AABA Coliseum Case Study

in partnership with University of California Berkeley, Haas School of Business Dr. Robert Edelstein, Co-Chairman Fisher Center for Real Estate and Urban Economics

hat happens when you gather eleven MBA students, a renowned economics professor, and graduate intern together with several seasoned businesspeople to facilitate dialogue? Add in a dynamic business district as the focal point of discussion and youve got yourself a real-world case worth studying. An AABA Coliseum Case Study, that is. And so it happened on the eve of May 2, 2012 in Cheit Hall, Room C325, that this gathering occurred as part of Course 284 taught by Dr. Robert Edelstein to his MBA class at Haas School of Business. The Coliseum Case Study project, several months in the making, began in 2011 with a meeting between Dr. Edelstein and AABA. MBA intern Thu Banh was brought on board to write a case study with the guidance of Dr. Edelstein, AABA Economic Development Group Chair Randall Whitney, and JRDV Architects Managing Director Ed McFarlan. The study would focus on the Airport Area, more specifically the Coliseum complex, in solving a hypothetical (but very real life) problem of retaining an NFL football team at the site. Dr. Edelsteins students would read the case study and come up with solutions in overcoming a $400 million funding gap to get a new NFL stadium constructed and generating revenue. Students were provided with the AABA case study document and three guiding questions two weeks in advance of class to aid in preparing solutions to the problem.

Authority. From a macro development perspective, how would you create a PPP that: Significantly increases revenues and closes the anticipated $400 million funding gap through various public-private finance and marketing strategies that employ innovative and best business practice, taking into account stadium indebtedness? Attracts private-public sector financial entities (e.g., sports teams, investors, hotel operators, developers, public assessment districts, etc.) and devises a schema for risk-reward sharing related to participation in the overall performance of the Coliseum area? Has a positive fiscal impact on both the local and regional economy, with the goal of maximizing social and economic benefits?

Closing the Gap

uch of class time centered around discussion of generating a revenue stream to fund the stadium. As Ed McFarlan noted, a gap would exist in any city where a billiondollar NFL stadium is built whether in Santa Clara, Los Angeles, or right here in Oakland. Closing the loop on funding is obviously not an easy assignment and requires some big thinking. Students and facilitators were up to task, citing both typical and creative sources of revenue in delivering solutions to get the stadium built and operating in the black. Case in point: Maximization of non-game day events Renegotiation of existing debt Taxation of concessions and merchandise Negotiation of a better naming rights deal Sale of public land to private investors Restructured parking fees Use of New Markets Tax Credits Creation of a REIT to attract investment Use of technology in advertising and media Innovative seating and suite programs

Guiding Questions

ou are a private developer crafting a Public-Private Partnership (PPP) to finance the construction of a new venue that will incentivize the hometown professional sports team to remain in Oakland. You are presenting your proposal to the team and the Oakland-Alameda County

PHOTOS, top to bottom: Haas School of Business, where Course 284 is taught AABA Executive Director Debbie Hauser, board member Randall Whitney, Dr. Robert Edelstein, and Thu Banh meet at the Faculty Club before class Ed McFarlan (skyped in larger than life from Malaysia), Dr. Edelstein, and Mr. Whitney are ready to engage with students for a three-hour class session

Case Study Participants

eveloping and presenting a case study has many moving parts, and thus many people to thank. AABA acknowledges the following individuals for their time and effort in participating in the Coliseum Case Study on behalf of the organization: The recipient of high academic honors throughout his distinguished career, Dr. Robert Edelstein is the author of numerous books and papers on economics and real estate investment. A past lecturer at Harvard University and Wharton School, Dr. Edelstein has taught at Haas School of Business since 1985. His fields of expertise include urban economics, money and banking, public finance, urban land economics, energy economics, economic forecasting and real estate financing.

Agency assigned to the Coliseum Redevelopment Area. Jay views the Coliseum and Airport Area as unique drivers with clear market potential to anchor the Bay Area sports marketplace, and notes the Coliseum is already a championship venue with three professional sports teams, a rare commodity in the world sports marketplace. Aliza Gallo, who joined discussion, is the Business Development Services Coordinator for the City of Oakland, focusing on major projects, business retention and attraction, health care and life sciences expansion and the development of strategic partnerships with key private and governmental entities. Thu Banh is an AABA intern. Thu has a BA in Economics from Yale University and is currently an MBA candidate at Haas School of Business. Thu has over twelve years of experience in designing and facilitating meetings, trainings, and community planning processes for foundations, community-based organizations, and government agencies. Post-MBA, she will make a career transition into real estate, focusing on urban infill development that enriches the socioeconomic fabric of our cities.

The Managing Director of JRDV Architects, Ed McFarlan is also an alumnus of Haas School of Business. Ed and a team of multi-disciplined professionals his firm assembled were recently awarded an Exclusive Negotiating Agreement by the City of Oakland toward the development of Coliseum City on the Coliseum site, as well as an agreement for the creation of a Specific Plan and EIR in master planning the 750 acres surrounding the Coliseum. JRDVs success in attracting worldclass stadium developers, Forest City and HKS, bodes well for the Coliseum City project. Randall Whitney is President of Pacific Thomas Capital. The companys real estate activities and holdings span the Hawaiian Islands as well as West Coast locations. Randall heads a team involved in real estate acquisition, investment analysis, project management, lease-to-fee conversion, tenant management, and entitlement processing. Pacific Thomas Capital is the developer of the proposed Gateway Community, a ten-acre Transit Oriented Development (TOD) nearby BART in the heart of Oaklands thriving Fruitvale district. Jay Musante, AABA Board member, joined in the case study discussion. Jay was the Senior Project Manager for the City of Oakland Community and Economic Development

About the Course

eal Estate Investment Strategy 284, is a capstone course for students who have completed prerequisite real estate courses and-or have obtained significant previous real estate-related experience. The course utilizes the case method, with a focus on developing strategic real estate management decision-making skills. Class time is spent presenting and critiquing management strategies that students develop for each case. Cases are chosen to examine either recent or classic management problems in real estate development and acquisition, real estate financing and capital markets, corporate real estate, real estate transaction restructuring, repositioning and marketing, the entitlement process and project management. In most class session presentations, senior decision-makers involved in the case lead the discussion.

More on the Study

Visit http://coliseumscribbles. blogspot.com to read the Coliseum Case Study.

PHOTOS, top to bottom: MBA students react to a question posed by Ed McFarlan in a back and forth exchange of ideas MBA student Thu Banh, author of the Coliseum Case Study, will take Dr. Edelsteins Course 284 next year as part of her studies at Haas School of Business Case Study participants after class: students, professor, and business leaders, including City of Oakland manager Aliza Gallo (bottom left)