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February 16, 2012
Kings arena funding would be 60% public; nada on who gets revenues
The Sacramento Bee has a rundown of the likely cost shares for the upcoming Kings arena proposal, which go a little something like this:
- $85 million from the Kings owners, Joe and Gavin Maloof.
- $50 million from arena operator AEG.
- $40 million "or so" from the sale of public lands.
- $200 million from the sale of future city parking revenues.
There are some immediate problems here, notably that that's not quite the $387 million the Kings say will be needed to build an arena, plus that a $200 million payday from the parking sale remains very speculative.
More important, though, is that the Bee makes one of the most common errors in sports facility reporting: looking only at up-front costs. The key here isn't just going to be who fronts the money, but who collects the arena revenues — right now we have AEG counting on those so they can turn a profit on running the place, the Maloofs counting on them so they can turn a profit on the team (okay, a bigger profit), and the city presumably counting on them to help fill the $9 million a year hole that the parking sale will blow in the city's budget for the next few decades. As there's only so much money to go around, this is going to be a vitally important piece of the negotiations in determining who's really footing the arena bill.
One hopes that the arena funding plan to be presented a week from Tuesday will include some lease details so that the city council can know what exactly they're voting on before they vote on it — but given past history in arena deals, I wouldn't count on it.
I think "or so" is the best amount describe how much public lands sales would raise. Remember, Sacramento got hit pretty hard by the real estate bust. I sure hope the City Council questions the wisdom of selling real estate in a down market.
There's also that little matter of the $70M the Kings owe the city. How does that play into all of this? I sure hope that that's NOT their cash contribution. Oh, and is the land surrounding Power Balance Pavilion really worth $25M.
Posted by jjo916 on February 16, 2012 12:38 PM
If you can't afford to run a professional sports team and pay for your own arena, you shouldn't own one to begin with. Stop making taxpayers fund your expenses. Crooks.
Posted by Roger C. on February 16, 2012 02:56 PM
I think what they've done in Sacramento is combine the worst of Chicago's parking deal with the worst of Orlando's Amway deal, mixed it all up, and decided to see just how awful a recipe they can concoct.
Right now, that recipe tastes a lot like...
Shhh. She's coming. Get off the internet.
-- With apologies to "Finding Nemo."
Posted by MikeM on February 16, 2012 07:54 PM
Neil, I still think the $67M "loan" balance will play a role here, too. The security for that loan is the existing arena and land. If they sell that, I'm hard-pressed to see why the bond-holders wouldn't demand repayment.
Selling that land doesn't produce money for the new arena; it produces money for paying off the existing loan.
Posted by MikeM on February 16, 2012 08:13 PM
Yeah I don't see how the Maloofs can even use the land as part of their $85 million without that money having to go back into paying the debt on their loan. I just do not understand how that could go the arena and not back to the bondholders.
Posted by John on February 16, 2012 08:42 PM
Pay for your own arena? LOL Name one owner who pays for his teams arena.
This idea that they are crooks is totally based on lack of information. Minneapolis has had problems because the tax payers are fronting a bill for the twins new stadium and now are looking at doing it again for the Vikings. Look at Seattle I mean the situation is commonplace. To solely place blame with the owners is irresponsible. To flat out call them crooks is ignorant.
This seems like a lose lose situation even if the owners cough up the dough taxpayers are still going to take a hit with the loss of parking revenue. That money will have to come from somewhere, that somewhere is going to be the taxpayers.
It's been a year with no definitive plan and they're rushing in crunch time now to work something out. Whatever comes from this you can bet its going to be half assed and not thoroughly thought out.
Your best hope is that the nba sees a potential here and grants another extension to get the details worked out and you keep your kings.
Pay for your own arena? LOL Name one owner who pays for his teams arena.
This idea that they are crooks is totally based on lack of information. Minneapolis has had problems because the tax payers are fronting a bill for the twins new stadium and now are looking at doing it again for the Vikings. Look at Seattle I mean the situation is commonplace. To solely place blame with the owners is irresponsible. To flat out call them crooks is ignorant.
This seems like a lose lose situation even if the owners cough up the dough taxpayers are still going to take a hit with the loss of parking revenue. That money will have to come from somewhere, that somewhere is going to be the taxpayers.
It's been a year with no definitive plan and they're rushing in crunch time now to work something out. Whatever comes from this you can bet its going to be half assed and not thoroughly thought out.
Your best hope is that the nba sees a potential here and grants another extension to get the details worked out and you keep your kings.
Sacramento has now jumped the shark. They're proposing a $1-$3 parking surcharge, but only for out-of-towners, and only on event-nights.
How many ways can this plan fail?
www.sacbee.com/2012/02/18/4273966/sacramento-considers-parking-surcharge.html
Posted by MikeM on February 18, 2012 06:35 PM
Hey Mayhem, the POINT is that the Maloofs are leeches. They won't invest in their team, but they want us to buy a new arena for them? Please. That's where the "crooks" reference comes from..
Posted by Goofenstein on February 20, 2012 07:08 PM
Allrighty then... AEG's Leiweke has publicly stated that his firm will not contribute to capital costs of this arena, and that any 'deal' will look considerably different than that of Kansas City because of their ownership of KC's entertainment franchise... And the Maloof's are already nearly underwater in debt, owing $70 million to Sac and $150 million to the NBA, with only the lowball value of the team and some shares in Wells stock to boot, all in all worth less than about $250 million in toto, if that.... and on a downward trajectory...
So, given this, and given the inevitable cost overruns and infrastructure necessary to bring this project into reality, Sacramento's contribution is nearly NINETY PERCENT - not SIXTY ...
This is my take on a more REALISTIC statement of costs for the project:
$400M for David Taylor/ICON's cost estimate lacking infrastructure without which banks will not finance (and have been turned down at least seven times);
$200M for city recommended infrastructure filling in David Taylor's omissions;
$150M for URBAN LAND INSTITUTE's recommendations for subterranean construction and addl land to site next to the Intermodal transit project;
$10M to reimburse the Prop 84 Intermodal acquired land;
$70M to liquidate the Maloof's loan
$100M for a budget contingency to avoid city liability for inevitable cost overruns...
THIS is how much this project will cost....
...exclusive of any bonding required to construct, especially because the offsetting funds are not one shot deals but rather will dribble in over time... requiring debt service costs on the part of SOMEONE -- and given that all the SOMEONE's in this picture are broke or just greedy, this bonding will most likely be the role of the city...
This project is CORPORATE WELFARE at its finest... or worst.... and given KJ's history of federal fund fraud and other more lurid allegations, it's probably the lesser of the two...
Posted by bbbbmer on February 21, 2012 02:23 AM
@Goof I understand that but as the Maloofs have not yet made and official statements regarding their contributions any pejorative slurs or statements are completely opinion based conjecture at best.
Posted by TrojanMayhem on February 21, 2012 10:01 PM
Ugh stupid autocorrect *and = any
Posted by TrojanMayhem on February 21, 2012 10:02 PM