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.

Maloofs spotted watching old episodes of “The Virginian” on Netflix

Two unidentified people who were at a briefing by Virginia Beach economic development director Warren Harris about new arena plans last Thursday have told the Virginian-Pilot that Harris said Virginia Beach Mayor Will Sessoms has met with the Maloof brothers, owners of the Sacramento Kings. Harris told the Virginian-Pilot that he never mentioned the Maloofs or the Kings by name in the briefing, but said that Sessoms has met with representatives of an NBA team. He did not disclose whether he referred to them by code name, such as Loofahs, Sack-o’-Tomatoes, or the Rochester Royals.

Anyway, even if the Brothers Who Shall Not Be Named did meet with Sessoms, people meet all the time without moving, or even seriously thinking about moving. Regardless, this should be enough to spark some panicked headlines out in Sacramento — oh, look, there’s one now.

Meanwhile, a new economic impact report is scheduled to be presented to the Virginia Beach city council on Tuesday, after some councilmembers noted that the first report was entirely based on the arena promoters’ figures and contained some improbable assumptions. I bet this new study is totally going to fix all those problems, though — and if not, it’ll give arena boosters another chance for excited news stories about how much economic impact is projected by the people who would be getting money from the project. It’s a win-win!

 

Virginia Beach could totally have an NBA team next year, says Virginia Beach

When I first saw yesterday’s headline reading “Study: NBA Team Could Move To Virginia Beach In 2013,” my first thought was, as I hope was yours: 2013? Virginia Beach? Who wrote this study, anyway?

And the answer is, the only people who could possibly have written it:

An economic study prepared for the Virginia Beach Development Authority suggests an unnamed NBA team could move to Virginia as soon as next year by playing its first two seasons in various arenas around the state while a permanent home is built near the Virginia Beach oceanfront…

The study says Philadelphia-based sports and entertainment company Comcast-Spectacor has said an NBA franchise is considering the possibility of relocating to Virginia Beach, but it doesn’t specify which one.

So basically, this is one of those studies that was researched by reading newspaper articles from August.

The report also claims that a new arena would generate $503 million a year in new economic activity, and $11 million a year in state tax revenues, and all kinds of other stuff that’s based entirely on figures provided by Comcast-Spectacor. Richmond firm Chmura Economics & Analytics charged the city $31,240 for the study. I’m really in the wrong line of work…

Virginia Beach poll: NBA arena, feh!

Hey, remember that $275-400 million arena plan that was announced for Virginia Beach last month with much fanfare, then promptly disappeared off the radar? A new poll shows that local residents don’t like the idea, opposing it by a 45-38% margin — and like it even less when the tax-kickback financing model is explained to them, with opposition rising to 58-32%.

Virginia Beach economic development director Warren Harris optimistically responded, “It just says to me that we have to put people in a position that they are informed about the project, and then see what the response would be.” Except that in this poll, the more informed residents are, the more they dislike it. Unless he meant a different meaning of “informed.”

Seattle, Virginia Beach arenas counting on nearly double national average in annual events

In my recent Slate article about the Seattle arena plans, I noted that 200 events a year is generally considered the point at which a typical arena can think about starting to turn a profit. Coincidentally, that’s the number of events that Chris Hansen is promising his arena will be able to host annually — and arena boosters in Virginia Beach have projected the same figure for their proposed arena.

So, how many events does a typical arena usually host in a year? I asked the International Association of Venue Managers, and they were happy to supply a figure: In 2010, the most recent year for which figures are available, arena managers reported that they averaged 111 “event days” per year. Out of 64 arenas responding to the IAVM survey only nine — 14% — said they were busy more than 200 days a year.

Obviously, there are exceptions: Madison Square Garden has reported hosting 320 events a year (though other sources say 225 or more than 600, so clearly the science of arena stats still has a ways to go). But for the vast majority of arenas, 100 events or so a year is a far more reasonable expectation than 200. Something for Seattle and Virginia Beach officials to consider.