Sacramento arena talks “rocky” as Kings sale deadline nears

Sacramento Mayor Kevin Johnson’s self-imposed March 1 deadline to have a plan in place for local buyers to purchase the Kings — and to get a new arena built for them — is just a week away. So how are things going, KJ?

“We as a community are going to deliver a brand new downtown arena,” he said.

Okay, that’s nice. But really how are things going, CBS13 news?

High-ranking sources inside city hall tell CBS13 an initial meeting between the mayor’s possible investor group and the city was “rocky” when it came to the arena. The investment group initially asked for more public funding than the city had anticipated.

Last year’s city council agreed to spend $255 million in taxpayer money on an arena, but that plan expired when the Maloofs walked out on that agreement. Johnson told ESPN the public contribution for the arena this time around could be lower.

“Essentially we’re going to commit a public investment of $200 to 250 million to build that arena. Again, we know that’s a competitive advantage,” he said.

So what sounds like is going on here is that the buyers the mayor is talking to want more money than the city offered last year — which is understandable, given that last year’s plan was kind of a mess, and now the city is under the gun of a threat of the team moving to Seattle. Johnson, meanwhile, figures that offering $200 million in subsidies is still more than the Kings would get Seattle — also sort of understandable if you squint just right, though of course prospective Sacramento buyers can’t be expected to care what harebrained arena scheme Chris Hansen has up his sleeve, they’ll just want a guarantee that they won’t be on the hook for building one in Sacramento.

Really, we’re back to the same problem that Johnson has been facing for years now: Nobody wants to own the Kings unless somebody builds them a new arena, and there’s no way to come up with city money to build one without busting the budget. The difference now is that there’s a deadline in place — not the March 1 made-up deadline Johnson set for himself, but the April 18 NBA board of governors meeting where the Kings’ sale is almost certainly going to be voted on. Right now it doesn’t look like Sacramento is willing or able to sweeten its arena offer enough to throw a roadblock in the way of the Seattle move — but a lot can happen in seven weeks.

19 comments on “Sacramento arena talks “rocky” as Kings sale deadline nears

  1. They really do not have seven weeks, Neil.

    As we understand it, the price was agreed to right around Christmas Day; then news of the sale was leaked on Jan 7; and then, the news was made official on Jan 21 — just over a month ago.

    What’s more, Stern has requested that KJ submit his plan before March 1. Now, I consider that to be a soft deadline myself; if the plan came out on March 8, the NBA would not cut KJ off. On the other hand, if that plan came in on April 1, the NBA would probably be pretty open with their rejection.

    Anything after March 1, KJ is taking his chances; anything after March 15, the well is probably dry. The NBA is going to vote on the Hansen offer on April 19, and not merely ask for competing offers. These are complex deals. Opening some new plan for review on April 18 would be really unfair to Hansen.

    With the way KJ keeps delaying introduction of the whales, I think what these whales were is bargain-hunters. They were only interested in a one-sided deal. Once it got to the point where they’d have to pay for 2/3 of the arena and also pay $525M for the team, they were out. Pretty predictable, really.

    Here’s the AP article where Stern says “Before March 1.”

    What would possibly compel the Maloofs to accept Offer B if the BOG rejects Offer A anyway? The Maloofs have so much contempt for KJ, Burkle and Sacramento that if Offer A is rejected, they’ll look for their own Offer C.

  2. The sentence, “Again, we know that’s a competitive advantage” is really confusing. I’m pretty sure he meant to say “disadvantage.”

    Check out this News 10 report. Carmichael Dave employs circular logic…

  3. Again, MikeM, that AP article doesn’t say that Stern requested a plan from KJ by March 1. It says that Stern says KJ *promised* to deliver a plan by March 1.

    There’s still plenty of time for KJ to announce some “preliminary” plan by March 1, hash out funding with the city council over the course of March, and then have something final in place with enough time for the NBA owners to look at it before their meetings on April 18. Assuming that you think that a deal can be hashed out at all, which is a big question. But time isn’t the problem — look at how quickly the Minnesota legislature created a stadium plan out of whole cloth last spring after Roger Goodell flew into town — money is.

  4. I disagree, Neil. Close-read the first three paragraphs of that AP article.

    The problem is that KJ did say that March 1 is his self-imposed deadline. So now, we have Lawyer Stern saying, “We have an April 17th meeting of the board, but if the mayor follows through on what he’s told us, we’ll have it comfortably by March 1.”

    Listen to that sentence in your head, and imagine it came from an attorney.

    There is the way people talk, and then there’s the way the subspecies “Lawyer” talks. It’s an altogether different filter.

  5. I’ve read it, and I do not think those words mean what you think they mean. Stern said he needs a plan in plenty of time before the April 17 meeting, but the mayor has promised a plan by March 1, so if he follows through on that, there’s no problem.

    Really, though, you should be ignoring pretty much everything David Stern says at this point, not picking over it for tiny details of nuance. He wants to get the best deal he can for the NBA, so he has no reason to set deadlines, or tip his hand at all, frankly. Hell, there’s no reason why the league can’t push back its decision beyond April if it thinks it can get a bidding war going on — not saying that’s likely, but we saw it last year when the March 1 relocation deadline got pushed back. Stern makes the rules, so he can do whatever he likes with them.

  6. The Maloofs have just enough contempt for KJ, Ron Burkle and the City of Sacramento to where if the BOG rejects Hansen’s bid, the Maloofs will just say, Fine, we’re keeping the team.

    I’m pretty sure some team out there will be willing to surrender a second-round pick for Cousins.

  7. Jared S: No. And, in fact, last June, they suspended the entire parking lease-out process. If they were to re-start it, odds are pretty good they’d have to start from square one, especially since the shopping mall location wipes out half of one of the lots they were hoping to lease-out.

    Anyway, breaking: The ILWU lawsuit has been denied. One down, one to go.

    Just a little speed-bump on the road to completion.

  8. Stern (or his successor) would be extraordinarily happy to have additional groups raising the stakes in the fight for any team. You never say “whoa” in a horse race, particularly when one bidder is bidding against himself but doesn’t seem to realize it.

    If he were asked while under truth serum, I suspect Stern would say “A) we’d like to be rid of the Maloofs, and B) Seattle will be a better market for us than Sacramento. But, we can have all three of those things if we really want them”. That is never going to be uttered in public, of course.

    If Sacramento can miraculously come up with a “plan” that the NBA thinks is better than Hansen’s in Seattle, Stern can have a quiet talk with the Seattle group and promise them a franchise within a very short time frame (whether a relocation or expansion one). Having said that, I don’t believe Sacramento can come up with anything close to ‘acceptable’ by present NBA standards. Nor do I think either the city or the NBA wants to continue dealing with the embarrassment that is the Maloofs. So the odds are firmly against them.

    The simplest and cleanest solution might be to tell KJ that he’s “done well” in a short time frame, but that they will be permitting the move and invite the Mayor to spend more time working on an arena plan that would lure the NBA back to Seattle. It’s more or less exactly what Stern said to Seattle years ago…(and for anyone scoring at home, the present deal in Seattle is significantly better for the city than the ones Schultz/Bennett wanted).

  9. I absolutely agree, John.

    What people are failing to consider is that the City of Sacramento, if it decided this afternoon to proceed with a parking lease-out, they probably wouldn’t see any cash at all for about a year. It’s a complex deal with a lot of legal requirements. And when they decided that the Downtown Plaza is a good location, they wiped out about half of the largest lot in the proposed lease-out. At that point, you’re looking at starting from the RFI phase.

    They’re a year away from raising a single dime from a parking lease-out. I bet the BOG is fully aware of this. It has to be a factor.

  10. In hindsight, I guess it’s kind of amazing that we thought the ILWU suit even had a chance. That hearing didn’t even last an hour.

  11. The problem with the arena parking deal is that the city only clears about 9M a year on the parking lots. The city, in the previous deal with the Maloofs, agreed that AEG would build a 1,000 seat or so parking garage for premium parking. And that the Maloofs would receive a guarantee of 2.4 million from the parking revenues of the garages, presumably from game night revenues, not counting the premium spaces.

    But if an investor demanded a four percent return on 225M then the revenues from the garages would have to be 13M to payoff the Kings gurantee and earn aforementioned return. And if the investors demand five percent becasue there is no cushion in the deal then the amount increases to 15M. The ciy was going to sell other land holdings to try to cover the extra 25M for the 250M contribution.

    The briefing document prepared for the city council by staff seemed dubious if enough money could be raised. So what would have likely happened is that the city would have pledged additional revenue from the arena, which was supposed to cover the loss of the 9M to the city from the garages, to cover any gaps, After the deal fell apart K.J. said one reason the city could not agree to a deal of less than 30 years, as the Maloofs demanded, is that it would have been impossible to finance, which leads me to believe the Mayor knew the parking revenues would not have been enough.

  12. John Shirey, who helped engineer Hamilton County’s disastrous Paul Brown Stadium deal, now works for the City of Sacramento.

    He introduced a new Council agenda item today (Saturday) at 4:10 p.m. to authorize negotiations on a new arena. This just barely beat the 72 hour deadline prescribed by the Brown Act. However, the staff report used to support this agenda item won’t be available until late Monday, so it’s possible that the Council won’t be able to vote on this agenda item, even if it wants to.

  13. The Semen Whales along with Guido will be announcing a billion dollar proposal to buy the Royals and build an arena in Rio Linda. Put in on the boards and book it. I’m supreme and know more than you. All New Yorkers are better than all.

  14. That’s barely enough time for the ThinkBig people and the Downtown Sacramento Partnership to print white t-shirts with this week’s hashtag slogan- #HereWeViolateTheCAOpenMeetingsAct for the people they bring in to fill the city council chambers.

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