I must apologize to anyone who may have read my last post.
In that post, I said the free 75-year leases being offered to Larry Ellison by the city of San Francisco in return for bringing America's Cup 34 to the city were on a few acres of waterfront property.
I was wrong. The size of the free land grab being offered to Larry is nothing like a few acres.
A quick consultation with Google maps showed me that my guess was so far off that I must set the record straight. The properties are actually much closer to 25 acres.
Now, that may not seem very big if you're in the middle of Wyoming, but in San Francisco, most people don't lease their waterfront property by the acre, or by the 25 acres. They're usually racking their brains figuring out how to pay for a few hundred square feet.
I was trying to get my head around just what 25 acres might look like in an urban setting and how much an enterprising fellow like Larry might stand to make from such nifty plots of land.
Here's an aerial photo of piers 30-32, one of three properties included in the lease:
With nothing to establish scale, it's hard to get a feel for the size of this tidy parcel. So here, at the same scale, is a similarly-sized plot occupied by one of Larry's prospective neighbors:
The roundish thing with the green middle part is where a local ball club hosts regularly scheduled parties with other members of the National League. Larry would be just two doors away, so that might add something to the value of his modest lot. He needs to consider that, because the only other thing adjoining his lot, on three sides, is San Francisco Bay. And you know how tiresome it can get having to look at water all day long. And you can see that if Larry wanted to buy a ball club of his own, he'd have plenty of room to build them one of those roundish things with the green middle. He's got about as much space as his neighbor.
And if he wants to invite some friends over for the day, there's a convenient two-acre parking lot across the street that's also included in the deal. You know how some offstreet parking can improve a property's value.
Of course the pier 30-32 site is the smaller of the two main parcels.
Here is the more comfortably-sized pier 50:
Again, from this aerial shot, it's hard to judge scale, so here's a helpful hint. Those two long gray things on the right are container ships. See:
This would be a great spot for Larry to tie up a few of his boats. There's even enough space so that he could leave his dinghy in the water, too. You know what a pain it can be to have to haul your dinghy up on deck after every sail.
As I hinted, I was starting to wonder just what Larry might collect in rent on these parcels if he decided to sublet. He already has a ramshackle place with a view of the ocean in Newport, Rhode Island. He might want to just stay there.
I figured Larry is a pretty busy guy. He may not want to bother building anything on the piers. After the Cup is over, he might just want to rent out the space for parking. This would probably be the very least amount of income he could get out of these piers.
I checked around and it turns out that people are paying around $250 per month for someplace to park their cars near the water. In San Francisco, it must be a prestige thing to have a parking space near the water. Here's a place in the snooty Marina district where you can park your car near the water for $250 per month:
And then, I had to do some math. A typical parking place is about 10 feet by 20 feet, or 200 square feet. Since there are 43,560 square feet in an acre, you could park about 200 cars in an acre, leaving some spare room to maneuver. In 25 acres, you could park 5000 cars. And at $250 per car, that's $1,250,000 per month, or $15 million per year. After 66 years, that comes out to $990 million, assuming the price of parking in San Francisco doesn't go up.
But, it always does.
And Larry is a pretty smart guy. He could probably figure out some use for his real estate windfall that would bring in more than a bunch of parking lots would.
So, I think it's pretty safe to say that this little deal will be worth over $1 billion to Larry if he plays his cards right.
And he usually does.