VA subcommittee: No state tax money for VA Beach arena, but here’s some state tax money

So those Virginia Beach arena plans aren’t quite as dead as we were led to believe. Apparently there’s still a bill kicking around in the state house, and it passed a subcommittee yesterday and moved on to committee, which is no assurance of anything but is still more progress than anyone expected a couple of weeks ago.

What the bill says, and what legislators say it says, is a hilarious lesson in the rhetoric of public subsidies. From the Virginian-Pilot’s report:

When talks with the [Sacramento] Kings were under way, the proposed deal included $150 million in state support. But Del. Bob Purkey, R-Virginia Beach, said today that local lawmakers made it clear to city officials “there was no chance in hell” of a direct state contribution.

Instead, [Del. Ron] Villanueva’s bill allocates state income and sales tax revenue generated by an arena to pay off the construction bonds.

So, instead of a “direct state contribution,” under Vilanueva’s bill the state would take state money collected at arena events and use it to pay off the cost of construction. (Yes, that’s a TIF.) And just to drive the point home, a legislative staff analysis says that the cost to the state treasury “would likely be significant.” But that’s not a state contribution, oh no. Heaven forfend!

None of the coverage of the new bill discusses how much money would be raised by this TIF, but keep in mind that Seattle’s arena sales tax kickback is only expected to be worth $5.8 million (that’s total, not per year), and income tax kickbacks usually don’t amount to that much either — even if you assume a $70 million NBA payroll, and that Virginia could collect its 5.75% income tax on the entire year’s earnings, not just the part of the year the NBA season was underway, that’s still only about $4 million a year. But, hey, you gotta start somewhere. And at least now the Virginia Beach arena advocates know that some legislators consider some tax dollars to be more public than others.

VA Beach, Comcast declare arena plans dead (for now)

And this just in from WAVY-TV in Virginia Beach:

Today, Virginia Beach Mayor Will Sessoms and Peter Lukko, the president of Comcast Spectacor, will release a joint statement regarding their ongoing negotiations to get the arena deal done.

Unfortunately, those negotiations are at a stand-still.

So, the Kings will not be signing an agreement to come to Virginia Beach if the arena is built.

At least not now.

And here’s the text of the Sessoms-Comcast statement, which says that while “we both firmly believe that Hampton Roads is ready for a large sports-and-entertainment venue,” “we have not reached a level of progress that will allow the city to go before the General Assembly to request the necessary funding.”

So on the spectrum of possibilities, this is pretty much “nothing has been accomplished but that everyone will reconvene at a later time to try again.” Sessoms will not ask the state legislature for $150 million toward the arena project this session, Comcast Spectacor will take their ball and go home for now, and everybody will forget this entire “NBA in Virginia Beach” thing ever happened. Until the next time there’s talk of a team moving somewhere, when suddenly people will be able to raise Virginia Beach as an option without people laughing (too loud, anyway). This is arguably moderately good for Virginia Beach’s profile, and outstanding for NBA teams seeking leverage with their current cities.

And speaking of NBA teams, this still leaves the Kings without a relocation target, less than two months before the March 1 deadline for the 2013-14 season. There’s always Seattle — KING-TV reporter Chris Daniels is already predicting the Seattle rumors will heat up imminently — but that would require selling the team to Chris Hansen, which the Maloof brothers still insist they don’t want to do. Unless Hansen is prepared to swoop in and overwhelm the Maloofs with an offer — which would be kind of dumb now, since he’d be bidding against himself — and the Maloofs are prepared to accept it — and the Maloofs have never been known for being ready to take action on anything more complicated than ordering appetizers — it’s probably a pretty safe bet that the Kings will be back in Sacramento, for next season at least.

VA Beach mayor, Comcast plan joint arena announcement tonight

Virginia Beach Mayor Will Sessoms and Comcast/Spectactor are set to issue a joint statement tonight on their attempts to build an NBA arena. The statement is set to be issued at a city council hearing that starts at 6 pm and … that’s all we’ve got, really. This could be just about anything: an announcement that the Sacramento Kings are ready to move in once an arena is built, that a team has committed to move in if there’s an arena without giving any details, that enough progress has been made that Sessoms has agreed to extend his deadline, or even that nothing has been accomplished but that everyone will reconvene at a later time to try again. Or, I suppose, they could be announcing that nothing’s gotten done and everyone is giving up, but 1) it seems odd that Comcast/Spectacor would be present for that, and 2) at no point has it seemed like Sessoms is ever going to give up, no matter how many ultimatums he issues.

Anyway, we’ll know more tonight. If I had to put my money somewhere, it’d be on “vague pronouncement of progress that’s enough to keep pushing forward,” but I’ll freely admit that that’s nothing more than a total guess based on the other options seeming even less likely.

VA Beach mayor: Give me team by Monday or I take my ball and go home

Okay, so now Virginia Beach Mayor Will Sessoms says he not only wants an NBA team to commit to moving there before he’ll build an arena, but he wants the commitment by Monday. Yes, this Monday:

“We have a timeline that is right upon us to go to state to ask for a substantial amount of money,” Sessoms said. “We are not going to go up there and make a fool of ourselves. I need to know something by Monday.

“I don’t want to be wasting people’s time or my time if we are not going to bring some conclusion to these negotiations quickly.”

Hearing this, I’m officially taking my money off of “hoping desperately to shake loose a commitment from theSacramento Kings that he can take to the state legislature” and putting it on “setting ridiculous deadlines so that when the arena deal crashes and burns even more than it has already, he can blame Comcast for not getting a team instead of himself for not having any idea how to pay for the damn thing.”Monday. Sheesh.

The less-likely, still crazy interpretation is that maybe Sessoms knows that the Kings owners are close to a deal to move to a Virginia Beach arena if one gets built, and is trying to get them to sign on the dotted line already. (Or that one Maloof brother is ready to sign and another isn’t, say.) Still, the notion that whatever’s keeping the Maloofs from moving to Virginia Beach is likely to be wiped away by an abrupt deadline would be … I already said “crazy,” so let’s go with “speculative.”

VA Beach mayor: Team first, arena deal second

Correct me if I’m wrong, but I think this is a new position for Virginia Beach officials:

With the start of the General Assembly session looming, city officials are waiting to see if the company that would operate the estimated $346 million arena can reach a deal with the NBA team targeted as the building’s anchor tenant. Sources have said since August that the team is the Sacramento Kings.

If an agreement is reached, city officials can make the pitch to state lawmakers for $150 million to help build the 18,500-seat arena. If there’s no deal, the project is dead.

Mayor Will Sessoms said he hopes to hear this week from officials at Comcast-Spectacor, the company negotiating with the team, about which way it will go.

“It’s critical,” he said of an agreement. “I can’t go to Richmond and plead for money if we don’t have a deal.”

Okay, so now the owners of the Kings — sorry, of the “unidentified NBA team” — need to commit to moving to Virginia Beach before the arena plan will proceed? As much as I always warn against building arenas on spec, since then all you end up with is an empty building and no leverage to acquire a team, there’s pretty much no way that any team is going to commit to a move — especially to a smallish market like Virginia Beach — until they see what the arena deal is going to look like. So nice try.

Of course, Sessoms has been the #1 booster of this deal, so it’s always possible what he’s doing here is sending a message to would-be arena developers Comcast/Spectacor: “Please, throw me something about the Kings moving here so that I can take it to the state, because otherwise they’re going to tell me to get lost again.” And it’s always possible that the Maloof brothers would be willing to sign off on a vague “If you build it, and we like it, then we will come” kind of commitment. Doesn’t seem bloody likely, given the Maloofs’ track record, but if this is the only way to get the state legislature interested, no harm in asking, right?

Virginia Beach asks residents: Would NBA arena be cool or what?

There may be no money for it, but that’s apparently not going to stop Virginia Beach from plunging on ahead with plans to build its $426 million NBA arena, or at least talking a whole lot about plunging ahead with it. The latest came Tuesday, when a city council committee held a town hall meeting at which local residents could weigh in on such questions as “What intrigues you about the idea of having a sports and entertainment venue in Virginia Beach?” and “What concerns do you have about the arena project?” (Okay, those were actually the only two questions. “What have city leaders been smoking?” inexplicably failed to make the cut.)

According to WAVY-TV, “The moderators did not encourage or discourage any of the comments. Instead they wrote them down, to bring them back to city council.” WAVY didn’t provide much detail on the comments either, so we’ll have to hope that the council provides a full public accounting, which I’m totally sure they will. The council also took the opportunity to hand out its latest PR documents on the arena plan, in case anybody was feeling insufficiently intrigued.

Meanwhile, an official at the city’s convention center says that what intrigues him about an NBA arena is that it would enable the city to tap into the lucrative world of arena lacrosse and religious assemblies. “They’re meeting in the cities, like the San Jose’s of the world, the Omaha, Nebraska’s and we feel we have a similar product and we could go after those groups,” said Convention and Visitors Bureau VP Al Hutchinson. Which marks the first time in recorded history that anyone has used Omaha as a favorable comparison as opposed to, well, you know. Congratulations, Omaha! You’re moving up in the cautionary tale world!

VA gov: No money for VA Beach arena — yet

Apologies for being a bit behind on bringing you the latest news: First stories started breaking late on Friday night, in contravention of the usual news cycle (let alone my sleep cycle), and then I was out of commission a good bit of this morning recovering from last night’s trip to Saturn. Anyway, without further ado:

On the aforementioned Friday night, Virginia Gov. Bob McDonnell threw a sizable roadblock in the path of the proposed Virginia Beach arena, declaring that he would not include $150 million in requested state money in his new budget. Since Virginia Beach is already facing a steep enough climb coming up with its own $195 million for the project, that pretty much sinks the plan, for this fiscal year, anyway.

Not, though, probably forever. Here’s what state Virginia Economic Development Partnership president Martin Riley actually said in his statement on Friday announcing McDonnell’s denial of funds:

“Should the city have a detailed financing plan, or alternative plans, that provide more clarity on what the revenue sources are for building the arena and how they will be applied to retire the city’s debt obligation, this would certainly be helpful for the administration to receive,” Riley wrote.

To which McDonnell spokesperson Tucker Martin added:

“Virginia Beach officials were informed this afternoon that the governor’s budget amendments will not provide resources for this project at this time, as the VEDP analysis is ongoing.”

So basically this is less a “no” than a “Seriously, guys, you want us to hand over $150 million for a funding plan that’s put together out of Tinkertoys and chewing gum?” There’s nothing stopping Virginia Beach from coming back to the state in future years, and subsequent reports have even indicated that McDonnell could reconsider his decision during the legislative session that begins in January, if the city has its funding ducks in a row by then. All of which means it’s not all that likely that the Sacramento Kings would have time to put an arena deal in place in time to meet the March 1 NBA franchise relocation deadline, but really, that wasn’t very likely in the first place — even if you think that the Maloof brothers, unlike everybody else on the planet, take Virginia seriously as a relocation site, that would have been an awfully quick turnaround for an arena plan.

So, unless the Maloofs have an abrupt change of heart and decide they’re willing to sell their team to Seattle’s Chris Hansen, I’d lay at least even odds that the Maloofs decide to wait out 2013 and see what they can shake loose from Virginia Beach with a bit more time. Even if they don’t really want to move there, after all, it’s always good to get some extra bids to drive up your price.

Virginia Beach arena to require $391m in public money, still no clue where it’d come from

The Virginia Beach city council gave its nonbinding agreement last night to move ahead with talks for a new $426 million arena, which is no real surprise, given that it’s nonbinding, and they’ll get a chance to vote on any actual deal once there’s one to vote on. But it does mean that Comcast-Spectacor can go back to the owners of the Sacramento Kings and say, “No, seriously, are you actually going to move here and what would it take to get you to do so?” which is kind of an important question.

As for how this arena would be paid for, Mayor Will Sessoms presented this new framework, according to WAVY-TV:

  • $195 million from the City of Virginia Beach
  • $35 million from Comcast-Spectacor
  • $150 million from State of Virginia (including moving costs for a sports team and initial construction)
  • $46 million borrowed

Um, er, yeah, you guys know that money that’s borrowed has to be paid off somehow, right? So who would be paying off the $46 million? Guys? Anyone?

Actually, how any of it will be paid for is still, generously, a work in progress, with proposals including everything from a 1% hotel tax hike (which would generate enough to pay for maybe $40 million of the total) to a $2 per ticket “arena development fee” (which would generate … let’s generously say 150 events a year, average 10,000 people per event, that’s about $3 million a year, covering maybe another $50 million in costs). Presumably Comcast would pay some rent as well, but still we’re talking about a massive funding gap. In other words, we’re still back where we were in August: There are developers willing to build an arena in Virginia Beach, as soon as somebody else figures out how to pay for it.

Maloofs on Kings future: Crazy like a fox, or just crazy?

Ailene Voisin of the Sacramento Bee, in a column that’s otherwise devoted to the dubious notion that the Sacramento Kings owners need to end “their ongoing silence” about the team’s future (what, and give up leverage?), drops a few hints about WTF is going on with all these rumors about the Kings talking about moving to Virginia Beach:

  • George Maloof – the architect behind the near-move to Anaheim in 2011 – is particularly intrigued with a proposed arena deal in Virginia Beach that would be 90 percent publicly funded, with $195 million coming from the city, $35 million from developer Comcast-Spectator and another $150 million from the state.
    Family members and/or their representatives also have had recent talks with officials in Seattle, San Diego, Kansas City, Mo., and St. Louis. … George is the naysayer. Joe and Gavin are attached to Sacramento, but they are unsure about how to breach the emotional and financial separation between the family and the community.
  • The Maloofs are united in their refusal to sell the team, which means the folks in Seattle might look elsewhere. This should be reassuring to Sacramento, because a sale would virtually ensure the Kings’ departure. (The Chris Hansen group in Seattle, for example, would outbid any investors interested in keeping the team here.)
So if Voisin is correct and the Maloofs aren’t simply playing good cop/bad cop with her, then what seems to be happening here is that Seattle is the market where the Maloofs could make the most money, but they don’t want to sell the team and Hansen wants to be an owner, not a landlord. So instead you have George Maloof (and/or his representatives) jetting around the country to try to shake loose a deal lucrative enough that his brothers will give up their emotional ties to Sacramento that go all the way back to 1998.

This doesn’t actually sound like the most effective way to leverage the best deal for your team — “Hey, everybody, let’s refuse to sell to the guy who wants to throw money at us and then bicker among ourselves about what to do instead!” — but then, the Maloofs have a long track record of head-scratching moves, so maybe they really are this dysfunctional. Unless that’s just what theywant us to think, and this is really the world’s longest-running grift.

A funny thing, meanwhile, has started to happen out in the cities that are supposed to be bidding against each other for the Kings: They’ve started to pay attention to what the others are doing, and not just in an “Oh my god, somebody else wants the team too!!!” kind of way. From an editorial in yesterday’s Virginian-Pilot:

In Seattle, which is building a $490 million arena, the city has required the developer to personally guarantee the $200 million public investment if rent and admissions taxes fall short. His net worth must remain at least $300 million, and Seattle will audit him each year to ensure he’s capable of making the payments.

Admittedly, this isn’t the most important part of the Seattle arena plan — that would be that Hansen is agreeing to sizable rent payments that will rise to meet the bond payments if there’s a shortfall in tax revenue, something that Comcast hasn’t promised to Virginia Beach so far as I know. But at least newspaper editors have learned to look at other cities for examples of how to negotiate better sports facility deals. Baby steps…

Virginia Beach to ask state for $150m for arena to lure Kings

Laugh all you want, but Virginia Beach is still taking seriously its chances of building a new arena to lure an NBA team (presumably the Sacramento Kings), with Mayor Will Sessoms last night formally directing his staff to ask the city council to ask state officials for $150 million to help build the thing.

Actually, only $70 million would go to the arena, according to WAVY-TV sports director Bruce Rader, with the other $80 million going to pay the Kings’ NBA relocation fee and to compensate them for playing at Old Dominion’s arena while the new one is being built. This could mark a new trend in sports deals — we’re not asking you to subsidize the arena, we’re just asking you to subsidize the team! — except that we still don’t know whether the city is going to be asked for additional subsidies for the arena itself, since the full finance plan is still a mystery. [UPDATE: Sessoms now says the city would be putting in $195 million; it’s only where the money would come from that’s a mystery.]

As far as the state’s concerned, is there any way that $150 million could be a reasonable expense to lure an NBA team? An economic impact study last month projected $11 million a year in new tax revenues for Virginia, which would just about barely pay for a $150 million lump-sum payment in present dollars — but that was based entirely on numbers provided by the arena developers, so should probably be taken with a large grain of salt. Would it be too much to hope that the Virginia legislature would have the good sense to authorize an actual independent economic impact study before voting to shell out arena money? Mm, yeah, probably.