Sacramento’s arena plans lack county approval, face billboard opposition, may not get fast-track benefit

More news continues to trickle out about the Sacramento Kings arena term-sheet-but-not-yet-actually-an-official-financing-plan that was approved two weeks ago, and a few more holes have turned up:

  • Sacramento County is supposed to kick in $600,000 a year for arena construction (enough to pay off maybe $10 million in bonds), but according to the Sacramento Bee, “county officials say they have not had any detailed discussions with the city this year about a county contribution – and Supervisors Don Nottoli and Phil Serna expressed surprise at a recent city staff report that says ‘the county has agreed to contribute’ funds.”
  • The city’s plans to give the Kings owners the rights to erect six electronic billboards along local highways — potential value, $3 million a year — is being challenged by Clear Channel, which says it won the exclusive right to erect electronic billboards in a 2009 RFP.
  • The law passed in 2011 to fast-track large California development projects had its section allowing projects to skip over trial courts and go straight to appellate courts ruled unconstitutional by a state judge a week ago Friday, which diminishes any benefit that was expected to provide for Sacramento as far as being able to get an arena open sooner than Seattle.

Now, none of these are the kiss of death: The county money will probably be approved eventually, and in any case isn’t that much; Clear Channel doesn’t seem likely to sue over the billboard thing, though it may demand other inducements (more billboards?) to go away quietly; and the fast-track thing isn’t considered to be a major issue either way. Still, right now perception counts, as the NBA gets set to render its verdict (one of these weeks or months, anyway), and it’s Sacramento that’s been getting the negative headlines about its arena plans the last few days. Still, there’s an awful lot of ballgame left to be played.


35 comments on “Sacramento’s arena plans lack county approval, face billboard opposition, may not get fast-track benefit

  1. None of these items would be able to stop this project by themselves, but taken in total, where the NBA is supposed to provide an answer by the 19th, they’re probably pretty damaging. Seattle has a substantial lead. If they can somehow show that it’s also an insurmountable lead, any delay past the 19th won’t be very long, but it will be pretty predictable.

    Don’t forget we also have pending lawsuits and also the issue of how much money will bond sales against that parking REALLY raise. I’ve thought all along that $212M is a very high guess, and that $448M for an arena at that location is a very low guess.

    Seattle just seems very solid to me right now. Kings fans need Seattle to have a setback. Maybe the NBA just needs to see the result of the I-91 lawsuit. It’s just too bad I-91 was written in crayon.

  2. Your help is desperately needed in Sacramento, Neil.

    http://www.sacbee.com/2013/04/08/5323690/job-front-what-sacramentos-job.html

  3. What unexpected news!

    This is quite unlike Sacramento.

    The government and local yokels and developers in Sacramento are some of the finest most upstanding citizens in the world!

    Why it was an unexpected surprise when the City Librarian hired a bunch of crooks and when the crooks were given prison sentences the poor lady quit! All certified and backed up by the local government who appointed her! But that’s not what Sacramento is all about, no sirreee…why Sacramento is just a den of purring individual enterprise and determination with all absolutely devoted to limiting the size and scope of government!

  4. From that SacBee article: “You can’t deny the fact that if we lose the Kings, we will lose jobs.”

    Don’t make me go get Roger Noll again, people.

  5. A couple small issues pop up in Sacramento and Seattle fans spin that practically as victory? It has to be so hard to be a Seattle basketball fan right now. So much crowing for months about how Hansen’s deal to buy the Kings would definitely bring the Kings to Seattle. That small group of hardcore fans was practically lining up at KeyArena for tickets.

    And now? They’re scared. They also know that it could be several years before Seattle can get a team again. Could Hansen keep fan interest high in the interim, amid all the disappointment?

    At worst for Sacramento, this is a dead heat on arena deals. And a dead heat goes to Sacramento. The Seattle arena deal is already fighting two lawsuits (not prospective, actual lawsuits) and more will come after the EIS is completed. And Seattle’s arena deal isn’t binding either. No final approval has been granted. Plus, unlike Kevin Johnson, Seattle Mayor Mike McGinn is a dead man walking. He’s out of office in November. Not even because of the arena but because he’s incredibly unpopular and a bad mayor.

  6. MikeM: You said “Don’t forget we also have pending lawsuits and also the issue of how much money will bond sales against that parking REALLY raise. I’ve thought all along that $212M is a very high guess, and that $448M for an arena at that location is a very low guess.”

    I think that parking number is far too high and always has been. I think that is part of why the city switched to a parking-bond model because it allows them to just make up any number that suits them. If they were still considering selling the parking they would actually receive real bids, from real companies and those bids might end up a lot lower than the city is hoping.

  7. “At worst for Sacramento, this is a dead heat on arena deals.”

    Yeah. Right now, not seeing that at all. Suffice to say I don’t agree.

  8. KevinS, they probably did receive informal bids. I can see KJ going to the parking companies and asking them, one by one, if they’d give $250M for the parking, and KJ lost count of the number of negative responses he received.

    Isn’t there bonding against the parking lots already? So if someone told the City the parking was worth $212M, that doesn’t mean they’d raise $212M; it would mean the most they could raise is the equity they have.

  9. Yep, I’m sure they got informal bids and they weren’t what they hoped for.

    According to this study done last year:

    http://www.cityofsacramento.org/arena/pdfs/ESC_Update_Parking_Monetization.pdf

    The value of the parking is estimated at somewhere between 170 million and 245 million. I’m guessing probably closer to 170 million.

    Also:

    “Three of the parking garages are encumbered with tax-exempt bond debt which would have to be paid off upon monetization requiring payment of a total of $52 million for bond defeasance and IRS private use penalties.”

    I’m not sure how this works out in regards to bonding out the parking, again.

  10. It’s now battle of which city could get the shovel in the ground first along with who will have the better building in the next 2 or three seasons- Key Arena versus Sleep Train Arena. The Clear Channel thing is a non-issue. But hey could make life difficult because their competitor in billboards and Radio, CBS, has the radio broadcasting rights for the Kings but the CBS radio station that broadcasts Kings games will be loading up on Oakland A’s game so that may not be an issue. The County BOS is not going to get in the way. The local electeds here seem to respond well to young guys in white t-shirts and those characters will show up to county BOS meetings too. But I do have to say that Sergio’s comments on here do sum things up pretty well.

  11. Enter Milwaukee- a conference that discusses the Pittsburgh, Seattle, and OKC experiences. I’m sure Sacramento was mentioned: https://law.marquette.edu/current-students/new-milwaukee-sports-and-entertainment-arena-divining-benefits-and-dividing-costs

  12. One whale down, two to go. Also, KJ just said that Burkle is out as BOTH team owner AND arena developer. Just involved in “economic development” around the arena. So sacbee seems to be wrong on this one.

    http://www.sacbee.com/2013/04/08/5325689/burkle-to-focus-on-building-arena.html

  13. Better building is a factor ? One in Seattle hasn’t hosted the NBA for 6 years and doesn’t have the infrastructure for HD broadcasts. Where the old NBA practice facilities were (and a big parking garage) now stands the Bill and Melinda Gates Foundation headquarters. The arena in Sacramento had a game in there on Sunday and has a practice facility (that the team owns if I read correctly).

    It may be run down, but I think Sacramento would have the “current arena” advantage unless Hansen has some special plans for “intermediate upgrades” that would be impossible for the Sac whales.

  14. I had to run off to verify Griffin’s comments.

    Verified.

    http://www.usatoday.com/story/sports/nba/2013/04/08/sacramento-kings-ron-burkle-nba/2064661/

    Neil, if I’m not mistaken, this would have to be considered a major change to the term sheets. Does the 7-2 vote mean a thing now?

  15. ChefJoe: Part of Hansen’s presentation to the committee last week was $20M in upgrades to Key Arena.

    I think that’s your answer.

    Also, Kings games are broadcast in HD. Just pack up that equipment and ship it north.

  16. Daniel Kaplan of Sports Business Journal predicts the Kings will stay in Sacramento because the Seattle deal relies on Hansen/Ballmer taking on more debt than the JacoRanaStrov group.

  17. Well, Jason, they’re taking on more debt, but with Burkle now basically out, they have about 10 times the assets. If you’re analyzing debts, you have to analyze assets, too.

  18. MikeM, the $20 million is a number that nba.com David Aldridge pulled out of lord only knows where. Hansen has resisted putting a firm number/plan on the upgrades and only committed to $7M (which would be funded by various tax collections at the KeyArena, and $5M of that $7M follow the WNBA team if they chose to sign onto a SoDo arena use). He said there would be a mix of permanent and portable (food vendor setups, various TV screens, maybe a scoreboard) upgrades to be done, but it’s certainly not $20M in permanent building renovation.

  19. Oh, ChefJoe, who are you gonna trust, Aldridge or Me?

    Think carefully before answering.

  20. Ballmer/Hansen may have more assets than the Sacramento group but Seattle is relying on a smaller arena subsidy. Ballmer/Hansen have enough cash to borrow less. From watching last week’s press conferences, I still think Sacramento has pulled close to even with Seattle. Now it’s a race to get a building up. Regardless of what’s being looked at for Key Arena or Sleep Train, David Stern describes both as “suboptimal.” On the Sacramento side, I do expect that lawsuit to be filed by the end of the week.

  21. Was there a Mike M(aloof) in NY last week ? :-)

    In jest, not trying to insult you by suggesting you’re of the family so hated in Sacramento.

  22. People, I’m really, really getting tired of reading comments like “Sac has pulled even with Seattle” or something to that affect. No matter how much the Sac media and KJ want to spin things, these are NOT competing bids. The Maloofs have entered into an agreement with the H/B/N group from Seattle and NO ONE ELSE. Everything Sac is doing right now is merely a contingency if for some non-existent reason the BoG denies the sale of the Kings to what will be the most affluent ownership group in the league. Even after that denial, the team isn’t automatically awarded to the Sac group. This isn’t ebay, people.

    I come to this site hoping to participate in a logical, unemotional analysis of this situation. I read enough biases from commenters on the Seattle Times and SacBee websites. C’mon now, folks. Please check your emotions at the door and analyze this situation without personal bias.

  23. Actually, I am part of a hated family in Sacramento, just not THAT one.

    And I agree with you, Jeff S. However, even Neil has told me, several times, this is a sports league, they can do what they want.

    I just think today’s news completely botches things up for Sac. Jacobs, Matrov and Ranadive were supposed to overpay for the Kings, and Burkle was supposed to build the arena. Now Burkle is out of the arena side, which means Jacobs, Ranadive and Mastrov are supposed to overpay for the team, AND pay for the arena? Their level of investment just increased by an average of $65M each? That cannot be good.

    This is a setback in Sacramento at a time when Sacramento needed a setback in Seattle. Next sports analogy: Seattle just scored 4 in the top of the ninth to take a pretty safe lead, and their star closer is coming in.

    This really is exactly the opposite of what the Sacramento needed today.

  24. You’re right, of course, Jeff S., except for one thing: The NBA’s decision is effectively going to come down to “let the sale to Seattle interests go through” vs. “make the team stay in Sacramento.” So while these aren’t actually bids per se, the league owners are likely going to treat them as such.

    I am still curious, though, what happens if the sale is rejected and the Maloofs say, “Fine, we’ll keep the team, then.” Does the NBA arm-twist them to sell? Tell them the team will only get an arena deal if they sell? The league has veto power over sales, but it can’t force one if owners don’t want to do it.

  25. Depends on how much money the NBA has loaned the Maloofs and if they can call that debt freely. Something tells me loans from the NBA head office aren’t as regularly structured as mortgage loans, especially knowing how some of these characters own teams through LLCs and people like Paul Allen file for bankruptcy.

  26. Neil, it has been pointed out — fairly, I think — many times in Bee articles that all Sac’s group is doing is assembling a backup offer, to be considered only in the event that the BOG finds some technical reason to reject Seattle’s offer.

    They are going to approve Hansen, but the relocation fee will be SO high that Hansen will genuinely have to reconsider everything. Just you wait and see.

    $75M? Pshaw. That’s yesterday’s news.

    All totaled, between the team, the arena and relocation, we’re going to be looking at $1.2B.

    I told you months ago that Hansen was insane. You’re going to see proof of this very soon.

  27. Sacramento Government has always, well at least for the last 20 years, resembled “The Court of Miracles”…where the lame can walk and the blind can see…

    before Sacramento could madly spend redevelopment money without a care of every repaying it…which drove the city for the last 20 years, including 150 million renovation of the downtown mall that proved to be such a hit over the years…that WAS Sacramento development…government FREE money…

    Moonbeam put an end to that crap including the people paying for “Mermaid Bars”….

    the chickens are coming home to roost in Sacratomato…

  28. Impossible MikeM. How could women swimming in a 40 ft tank not attract a crowd ?
    http://youtu.be/ER6W_3NYiRo

    Oh, you dress the young women up in a mermaid costume with that sort makeup, and further crowd the bar with people just hanging out to watch the tank…. yeah, I see the problem.

  29. New names for Arena in Sacramento:

    Food Max Pavilion

    CVS Arena

    Ronald Mc Donalds Forum

    Grant Napear Center

  30. Good luck with that. Key Bank hasn’t even paid for naming rights to the Seattle Center Coliseum since 2010 (and they were only paying $300k a year for those last two years).

  31. I think the NBA will approve the sale because it is the easiest way to get rid of the Maloofs. I suppose the NBA could try to squeeze the Maloof’s out but what is to stop them from getting a loan from Henry Samueli in Anaheim and moving there in a year? The NBA could try to block the Anaheim move but would risk an antitrust suit. The current situation in Sacramento with the Maloof’s is untenible and the quickest solution is to approve Seattle, especially with Burkle dropping out. Seattle has Ballmer behind the group and he can ake 750M out of his pocket. Not sure the three Sacramento owners can swing 750M.

  32. Naw, If the kings move to Seattle they can’t use Key Arena. One of the reasons given for the Sonics moving is that Key Arena is a dump, and is unuseable for the NBA.

    Even the NBA can’t have it both ways. Either Key Arena is an unusable dump, or the NBA lied about Key Arena when the NBA moved the Sonics. The NBA needs to be made to clarify its position on Key Arena.

    So, if the Kings move to the Seattle area, their arena should be called the Tacoma Dome.

  33. As regards the 100,000 pound with a revolutionary steel structure Mermaid Tank for which a Professional Mermaid (Professional Mermaid? Why do I still bother to go to work?) was hired from LA to instruct neophyte mermaids: If the Kings are moved to Seattle, the Mermaid Tank should move with them.
    The Kings could be renamed the Seattle King Crabs, and the Mermaid Tank could be integrated into the state of the art above court scoreboard. It could be filled with King Crabs and Mermaids.

    And where, pray tell would one acquire live king crabs? Why that is simple, from one of Hansen’s arena shell corporations.
    The King Crabs mascot, Kenny the Smiling Crab, could do pre-game, or half-time shows in the mermaid tanks with the Mermaids. This would allow Kenny the Smiling Crab to be kept separate from the crowd as Kenny the Smiling Crab completely creeps out children, some to the border of Hysteric Catatonia (but that was when Kenny was still Kenny the Crab, and not Kenny the Smiling Crab. We had a big argument about this at King Crabs Rising Central, and the side that wanted to tone down the intimidating presence of Kenny the Crab won. That really pissed me and others off. Yeah, add a smile and turn our awsome crab into some take-off of Chuck E. Cheese. All so some apron string clinging whiny children don’t get frightened. The ones on the border of Catatonia at least shut the frack up. Children are just catered to too much in 2013. I am kind of sick of children, acting so sweet and innocent, but I know their game, in the end they only grow up to be a bunch of pricks, thieves, and wanton fornicators. So, it was decided that Kenny would be a Smiling Crab.).
    Anyway, the Mermaids, Kenny the Smiling (grrr) Crab, and the trained king crabs could do little shows, and lead the crowd in the famous dance know as the Seattle Scuttle: “Clack those Claws, and wiggle your stalks, move side to side like a king crab walks, the King Crabs will win, there’s no time for rebuttal, now we’re all doing the Seattle Scuttle”.
    None of this could happen unless that Mermaid Tank gets moved to Seattle. We deserve and need that Mermaid Tank in Seattle. If I remember right our Mermaid Tank was stolen 5 years ago. The NBA took our team, and the NBA took our Mermaid Tank. That Mermaid Tank is really ours, because someone else stole our Mermaid Tank, and Steve Ballmer has more money than anyone in Sacramento, so that Mermaid Tank really belongs to Seattle.
    A Mermaid Tank integrated into a state of the art above court scoreboard would finally make Seattle a true World Class City.