Author's Blog

 July 31, 2010

San Francisco Giants to Purchase Part of San Jose Giants


Friday, April 3, 2009

San Jose Giants ownership announced Wednesday that they have reached an agreement to sell 25 percent of the team to its parent club, the San Francisco Giants.  The big league Giants have an option to buy another 30% in 2010, which would give San Francisco a controlling interest in the team.   Financial details of the deal were not released.

The move likely assures the minor league club will maintain its long term partnership with San Francisco for years to comd.  The San Jose Giants have been an affiliate of San Francisco since 1988.  The revenue to San Jose will also allow the San Jose Giants to do some much needed improvements to the team’s facilities, specifically the team’s clubhouse, which has only five showerheads and two toilets, for team with 25+ players plus supporting staff and coaches.

Interestingly enough, the San Jose city council is not necessarily pleased with the announcement, specifically the timing of the announcement.  First, the announcement came days after the city council approved $700,000 for improvements to Municipal Stadium.  Perhaps more importantly, the purchase has been construed as an effort by the San Francisco Giants to strengthen their claims to the South Bay market in an effort to thwart talks between the Oakland Athletics and San Jose to build a new Major League stadium in the city.  The Giants were given “territorial rights” to the San Jose market in the early 1990’s when the team was interested in relocating out of Candlestick Park to San Jose.  That move was nixed in 1992 when San Jose voters rejected the use of public funds for a new stadium.  The San Francisco/San Jose Giants deal comes just three days after Major League Baseball showed signs of a possible willingness to allow Oakland to move to San Jose if they could get a new stadium.  Using only slightly arbitrary language, league commissioner Bud Selig announced that a committee would be formed to asses “the prospects of obtaining a ballpark in any of the communities located in Oakland’s territory.”  It’s easy to see that Major League Baseball would rescind San Francisco’s territorial claims to San Jose if the trade off was a new stadium for the A’s.

San Jose Giants president Jim Weyermann has said that any connection between the San Francisco deals is unrelated to discussions about a new stadium for the Athletics.  Weyermann insists that the deal has more to do with building stability in the Giants farm system, and improving the playing experience for some of San Francisco’s top prospects.  Indeed, there appears to be a growing interest by a number of Major League teams in purchasing a minor league club.  The Boston Red Sox, for example, purchased the Salem Avalanche of the Carolina League, after having an affiliate with Lancaster,  to assure that their Single A Advanced affiliate reamained geographically closer to Boston.  Nevertheless, the San Jose Giants website, when talking about the deal, goes so far as to state, “Given the stronghold of [San Francisco] Giants fans in the South Bay…”  It’s hard not to read into that statement a reminder that fans in the South Bay are more likely to be Giants fans than A’s fans.

Regardless of San Francisco’s intentions of buying a stake in the San Jose Giants, the simple fact that Minor League teams have become an attractive business.  Once upon a time, minor league teams were not considered to be that valuable, but with increased attendance and sponsorships, teams now represent multi-million dollar businesses.  The San Jose Giants, for example, are valued at $7 million by the San Jose Mercury News.   It’s not uncommon for ownership groups to have interests in other sports teams.  Owners of a local hockey team might also be owners of the local soccer team.  Investment in a minor league team, especially one affiliated with one of the existing teams on an investment group’s portfolio, creates a number of great cross promotional opportunities that can make such a deal attractive.

 


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