some reason...