New ballpark only the start of economic rebirth in SF’s South of Market neighborhood

 

The idea of building a privately financed ballpark in San Francisco seemed like an impossible dream to many, says Larry Baer, president and CEO of the San Francisco Giants. Based on the Giants’ history at Candlestick Park, many believed San Francisco simply wasn’t a baseball town.

When a rezoning measure passed in March 1996 to enable the construction of the ballpark now known as AT&T Park, skepticism began to wane a bit.

Ten days later, the Giants announced a naming rights deal with the largest employer in the region, Pacific Bell and two months after that, the team finalized a deal with Chase Manhattan Bank to finance the new facility.

“Then everybody said, ‘OK, that’s nice. Maybe you’ll get this thing built, but you’re going to have terrible teams. With the debt service you’re taking on to build the park, you’re not going to be able to afford the team. Or if you can afford it, you’ll be awash in red ink,’” Baer says.

When the ballpark opened in 2000, the Giants won the most games in the National League.

“I don’t want to sound boastful, but each step along the way, we’ve had a lot of detractors,” Baer says. “The key ingredient was people inside this organization believed and they didn’t get dissuaded by pessimism, by hurdles or by challenges.”

As it turns out, the debt service on the ballpark was high at $20 million a year, “by far more than any team in baseball,” Baer says.

“But it didn’t prevent us from putting a good team together or being profitable because we way out-revenued the debt,” Baer says. “Our revenue was so far beyond what anybody thought it would be, we were fine.”

One factor in the financial success is the attendance, which has been at 98 percent capacity over the past 16 years, including five consecutive years of being completely sold out.

But perhaps even more important has been the attention to detail and the unrelenting commitment to find a way past every hurdle that has arisen since Baer, Peter Magowan and their investment group bought the Giants in 1993.

“I try to run this organization like a public company,” Baer says. “The goal is to grow and provide shareholders with value.

“We know we only have so many seats to sell, only so many areas for sponsors to put their messages — TV, radio and all the different levers for revenue. How do you grow beyond that? How do you get yourself the financial strength to be right there with the Dodgers and the Yankees in larger markets? We’re in a tremendous market, but it’s not the same as the ones they are in.”

The place to be

Dennis J. Conaghan remembers what it was like in the neighborhood that the Giants now call home. It was warehouse space that thrived in the 1930s and 1940s when the shipping industry was big business, but has since been left to decay.

“The warehouse business went away when the steel container business started to come in,” says Conaghan, executive director of the San Francisco Center for Economic Development. “It left that area, which also used to have a rail line come through there and in the adjacent Mission Bay area. A lot of that became deserted with very little activity.

“I remember walking across the street where the Giants ballpark is now located with an industrial real estate broker and he was talking about the buildings and he said, ‘I can’t give them away,’” Conaghan says. “Nobody wanted to use these buildings. It was just a bad area.”

It all began to change when AT&T Park was built.

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Larry Baer, president and CEO of the San Francisco Giants, talks with Smart Business about the team’s path from its chaotic times to a gleaming new ballpark. Click on the image to read the March cover story.

“It was the beginning of the transformation of that South of Market area,” Conaghan says. “With it came restaurants, a supermarket and some residential development. Today, a lot of that property adjacent to the ballpark is some of the most valuable in San Francisco. So all of a sudden you have an Amici’s Pizza and a Starbucks on every corner and a Safeway grocery store.”

The new businesses get a lot of traffic from Giants fans, which helps the team and the city, says Rufus Jeffris, vice president of communications and major events for the Bay Area Council.

“We haven’t done an economic impact analysis of the Giants,” Jeffris says. “But certainly they generate hundreds of millions of dollars every year in revenue from their sold-out games. They’ve had a long string of successful seasons and of selling out that ballpark. That generates tax revenue for the city, which helps support services around the city.”

But the foot traffic doesn’t stop when the baseball season ends. Giants Enterprises, a wholly owned subsidiary of the Giants, was launched to plan, host and deliver customized meetings and events at AT&T Park and throughout San Francisco.

“The Giants have marketed that property to use it for things other than the ballpark,” Conaghan says. “They keep it busy. That’s healthy for the neighborhood, aside from the fact that the ballpark is attractive. And they keep it clean. It changed that whole part of town.”

The renaissance continues

The renaissance should continue with last November’s passage of the Mission Rock initiative.

It will take the site just south of AT&T Park currently known as Parking Lot A and create approximately 1,500 new rental homes, 40 percent of which are expected to be affordable to lower- and middle-income families, without disrupting existing neighborhoods.

The plan is to build affordable rental homes near existing public transit, create 8 acres of parks and open space and bring 11,000 permanent new jobs and 13,500 construction jobs to the city. Ballpark parking will be “responsibly integrated into the neighborhood,” according to the team coordinating the project.

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In addition to its economic impact, the Giants organization shows it’s committed to giving back, helping those who need it, and finding creative and inspired ways to help others. Click on the image to read more.

There are also plans to revitalize historic Pier 48 to become the expanded home for Anchor Brewing and protect against sea level rise. All told, Mission Rock is expected to generate over $1 billion in revenue for San Francisco.

The revitalization of the neighborhood over the past 16 years was the impetus for Mission Rock, Baer says.

“This neighborhood has become one of the most desirable neighborhoods in North America to do business,” Baer says. “Within a 10-block radius, we have headquarters for Twitter, Salesforce, Uber, Airbnb and on and on and on — all companies that are driving the economy these days.

“There are 3,000 Google employees within a few blocks. So, it just made sense to us that our secret sauce in terms of growth could be building out this neighborhood. We have a parking lot with surface parking that is increasingly valuable real estate.”

In addition to helping the city and facilitating continued economic growth, Baer says the project also ensures a healthy environment for generations of fans who will attend games in the years ahead.

“We want control of the front door to our ballpark,” Baer says. “We’re not going anywhere, we have a 66-year lease. Let’s ensure the 3.3 million who come and go every year have a great experience getting in and out of the ballpark and can extend their stay and do all kinds of great things.”

Managing the project will be quite a commitment, but Baer says fans need not worry that the product on the field will suffer from a distracted group of leaders.

“I think it all starts with people,” Baer says. “If you have the people, you’re stretching people into new dimensions. That’s a really good thing. And it allows you to retain the best people, they are now part of a new cause, a new crusade.”

Sustainable success

Success in any industry is rarely easy to achieve and the San Francisco Giants have certainly faced obstacles on the path to becoming three-time World Series champions. The true test of becoming a strong organization is the ability to continue making progress toward your goal, even when you encounter a few bumps in the road.

“We have a win and develop motto and we want to do it at the same time,” Baer says. “That means integrating young players with veterans, players that we believe are ready to contribute to a championship team, even though they are young.

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Click the image to look back at the history of the San Francisco Giants, the team’s move to San Francisco, its players and more in our Uniquely Northern California.

“What I am proud of is even in the years that we didn’t win the championship in the last five years and didn’t make the playoffs, we got valuable playing time and experience for players like Brandon Crawford and Brandon Belt and Matt Duffy and Kelby Tomlinson. We’ve had young guys that we’ve been able to integrate.”

One of the backbones of the team’s success is Bruce Bochy, who has served as the Giants manager since the 2007 season.

“When we hired Bruce, he had free rein to change out the entire coaching staff,” Baer says. “He could have done that, but he only added one coach. You have a seven- or eight-man coaching staff and he only added one coach. He inherited coaches he only knew on a casual basis, but he took them all in and only added one new person.

“That’s the sign of a confident person, a confident leader, someone who runs a meritocracy. So I can’t say enough about him.”

The Giants have won the World Series in each of the last three even-numbered years, but the team’s optimism for 2016 stretches well beyond the fact that it’s the next even-numbered year on the calendar.

And if another title does not come in 2016, or if the team falls off a bit in the years ahead, Conaghan is confident that the team’s fan base will be patient.

“The whole organization and the way it works and the camaraderie that has been developed seems to contribute to a fairly well-oiled machine,” Conaghan says. “They don’t tend to do irrational things and they’ve built a very loyal fan base.”