A year and a half ago, the African American Sports and Entertainment Group’s dreams of redeveloping the Oakland Coliseum seemed like the stuff of fantasy beyond some early negotiations with the city to eventually acquire its half of the enormous property.
Now the group, called AASEG, is on the cusp of owning the entire 112-acre site, which it intends to transform into housing, restaurants, bars and hotels — a new megaplex. But reality is often messy, and this sale is no exception.
AASEG now finds itself in the crosshairs of a wildly toxic election season in Oakland, with onlookers worried if a newly restructured deal can deliver the revenue that Mayor Sheng Thao has promised would help fix a perilous local budget crisis.
Jobs are at stake, and so are crucial city services. Where does the Coliseum sale stand? Here’s a breakdown:
Why was the deal restructured?
On Monday, city officials made public what this news organization first reported last week: Thao’s office and AASEG have agreed to a revised purchase agreement worth $20 million more than the original price, but with most of the money due many months later than previously expected.
The deal was a surprise to several City Council members and other observers who had figured — as had been agreed — that AASEG would pay the original $105 million price in regular, increasingly larger installments.
What changed? In interviews, officials around AASEG said its main financial backer, the large investment bank Loop Capital, didn’t want to pay incrementally if each chunk of money did not grant the group a share of the Coliseum.
The city’s historic budget deficit is so perilous that Loop’s executives decided it’d be a bad investment to pay Oakland any money if it wasn’t secured against the property. City officials told AASEG that such a structure simply wasn’t possible.
On the other side, city officials wanted more money out of the deal altogether, especially after the Oakland A’s sold their own half-share of the Coliseum to AASEG for a higher price — $120 million.
How does the new deal differ from the last one?
After inking the original purchase-and-sale agreement last month, AASEG sent the city $5 million, with plans to send the next $10 million by Sept. 23.
But when Loop Capital pushed for less risk, the two sides negotiated past that date and toward a new, Oct. 7 deadline that technically was supposed to be triggered if the city noticed AASEG of a defaulted payment.
The new deal allowed AASEG on Monday to show the city evidence that it has $10 million to pay by a deadline set 30 days later, on Nov. 7.
Then, the group will have until May 30, 2025, to transfer another $95 million to the city for a fully secured purchase of the Coliseum, plus another $15 million down the line when the city issues building permits to AASEG for the actual redevelopment.
Separately, AASEG also has agreed to pay an estimated $16 million to cover longstanding bonds taken out for improvements to the Coliseum complex — obligations that otherwise would’ve prevented the group from taking full ownership until early 2026.
The total $125 million for Oakland equals what the A’s received for selling their own half-share to AASEG, and it allows the group to wait until the city’s shaky financial situation bears out this fiscal year before purchasing most of the site.
How does the change in this deal affect Oakland’s budget crisis?
Thao’s announcement of an expedited Coliseum sale in May led numerous financial analysts to warn the city not to use revenue from selling a long-term asset for short-term costs.
With the deal still far from done in early July, the City Council approved two budgets: one that assumed revenues from the then-$105 million Coliseum sale, and a contingency budget that imposed severe cuts to police staffing and fire station availability.
The shifting Coliseum deal structure has forced the city into that contingency budget, which means some cuts may be unavoidable.
But city officials, including a person with direct knowledge of Oakland’s financial situation, said in interviews that for now the worst cuts can likely still be avoided with available cash on hand, salary saved from employees leaving and leftover money from special funds.
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Three members of the City Council — Janani Ramachandran, Treva Reid and Noel Gallo — unsuccessfully pushed this week to discuss the deal in a meeting. But not enough council members showed up to the planned Monday morning start time, so that couldn’t happen.
Ramachandran still believes the city’s revised deal should’ve been put to a council vote instead of negotiated by the mayor’s office, but she acknowledges there’s a legal “grey area” — after all, the new terms still guarantee Oakland more money.
Either way, the new deadlines put the city fully at AASEG’s mercy. The city’s new strategy is to keep everyone paid until next May, and then backfill the other money sources it drew from with $95 million received before the end of the fiscal year.
If something goes wrong with the deal, everything could go wrong for Oakland.
