February 09, 2012

Sacramento rejects arena funding referendum, and other Kings news

Much minor news in the ongoing Sacramento Kings arena drama:

• The Sacramento city council voted Tuesday on a bill to put to a public vote its plan to sell future parking revenues to pay for an arena ... and rejected it, 5-4. Still, the fact that it even came close to passage is being touted as an indication that the council could drive a hard bargain on the parking deal, or something.
• AEG is reportedly looking for a similar deal to what it got in Kansas City in exchange for kicking in money toward a Kings arena. Local news station KXTV says that this would mean AEG would put in about $50 million, leaving the Kings owners to contribute $80 million. The city, meanwhile, would still be on the hook for at least $270 million, which — if AEG gets the same kind of guaranteed profits and high rate of return that it did in K.C. — sounds like a great deal for the arena manager, and no real help in filling the public funding gap.
• Anaheim Ducks owner Henry Samueli broke ground on $20 million in improvements to the Honda Center, promised last year in an attempt to lure the Kings south. Actually, last year he promised $70 million, but what's $50 million among friends?
• Those imminent plans for an arena in Seattle may not actually be that imminent after all. I know, shocker, right?

As the March 1 NBA deadline for the Kings to announce their intent to relocate approaches, it's important to keep in mind that nothing really matters here other than what owners Joe and Gavin Maloof think has the best chance of making them the most money: If they think there's hope of getting a windfall in Sacramento, they'll likely wait and see what shakes out. Given that the alternatives right now are an Anaheim offer that the rest of the league hates and which includes giving Samueli much of their TV money, and a Seattle plan that's even less far along than the current Sacramento one, and I'd be stunned if the Maloofs don't stick around to see what they can get out of Sacramento ... or at least ask for another one of those extensions that the NBA hands out like candy.

February 06, 2012

Seattle rich guy wants to build arena, presumably not with own money

Talk about a new arena in Seattle has been fairly quiet since the Sonics left, at least in public. But behind the scenes, according to an investigation by the Seattle Times, the mayor's office has been talking to a local hedge fund manager about building a new arena to lure teams, possibly targeting the Sacramento Kings or Phoenix Coyotes:

In an initial email laying out his vision, [Christopher] Hansen told city officials an arena could be built with minimal impact on taxpayers...

"I really appreciate it and look forward to making this happen in Seattle," wrote Hansen, a multimillionaire who built a fortune in the private investment world. "I genuinely mean that and am confident that with a little effort and creativity we can find a solution that meets our needs and the City's /State's desire to get a team back to Seattle without a large public outlay."

Hansen offered to provide information on "recent municipal arena deals that have been put together and some of the direct and indirect contributions that the city can make that don't require incremental taxes or direct public funding."

There's the catch: How on earth to raise the cash (the Times article doesn't say, but $400 million is a decent starting point) to build a new arena without charging teams such a high rent that they have no interest in relocating there. Seattle voters approved a referendum in 2006 that requires that the city get a positive return on any investment in a sports facility. The Times speculates that possibilities could include kicking back ticket taxes to pay off arena costs (which could still violate the 2006 law, since the money would be cannibilized from existing local spending) or "increased tax collections tied to a boost in Sodo property values," which is pretty much the definition of "incremental taxes," unless Hansen means something else by that term.

Reading between the lines here, it looks as if Hansen is going to try to find a loophole in the "return on investment" clause in the 2006 law, by claiming that the tax revenues being kicked back to the arena wouldn't exist without it. That's generally a pretty lousy economic argument, but given that this would likely be decided in a court of law, not a court of economics, Hansen might have a chance at pulling it off. And at the very least, it let him get his name in the paper.

Meanwhile, talk of the Kings having another relocation option is likely to heat up talks by Sacramento to sell off their future parking revenues to pay for a new arena there. Not that that has a great shot of success either — while plenty of bidders are interested, it would blow a $9 million a year hole in the city budget that would presumably have to be filled before the plan could go forward — but in the arena game, much of the time it's about throwing as much stuff against the wall as possible, figuring that eventually something will stick.

January 10, 2012

Sacramento solicits bids for parking money to fund Kings arena

The city of Sacramento is moving ahead with that plan to solicit bids for its future parking revenues, issuing a request for qualifications to see who's interested in coughing up $200 million that could be used (part of it, anyway) towards a new Kings arena. City officials plan on presenting a list of qualified bidders to the city council by February 14, at which point the council can issue a formal request for proposals (i.e., honest to goodness bids, not just expressions of interest) that would take several months.

That timetable would seem to be a problem if you read the Sacramento Bee's description of the "impending March 1 deadline from the National Basketball Association for the city to come up with a financing plan for the $387 million facility," after which the league "would give the owners of the Sacramento Kings the freedom to once again explore moving the franchise." Except, of course, that the Kings owners have already said that that deadline isn't to be taken seriously. Unless you're a newspaper writer, that is.

In any case, it's still not clear that the city council will approve this whole mess, given that it would blow a $9 million a year hole in the city budget from now until the end of time. But right now it's the only straw Mayor Kevin Johnson's arena plan has to cling to, so cling they will — at least until the next arena plan with no idea for how to pay for it is ready.

December 22, 2011

Naming-rights musical chairs!

Maybe it's just end-of-year contract cancellation time, but this week has seen a relative whirlwind of naming-rights reversals: A national pizza chain announced it was taking its name off of FC Dallas' soccer stadium, while the Indiana Pacers' arena got a new name thanks to a corporate renaming, the Miami Dolphins' stadium is getting one thanks to its namesake company closing up shop in the U.S., and the Sacramento Kings' arena could get one depending on how its sponsor's bankruptcy proceedings go.

All of which is pretty much old hat in the sports world by now — this will be the eighth name for the Miami stadium in 25 years — but it does make you wonder how much brand value a stadium name when nobody can remember what it's called. (Quick, anyone: Where do the Oakland Raiders play?) So far, companies still seem willing to throw their name onto any building that might get it on the lips of national sportscasters — just look at the San Diego Chargers' stadium, which got a new name that will last only from last Sunday through next Wednesday in order to promote its usual sponsor's new cellphone chip at three major football games. But how long will it last, especially if announcers stop making as many references to stadium names-of-the-week.

It's possible to imagine, even, a world where entire articles could be written about stadiums without ever bothering to mention who has paid to advertise on their sides. But no, that could never happen.

December 16, 2011

Kings owners: By 'deadline' we didn't actually mean 'deadline'

This time, the Sacramento Kings owners didn't even wait until the deadline was up before retracting their March 1 deadline for a new arena plan:

"I'm sure we'll always have flexibility," Joe Maloof told The Bee Thursday afternoon. "The league has always been flexible ... so I don't know about that [a firm deadline]. There are a lot of people working in a positive vein this time, where before, there was a lot of negativity. But everybody is on board. So we're optimistic guys. We want to get it done here in Sacramento."

This gambit will be familiar to anyone who's read Chapter 4 of "Field of Schemes" (and if you haven't, what's keeping you? you can even buy it as a holiday present for that new Kindle owner in your family!) as Step 5: The Two-Minute Warning. But if you need a refresher, Maloof's statement translates into: "Setting a deadline was great for lighting a fire under the mayor and the city council, but now that we have them on the hook, we'd be crazy to be impatient about reeling them in given the hundreds of millions of dollars they're offering us. Especially when the alternative is a kinda crappy deal as a second-fiddle tenant in Anaheim that the league was never going to approve anyway — wait, did I just say that out loud? This is only a hypothetical internal monologue? Phew — otherwise that would have ruined the whole point of planting the deadline threat in the first place."

December 14, 2011

Sacramento approves parking fee sale for Kings, sorta kinda maybe

The Sacramento city council voted 7-2 last night to approve soliciting bids from private companies to buy the city's future parking revenues for an up-front lump sum that could raise $200 million for a new Kings arena, but more likely not.

The Sacramento Bee calls this a "critical step" for the arena plan, but then adds:

Several council members who voted to move forward added they would not support a final financing plan that negatively affects the city's general fund budget, which pays for police, fire and most other basic services.

If they're serious, then this would pretty much rule out accepting any bids at all, since the parking revenues currently provide $9 million a year for the general fund, which at the moment is supposed to be replaced by elfin magic. If they're serious, that is, and not just making soothing noises about how they'd never spend public dollars on a basketball arena, just dollars that, you know, happen to be collected by the public.

We should know more in the next couple of months, once the responses come in and the council has to decide whether to issue a formal Request For Proposals — not to mention as the council figures out how to fill that $9 million gap, not to mention where to find another $300 million or so to meet the Kings' March 1 deadline — yes, another deadline, quit laughing — for a workable arena funding plan.

December 09, 2011

Sacramento releases no details of arena funding

Big news! According to a headline in the Sacramento Business Journal, "Sacramento releases details of arena funding," citing "a report that will be unveiled at Tuesday's City Council meeting." And what are those details?

• The city of Sacramento will contribute "between $170 million to $245 million" that it will collect in exchange for future parking revenue, less $52 million in remaining debt that it has yet to pay off on its parking garages.
• Developers ICON-Taylor, the NBA and the owners of the Kings will pay the rest via "a financing strategy that includes both private and public contributions."

So that's ... uh, exactly the same details we had last week. Only with $52 million less from the parking money. And still no indication how Sacramento will replace the $9 million a year it currently collects from parking fees. They sure don't make details the way they used to.

December 02, 2011

Sacramento can't actually raise $200m for Kings arena by selling parking revenues

Remember way back on Wednesday, when the city of Sacramento said it could raise $200 million towards a Kings arena by selling off future parking revenues? Turns out that Bank of America number-crunchers have determined that the actual number is lower than initial "hopes or expectations," according to Sacramento city manager John Shirey.

And it gets worse, explains the Sacramento Bee:

City officials are trying to determine how revenue from on-street meters could be used for an arena project. State law requires that meter money be used for traffic safety enhancements or to pay for parking facilities.

In addition, the City Council will certainly insist that any privatization plan replenish funds that now flow into the city's general fund from parking. The general fund pays for most basic city services, including police and fire protection, parks maintenance and code enforcement.

Neither of these issues is actually new — see here and here — but it still adds up to: Nobody knows how much money selling future parking revenues could, and in any case that money needs to be replaced somehow. But if you're looking for a way to shift the debate from "How can we pay for an arena?" to "How can we pay for all the stuff we used to be able to afford before we paid for an arena?" then go for it.

November 30, 2011

Sacramento can raise $200m for Kings arena by ... hey, look over there!

Sacramento Bee columnist Marcos Breton, who you'll remember from such new-arena-touting columns as this one, weighs in today with a piece on the Kings arena plans that defies easy diagramming, but I'm going to give it a try:

• Selling off the rights to collect parking fees in downtown Sacramento could generate "as much as $200 million, or slightly more" to use towards building a Kings arena, "according to multiple sources familiar with the details."
• The total arena cost would be $387 million, "but it could go higher."
• A private developer (as yet unidentified, but maybe AEG), the Kings, and the NBA would contribute unknown amounts to the project.
• Parking meters make up about a quarter of the $200 million. "Is it legal to use that money for private use?" asks Breton, then doesn't provide an answer.
• The parking fees currently generate about $10 million a year in revenue for the city — conveniently enough, pretty close to $200 million in present value — "money that would have to be replaced somehow" if the parking were sold off to pay for an arena.
• No other cities in the region are going to cough up money for an arena, and sales tax hikes won't be used, because "regionalism is an empty word around here" and Sacramento is "anti-tax."

So, to sum up: Sacramento can raise $200 million towards a Kings arena by selling a revenue stream worth $200 million, but then needs to come up with some money to pay for all the things that that revenue has been paying for until now. I'm pretty sure I've heard this plan somewhere before...

November 28, 2011

Sales taxes are still regressive, 49ers and Kings still spinning wheels, and other non-news

With Thanksgiving making for an epically slow news weekend — aside from for those reporters lucky enough to cover Black Friday pepper-spray incidents — we were instead treated to a smorgasbord of stadium non-news stories this weekend:

• Rich people pay more property taxes while the poor and middle class pay more sales taxes, reports Cincinnati.com. This is considered newsworthy because the deal to cut property taxes following a sales-tax hike to pay for new Bengals and Reds stadium will mean not just a massive transfer of funds from taxpayers to the sports team, but also from the hoi polloi to the hoity toity: "The half-cent stadium sales tax paid by homeowners is estimated by the county to be a maximum $192 annually, while owners of the county's highest-value homes get rollback rebates of $1,175 or more — netting them nearly $1,000 apiece under the current structure."
• The NBA lockout looks to be over, and everybody in Sacramento is back to saying what they were saying before about a new Kings arena. "Our position from day one is that this has never been about building a facility to benefit a professional sports team," said Mayor Kevin Johnson, who two years ago kicked off his arena campaign by declaring that without one the Kings "very may well look elsewhere." The apparent end of the lockout "is good for the efforts to keep the Kings in Sacramento," said Michael Ault of the Downtown Sacramento Partnership, which is working on efforts to keep the Kings in Sacramento. And a local economic consultant and a woman who runs a restaurant said they hoped the end of the lockout would help the economy. This is considered newsworthy because it's the same thing the Sacramento Bee runs every other day, and the announced resumption of the NBA season gave them an excuse to run it on page one.
• The San Francisco 49ers are winning, but don't have a new stadium yet, writes the San Francisco Chronicle. And they're not especially talking to San Francisco about one, while continuing to pursue one in Santa Clara. This is considered newsworthy because ... okay, I'm stumped on this one. Maybe the reporter was originally assigned to cover Black Friday, but came away empty-handed when no shoppers thought to bring pepper spray?

November 22, 2011

Kings arena name sponsor (predictably) goes bankrupt

Hope you weren't getting to used to calling the Sacramento Kings' arena "Power Balance Pavilion": Power Balance, the maker of silicone bracelets, just filed for Chapter 11 after admitting, under an onslaught of lawsuits, that there's no scientific evidence that the bracelets do anything. Among the firm's unsecured creditors (i.e., people who can pretty much give up on ever seeing their money) are the Kings, who are currently owed $100,000 by the company, and presumably were expecting further future payments as part of the five-year naming rights deal.

This isn't necessarily a catastrophe for the Kings, as they can now grab back the name of the arena and resell it, presumably to someone who makes something that does more than a rubber band. That could be a tough sell, though, as not only are used building names worth less — Pro Player Stadium kept its name for six years after that company went bankrupt as the Dolphins sought a new sponsor — but the Kings are trying to move out of the arena, either to a new building in Sacramento or to another city. Which, no doubt, is why last year they had to resort to partnering with a company that was already being charged with fraud.

Still, there's probably somebody out there who'd be willing to drop a few hundred thousand dollars on an arena name that's guaranteed to get you TV exposure every night of the NBA season ... oh, wait.

November 04, 2011

Sacramento floats using parking meters to pay for Kings arena

With time running out for the mayoral public-private task force Think Big Sacramento to come up with an actual funding plan for a new Sacramento Kings arena, city officials have a new idea for raising money. Let's try to understand it, with the help of the Sacramento Bee's Tony Bizjak:

City officials said Thursday they are looking at ticket revenues as part of a still-forming plan to lease city parking services to a private company for cash.

Assistant City Manager John Dangberg said a consultant's early analysis has found that the value of city garages, parking meters and ticketing revenues is significant — perhaps hundreds of millions of dollars — and could play a key role in generating upfront cash to launch construction of an arena.

Okay, so the city would effectively sell its future parking revenues to a private company in exchange for an up-front cash payment, which would be used to help pay for an arena. So then what happens when the city notices it's no longer getting those parking revenues?

City Councilman Rob Fong said any parking funds used for an arena would have to be replaced by revenues from other sources to replenish any annual parking revenue loss to the city general fund, which pays for basic city services. That amount is undetermined, but could be at least $6 million annually.

Er, what? So in order to solve the problem of where to get money for an arena, the city would sell off its parking meters, and then would instead only be left with the problem of where to get money to replenish its parking-meter fund. That's some kind of contest, but it's not basketball.

October 12, 2011

Lockout hurts Kings arena push (or not), hurts Sacramento economy (or not)

Meanwhile, in the never-ending Sacramento Kings arena saga:

• The Sacramento Bee reports that the NBA lockout could cut into public support for a new arena for the Kings, though most of their evidence is a single arena task force member who admitted, "It's not an issue that helps anything" and said the lockout "have some psychological impact." However, the official, Downtown Sacramento Partnership president Michael Ault, also said the arena is "about more than sports" and would likely move forward even if the Kings moved — which is the first time I'm hearing this, and pretty alarming given that the only ones demanding a new arena are the Kings. (Dave Grohl seems happy enough with the old arena.)
• Sacramento Mayor Kevin Johnson declared that the loss of four Kings home games already to the lockout represents a "big hit" to the local economy. Jeez, doesn't anybody around here read Slate?

October 06, 2011

Sacramento, AEG hold talks about plan for talking about plans

Sacramento city officials and would-be Kings arena builders ICON/Taylor held their first meeting with representatives from the arena-management company AEG yesterday, and emerged with an agreement that this meeting thing is a keen idea:

In a joint statement, Mayor Kevin Johnson and City Manager John Shirey said the conversation focused on making progress before the end of the year.

"All sides expressed a desire to continue to work collaboratively," it read. "Our focus is on putting in place a public-private partnership that will put the taxpayers first and generate more than 4,000 jobs and $150 million in annual economic activity in the city."

Before the meeting, Shirey had issued a memo that the meeting with AEG was only a "preliminary technical discussion," and adding: "Following this discussion, we will lay out the process and timeline that formal discussions and negotiations will take place. Our collective goal is to reach a definitive financing plan by the end of the year."

As for the elephant in the room — the fact that the city still doesn't have a set funding plan — that wasn't mentioned in either of Shirey's statements. Not in the room, meanwhile, were representatives of the Kings:

Kings co-owner George Maloof, asked about the Dallas meeting, said, "We weren't invited."

"They're going to meet and they're going to get back to us," he said. "That's been the process. It's a little strange, but we're anxiously awaiting what they have."

He said the city and the developers have been extremely busy and "we've left them alone," adding that the Kings' owners have not been approached with a proposed annual rental fee.

"Nobody's put a number down," he said.

Arena talks are lots of fun, until it's time for somebody to pick up the check.

September 26, 2011

AEG sniffing around Sacramento Kings arena deal

Take this with a grain of salt, but: AEG, the entertainment giant that is trying to build an NFL stadium in downtown Los Angeles, is reportedly "interested" in being part of a Sacramento Kings arena project.

"We have made the mayor aware that ... any assistance he would like to ask us for, we would be interested," AEG spokesperson Michael Roth said on Friday. (Oddly, none of the news outlets reporting this indicate what Roth said in the ellipsis. I'm willing to make my own guess, though.)

This is likely just tire-kicking: "Sure, if you figure out a way to build an arena, we'd love to manage it. We still get to pay ourselves guaranteed profits before the city sees a dime for repaying its debt, right?" Still, the announcement provides a smidgen of momentum for the arena plans, which is a smidgen more than they had yesterday.

In related news, meanwhile, the Sacramento city council is set to vote tomorrow on a city plan to spend $555,000 to hire a consultant to analyze its arena proposals and negotiate with the Kings. That price tag is about par for the course, and isn't a terrible idea — as noted here previously, one reason cities often get stuck with terrible leases is because they don't have experts on their side — but it all depends on what they're buying. The biggest contract would go to Barrett Sports Group, which has a long record of working for both government and team clients, which is promising; their website also prominently features a quote from NFL commissioner Roger Goodell on their expertise in "finding solutions to the always-complex challenge of developing stadium facilities," which is less so, given that you want an arena evaluator to tell you whether to build a new building, not just how to do so.

September 22, 2011

Kings arena costs uncertain, could steal funds from other projects

The Sacramento News and Review has a good rundown today of where things stand in the Sacramento Kings arena campaign, and it goes a little something like this:

• The $387 million price tag is just a guess, and doesn't include land costs (the site was initially bought with money earmarked for transportation projects, so the transportation fund would "have to be reimbursed $10 million to $20 million, maybe more") or infrastructure costs (including building new streets and sewers). Also, whether a new freeway interchange will be needed, which won't be known until a traffic study is done — which can't be completed before the Kings' March 1 deadline to decide on building an arena.
• The site of the Kings' current arena could require an "incentive package" to get new development there once the arena is gone. But "we don't have any money with which to incentivize anyone," according to Sacramento city council member Rob Fong, an arena proponent. One possibility: Giving extra city-owned land near the arena to a developer as an incentive for building there ... except that sale proceeds from that land are already being included as one way of paying for the arena. "Clearly, that land can't be sold to raise money, and also be given away to entice a developer," notes the News and Review. Oh, can't it?
• If you're going to be selling off city land and investing in city infrastructure, it's worth considering whether doing other things with the money would be more effective than building an arena. "The city can always sell land, but it makes the most sense for a one-time expenditure that brings a stream of benefits into the future," Sacramento State University economist Rob Wassmer told the paper. An arena could fit that bill, he said, "but so would the building of a new public park or a bike trail." Adds California Budget Project director Jean Ross: "There are a number of options which could potentially touch the lives of a broader range of residents, and have a greater impact on Sacramento as a place to live, work and play You could build world-class science labs in all city schools. You could invest in endowments for pre-school programs and after-school programs. You could Wi-Fi all of downtown. You could improve parks and other facilities that far more people would actually use over time."

Or you could renovate a local community theater, which is what Sacramento has been planning to do with $50 million of the money that could now be redirected to a Kings arena. "The Community Center Theater needs a renovation to add more seating and make it A.D.A. complaint, without it, there will be no Broadway season," Broadway Sacramento director Richard Lewis told the local ABC affiliate. Question: Is that factored into the arena proponents' economic impact projections?

September 14, 2011

Sacramento council okays negotiations with developer to build something for Kings, someday, somehow

The funding plan may remain a work in progress, but the Sacramento city council voted last night to okay the city to work on an exclusive development deal with the ICON-Taylor group to build a Sacramento Kings arena. You'll remember ICON-Taylor from the last time they were picked by the city for an exclusive arena deal, though you may also remember co-developer David Taylor from the time last week that he promised that "big-time developers" would surely starting building all kinds of stuff if only exclusive arena rights and lots of public subsidies were first granted to, um, him.

The council's gung-ho-ness notwithstanding, there are still a number of issues to be worked out before any arena deal to go forward. Among those identified by city staffers: the proposed arena site needs toxic cleanup and water and sewer changes, the city would need to buy an additional two-acre parcel of land, and the site needs an extra 1,500 to 1,800 "premium" parking spaces. And, of course, the city still needs to figure out exactly how to pay for the whole mess.

A reader who was at last night's council meeting further reports that it's against state law to selling parking meters to a private entity, which would rule out that form of arena funding; that an environmental review will take 16-20 months, which would make it tough to approve an arena deal by the Kings owners' declared March 1 deadline; and that Sacramento doesn't have the bonding capacity to finance an entire $400 million arena, so would need other local governments chip in as well. Little stuff like that.

The city is to report back in three weeks, at which point the council will presumably give it a whole new list of things to figure out how to accomplish. Eventually.

September 12, 2011

Cal legislature okays fast-track for all stadiums and arenas

The bill to fast-track Los Angeles' $1.2 billion downtown football stadium indeed passed the California State Senate on Friday, by a 32-7 margin. And later the same day, the senate also passed president pro-tem Darrell Steinberg's bill allowing all development projects to be exempted from lengthy lawsuits — which, depending on how you look at it, either puts all of the state's big projects on equal footing, or uses a loophole granted to one developer as an excuse to grant loopholes to all developers (so long as their projects are worth at least $100 million).

Assuming Gov. Jerry Brown signs the bills — no word from the governor's office at last check — this will obviously smooth the path for AEG's L.A. stadium, as well as proposed buildings for the San Francisco 49ers, Sacramento Kings, and San Diego Chargers, among others. Still, the main holdup in all of those cases is money: The 49ers still haven't firmed up their share of construction costs, the Kings arena finance plan right now mostly amounts to wishful thinking (the latest involving selling off future parking revenues for up-front cash), and AEG needs to find an NFL owner who wants to give up either a hefty annual rent, a hefty share of stadium revenues, or a hefty share of the team itself in exchange for moving to L.A. Not having to worry about pesky lawyers is a nice plus, but pesky bankers are still the main reason why stadium deals do or don't get done.

September 09, 2011

Latest Kings arena plan includes every funding scheme but the kitchen sink

At last, it has arrived: Sacramento Mayor Kevin Johnson's Think Big arena task force yesterday issued its Nexus Report — nobody can say they're not thinking big in terms of ostentatious titles, anyway — on how to fund a $387 million Sacramento Kings arena. The result, though, is more sketchy framework than detailed plan, and mostly amounts to a laundry list of funding streams that it thinks would be politically feasible:

• There's no sales tax hike or other broad-based tax, presumably because those would require a public vote, and the last time the Kings tried that they failed miserably.
• The crux of the Nexus would be what proponents are calling a split of the arena funding into thirds: one-third from the public, one-third from private sources, and one-third from users of the arena.
• The public share would amount to $94-123 million, and could include the sale of public land, diversion of existing hotel taxes, and/or billboard revenues.
• The private portion would be $91-156 million, a good chunk of which would presumably come in the form of rent payments from the Kings: The Sacramento Bee reports that "task force officials have indicated they want the Kings to enter into a lease comparable to the deal the team struck in their aborted attempt to relocate to Anaheim," which included a rent equal to 7.5% of ticket revenue, which would come to somewhere around $2-3 million a year. Though the Kings owners would there have gotten a cut of arena ad revenue plus naming rights money, which would be problematic in Sacramento's case because...
• Naming rights would be part of the "user" slice of the pie ($90-112 million), which could also include parking fees, a ticket surcharge, business improvement district fees, or even the EB-5 green-cards-for-cash plan used by the New Jersey Nets for their new Brooklyn arena.

In short, this is a run-stuff-up-the-flagpole package, with lots of hand-waving and gaps to be filled in. (Best line from the Sacramento Bee's solid analysis of the plan: "The Think Big report also glides over the existing $67 million debt the team owes to the city, calling it a 'significant issue that must be addressed.'") And while it manages to cobble together enough money to pay for an arena, it leaves unclear whether either taxpayers or the Kings would get back enough revenue to make the whole thing worthwhile.

The Kings owners the Maloof brothers issued a statement calling the Nexus plan "a very positive step," but otherwise didn't comment on the specifics. The Sacramento city council is expected to begin debating on Tuesday whether to give the city the go-ahead to start negotiating with developers to turn this pencil sketch into an actual arena plan; even if that happens, though, the real battle could be over what to pick and choose from this menu of funding options, and whether a mix can be found that will please the Maloofs and an arena builder without soaking the public.

UPDATE: Commenters below note something that blew right past me: While it's implied that the dollar figures above are in present-day dollars — i.e., $100 million means enough future cash to pay off $100 million in construction bonds today — it never actually says whether it means present value or nominal future value over time or what. If it's the former, it's the right way to do it — except for the bit about not explaining what units you're using in a high-priced document that took months to produce.

California senate to okay fast-track for all stadiums, arenas?

It's D-Day for AEG's Los Angeles stadium fast-track bill, which passed the state senate on Wednesday and now goes to the state assembly. With the legislative session ending today, either the bill will get swiftly approved — just nine days after it was written, though that still wouldn't be a record — or AEG will need to decide whether to move ahead with its project without the promise that any lawsuits will be swiftly resolved.

The state senate, however, appears to be focused on a new bill, introduced just yesterday, that would allow the governor to fast-track any development project over $100 million, for the next three years. Reports the L.A. Times:

Senators acknowledged that the broader measure would probably have to pass if they are to approve the AEG stadium bill. Its principal co-author, Senate President Pro Tem Darrell Steinberg (D-Sacramento), said it was justified by the state's 12% unemployment rate.

"This is a recession," Steinberg said. "People are hurting, and we have to use every tool in our disposal to help people get back to work, and do so in a way that does not undermine our very important environmental laws."

The bill, AB 900, would allow a wide variety of projects — residential, commercial, sports, cultural, entertainment, renewable energy and recreational — to apply to the governor for expedited treatment. They would have to be located on an under-utilized property in a developed area.

This would make Steinberg, for one, happy because it could potentially be applied to the Sacramento Kings arena; the senate leader is co-chair of Sacramento's Think Big committee trying to get that built. Less happy, though, are the environmentalists who'd endorsed the AEG-specific bill: National Resources Defense Council attorney David Pettit had barely finished blogging about how the AEG bill was worthwhile because they'd added legally binding commitments to increase public transit use by fans when he was telling the Times that the broader bill was problematic because it could apply to so many projects:"There are a lot of projects that could get under the wire by 2015."

According to the Times, though, senate leaders say it's the broader bill or no bill at all. Looks like you can listen live here (and possibly watch live here) if you want to follow the play-by-play of today's final senate session.

September 06, 2011

California legislature mulls bill to fast-track AEG stadium

As expected, two California legislators on Friday introduced a bill to fast-track AEG's planned downtown Los Angeles NFL stadium, forcing any environmental challenges to be resolved within six months. The twist: With just four days left in the legislative session, some legislators said they'd barely have time to read the bill before having to vote on it.

Defense against what it considered frivolous lawsuits was one of AEG's main demands, especially after its stadium competitors in City of Industry got an even more sweeping get-out-of-lawsuit-free card two years ago. It looks like this one could see some opposition, though, particularly from legislators who don't see why their cities' stadium and arena plans shouldn't be similarly fast-tracked: San Diego assemblymember Nathan Fletcher declared, "I oppose this effort unless it's amended to apply to the entire state. Los Angeles isn't the only city to undertake this kind of effort, and if the process is broken, the fix should apply to the entire state." And Senate President Pro Tem Darrell Steinberg of Sacramento suggested that he'd prefer to see a statewide change to environmental laws as well, presumably so that the Kings could take advantage of it as well, if their arena plan ever gets off the ground.

All of which seems like a lot to untangle in the next four days, but if nothing else it could certainly lay the groundwork for a broader exemption next session.

In other Kings news, meanwhile, Mayor Kevin Johnson's arena task force is set to turn in its final financing plan this Thursday, which means it's time for the spin attempts to begin. First up: Developer David Taylor, who promised on Thursday that "if the arena is a go, there will be private investors, big-time investors" will build other projects — why, he might even build a hotel himself. Taylor, of course, is one of the developers hoping to build the arena itself — but a developer would never lie about the likely benefits of development just to win public subsidies, would he?

August 19, 2011

'Preliminary' Kings arena funding plan floats ticket fees, parking money, anything else lying around

Think Big Sacramento, the confusingly unpunctuated task force assigned by Sacramento Mayor Kevin Johnson to come up with a way to build a new arena for the Kings, issued its "highly preliminary" report yesterday — no, really, it says "highly preliminary" in big red letters on the top of each page — on how to pay for a $387 million arena.

The main focus of the report is what it calls "user fees," which it defines to include ticket surcharges, concessions surcharges, parking fees — and, more weirdly, business improvement district revenues and naming rights revenues. Local businesses and naming-rights sponsors aren't usually considered arena "users," but given that the report declares that "public support for users fees is strong" (apparently Think Big isn't any better at grammar than punctuation), there could be some attempted spin at work here: Look! We're going to raise all the money with user fees! User fees good!

Except, of course, that things like ticket and concessions surcharges mean that the Kings wouldn't be able to charge as high a price for tickets and hot dogs — since presumably they'd already be charging the most the market will bear, so a surcharge would drive fans away unless the base price were lowered. So this is really a revenue-sharing deal, which, while potentially promising from the city's perspective, isn't likely to make the Kings owners the Maloof brothers too happy, since if they wanted to build an arena with their own money they would have done so already.

And also except that the Think Big report also specifies that the "finance plan will require support from three areas: private investment, user fees and public participation" — so there would almost certainly need to be more public money involved. (The report does some quick back-of-the-envelope math to come up with annual revenue of between $5 million and $20 million, which is to say somewhere between "nowhere near enough" and "not quite enough" to pay for arena construction itself.) Other public funding, as laid out in a cursory flow chart, could include the sale of public land or "revenues from assets directly enhanced by" the arena, which sounds an awful lot like a TIF.

Initial reaction to the proposal from all corners could probably best be described as "wait and see." A less preliminary plan is slated to be revealed on September 8.

July 28, 2011

Sacramento arena task force grasping at every funding straw in the book

Hey, how's that Sacramento Kings arena mega-task-force coming along? Any ideas for how to actually, you know, pay for a Sacramento Kings arena? What's that you say, Sacramento Bee?

Aides to Mayor Kevin Johnson say they're focused on user fees such as ticket surcharges for people who attend arena events. That revenue could be coupled with event-night parking fees at downtown garages, new corporate sponsorships, and up-front money from private companies that could build and operate the arena for the city.

Another idea: The city could sell up to a dozen parcels that it owns to developers, raising $30 million to $60 million, according to a financing update that will be discussed today at a meeting of Johnson's 70-person regional arena committee. The report does not indicate which parcels those are.

Officials say they're even considering renting the arena's rooftop to telecommunications companies for cell towers.

Even added together, though, these funding streams don't seem likely to generate more than $10-20 million a year, which won't pay the nut on a $387 million arena bill. More important, they're revenue streams that the Kings owners are going to want to control themselves — a ticket tax, in particular, reduces the amount that the team can itself charge for tickets, so the Maloofs are quite likely going to see this as a tax on them. Which might actually be fairer, since they'd be the ones reaping the benefits of a new arena, but if this were about fair, we wouldn't need the talcum powder.

July 05, 2011

Sacramento study shows $7B in arena gains $690m in arena losses

So it looks as if the big news during my hiatus was the release of a study by Sacramento Mayor Kevin Johnson's arena task force that claims $7 billion in economic benefits from a new Kings arena:

Advocates of a new downtown Sacramento sports arena rolled out a study Thursday that puts an eye-popping number on the building's projected economic benefits: $7 billion over 30 years.

[The study] said the new facility would shower the region with $157 million a year. That includes spinoffs such as sales at restaurants and hotels, as well as $6.7 million in taxes. ... The Sacramento study's author, Sacramento consulting firm Capitol Public Finance Group, contends that the downtown location would create considerable economic activity beyond the walls of the building itself. The arena would draw 3.1 million new visitors a year downtown, the report said.

The actual report is here. (Note that the task force has been renamed from Here We Build to Think Big Sacramento, apparently because they couldn't get the rights to the old domain name.) Actually reading it reveals a few details not covered in the Sacramento Bee article:

• It's not 3.1 million new visitors that the arena would be expected to draw each year, but rather 3.1 million visitors total. The report doesn't bother to say how many visitors the current arena gets.
• Likewise, the $7 billion a year in "economic benefits" is actually economic activity: in other words, the gross total of all spending in the greater Sacramento region by anyone going to a new arena, whether inside the gates, at local restaurants, etc. Net spending — in other words, money that would be new to the region — is actually estimated to be just 15% of that, a little under $25 million a year.
• That's economic activity, not revenue to Sacramento. Actual new sales and hotel tax revenue to the city is estimated at $1.7 million a year.

So, the plan here is to spend around $400 million (the task force hasn't decided yet how the money would be raised), which comes to around $25 million a year in bond payments, to build an arena that would only generate about that same amount of money per year in new economic activity — and which in tax revenue would bring in less than one-tenth of what taxpayers were spending. That's eye-popping, all right, but probably not in the way that the Bee meant it.

June 02, 2011

Sacramento arena commission to include every power broker in a 50-mile radius

Sacramento may still not have any idea how to pay for a new Kings arena, but they'll sure have enough people working on the problem: Mayor Kevin Johnson earlier this week announced he's convening a 60-member commission, led by two state senators and a political strategist who worked on past arena campaigns, to come up with a funding plan.

Called "Here We Build," the task force's final roster is expected to be finalized in the next few days, with its first meeting in a couple of weeks. It will then have 100 days to come up with a report — timing that ensures that at least it won't get upstaged in the news by anything.

So far the list of task force members seems to be limited to the usual suspects: local elected officials and area business and union leaders. (It'd be nice to hear that some actual economic development experts or citizen community groups were involved, but so far no such luck.) Sacramento political consultant Doug Elmets told the Sacramento Bee that "the mayor is smart to cast a wide net so as to not alienate any of the decision-makers within the region, especially if you're going to be asking them for some type of political or financial investment." In other words, this is more about getting all your ducks in a row than about actually coming up with something that makes economic sense. Which is actually reasonable, given that even arena supporters admit that building one makes no economic sense.

May 31, 2011

Sacramento's $387m arena proposal includes no payment plan, parking

Playing a bit of catchup here after an extra-long Memorial Day weekend, so please be patient as we gather in all the loose threads of stadium and arena battles from around North America. First off, the Sacramento Kings arena plan, which showed up on Thursday and, as predicted, included no actual financial details at all:

The report concluded that a new arena would best be located in the downtown rail yards, would cost about $387 million and would require a private/public partnership. However, developers said they were not yet ready to identify specific funding sources.

"The financing is always going to be a little more dicey," said council member Sandy Sheedy, who said she wants more information about how a possible transient-occupancy tax -- better known as a hotel tax -- would work.

Also a problem: The arena plan doesn't include any on-site parking. "I'd say enjoy the walk, and buy a meal on the way, and enjoy downtown, and use light rail and the train system and don't drive," developer David Taylor told KCRA-TV following Thursday's presentation, which may be the first time anyone in history has told Californians not to drive while keeping a straight face. It still doesn't beat D.C. baseball aide Stephen Green's suggestion that having a too-small subway station would encourage fans to stick around and go shopping after the game for wackiest transit-related sports rationalization, but it's up there.

May 24, 2011

K.C. Star writer to Sacramento: Sprint Center cost nothing! Really!

On Sunday, the Sacramento Bee ran a front-page (of the E section, anyway, whichever one that was) opinion piece by Barbara Shelly, a columnist for its fellow McClatchy-owner paper the Kansas City Star, on what Sacramento's Kings arena push can learn from Kansas City's own arena battles. And Shelly's conclusions went a little something like this:

Since opening in 2007, the Sprint Center has shattered the expectations of even the most ardent believers. Pollstar magazine rated it the fifth-busiest arena in the nation and 12th-busiest in the world in its latest rankings. It turns a profit for its operators and the city, even though a pro sports franchise has not yet materialized.

In a coup that silenced all but the most hard core of the naysayers, Kansas City built a $276 million arena without raising taxes for residents or assuming any risk for operating losses. Its story involves a great deal of luck, but it could point to a way forward for Sacramento and other cities.

Only one problem with that description: It bears no resemblance to reality. As both I and my own corporate colleagues at The Pitch explained two years ago, the Sprint Center turns an operating profit for Kansas City — but that's only if you don't count the city's annual $13.8 million in construction bond payments. And that money is all coming from hotel and car-rental taxes — which only counts as "not raising taxes for residents" if you think that people only ever rent cars while on vacation. (And even if you do think that, there's still an opportunity cost to devoting car and hotel taxes to an arena: It means you can't raise them to pay for something else, meaning other taxes — the kind that are indisputably paid by residents — have to be higher than otherwise as a result.)

Even with my lowered expectations for standards of professional journalism since journalism effectively stopped being a viable profession, I find it pretty astounding that this stuff could end up in a major newspaper without anyone bothering to do a quick fact-check, or even a reality check. I was hoping that The Pitch might have caught wind of it and taken the Bee to task, but they're kind of busy right now with a wind of their own, so it's probably understandable that they haven't.

May 22, 2011

Sacramento columnist: Public arenas are bad, let's build one!

Every once in a while I get (or ask myself) the question: Why, after nearly two decades of economic studies showing that stadiums and arenas are lousy ways to spend taxpayer money, has this had so little effect on people arguing for public sports subsidies? And here is our answer, courtesy of today's column by the Sacramento Bee's Marcos Breton on the pending Kings arena finance plan:

Will an arena by itself create tons of jobs? No. Are arenas an economic drag when the public sector assumes all the costs and the sports owners collect all the money? Yes.

That's why we can't have one of those deals. It's why you are probably not going to hear talk of a sales tax increase to finance an arena. It's why financing will take some form of hotel or car rental tax, some leveraging of public land, some redevelopment money and some private equity investment to get it done.

Let's go down that list: Hotel or car rental tax? Public money. Leveraging of public land? Public money. Redevelopment money? Public money. So essentially Breton is saying that to avoid "one of those deals" (the bad kind), Sacramento just needs to have a deal where "some" money comes from a private party — something that's true of virtually all stadium and arena deals, if only because team owners invariably get to collect naming-rights revenues and throw that into the pot as their "private" contribution.

When newspaper columnists (and, presumably, elected officials) are able to think to themselves, "Sure, virtually every economist agrees that public sports facilities are a terrible deal, but this is a public-private partnership, so that's a totally different thing!" then there's really no reasoning with them. And as recent events have shown, when people really want to believe in something, they have an amazing capacity for cognitive dissonance.

May 04, 2011

Everybody wants to build a Kings arena, nobody wants to pay for it

Elected officials from around the greater Sacramento region have begun chiming in on the idea of regional cooperation for a new Kings arena, calling it a great idea so long as it doesn't cost them any actual money:

• "I'm totally in favor of regional cooperation," Yolo County Board of Supervisors chair Matt Rexroad told KXTV. "My question is, how is it financed? I have a strong personal belief that it needs to be funded by the people who use the arena."
• Sutter County Supervisor Stan Cleveland told KXTV of voters in his district: "They really do not want any of the taxpayers' funds going toward a new arena in Sacramento."
• Yuba City Mayor John Dukes told the Appeal-Democrat: "We want to take a different approach, more tourism related. We're looking at fees, no general fund tax money. We're looking at private and public investment, fees that can be developed by people who travel through the area. There are a lot of different options."

There's a bunch of wiggle room there, obviously — car rental or hotel taxes, for example, are often described as "user fees" though they're really not. But it's clear that drumming up enthusiasm for a new Kings arena is going to be a lot easier than actually passing the hat for cash. Especially since any tax hike would likely require a voter referendum, and as California state assemblymember Roger Dickinson told the Sacramento Bee yesterday, a tax hike would be a tough sell if voters are worried about "schools or streets or child care or whatever."

We may know more on May 26, when the ICON-Taylor group is expected to present possible arena funding strategies to the Sacramento city council, though given its past performance, it might not be best to get your hopes up for too much in the way of specifics.

Meanwhile, the NBA has sent a nine-member marketing team to help the Kings sell tickets, something that wasn't so much a priority when the franchise was planning on being in Anaheim come fall — or whenever the next NBA season actually gets around to starting. Suggested marketing slogan: "Buy tickets or we'll shoot this team."

May 03, 2011

Sacramento keeping the Kings — now what?

So as reported yesterday, the NBA, Sacramento Kings owners Joe and Gavin Maloof, and Sacramento Mayor Kevin Johnson all announced yesterday that the Kings are staying put for at least one more season, spurning (for the moment) an offer to move the team to Anaheim. So now that Johnson has pulled off another miracle finish, what happens next?

First off, NBA commissioner David Stern made clear yesterday that this is only a stay of execution: If Sacramento doesn't cough up a new arena plan by next May 1, the team is outtie. "If this becomes yet the fifth or sixth or seventh [failure], it'll be the last, as far as we're concerned, effort with respect to an arena," Stern said yesterday during a conference call with reporters. He added that while he's giving KJ the benefit of the doubt, "With respect to the issue of an arena, I think anyone who's watched this over the last decade or so has the right to say, We'll see.' That's all."

To that, the Maloofs added this not-so-subtle threat in their own statement:

"During this process, Mayor Johnson has strongly indicated to both the community and the NBA that he is capable of getting the support to build a state-of-the-art entertainment and sports facility that the Sacramento Region and the tremendous Kings fans so rightly deserve. We look forward to seeing Mayor Johnson bring his vision to reality. However, if an arena plan cannot be finalized in a timely fashion, the NBA's relocation committee has assured Maloof Sports and Entertainment that it will support an application to move the franchise to another market starting in 2012-13."

Note that that's "another market," not "Anaheim." And though clearly Orange County is the leading Plan B, this delay also gives the Maloofs another 12 months to come up with Plans C and D in case an arena in Sacramento still proves impossible, and the details of a lease in Anaheim and payoffs to the Los Angeles Lakers and Clippers can't be worked out.

As for Sacramento, the ball is now in its court, but it's a really, really expensive ball. The last batch of plans were for a $350 million arena, and no one had yet quite figured out how it would be paid for. Johnson, for his part, insisted to Sacramento's KXTV that any funding gap will have to be filled in part by the Maloofs:

"They're going to have to participate by this public-private partnership. They're going to have to put dollars in some shape or form. What that is or how much we don't know yet. But they're going to have to participate," said Johnson.

He also said his first objective is still to protect the taxpayers.

"Maybe there's a new way to help finance this darn thing. We going to find all of our options, everything is on the table, but at some point between May, June and July, we going to have to say, here is what we think is the most likely scenario to finance a new arena, get out and talk to the public, try to get people on board. That's why the regional commitment is so important."

Tough talk, but in the end it comes down to "I'm going to scrounge around for whatever money I can find, and in the end hope that the Maloofs will agree to pay what's left over." It's never worked in the past, but as Stern implied, there's a first time for everything.

May 02, 2011

Maloofs: Kings staying in Sacramento "one more season"

And the verdict is as expected:

It's official. The Kings are staying.

After weeks of political drama and speculation, team officials said this morning they are dropping plans to move to Anaheim this year, co-owner George Maloof told The Bee.

"We are heading back to Sacramento. It was a tough decision. Ticket holders were reaching out to us, and it was the right thing to do to give it a shot at one more season," Maloof said during an interview in his office in the Palms casino in Las Vegas.

That's hardly a ringing endorsement, but it's about the most you're probably going to get out the Maloofs after the NBA apparently arm-twisted them into staying put for another year to see if arena and/or sale plans work out.

The tough part now is going to be for Sacramento to negotiate that arena deal, since presumably if nothing gets done by next March, the team really will be allowed to depart (assuming the whole matter of restitution to the Lakers and Clippers can be worked out — that sort of got punted in all the excitement over the emergence of a new Sacramento arena plan). It's going to be hard for Mayor Kevin Johnson to drive a hard bargain under those circumstances, especially given how he's set up retaining the Kings as a signature of his administration.

If nothing else, this was extremely well played by the NBA, which now has an upgraded offer from Anaheim and a potential upgraded offer from Sacramento to choose from, where six months ago the Kings were looking at having to survive on just the revenues from their ancient 19-year-old arena. That Jerry Reinsdorf knew what he was talking about.

Report: Kings staying put in Sacramento for 2011-12

It's D-Day for the Sacramento Kings on their proposed move to Anaheim — no, really this time — and one report by Comcast SportsNet California says that the Kings owners are being told the team will stay put for next season, with NBA and Kings press statements due later today, as well as a press conference by Sacramento Mayor Kevin Johnson.

Since Kings owners Joe and Gavin Maloof haven't even formally applied to relocate yet — that's what today's deadline was all about — presumably this report, if true, means the Maloofs have been convinced not to apply yet, to keep the peace with the NBA while waiting to see if any of the new arena plans in Sacramento are for real.

Speaking of which, after years of failed proposals, it seems like everybody and their sister now wants to get in the game of building a new home for the Kings (though of course, plenty of people had ideas in the past in this regard, not that any of them ended up working out). Among the latest developments:

• Mayor Johnson said the new arena should be bigger than the Kings' current home in square footage, but smaller than Los Angeles' Staples Center. He didn't say anything about how much this would cost to build.
• A mysterious "private equity fund" headed by a "Nevada businessman" reportedly wants to buy the Kings and build a mammoth 25,000-seat arena that would be "community funded and owned," according to Sacramento's Fox affiliate, which broke the story on Thursday. Of course, this is the same station that previously led fans to believe the team was moving when it wasn't, though also the same station that first reported Ron Burkle's interest in buying the Kings, so your call whether you choose to believe them this time.
• If you and 499,999,999 of your closest friends each have a dollar, you can build a Sacramento basketball arena with no tax money at all.

April 29, 2011

Samueli increases offer for Kings to move to Anaheim

Anaheim Ducks owner Henry Samueli has upped the ante for luring the Sacramento Kings to move to his Honda Center in Anaheim (not really his Honda Center, since Anaheim owns it, but he controls all the operations and revenue):

In a late move to land the Kings, Orange County billionaire Henry Samueli has offered to increase his personal loan to the team from $50 million to as much as $75 million, and has offered to buy a minority stake in the organization.

Samueli, owner of the Anaheim Ducks hockey team, also has agreed to make far more costly improvements to Anaheim's Honda Center, which he manages, to bring that facility up to NBA standards.

Originally, Honda Center officials had planned to spend $25 million on upgrades. That figure has jumped in the last few days to $70 million, center officials said Thursday afternoon.

No way of knowing whether this will be enough to get the NBA to change its mind about waiting till next year to approve any move. (Presumably Samueli's offer will still be good then, in which case there'd be no harm in waiting.) But if nothing else, all this hemming and hawing over the Kings' future is getting a good old fashioned bidding war going on, which may well have been the goal all along.

April 28, 2011

Kings-to-Anaheim application now murkier than ever

The NBA relocation committee held a conference call yesterday with the owners of the Sacramento Kings and officials from Anaheim's Honda Center to get more information on the Kings' proposed lease there, and ... nobody's saying what was said:

After the meeting, [Kings co-owner] Joe Maloof, [Anaheim Arena Management chair Michael] Schulman and NBA spokesman Tim Frank each declined to comment.

Meanwhile, the Sacramento Bee is now reporting that a "source close to the situation" says the Maloofs "remain uncertain" about whether to formally request a move to Anaheim by Monday's deadline, and that it "appears unlikely at this point that team owners will come to a conclusion" by then. The Bee's Ailene Voisin adds:

Although the Maloofs have until Monday to file an application to relocate to Anaheim, sources close to the family expect an announcement before the weekend. I also continue to hear that diverging opinions exist within the family — some wanting to sell, others determined to retain ownership even if that means returning to Sacramento and figuring out a way to handle the situation from a p.r. standpoint. Ultimately, this is Joe and Gavin's deal. Unless the Maloofs are totally broke — some sources insist they are, others insist they will recover nicely after restructuring their debt at the Palms — the brothers probably make the decision. Also true: they have been stung and stunned by the resistance from the Board of Governors and what we're hearing from the Relocation Committee. They hate being portrayed and/or perceived as villains, and are reluctant to alienate their peers, especially given the labor situation and ongoing collective bargaining talks.

It sure sounds like the Maloofs have seen the writing on the wall and are just trying to decide whether to file a relocation request and see it put on hold by the NBA until 2012, or decide to go with the flow and wait till next year. Or, if Voisin is right, maybe sell the team now and make the whole thing somebody else's problem, which would certainly be a game-changer.

April 26, 2011

Regional Sacramento Kings arena task force announced, then un-announced

The latest Sacramento Kings arena plan is barely two weeks old, and already there's squabbling over how to raise the money that no one has yet figured out how to raise. Yuba City Mayor John Dukes said that Sacramento Mayor Kevin Johnson had asked him to lead a regional arena financing effort last week — only to have Johnson's office issue a statement calling any joint arena group "premature."

Assuming this thing finally gets off the ground, officials from Sacramento, El Dorado, Placer, Yolo, Yuba, and Sutter counties — a swath of north-central California that stretches all the way to the Nevada border — will get together and find money ... somewhere. According to the Sacramento Business Journal, "Dukes said he has an outline for where the money for an arena would come from, but he doesn't want to disclose any details yet."

Right now, it seems like KJ's efforts are focused on pulling together $10 million in corporate sponsorships that he promised the NBA he'd line up as a first step at keeping the Kings from moving. Getting local companies to pledge to buy ads and stuff, though, is relatively easy; finding hundreds of millions of dollars to build an arena, when those paying for it wouldn't even get ad space in return, is likely to be another thing entirely.

April 25, 2011

What next for the Sacramento-to-Anaheim-to-Sacramento Kings?

More on the Sacramento Kings-aren't-really-moving-to-Anaheim front:

• The Los Angeles Times reported Friday that unnamed NBA executives told the paper they "now expect the Kings to play next season in Sacramento." It quoted one league official as saying that Sacramento Mayor Kevin Johnson's presentation to the owners the previous week was "amazing," and indicated that the NBA now intends to wait until next year to see if Johnson can actually pull off the revived corporate support and new arena plan that he has promised.
• Reading tea leaves, Sports Illustrated's Sam Amick notes that there are "no NBA trips currently scheduled for Anaheim despite the fact that Stern made it clear last week that the owners intended to investigate that plan further." The only question at this point, Amick writes, is whether Kings owners Joe and Gavin Maloof will go ahead and file for relocation on May 2 and have the NBA officially vote to block it, something that "would be unprecedented and would almost certainly take this Sacramento saga to the courts if they proceeded in that fashion."
• The Cowbell Kingdom blog speculates that if the Maloofs want to be welcomed back to Sacramento for a possible lame-duck season, they might want to start by fixing the broken toilets at Arco Arena.

The big mystery now is how on earth KJ plans on getting an arena built, given that all previous proposals have crashed and burned, and last I checked no one had discovered an unknown sea of oil under Sacramento. From all accounts, Johnson's presentation to the NBA only involved a feasibility study for a new arena, not an actual funding plan; and while potential Kings buyer Ron Burkle is a billionaire, he hasn't indicated that he wants to shave off any of his billions by paying for a new arena.

If all those unnamed sources are to be believed, the next deadline could be March 2012, at which point Sacramento would either have to have an arena agreement in place, or we could be going through this all over again. If so, it's going to be a really interesting ten months.

April 22, 2011

Kings likely staying put in Sacramento for 2011-12

All signs are that the Sacramento Kings' move to Anaheim is falling apart, even after getting a two-week extension on submitting their relocation plan to the NBA. According to Sports Illustrated's Sam Amick:

Sources say the Anaheim presentation given at the meetings was as ineffective as Johnson's was impactful, and there is serious doubt as to whether there will be enough support to warrant the Maloofs filing for relocation (a majority vote is needed to approve a move when a team files).

Specifically, a source with knowledge of the proposal revealed that the television rights riches that had long been seen as a major motivating factor for the Maloofs aren't quite as lucrative as they had hoped. ... The plan as presented in New York included a possible partnership worth $20 million annually with KDOC, an Orange County-based, independent television station that is co-owned by the very man working so hard to make this move happen. Anaheim Ducks owner Henry Samueli, who operates the Honda Center where the Maloofs' team would play and has already committed $50 million through city bonds to help cover their cost of relocation, reportedly teamed with Bert Ellis to pay $149.5 million for the station in 2006.

In other words, part of the deal for the Kings to move to Anaheim would be to give their new landlord a cut-rate TV deal, far below what league officials were figuring the Kings could earn from Fox Sports West, which was recently spurned by the Los Angeles Lakers. Amick notes that this could help explain NBA commissioner David Stern's recent remarks that one reason for extending the relocation application deadline until May 2 was concern over "certain areas having to do with the contractual relationship between Mr. Samueli's organization and the Kings, having to do with the building, having to do [with] television revenue."

Meanwhile, a Sacramento group is expected to soon have enough signatures to force a $75 million Anaheim bond sale for arena upgrades to a public referendum, which couldn't happen until 2012. The Kings and Samueli could then try to find an alternate way of raising the up-front cash, but as we've seen before, finding financing structures that work can be tricky — which is, no doubt, why they proposing using city of Anaheim bonds.

Kings owners Joe and Gavin Maloof are still reportedly planning to file for relocation on May 2, but it's hard to see that happening if the writing is on the wall that the NBA won't approve a move until more is known about both Samueli's role (including that possibly never-signed lease) and the possibility of a local Sacramento buyer. This isn't necessarily a disaster for the Maloofs, the Kings, or the NBA — as I've said before, the whole point of a move threat is to play two cities off against each other in bidding for the rights to host your team, and that certainly seems to be happening here. But it could make for a long, ugly maybe-lame-duck season in Sacramento for the Kings next season — if there is a season.

April 18, 2011

NBA on Kings' Anaheim move deadline: Enh, take another two weeks

Sure enough, they punted: On Friday, NBA commissioner David Stern gave the Sacramento Kings a two-week extension until May 2 on their deadline to submit plans to relocate to Anaheim.

Stern credited Sacramento Mayor Kevin Johnson's last-minute plan to have Pittsburgh Penguins owner (and Magic Johnson pal) Ron Burkle buy the team and build a new arena in its current home town — via a "public-private partnership," which is accepted code for "we haven't figured it out yet" — as the proximate cause of the delay. "The mayor's vision we don't know if it's real or pie-in-the-sky, but we'll knock ourselves out finding out over the next few weeks," said Stern on Friday. "This is very building-focused."

However, there are also indications that the emergence of the Burkle plan helped provide cover for NBA execs who are still waiting to hear details of the proposed Anaheim move. The L.A. Times reports:

The relocation committee headed by Oklahoma City Thunder owner Clay Bennett will press the Maloofs and Honda Center officials to specify their plans for anticipated television revenue in Anaheim, and to detail arena improvement initiatives for which the city of Anaheim last month authorized $25 million in a $75-million bond package that includes undetermined relocation fees the Maloofs would owe.

That's a lot of known unknowns, and it's not obvious which if any of them can be cleared up in two weeks. Anyone want to lay odds on whether this is the last extension the Kings get?

April 15, 2011

Kings-to-Anaheim D-Day ... or not

If you were hoping for a quick resolution to the Sacramento Kings relocation drama this weekend, you may be disappointed. After the Kings owners gave a 90-minute presentation to NBA commissioner David Stern and the league's relocation committee yesterday, it looks as if the likely scenario now goes like this: The Maloof brothers file an official relocation request by Monday's deadline, then the league spends the next 60 days figuring out whether it can line up the votes to approve it — or, more to the point, whether it can come up with a territorial rights fee that will placate the erstwhile no votes without breaking the Maloofs' bank.

It's really hard to read tea leaves on this one, though, without any leaks about what conversations are going on at the actual meetings. Until then, we're left with an extremely thin gruel of rumor such as the San Jose Mercury News asking Joe Maloof whether a decision could come today, and Maloof texting back: "Yes, I think so."

Sacramento Mayor Kevin Johnson, meanwhile, told the NBA yesterday that Pittsburgh Penguins co-owner Ron Burkle is interested in buying the Kings and keeping them in Sacramento. Assuming a new arena is built, though, in which case the Maloofs would want to stay in Sacramento, too. Also assuming the Maloofs would sell, which so far they say they won't. Still, it might convince a couple of NBA owners that there are other options than cracking open the Lakers' and Clippers' market, so for KJ, it's certainly worth a shot, even if a low-percentage one.

April 13, 2011

Kings may not have NBA votes for Anaheim move

Pretty much everything we're hearing about the Sacramento Kings' attempted move to Anaheim these days is at the level of rumor; that said, this is certainly an interesting one: KFBK's Rob McAllister reports that "those close to the negotiations" say Kings owners Joe and Gavin Maloof "are not sure they have enough support from the rest of the league's owners to approve the move." Which wouldn't be a total surprise, given that the precedent of allowing a minimal territorial rights payment for incursions into a team's existing territory is likely to freak out more than a couple of owners, but it is the first we're hearing of this, even as an unsourced news item.

Other tidbits in the KFBK story:

• Honda Center officials "would not confirm" whether arena owner Henry Samueli had signed off on the 200-page arena lease that the Maloofs have presented to him.
• The Kings have tapped a $75 million line of credit from the NBA to help meet expenses, though it's unclear how much of the money they've used so far, and there's no source at all given for this item.

All four Maloof brothers are expected to make their relocation pitch to the NBA owners' meetings tomorrow and Friday, with a vote presumably to follow. At this point, no outcome — quick approval, quick disapproval, or putting off approval till a later date so that Samueli and the Los Angeles Lakers can be placated — would surprise me.

April 11, 2011

Kings-to-Anaheim D-Day creeps closer

The NBA owners meetings are just one week away, and it looks like a decision on whether the Sacramento Kings are moving to Anaheim will go down to the wire. Among the most recent developments:

• The Los Angeles Lakers are ramping up their opposition to the Kings' move, with coach Phil Jackson telling Sports Illustrated: "I don't see any community, I don't care if it's Bombay with 25 million [people], being able to support three teams [in the same market]. I know Istanbul does it with three soccer teams, and England does it in London with three soccer teams in the surrounding area, but it makes it very difficult in our community and our television area to do that kind of a thing. It will hurt all the franchises." As SI notes, the operative word is "television," given that the Kings arrival would reportedly cost the Lakers $300 million off their new $5 billion cable deal.
• April 18, the Monday after the owners meetings, is actually just the deadline for the Kings owners to apply for a relocation, not for its approval. So while it's still likely everything will be hashed out next weekend among the various owners involved, it's not unthinkable that they'd kick the can down the road a bit farther — if an agreement on territorial rights fees can't be worked out before then, for example.
• Orange County Register columnist Randy Youngman writes that "another publication hinted that Stern might ask the Maloofs to delay their plans to move until after the lockout, but that sounds like pure speculation." Youngman didn't provide a link, in any case, and Google has been no help, so it's tough to say where this is coming from.
• The Committee to Save the Kings is moving ahead with its signature drive to force a referendum on Anaheim arena bonds, which would delay the bond issuance until June 2012 unless Anaheim chose to fund a special election before then. The drawback, committee attorney Jeffrey Dorso tells the Sacramento Press: "The big pitfall is that it could happen regardless. They could come up with other ways to fund the $75 million." It'd definitely make the financing more complicated, though, and stadium and arena deals have been stymied over less.
• A Kings move could potentially throw a wrench into NBA revenue-sharing talks (or vice versa). As L.A. Times columnist Mark Heisler writes: "Does someone think [Lakers owner Jerry] Buss will watch $250 million fly away because someone set up a lemonade stand in Orange County, then say, 'I'd be glad to kick in an extra $5 million to $10 million annually?'"
• Speaking of revenue-sharing, the Sacramento Bee's Marcos Breton thinks this is all a sign that the NBA's revenue-sharing system is completely broken, even asserting that the division-leading San Antonio Spurs and Oklahoma City Thunder "could go the way of the Kings" eventually if things aren't changed.
• On the other hand, maybe this franchise is just cursed.

March 30, 2011

Anaheim approves $75m in bonds to lure Kings

Much news today regarding the Sacramento Kings' potential move to Anaheim:

• The Anaheim city council approved selling $75 million in bonds last night, which would go toward a $50 million loan to Kings owners Joe and Gavin Maloof, renovations to the Honda Center, and "an NBA relocation fee," according to the Sacramento Bee.
• One day after Sacramento Assistant City Manager John Dangberg sent a letter to Anaheim threatening legal action if the Kings' move caused "blight" in Sacramento — which could violate the California Environmental Quality Act — Sacramento Mayor Kevin Johnson backed off, insisting he's fine with the relocation so long as the Kings' owners repay $77 million they owe to his city: ""The mindset of the city is to make sure that they fulfill their obligation," Johnson said earlier in the day. "If they do that, then I don't want a messy divorce."
• A group of Sacramento lawyers raised another legal obstacle, claiming the bond sale is illegal under California law unless there's a 60-day waiting period to allow for a voter referendum.

The weirdest bit here, aside from all the dueling maybe-lawsuits, is that it's going to be hard to set aside a portion of $25 million to pay relocation fees if the relocation fees ultimately run into the hundreds of millions of dollars. (The Sacramento Press reports that the relocation fee would come out of Maloofs' $50 million, which makes slightly more sense, though not much.) The lede in today's Sacramento Bee story was "It's pretty much up to the Maloofs now," but more accurately, it's up to the Lakers and Clippers owners — and the 27 other NBA teams who will be voting on this in a couple of weeks.

March 28, 2011

Kings get Anaheim lease, get Sacramento counteroffer and reject it

That mystery plan to finance a new Kings arena in Sacramento was revealed on Friday, and the details include ... you know what, never mind. You know why?

1) The source here is the same apparently unhinged TV news guy who excitedly reported the plan last Wednesday (and who has previously shown himself to be willing to say just about anything to get ratings).

2) Though the report says that "a revenue source to pay for the plan has been found," it doesn't actually indicate what it is, how much it would pay for, or whether it's politically feasible.

3) Kings owners Joe and Gavin Maloof didn't even wait out the weekend before rejecting the plan outright, on the grounds that the revenue source wasn't really a revenue source, and in any case it only would have financed a renovation of the Kings' existing arena, not the new one they crave.

Far more interesting are the details of the Kings' proposed lease in Anaheim, which were also released on Friday. (PDF here.) Highlights include:

• The Maloofs, it turns out, would actually get that loan from Anaheim Ducks owner Henry Samueli, though it'd only be $50 million, not the $100 million that was originally rumored. Also, Samueli would in turn be borrowing it from the city of Anaheim, which would sell bonds to raise the needed funds. Another $25 million in city money would go to build new locker rooms and such for the relocated Kings.
• The Kings would have to pay Samueli rent equal to 7.5% of their gross ticket revenue and half of parking and concession revenue; at the same time, the Maloofs would get a one-third cut of all arena ad revenue, plus an additional naming-rights fee that Honda has agreed to pay on top of what it already gives to Samueli. (In case you're wondering, the city of Anaheim, which actually owns the building whose name is being sold, gets a big pile of nothin'.)

How the bottom line from this deal compares to what the Maloofs now earn in Sacramento is tough to say, especially given the one remaining wild card in the deal: how much the Kings would have to pay the Los Angeles Lakers and Clippers in territorial rights fees. ESPN is reporting that the arrival of the Kings could cost the Lakers nearly $300 million in lost TV revenue alone, though it's not clear whether that's in current dollars or spread out over the 20-year life of their new TV deal.

Either way, it seems likely that the Lakers and Clippers are going to be asking for a significant chunk of change in exchange for allowing the Kings to horn in on their SoCal market. The question now is how much support from other owners they'll be able to drum up before the NBA owners' meetings on April 14 and 15 — and then whether the price they can get the votes for turns out to be too rich for the Maloofs' blood. Expect this one to go down to the wire.

(Thanks to FoS reader Mike M for many of the above links.)

March 25, 2011

Vegas arena plans, Anaheim Kings subsidies, and more

A few items that fell through the cracks over the last week:

• Those plans for a tax-increment-financing-funded arena on the Las Vegas Strip got officially killed last week by the Nevada legislature — which then immediately expressed its intention to put a different arena plan on the ballot in 2012.
• The Anaheim city council is considering paying for upgrades to the Honda Center if the Sacramento Kings move there. No word on how much the renovations would cost, how they would be paid for, or why the city would have any reason to pay for them in the first place.
• Bronx borough president Ruben Diaz Jr. reiterated his call for a new hotel near the Yankees' stadium to help bail out those money-losing parking garages. Diaz presumably is more interested in using the garage fiasco as leverage to get more development for his borough; why city taxpayers should want to throw good money after bad is another question...
• A Canadian government analysis projects that for the federal government to pay for a Quebec hockey arena and a Saskatchewan Roughriders stadium, it would require ticket taxes of as much as $42 per ticket to pay off construction costs. That sounded crazy to me at first, but given that we're only talking about a million fans a year (combined NHL and CFL), it actually makes sense: A $42 ticket tax would generate $42 million a year, which is about enough to pay off $600 million in costs spread across two stadiums. It would also be insane, of course, but it's a good reminder of why teams don't generally jump to build stadiums with their own money — new sports facilities face a hugely uphill battle to earn back their own construction costs.

March 24, 2011

Sacramento Fox station floats mystery Kings plan rumor

The Sacramento Kings arena saga has had everything except a last-second mystery bidder ... until now:

A game-changing alternative plan to keep the Kings in Sacramento may soon be unveiled. A move to Anaheim is no longer inevitable.

FOX40 has learned exclusively about an innovative new plan to solve the Kings' arena problems. A group of government and business leaders is discussing it and hopes to talk with Kings owners Joe and Gavin Maloof to go over it as early as Friday.

FOX40 Sports Director Jim Crandell told FOX40.com, "I know the specifics, but I cannot share the details yet, because it could jeopardize a very sensitive discussion that is about to take place."

Check that out: Not only doesn't the report reveal its original sources, but its only quote is from the station's own sports director, and even he won't go into detail. So basically you have "Hey, guys, I heard a great rumor, but I can't tell you what it is or where I heard it. Can I go on TV and not talk about it?" Somebody needs to try harder if they're serious about living down their name.

March 17, 2011

Breaking down the Kings' public bailout request

The Sacramento Bee ran an interesting overview of the Sacramento Kings' financial situation yesterday, including much about how the economic downturn has exacerbated the financial gap between the NBA's haves (who have big enough markets that they can still sell tickets) and the have-nots (who don't).

Which, according to the Bee at least, is what's driving the Kings owners' arena drive:

In this climate, it's easy to see why the Maloofs would focus on a new arena as a way to restore the team's fortunes. Seven other NBA teams have moved into new buildings in the past decade.

Posh arenas don't guarantee success. Memphis and Charlotte, for instance, take in less money than the Kings despite newer buildings.

But in 2009, when the NBA was scouting Cal Expo as an arena site, the Maloofs predicted a new arena could boost revenue by $13.7 million a year through "additional lower-level seating, premium club seats, and additional suites," wrote consultant Economics Research Associates.

That's a jump of more than 10 percent, and some experts say the new-arena effect could be considerably higher.

There's something weird to this argument, even overlooking the fact that the Kings arena squabble started way before the economy tanked. Follow the bouncing logic: Lots of other NBA teams are getting new arenas, and even though some of them are actually doing worse in their new digs, the Maloofs figured they could add $13.7 million a year in revenues from a new home.

Only one problem: A $350 million arena would cost nearly twice that much. So what the Maloofs were actually saying — if the Bee has it right — is that they wanted the city of Sacramento to spend around $25 million a year so that they could increase their revenues by $13.7 million a year. Looked at that way, a new arena is less a "way to restore the team's fortunes" than a really, really inefficient money-laundering scheme for public cash.

Which is what most of them are, more or less. But it's unusual to see it laid out so bald-facedly.

March 08, 2011

KJ: Once Kings leave, let's build an arena!

Sacramento Mayor Kevin Johnson seems resigned to the Kings leaving for Anaheim, and says that once the team that spent the last several years demanding a new arena leaves, the first thing his city should do is ... build a new arena:

Johnson said embarking on a new arena is not for the sake of the Kings or the Maloofs, but for the city and the hundreds of jobs that would be created.

He said an entertainment and sports complex would take four years to build, and Sacramento would then be in a position to lure another team to town should the Kings leave.

"If we don't build an entertainment-sports complex, we will never be a major league city," Johnson said.

Of course, if you do build an entertainment-sports complex without getting a team to sign a lease first, odds are you still won't be a major league city. Unless he means "major league" in terms of debt service.

In other Kings move rumor news, Daily News sports columnist Mitch Lawrence wrote Saturday that "sources close to the Maloofs say they're willing to pay the two L.A. teams whatever it takes to relocate," which seems kind of excessive. ($100 million? $500 squintillion?) Though Lawrence also wrote in the same column that "Ducks owner Henry Samueli is prepared to help the Maloofs with the financing, offering a $100 million loan," something the Kings themselves said was off the table more than two weeks ago, so maybe he's not the absolute most reliable source.

The one thing we can be sure of: If the Kings move to Anaheim, they'll have to put "Anaheim" in the team name, because it's in the city's lease with Samueli. As for what the team name would be, you're welcome to vote here.

March 04, 2011

KJ says Sacramento is now Kings' second choice

Sacramento Mayor Kevin Johnson met with Kings owners Joe and Gavin Maloof for 40 minutes yesterday, and came out saying that he was told his city is now only Plan B, with Plan A being Anaheim. Among the key quotes from Johnson's news conference:

"It's a business decision and the economics of Anaheim are better than the economics for them at this state here in Sacramento. They are fully exploring their options, which appears to be Anaheim."

"I do not think Sacramento can influence the outcome of their decision. I'm OK with that. I think we're all OK with that. It's a decision they're going to have to make."

"They love Sacramento, they've been committed to Sacramento and they want everyone to know that. Their issue was not that they don't like Sacramento. They think we have the best fans."

"If the dust settles, and Anaheim is not where they end up, they would 100 percent be willing to sit down with the ICON/Taylor group moving forward."

(Watch clips from the press conference here.)

There's no reason to doubt KJ — he has no reason to try to downplay Sacramento's chances at keeping the Kings, and neither do the Maloofs if they want to keep ICON/Taylor's nose to the grindstone in coming up with an arena plan.

Still, this really only tells us what we already know: The Maloofs are going to spent the next six weeks trying to hammer out a deal with Anaheim (and the NBA), then sit back and see if what they're offered is better than what they have now. And that will depend on three factors — how rich a TV contract they can get, how much they have to pay in relocation fees to buy off the Lakers and Clippers, and what kind of lease they can agree to with Anaheim Ducks owner Henry Samueli — that we as outsiders can't know right now, and that even the Maloofs likely aren't going to know until we get closer to the NBA owners' meetings in mid-April.

Right now it looks like there are two likely options: The Kings announce a move after the owners' meetings, or they announce they're kicking everything back a year to give everyone a chance to sweeten their bids. Too bad for the Maloofs that we won't know until July 1 whether there's going to be an NBA lockout — that'd be a nice excuse to punt if that's what they decide they want to do.

March 01, 2011

Sacramento Kings get seven-week extension on move request

And also as expected, the NBA gave the owners of the Sacramento Kings an extension on their relocation application until April 18, which will allow the matter to be discussed at the April 14-15 owners' meetings.

I've written before (see article as well as comments), it seems unlikely to me that issues of TV rights, payoffs to the Los Angeles Lakers and Clippers for horning in on their demographic region, and a lease in Anaheim can all get worked out that quickly — especially with a lockout and revamped collective bargaining agreement looming — but that's just educated guesswork. If nothing else, those owners' meetings are going to be very, very interesting to sit in on.

In other Kings news, Power Balance is backing away from a deal to buy naming rights to the maybe-soon-to-be-abandoned Arco Arena, and fans at last night's game chanted "Here we stay!" Wouldn't "Apres nous, le deluge" have been more appropriate?

February 25, 2011

Sacramento Kings ask for extension on Anaheim move request

The Sacramento Kings owners have asked the NBA for a delay of next Tuesday's filing deadline for relocation requests, saying they want (in the words of an NBA press statement) "the opportunity to discuss their options with the Board of Governors at its April 14-15 meeting." It's widely expected the request will be granted.

The question now becomes: What are they waiting for? Sacramento Mayor Kevin Johnson declared yesterday, "This means one thing. They are trying to cut a deal to leave." And added, "They haven't cut a deal yet, or they wouldn't need an extension."

All of which seems unarguable, but what, then, is the holdup in working out a deal? Several sports business experts tell the Sacramento Bee that an Anaheim move might not be as easy as it sounds: Former A's and 49ers exec Andy Dolich notes that the Los Angeles Lakers and Clippers are likely to oppose the Kings relocating to Southern California, and those teams "have significant influence" around the NBA.

Stanford sports economist Roger Noll, meanwhile, notes that in additional to working out a lease in Anaheim and any relocation fee due the Lakers and Clippers, the Maloofs would also have to figure out a broadcast deal: "You want to make sure your options are as good as what you have in Sacramento." Which sounds like a no-brainer — Orange County has more than double the population of Sacramento County — but again, having existing teams around complicates matters, as we've seen before.

For now, it looks like the Maloofs are hedging their bets, trying to get Sacramento city officials and the Anaheim Ducks owners to, in effect, bid against each other to provide the Kings with a home. The trick will come when it's time to pick a winner, especially if neither partner in this game of chicken has budged much, or if the Lakers and Clippers can really throw up significant roadblocks among the NBA owners. But for now, kicking the can down the road is the better part of valor.

February 24, 2011

Today's Kings-to-Anaheim rumors

Speaking of rumors, talk continues to heat up that the Sacramento Kings are headed to Anaheim. The reality, though, is murkier:

• Orange County Register columnist Randy Youngman reports that "there are growing indications that the Maloofs will ask for an extension on the deadline because of unresolved issues as the protracted negotiations continue with Henry Samueli's lieutenants at Anaheim Arena Management, the company that operates Honda Center for the City of Anaheim." That actually doesn't sound like an acceleration of move talks so much as a snag, but Youngman insists that a final deal is expected in March, or maybe April.
• SoCal sports business expert David Carter notes that while the Kings would be a tenant in somebody else's building in Anaheim, and the third team in the greater L.A. market, "you could make an argument that you're better off being a junior tenant in a more compelling building, in a more compelling market, than being a big fish in a small pond."
• Mayor KJ says the Anaheim move is "more than rumors," though given he's still trying to drum up support for a new arena in Sacramento, he would say that.
• Mark Kreidler of ESPN.com is tweeting like crazy on the topic, with most notable tweets including: "Kings will ask for and receive extension from the NBA to consider the Anaheim deal. Am told the league also wants time -- not sold on OC.", "Kings extension on relocation could well run through the end of the season. The NBA doesn't really have set parameters, I'm told." and "Understand that what comes to me from Maloof-approved sources can be spin. That's expected. But extension is real enough and will happen."

I have zero inside information, but what all this sounds like is that the Maloofs are engaged in talks to move to Anaheim, but nobody's sure if they can work out a deal that will make them, Samueli, and the NBA happy all at once. But if nothing else, playing footsie with Anaheim can help turn up the heat on the Sacramento city council to approve an arena deal, especially if the footsie can be dragged out for months. It's all about the leverage.

February 21, 2011

Kings-to-Anaheim rumors heat up after Stern mumbles something about it

And in other trumped-up move threat news, the news media is awash in renewed speculation about a possible Sacramento Kings move to Anaheim after NBA commissioner David Stern confirmed that move talks had taken place during an All-Star Game press conference on Saturday.

Normally I'd be quick to blame Stern for saber-rattling, but it looks like in this case he was asked about a Kings-to-Anaheim move and did his best to duck the question, saying:

"I do know, because I read in the newspapers, that they are supposed to have had discussions with Orange County, and they have," Stern said. "I don't know whether they are ongoing. No one has told me that they have been tabled and no one has told me that they are ongoing."

And then the sports media went all kerflooey.

So what's the reality here? Well, the Kings do have a March 1 deadline to decide whether to apply to the NBA to relocate for next season, so presumably any talks that are ongoing are going on with a bit more urgency (though that assumes that there will be a next season). It's still unclear whether a move would work out financially, though — a Kings official said owners Joe and Gavin Maloof would no longer be getting a $100 million loan from Anaheim Ducks owner Henry Samueli, and the Maloofs would be stuck with an empty arena in Sacramento.

Not that it couldn't happen, but I'm still skeptical that there's enough added revenue in an Anaheim move to make this a slam dunk for the Maloofs. Which could mean that they punt the March 1 deadline, especially given the labor situation, and wait till next year. Guess we'll know more next week.

February 10, 2011

Sacramento council: Never mind, we can wait for arena details

So it looks like when the Sacramento city council declared two weeks ago that it wanted answers within two weeks on which Kings arena plans were actually viable, it was only joshing: On Tuesday night, the council reversed course and re-anointed ICON-Taylor as the preferred developer, giving that team an additional 90 days to figure out how to pay for its plan. Spake Sacramento councilmember Steve Cohn:

"While I appreciate dreams and visions that people have for whatever sites they want to promote, I have to say, for me, it comes down to financing. I want straight answers, and I want the best possible team to get straight answers. Based on what I've seen, I think those answers can best come from the ICON-Taylor group."

According to the Sacramento Press, council staffers will read over whatever ICON-Taylor comes up with in May and report back to the council in July. Which is a nice exercise in kicking the can down the road, anyway; the test will be to see whether the Kings owners up the ante in the meantime by asking the NBA for permission to move to greener pastures.

January 26, 2011

Sacramento city council calls do-over on arena bids

I have been sadly neglecting the activities of the Sacramento Kings arena task force since their public hearing earlier this month — if going around in circles can be said to be an activity. The latest developments:

• On Friday, the mayoral task force picked the ICON-David Taylor team as its best bet to get an arena built. That would be the team, you'll recall, that won't even have a "conceptual approach" for "identifying strategies to finance an integrated arena and regional transit center" until April. Though given some of the past plans that have been floated in Sacramento, you'll forgive the task force if they preferred one that admits up front that it doesn't know what it's doing.
• The Sacramento city council responded last night by tossing the task force recommendation, and instead asking that all four developers come back in two weeks with more specific financial information. Assistant City Manager John Dangberg, in the words of the Sacramento Bee, responded that "a key element would be determining what financial investment the Kings owners would be willing to make in a new facility" — which, you know, no duh.

It looks like everyone will now reconvene in another two weeks to determine whether anybody knows enough about anything to say which plan makes the most sense, or is even a plan. In the meantime, expect lots of talk about the looming March 1 deadline for teams to notify the NBA if they want to relocate this fall — even if the relocation options aren't all that great right now.

January 10, 2011

Kings move rumors start flying: Anaheim? San Jose? Cucamonga?

With the latest batch of Sacramento Kings arena plans seemingly going nowhere, Orange County Register sports columnist Randy Youngman is starting up the Anaheim move rumors:

The relocation rumors revved up again Friday when Bloomberg News Service reported that two private investment firms are negotiating to acquire a controlling interest in the Palms Casino Resort in Las Vegas, also owned by the Maloofs, after the family violated its loan covenants.

If the Maloofs are having significant financial problems — the Sacramento Bee reports that in 2009 the family sold its original beer distributorship in New Mexico for more than $100 million and that there also were staff layoffs in the Kings organization and at The Palms — then perhaps there is a greater sense of urgency to move the franchise to a market with better demographics, more potential corporate sponsors and an NBA-ready arena.

That's where Anaheim comes in. If the Maloofs decide to move the Kings — or are forced to sell a team struggling on the court (NBA-worst 8-25 record) and struggling at the gate (29th out of 30 in home attendance) — Anaheim and San Jose are believed to be the most likely destinations because they both have NBA-quality arenas and waiting billionaires to help them overcome financial obstacles.

Well, maybe. Except that Anaheim and San Jose also both have hockey teams that are the primary tenants, and they're not going to give the Kings the kind of sweetheart lease that they'd want, assigning them all the arena revenues and as few of the costs as possible. Unless the Maloofs are really strapped for cash, it seems like it would make sense for them to at least wait for this latest round of arena proposals to run its course, on the off change they'd land the golden ticket — if not, there'll be plenty of time to move to Anaheim after the lockout.

January 07, 2011

New Kings arena plans even vaguer than last batch

So it looks like Sacramento's arena task force didn't like the city's four new Kings arena proposals any better than I did:

Of the four teams looking to develop a new Kings arena and entertainment complex in Sacramento, two don't have concrete finance plans while the other two must leap significant financial hurdles to bring their projects to fruition.

That's the rundown of a public hearing Thursday hosted by the task force reviewing the proposals — reconvened by Sacramento Mayor Kevin Johnson after a team led by developer Gerry Kamilos failed to deliver after being selected last year to exclusively work on a new arena deal.

Fireworks flew when panel member Mark Harris, a professor and infrastructure finance expert, grilled Kamilos. Harris had previously compared Kamilos' three-party land swap proposal — between Cal Expo, property in the Railyards and Natomas land that houses Arco Arena &mdash to a game of three-card monte. This time, he said that statement was an insult to those practicing the three-card monte scam.

Yowsah! The "hurdles" facing the two plans that actually have plans include the need for approval from Cal Expo in the case of the Kamilos plan (the same thing that deep-sixed his previous arena proposal last year), and the reliance on selling 10,000 seat licenses plus $70 million in PILOT bonds in another, despite the fact that, as the Sacramento Business Journal notes, "representatives from the Natomas team couldn't answer the panel's questions on how those bonds would work." At this rate, I could become the frontrunner tomorrow with my plan to fund an arena with elfin magic.

January 03, 2011

Sacramento developers throw more Kings arena plans at the wall

Four of the developers whose Sacramento Kings arena plans were rejected in the last set of talks are back for another round, submitting arena plans by last Thursday's deadline. Though in some cases, "plans" might be pushing it:

• Gerry Kamilos, whose three-way land swap plan was rejected by Cal Expo in September, is back with a new iteration of the same plan: This time, Cal Expo would stay put, but hand over 125 acres of its land to Kamilos for redevelopment, in exchange for getting help rebuilding on a smaller site. Kamilos would then package the profits from that land, plus development on the current Arco Arena site, to come up with $350 million to build a Kings arena on downtown railyard land.
• A team led by ICON and developer David Taylor team would "focus on identifying strategies to finance an integrated arena and regional transit center in the railyards" and present a "conceptual approach" by April, according to the Sacramento Press. In other words, they don't really have a plan, but they'll be writing more in a week or two.
• The "CORE" team is now considering either the Westfield Downtown Plaza or the railyards as sites, but according to developer Ali Mackani (in the Press' words), "more information must still be gathered to create a workable financing plan under a public/private partnership."
• Natomas ESC Partners has probably the most worked-out plan, which should be no surprise, since it just resubmitted its same proposal that was rejected last time around. This would build an arena on city-owned land just north of Arco Arena, with construction costs coming from $10 million in annual rent from the Kings, a share of game-day ticket revenues, naming rights, parking fees, and other money that the Kings owners are presumably counting on themselves as the whole reason they want a new arena.

Sacramento Mayor Kevin Johnson summed up the proposals: "At the end of the day, to develop a project of this nature in these difficult economic times is a challenging endeavor, but the teams who have submitted bids certainly reflect a seriousness of purpose." In other words, A for effort. But still no one has found a solution to the problem of how to generate money out of thin air.

November 19, 2010

Sacramento arena plans only mostly dead

Two months after the NBA stuck a fork in its Sacramento Kings arena lobbying efforts, Mayor Kevin Johnson isn't taking "dead" for an answer:

The mayor is calling on developers once again to come up with proposals to replace aging Arco Arena — or "tweak" plans they previously proposed — and submit them to a task force Johnson is reconvening.

Johnson's task force will meet today, one year after the mayor first commissioned the group to act as community liaison for ideas on how to get an arena built. ...

Johnson said this week that he will ask the task force to review any proposals submitted by the end of the year. The group will likely conduct a public hearing in late December or early January in which development teams will present their plans, Johnson said.

The mayor said he wants the task force's recommendation to go to the City Council early next year.

So, basically, this is a fishing expedition to see if anyone can come up with a more viable plan than the three-way land swap that was shot down by Cal Expo in September. Expect lots of far-fetched financing ideas, heated public rhetoric, and speculation that the team will move back to Kansas City if an arena deal isn't done for real this time — oh, look, there's one now.

November 10, 2010

Kings not for sale to Seattle, says Maloof

Microsoft CEO Steve Ballmer cashed out $1.3 billion in shares last week, leading to rampant speculation of all sorts of things: Either he hates the Windows Phone, or he's looking to buy a basketball team for Seattle, as he'd expressed interest in previously.

Sacramento Kings owner Joe Maloof immediately denied that Ballmer, or anyone else, was targeting his team, saying he's "never met Mr. Ballmer, we've had no contact with him and the team is not for sale." No denials yet from the owners of the Memphis Grizzlies, the Milwaukee Bucks, or the Baltimore Claws.

Of course, there's another obstacle to bringing the NBA back to Seattle, which is that the city would still need to come up with at least $150 million to meet Ballmer's (and the NBA's) demand for renovations to KeyArena. Not to mention that NBA commissioner David Stern is busy using the league's struggling franchises as a contraction threat against the players union. So while you shouldn't rule out the Ballmer Option entirely — people with billion-dollar checking accounts don't grow on trees, much as it may seem otherwise — you probably don't want to hold your breath, either.

September 30, 2010

NBA to Sacramento: Drop dead

In the wake of last week's Cal Expo vote to reject a land swap to help fund a Sacramento Kings arena, NBA arena czar John Moag issued an email Tuesday saying the league is done with its arena efforts in that city:

"On the heels of the disappointing — but not surprising — action (or inaction) of the state and Cal Expo board, it is fair to say that the NBA has ceased its activities on the Sacramento arena front. However, we will continue to monitor and respond to the activities and options of others that might reasonably ensure the competitiveness and viability of the Kings' franchise."

Reading between the lines, that certainly sounds like the NBA is trying to send a signal that it's open to relocating the franchise — Moag didn't say "ensure the competitiveness and viability of the Kings' franchise in Sacramento," after all. Though it could also easily be a signal meant to push the Sacremento city council — which will meet October 26 to consider whatever new plan developer Gerry Kamilos can cobble together by then — to approve a new arena. Or maybe Moag is just counting on Sacramento falling victim to one of the classic blunders.

Interestingly, Mayor Kevin Johnson has raised the possibility of renovating Arco Arena as a possibility, but Kings management says they're not interested: "Refurbishing the current Arco Arena is not an option," Kings president of business operations Matina Kolokotronis told the Sacramento Bee. "We need a new facility that can compete within the NBA. Our facility is one of the oldest in the league. We will continue to look at alternative arena solutions in Sacramento."

September 25, 2010

Kings arena land swap voted down by Cal Expo

And you can stick a fork in the Sacramento Kings' three-way land swap plan: One week after a state consultant said it would be a bad deal for Cal Expo, the Cal Expo board yesterday voted to reject the plan.

A spokesperson for Sacramento Mayor Kevin Johnson called the vote a "significant setback," which is mayorese for "pining for the fjords." Developers Gerry Kamilos and David Taylor say they're pursuing other options for arena funding — but without the cash from selling off the Cal Expo land, it's hard to see where the money would come from. (This is, of course, why the Cal Expo board voted it down: They'd have been the ones filling the Kings' financing hole, by giving up valuable development rights they could otherwise keep themselves.)

The question now being raised is whether the Kings will immediately file for relocation, but that would be problematic as well, since they'd need a place to relocate to. Kansas City has an arena, but a building manager with economic disincentives to offering a sweetheart lease; Las Vegas has that whole gambling thing; San Jose and Anaheim have hockey teams that would balk at turning over huge chunks of arena revenues to the Kings.

Not that it's impossible for the Kings to move eventually — never say never — but it seems more likely that this whole mess will drag on for a few more years as the Kings owner hold out hope of yet another Sacramento arena plan rising from the ashes. Just like, you know, last time.

September 17, 2010

Consultant: Kings arena swap would be bad deal for state

The Sacramento Kings owners' hopes for a three-way land swap with the state and city for a new arena took a major hit this week, as a state consultant reported that the deal isn't in the best interest of the Cal Expo state fair. Under the plan, Cal Expo would give up its 350-acre site and get a smaller parcel on the site of the Kings' current home, Arco Arena; consultant Andrew Plescia noted that it'd be more worthwhile to just sell off a section of the current site to developers to pay for upgrades to Cal Expo.

Developer Gerry Kamilos said he's still not giving up on the land swap plan, offering a revised financial plan that he insists would eliminate a $108 million funding gap that Plescia identified as a result of "revenue sources [that] are likely to be lower than projected." Cal Expo General Manager Norb Bartosik noted that the new Kamilos plan is "significantly different" from the old, and the Cal Expo board needs to discuss whether to continue to study the plan or drop it altogether

Kings owner Gavin Maloof, meanwhile, is keeping a stiff upper lip, telling reporters, "We have to continue to work hard to try and find a solution." Maybe involving even bigger banners.

August 27, 2010

Cal senate won't move on Kings arena until more questions answered

Looks like the Sacramento Kings arena land swap plan has hit a stumbling block in the form of California state senate president pro tem Darrell Steinberg, who's actually (gasp!) asking questions about the deal before he'll consider enabling legislation. Among the items that Steinberg wants more info on:

• Whether Cal Expo actually wants to relocate its state fairgrounds to the Arco Arena site. (A report on this is due next month.)
• Whether the cost estimates for a move are reliable.
• What laws would need to be changed to allow the land swap.

Now, Steinberg did say that once those questions are answered, he'd consider introducing a bill in December. But the Kings arena plan still comes down to: Until Cal Expo signs on and they figure out a way to pay for, this ain't going nowhere.

July 16, 2010

Vegas developers: Build it, and NBA team will come

In one of the weirdest arena campaign moves ever, the CEO of a development group hoping to build an NBA arena in Las Vegas said this week that "we have an NBA team under contract" to move to Vegas — but only if the city approves a tax-increment financing district to kick back property taxes in the surrounding area to help pay off arena construction costs.

The arena plan is scheduled to be discussed at an August 4 county commission hearing, but meanwhile, everyone wants to know: Really? An NBA team? Which one? The Las Vegas Sun briefly mentioned that the Detroit Pistons are for sale, leading to an immediate denunciation of any such thing by the team's current owners. And Sacramento Kings owner Joe Maloof says it's not him, either.

NBC Sports asked around among team execs at the Summer League currently underway in Las Vegas, and came to the conclusion that the development group "got a 'we agree to have a serious conversation with you if you get your arena built' rather than any kind of agreement to sell." Which would explain NBA officials' statement yesterday that they "categorically deny" that any such contract is in place.

In any case, though, expect Las Vegas to show up in lots of stories about NBA teams seeking subsidies for the next few months, whether it's in Detroit, Sacramento, Indianapolis, or wherever. Maybe if they play their cards right, Las Vegas can even be the new Kansas City!

July 12, 2010

How to split a hair, Sacramento department

The Sacramento Press headline is "Arena plan moving forward," but there are few new details on the Kings land-swap plan. To me, the most interesting bit is what it reveals about sports-facility salesmanship:

"The city and the state are not in a position to invest anything into these properties," [developer Gerry Kamilos] said. "The idea is to have the private sector come in and provide the capital to increase the value of those properties that both the city and state would benefit from."

Financing is proposed to come from land sales, parking fees, lease revenue, special districts to collect sales and property taxes from the properties, and bond proceeds generated by setting up tax increment districts, refinance districts and bond districts, Kamilos said.

So let's see: Sale of public land, special sales- and property-tax districts, tax increment financing (which is basically another form of property-tax kickbacks) — yeah, there's no way any of that could be construed as the city and state "investing anything" in the project.

Now, Kamilos would no doubt say that he doesn't mean no public involvement at all — the city and state just aren't going to directly pour any cash into developments at that site. But that's not how most readers are going to take it when they see "no city and state investment."

In fact, this has become one of the standards of the stadium-grubbers' handbook: Claim that you won't need public money, then look for ways to use public money. And this tactic becomes much easier when the journalists reporting your statements are too credulous, lazy, or financially illiterate to call you on it.

May 19, 2010

Consultant: Kings arena site too small for state fairgrounds

Still playing catchup from the weekend here — if you want to see what else I've been occupied with, head thataway — but the tentative Sacramento Kings three-way land swap arena plan took a hit on Sunday with the revelation that the site currently housing Arco Arena is too small to fit the state fairgrounds as currently constituted.

Now, this isn't exactly news — as one FoS reader wrote, "How many consultants does it take to convince you that 185 < 412?" — and Cal Expo says it's looking at "new design techniques" to squeeze a state fair into fewer acres. But that could be tricky: Even if they were to eliminate the racetrack currently located at the Cal Expo site, the Arco site would be more than 100 acres short, according to the state's consultants.

The Sacramento Bee reports that owners of about 25 vacant acres near Arco Arena say they'd be willing to sell to bulk up the parcel, but they haven't said what their asking price would be. And this for a project where it's already unclear where the money is going to come from.

In short: There are still many, many ways for this deal to blow up. Wake me when there's an actual financing plan.

April 29, 2010

Sacramento council okays Kings land swap (again)

The Sacramento Kings three-way land swap deal took another baby step forward on Tuesday, as the Sacramento city council voted to sign an exclusive negotiating agreement with the developers behind the plan. Next up: a whole lot more negotiating, since nobody's exactly figured out yet who'd be paying what to whom.

And, of course there's also Cal Expo, which would be swapping out its current land as part of the deal, and which is now publicly disagreeing with the proposed developers over how much that land is worth. There's a whole lotta baseball left to be played...

March 17, 2010

Sacramento council gives go-ahead to talking about negotiating possible Kings deal

The Sacramento city council yesterday unanimously endorsed the mayor's arena task force's endorsement of developer Gerry Kamilos' Kings arena proposal. Or at least endorsed endorsing it — the Sacramento Business Journal described last night's vote as "directing city staff to begin a preliminary analysis and lay out a timeline and process for working with the team led by developers Gerry Kamilos and David Taylor for a proposed arena in the downtown railyards," which is quite a mouthful of qualifiers.

The next steps: File a report on the parameters of a council committee to work on the arena project, and another report on the proposed language for a negotiating agreement under which to talk about the project. Once this is accomplished — which could take up to six months — maybe they can stop talking about how to talk, and begin actually talking about some items of substance, like how exactly the whole shebang is going to be paid for?

Another action item: Writing up language for the state legislature to approve the sale of its Cal Expo land as part of the Kamilos deal, something the state hasn't seemed keen on given the costs of building a whole new Cal Expo on the Arco Arena site. It should be an interesting six months, to say the least.

March 15, 2010

Kings land swap plan moves forward, but where's the money?

To absolutely nobody's surprise, on Thursday Sacramento Mayor Kevin Johnson's Kings arena task force officially endorsed developer Gerry Kamilos' three-way land swap deal that would end up with an arena on city-controlled land at the downtown railyards and a new Cal Expo on the site of Arco Arena. City officials now say they hope to sign an "exclusive negotiating contract" (presumably a memorandum of understanding or something similar) with Kamilos by next month.

The big question remains how the heck the Kamilos plan would be paid for, especially given that the state-run Cal Expo says it won't agree to relocate unless someone pays for a new modernized state fair facility, and that "someone" isn't them. There's also the issue of whether tax-increment financing (i.e., kicking back property taxes to the developer) would be involved, as previously hinted; city councilmember Sandy Sheedy, showing unusual perspicacity for a local elected official, noted, "Sometimes when you just say no new taxes, it doesn't mean the rest of the public funds that go into it."

And Sheedy's not the only one getting cold feet: The Sacramento Bee has run a slew of columns and opinion pieces over the last few days questioning the arena deal. Some samples:

Bee associate editor Foon Rhee:

There's a reason why financial projections for arenas and stadiums tend to be so rosy, says Stanford University economist Roger Noll, an expert in the field. Support from sports fans alone is not enough to build a majority in favor of public subsidies, he says, so boosters resort to two lines of argument: the benefits will ripple far and wide, and the arena will attract lots of family-friendly events besides sports.

But such boosterism is "increasingly not working," Noll said, because inflated claims are getting punctured by hard reality.

Economist Jock O'Connell:

Even if construction of a new arena is entirely financed by private investment (which is unlikely to be the case), the task of repaying lenders and bondholders — not to mention generating the revenue to cover the arena's maintenance and operations costs — will fall largely on individual ticket-buyers and those local businesses still able to lease luxury boxes.

It should come as no news to elected officials struggling to balance budgets that the Sacramento region is a much less affluent place than it was just three or four years ago. And no amount of civic cheerleading — or exceedingly optimistic economic impact studies — can obscure the fact that we are staring at several years of sluggish, if not jagged, economic growth in this region.

Bee columnist Dan Walters:

If the city is bent on providing the Maloofs with a new venue for events that only a tiny fraction of the region's residents can afford to attend, that's its business. But why should the state get involved?

Cal Expo, built four decades ago on the fanciful notion that it would become a year-round, Disneyland-like attraction, is a concrete and steel monstrosity and should be reconstructed or replaced with something more like the traditional fairgrounds it replaced. If selling the underlying property would provide the money to do so, as the arena promoters envision, so be it.

If, however, the Cal Expo site is valuable enough to finance a new fairgrounds and a basketball arena, then the excess should be returned to the state treasury, not ripped off by the city and the Maloofs. The state would be making this unjustified gift while it simultaneously is trying to sell other property and the state workers' compensation insurance system to cover gaps in the state budget.

This scheme is insanity, and someone should have the guts to strangle it before it takes on a life of its own.

February 25, 2010

Sacramento developer pressing Cal Expo on Kings land swap

Sacramento Mayor Kevin Johnson's Kings arena task force doesn't make its final report until March 11 — and really they could probably use even more time, given the haziness of some of the proposals — but that's not stopping developer Gerry Kamilos from lobbying the Cal Expo board to sign off on his convoluted three-way land swap deal. The Cal Expo board is scheduled to discuss the plan at its meeting tomorrow.

Cal Expo official Brian May (sorry, different Brian May) told the Sacramento Bee that the board was "intrigued," though he also suggested that the NBA's endorsement of the Kamilos plan may violate a letter of agreement the league signed with Cal Expo not to hold arena talks with any third parties. Continues the Bee:

May said Cal Expo has homework to do before deciding if the Kamilos proposal is workable: How much could the state get for the Cal Expo land? Is the Natomas site big enough? What would a new fairground cost to build? How would it be financed? Would there be legal challenges in Natomas to the State Fair being built there?

And what about Naomi?

February 19, 2010

Sacramento arena task force presses for details, any details

Sacramento Mayor Kevin Johnson's arena task force has begun questioning prospective Kings arena developers, and have actually begun focusing in on the big question: How the heck does anyone propose to pay for this thing? The answers are awfully handwavy, according to the Sacramento Bee:

Several of the contenders suggest selling long-term seat licenses to arena users. One talks about enlisting civic-minded real estate agents to donate commissions. Another relies in part on competing for federal transportation and job-creation funds. And one would coax major corporations to pay sponsorship fees.

The presumed front-runner, developer Gerry Kamilos, again stressed that the Kings would pay $10 million a year in rent under his plan. "That's substantive to me," Kamilos' development partner David Taylor told the task force. Given that that would come to less than $150 million, and the whole project would cost at least $700 million, maybe not — though the rent would come "with annual adjustments," according to the Bee, so maybe there's hope that the Kings rent would actually scale up enough over time to come to a more significant chunk of change. File this under: Reply hazy, ask again later.

January 25, 2010

Kings arena land swap to involve TIF subsidies?

More details are emerging about the Sacramento Kings' proposed crazy three-way land swap arena deal, and they put the emphasis on the "crazy." The Sacramento Bee (whose direct link to the full article is broken) calls the plan "audacious," "fragile," and "still-evolving"; it also gives a hint at some of the public subsidies that would be required:

The development team is counting on concessions from the city. The arena site would be a parcel of city-owned land at the railyard. The city also would be expected to donate 100 acres it owns near Arco for the new fairgrounds, Kamilos said. The developers also plan to ask the city for other forms of financial aid.

Without endorsing any of the proposals, Assistant City Manager John Dangberg acknowledged that any arena deal would likely require "a significant public investment," including land grants. To support the project, the city would consider contributing some of the tax dollars generated by the deal, he said. That way, the city wouldn't have to raise taxes.

That's right, it's our old friend TIFs. And while local officials like to tout the free-lunch aspects of tax increment financing — it's money that otherwise wouldn't exist! — they avert their eyes to the less salutary aspects, like the fact that new development brings new public service costs that those new property tax revenues are normally expected to cover, or that TIF-subsidized sites can siphon off development from other local sites that would otherwise pay full property taxes.

In any case, the land swap plan sounds like it's still pretty up in the air — one of the developers behind it tells the Bee that "We're hoping there is a land-development opportunity as part of this ... Cal Expo or something else." It may just be a trial balloon, but the NBA's designation of the plan as its favorite means that it's the balloon that everyone has their eyes on.

January 18, 2010

NBA choo-choo-chooses railyard land swap as best Kings plan

The city of Sacramento may be kicking around seven proposals for a new Kings arena, but the NBA has already declared its favorite — and it's not the one from downtown developer Thomas Enterprises that seemed to be the safe choice of local pundits. Rather, the league is backing something called the Sacramento Convergence, a complicated land-swap deal that would build an arena on city-controlled land at the downtown railyards, transfer the Arco Arena site and adjacent property to the state for a new state fairgrounds, and sell the current Cal Expo site to developer Gerry Kamilos for redevelopment.

As if that weren't confusing enough, the financial details of the project as reported are still murky: The Sacramento Business Journal says that the "initial phase" would cost up to $700 million, and that the Kings owners "would commit $300 million to the financing of the project, paying $10 million a year for 30 years" — though as anyone who's taken out a mortgage should know, that's not actually the same thing. (Depending on the interest rate, it would at most pay off $150 million in up-front costs.) Also not reported: how much money would be brought in by selling the Cal Expo site, which as we've seen is key to this kind of land-swap deal.

For their part, both Mayor Kevin Johnson and the head of his arena task force say they're still exploring all options, and aren't going to back a plan just because the NBA likes it. Which raises the question: Why the heck did the NBA even pick a favorite at this point, when on the face of it they shouldn't care who builds an arena, so long as it gets done without money their (or the Kings') money? John Moag, the former Maryland Stadium Authority chief who's been named the league's point man on the Sacramento arena push, told the Sacramento Bee that he liked the Convergence project because it included private partners "who are going to show me the money" — but if they're going to put up capital, they're going to want revenue back as well, so it doesn't actually help the project's bottom line.

Of course, maybe they're just hoping to steer clear of some of the more fanciful proposals, like the one for a riverfront arena whose restaurateur mastermind told the Bee, "Our river would literally come alive." Yikes!

January 07, 2010

Sacramento arena would create literally dozens of jobs

Sacramento's arena task force has come out with its job creation estimates for a new Kings arena, and the survey (by Sacramento consultants Capitol Public Finance Group) says ... 229 permanent jobs. For a $300 million building, of which no one is saying how much would be paid for with public funds.

I've been pretty critical of the Sacramento Bee's reporting in the past, so I give them full credit now for doing what too many newspapers don't, and actually trying to assess what economic impact projections actually mean. In this case, the Bee rang up Stanford economist Roger Noll, who didn't mince words:

Stanford University economist Roger Noll called the report "remarkably honest" but said it doesn't bolster the case for a new arena.

"Two hundred jobs is nothing," said Noll, referring to the permanent jobs the report estimates would be created. "You induce Macy's to open another store and you get that."

A critical issue, Noll said, is how the arena is financed. If taxpayers pay the bulk, that takes dollars out of their pockets, blunting at least some of the economic benefit. "How much are you willing to pay to get 200 jobs?" he asked.

To try to put some actual numbers to this: If the public put up all $300 million of the arena costs (even assuming the arena only costs $300 million, which seems low by recent standards), that would come to $1.4 million spent per new job created — in a job development world where anything over $50,000 per job qualifies as "execrable." And as for the issue of taking dollars out of local pockets, recall that when Kansas City was first proposing using tax money to pay for stadium renovations, it was calculated that a three-eighths of a percent sales-tax hike would cost each local resident $25 a year. Now that's something that should be included in every economic analysis — or at the very least, in newspaper coverage thereof.

December 29, 2009

Sacramento gets seven pipe dreams proposals for NBA arena

The results of Sacramento Mayor Kevin Johnson's Kings arena fishing expedition are in, and he's managed to net seven new proposals to consider alongside the possibility of an arena at Cal Expo or a renovation of Arco Arena. As promised, downtown railyard developer Thomas Enterprises is one of the applicants, along with a mixed bag of other local development bigwigs (and not-so-bigwigs — two are restaurateurs). Kings blog Sactown Royalty goes so far as to say that five of the seven "might as well be written on papyrus and shoved into a kiln."

The real question here, though, is who's managed to figure out not just where to build an arena, but how to pay for it? Interestingly, according to traces left in Google News' cache, both KCRA and MSNBC previously had the phrase "No specifics were released on possible funding options" in their stories, but it's gone now. We'll know more after Johnson's task force holds a public forum on January 14. Maybe.

November 16, 2009

Developers eager to host Kings arena, but mum on money

Sacramento Mayor Kevin Johnson's call for ideas for a new Kings arena is generating plenty of ideas, if nothing else. Both Thomas Enterprises, the developer for most of Sacramento's downtown railyard, and Gerry Kamilos, a local developer who doesn't have a site picked out, say they plan to submit proposal's to the mayor's new arena task force, and other developers have expressed interest as well.

Of course, the key question in these cases is seldom "Who's going to build it?" or "Where will it be built?" but rather "Who will pay for it?" So far, at least, nobody's talking funding sources — something that has proven to be problematic, to say the least, in the past.

October 30, 2009

KJ announces Kings committee, arena principles

Apparently not satisfied with the idea of selling quarter-million-dollar PSLs, Sacramento Mayor Kevin Johnson has a new idea for building a new Kings arena: He's convening a task force to solicit ideas for funding an arena. He doesn't know who'll be on the task force yet, but it's apparently based on one that former Sacramento Mayor Joe Serna Jr. formed in 1996 to bring major-league baseball to Sacramento, and since that worked out so well ... oh, wait.

Judging from the text of his speech, Johnson's self-appointed role yesterday seemed to be that of motivational speaker: "Look out those windows. Let yourself dream. You will see there are many options — options everywhere. Let's get after them." But the mayor also set out what he called four "guiding principals" (that's how his blog spells it) for arena negotiations:

Rule Number One: Taxpayer Comes First. The deal must make sense for taxpayers.

Rule Number Two: City Will Not Be Used As Leverage. We won't be a stalking horse for another city.

Rule Number Three: We Will Negotiate On Even Terms. We will have the best lawyers and consultants.

And Rule Number Four: We Must Think In and Out of The Box. Our arena will be an engine for economic development, not just a pretty building.

Well, there's a first time for everything, I suppose. Once the task force issues its findings, be sure to check back here for how well they match up with KJ's scorecard.

October 28, 2009

Sacramento considers PSLs as latest last-ditch arena finance scheme

The latest plan for filling Sacramento's Kings arena funding black hole: Personal seat licenses! Because nobody's ever thought of that before!

The Sacramento Bee writes that city officials have "met twice" with Chicago-based Stadium Capital Financing Group, which thinks that PSLs would be just the ticket:

An official with Stadium Capital estimated it would take fewer than 2,000 seat sales in Sacramento — in an arena with 18,000-plus seats — to finance construction of what could be a $500 million facility.

Let's do some quick math here: For 2,000 seat sales to fund a $500 million stadium, the average PSL price would have to be ... only $250,000. That's twelve times the top price that the New York Giants are charging for PSLs at their new stadium next year — and you can't get Giants tickets without shelling out for a PSL, whereas Kings fans would be able to sit in the other 16,000 seats with no down payment.

Mayor Kevin Johnson, meanwhile, is expected to give a press conference tomorrow calling for alternate proposals for a Kings arena and its funding. Maybe a bake sale?

October 27, 2009

Developer: I wouldn't touch Sacramento arena plan

John Semcken of Majestic Realty took some time off from luring NFL teams to L.A. recently to throw some cold water on Sacramento's plans for a new Kings arena at Cal Expo, telling the Sacramento Bee: "There is not a developer I know in the country who would do it, especially in today's economy." No, really?

The best line in the article, though, went to Cal Expo board member Gil Albiani, who summed up the financing woes of the $1.9 billion development project: "There is a black hole out there that has to be filled with money." Curse that Large Hadron Collider!

October 12, 2009

San Jose adds NBA to phantom team wishlist

As if San Jose and Santa Clara County didn't have enough on their plate, now the San Jose city council is set to vote on a memorandum on understanding for bringing an NBA team to town, should an NBA team be found that wants to move into HP Pavilion. The San Jose Mercury News reports that San Jose Sharks owner Greg Jamison, who operates the Pavilion, has met with the owners of the Sacramento Kings, though it gave no details of how serious the talks were, and it seems unlikely that the Kings owners would settle for being tenants in a two-team arena when their dreams are still alive of getting an arena of their own in Sacramento.

San Jose chief development officer Paul Krutko said, according to the Merc News, that any new team would require "modifications" to the Pavilion, to be paid for by a "public/private partnership." More details, one hopes, will be available in the MOU, once the council takes it up next month.

September 23, 2009

KJ issues Kings move threat against self

It often seems like local politicians act more like advocates for sports team owners than like negotiators for the public good, but this latest from Sacramento Mayor Kevin Johnson takes negotiating against yourself to new heights:

After learning that Arco Arena is considered unsuitable to host a major college basketball tournament, Mayor Kevin Johnson said Tuesday that Sacramento could lose the Kings if efforts for a new arena aren't stepped up.

"If we don't have a clear path to an arena in the not too distant future, then we as Sacramentans need to know that [the Kings] very well may look elsewhere," Johnson said.

Johnson has stumped for a new Kings arena before — and he is, of course, a former NBA star — but learning that Sacramento was considered ineligible for the NCAA men's basketball tournament (yes, that again) seemed to push him over the edge, as he declared, "I've got to be more aggressive, and I've got to move the timeline up in terms of the arena. The timeline has to include an Option B, an Option C, and I haven't quite determined what we're going to do."

The most recent plan, you'll recall, was for a $1.9 billion arena-and-"living-village" that has no developer and no financing. Sacramento's downtown railyard may be back in play as well: The land's owners say they'd "absolutely" like to see an arena there, but aren't offering to build it or pay for it or anything.

Meanwhile, we can almost certainly look forward to more articles speculating where the Kings are headed without a new arena — though you can't help wondering, if a move were so enticing, why the team owners didn't skip town the last time we heard this kind of talk four years ago?

February 11, 2009

Kings still pushing for new Sacramento arena

The Sacramento Kings' arena plans aren't dead, they're just resting. The Sacramento Bee reports that NBA consultant John Moag will present a new plan to the board of Cal Expo by February 27 to propose a ""mixed-use project" anchored by a basketball arena. (The Bee also reports that the Kings are losing $25 million a year, but as that's cited only to "sources close to the team," take it with a grain of salt, as it could well be an intentionally placed bit of disinformation from the team's owners.)

Of course, given that the last plan for Cal Expo depended on using future development rights to fund the project, and the value of real estate in Sacramento right now can only be measured with an electron microscope, the real news will be whether or not Moag presents a new financing plan. ESPN blogger Henry Abbott suggests that it's only a matter of time before someone pushes a Kings arena as a "shovel-ready" plan for federal stimulus funding; the sports-sleaze blog Sports By Brooks polled its readers on this, and currently 94% are opposed to the idea. Which only goes to show we'd probably be better off with sports blog readers running Congress.

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