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.

Virginia Beach arena to be paid for by (reply hazy, ask again later)

Well, that was the epitome of anticlimax. Yesterday’s big Virginia Beach arena announcement turned out to have no mention of the Sacramento Kings or any other teams, no discussion of how an arena would be paid for, and really, no details at all. What it did have: effusive promises about economic impact and job creation. Old Dominion economist James Koch put his name on the economic projections, but as one Virginia Beach city council member noted at yesterday’s hearing, all of his data came from the arena proponents, so it’s unclear what he did beyond running the numbers through a modeling script.

Even then, though, Koch did come up with a figure for how much an arena — provided it attracts an NBA team, 200 events a year, and so on — would generate for Virginia Beach in terms of new tax revenue. (Tax revenue is the key number in these things, not “economic impact” — except for the taxes paid, it should hardly matter to Virginians whether money is changing hands between team owners and players, or between arena builders and construction contractors for that matter, in their town or somewhere else.) That figure is: $5.2 million a year. So in the best-case scenario, we can say that the benefit to Virginia Beach would make it worth dedicating about $5.2 million a year toward an arena. That’s enough to pay off maybe $75 million in arena costs, meaning the other $200-325 million would have to come from Comcast’s pockets.

Whether that’s going to happen, unfortunately, we have no clue, as there’s currently no financing plan for the arena — that’s something the city and Comcast plan on working out between now and October, which is an awfully short time to find hundreds of millions of dollars in between the sofa cushions. But hey, why worry yourself over things like how it’ll be paid for when there are pretty pictures to paint? After all, it was so much fun the last time.

Virginia Beach mayor floats TIF district for NBA arena

The awesomely call-lettered Virginia Beach TV station WAVY has another report on that city’s arena plans today, though pretty much all of it is just he-said-she-said on who likes the idea and who doesn’t. There is, however, one interesting tidbit from Mayor Will Sessoms:

“I would look for help from the Commonwealth, from special tax districts at the oceanfront, perhaps an increase on the tax on hotel rooms and ticket sale revenues which could be huge,” Sessoms said.

This is the most specific that anyone has gotten about how on earth this $275-400 million arena would be paid for, and indicates that when Sessoms said that “revenue generated by the arena” would help pay for the place, he at least in part meant a TIF district to kick back arena taxes to pay for construction. Add in hotel taxes and “help from the Commonwealth” (aka state subsidies), and there’s really no telling how much of a taxpayer subsidy we could be looking at here.

All of which would help explain why Comcast-Spectacor, let along possible the owners of the Sacramento Kings, might be considering Virginia Beach as a workable place to build an NBA arena. Hopefully, more details will be forthcoming at today’s city council hearing, but right now this doesn’t look too promising.

Virginia Beach council to hear arena proposal tomorrow; Kings’ involvement still a mystery

Okay, we now know way more about the Virginia Beach arena proposal that was first rumored last week:

  • The official announcement will be at a city council hearing tomorrow at 3 pm, where Comcast-Spectacor will present plans for an 18,000-seat arena across the street from the Virginia Beach Convention Center. Comcast-Spectacor subsidiary Global Spectrum, which manages sports venues, and arena booking agent Live Nation will also be on hand.
  • The estimated cost of the arena would be between $275 million and $400 million, according to Virginia Beach Mayor Will Sessions, who added, “This is something Virginia Beach cannot take on on its own.” While Sessions said that Comcast-Spectacor indicated that “revenue generated by the arena” (which as we’ve seen before, could mean either actual arena revenue or kicked-back arena taxes) would help pay off any arena bonds, but also indicated he’d be asked for help from the state and the NBA as well.
  • A Virginia Beach spokesperson said that Comcast was “guaranteeing” a pro sports team as part of the deal, but wouldn’t name the team.
  • Even without naming names, this has been enough to get some people in Seattle panicked that someone else will steal the Sacramento Kings before they do.
  • Former Heritage Foundation economist Ronald Utt makes the should-be-obvious point that basketball arenas aren’t big economic boosts to cities.
  • The Kings owners the Maloof brothers aren’t expected to be at tomorrow’s council hearing, and say they haven’t spoken with Virginia Beach about its plans, but sports owners lie like eight-year-olds.

More tomorrow. You can tune in here, if you can tear yourself away from the Republican convention or the drowning of New Orleans.