Mr. Davis, I'll give you $35 million for that 10 percent
But the Forbes estimate is wrong. Way wrong.
It's wrong because the number's based on 2008 information, yet presented in this year: 2009. Moreover, media discussion on the Raiders value mentions the credit crunch, and the national economy, but fails to include the local employment situation.
People need income to buy tickets and that money comes from jobs. In September 2008, California's unemployment was just 7.7 percent, and we thought that was terrible at the time. Now the rate is at 9.6 percent as of October, and in Oakland it's over 17 percent.
So let's do some quick figuring. If jobs are needed to buy Raiders tickets, then its reasonable to say that Raider ticket purchases are attached to the unemployment rate. It's fair to use the statewide unemployment data because the Raiders are a statewide draw - sports is Oakland's true export industry.
So we take 7.7 in 2008 and subtract it from 9.6 in 2009. That's 1.9, which when divided by 7.7 (the previous year's rate) gives us 24.67 percent. Or, the magnitude of the total increase of unemployed Californians over the previous year is 24.6 percent.
So we have to subtract that from the Oakland Raiders total value since it was based on 2008 information. That leaves us with $797 million minus $196.67 million, or $600.33 million.
So the Oakland Raiders 10 percent stake is valued at $60.33 million. Or, $60 million.
It is worth it? Well. Let's just say this: I would not buy it for more than $35 million if I could and here's why.
While my estimate's based on an adjustment to reflect current state economic conditions, it does not include what may happen in 2010.
The UCLA Anderson school projects that state unemployment will rise to 11 percent by mid-2010. So if you bought the Raiders 10 percent stake at $60 million, you'd have taken about a $20 million bath in less than one year. Since there's no guarantee things will get better by 2011 absent a massive second economic stimulus, why even spend $40 million for the team?
New stadium for the Raiders? Okay... With what money and who's political will? I don't care what Oakland City Councilman and Oakland Alameda County Coliseum Authority Chairman Ignacio De La Fuente says, justifying building a new baseball or football stadium in this economic climate is pure folly, and this comes from a person who's a big advocate of stadiums as economic development.
This is one time I'd agree with California Attorney General Jerry Brown, who I know would make the same statement. In the past, I'd argue with him; not today.
I'm an idealistic realist. We're in bad times and it's going to take massive levels government spending to right this national economic ship. Preesident Obama should have pushed for $2.4 trillion, not $787 billion.
And justifying stimulus spending on a football stadium alone, as opposed to part of a larger complex, is a losing political fight because for the first time such costs compete with money for basic services. I've never seen an economic climate like this before.
Folks, we're experiencing the result of 30 years of job loss to foreign economies that I estimate has cost us $976 billion in revenue wealth, over $400 billion during the last eight years alone. I don't know if the collective American population is too slow to catch on, but all of this talk of too much government spending is the mouthing of idiots.
Sorry to be so honest and to a degree sharp, but I'm trying to convey in an effective way just how much trouble we're in. We've lived off a credit system that absorbed our nations economy from these Worldwide economic structural changes until the overall increase in weight of consumer debt over the past five years was just too great for the system to bear. The result is where we are and are going to be for a few years.
So spending even $60 million for 10 percent of the Oakland Raiders is just not a good idea. Yes, by advocating one purchase it for $35 million I'm stating the organization's value will fall to just about $400 million by 2011.
And if you're saying I'm just a blogger, I will tell you this is the same report I'd write to the Mayor of Oakland if I was his economic adviser, which I was from 1995 to 1999 and all the additional institutional models and data I use only point to the same conclusion. So slam my blog post you may, but let's talk in 2011 and see where we are. I'd look forward to that conversation.