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  #861  
Old Posted Jul 21, 2006, 10:53 PM
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Arena backers celebrate deal to replace Arco

Sacramento Business Journal - 12:55 PM PDT Fridayby Kelly JohnsonStaff writer


In a pep rally-type atmosphere in the sweltering heat Friday, the owners of the Sacramento Kings, local elected leaders and others with a stake in a new sports and entertainment complex celebrated an agreement to replace Arco Arena.

At the dusty downtown railyard, the speakers said the agreement for a public-private partnership to build a new arena on the site -- if voters support a quarter-cent sales-tax increase in November -- would allow for further investment in Sacramento's urban revitalization and the region as a whole.

Among the crowd were supporters holding "We (heart) the Kings" and similar signs, and wearing Kings T-shirts.

County Supervisor Roger Dickinson, who helped negotiate the new arena agreement, spoke with passion akin to a preacher. Surrounding him were elected leaders from other communities in Sacramento County, and the railyard development representative, Suheil Totah of Thomas Enterprises Inc.

City and county elected officials announced Thursday that they and the Maloof family, owners of the Sacramento Kings, the Monarchs and Arco Arena, had agreed to terms for funding a new 18,000-seat arena, preferably in the railyard.

The Maloofs were not in town for that news conference, so the Friday event provided an opportunity for them and additional stakeholders to comment on the new deal.

"I think we came up with a rendering and a solution to all of our problems," said Joe Maloof, whose family owns Maloof Sports & Entertainment.

With the dilapidated railyard buildings behind him, brother Gavin Maloof said this was his first time at the railyard.

Of Sacramento, he said, "We want to be here forever. We love Sacramento. We love the fans. The greatest years of my life have been here in Sacramento."

"There's no doubt in my mind we will win this election," he added.

Dickinson said he knows the arena's public-private partnership is controversial. "We welcome the public discussion," he said. The community is asking Sacramentans to make a difference. Other communities, he said, have energized and revitalized their urban centers with sports centers, and Sacramento has the same opportunity.

"There are 240 acres here just begging for attention," Mayor Heather Fargo said.

"We all share a vision and we are going to bring that vision to reality," Dickinson said. "The hard work is just beginning."

In an interview, former Assembly member Darrell Steinberg, who has negotiating on behalf of the Maloofs, said he has no Plan B if voters reject the quarter-cent sales tax increase, if the county Board of Supervisors decides next week to put the question on the November ballot.

The deal calls for a 15-year sales tax that would help pay for a $470-million-plus arena. The Maloofs committed to a 30-year lease and payments totaling hundreds of millions of dollars. The quarter-cent sales tax, if approved by a majority of voters, would expire after 15 years and raise an estimated $1.2 billion over that span.

Dickinson said the average consumer in the county would pay less than $5 per month.

At least half that money would be made available to the cities and county governments for public projects and improvements such as transportation projects or libraries. The remainder would go toward the arena, which has an estimated cost of $470 million to $540 million.

If voters approve, construction of a new arena could begin in summer 2008 and open by fall 2010.

The Maloof-owned Arco Arena would be demolished, and the property sold and redeveloped.

http://www.bizjournals.com/sacrament...ml?jst=b_ln_hl
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  #862  
Old Posted Jul 22, 2006, 3:34 AM
doriankage doriankage is offline
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I am so stoked about the arena deal!!!! I really hope it passes on both fronts.
If I lived in Sactown, I would vote YES!!!!
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  #863  
Old Posted Jul 22, 2006, 4:39 AM
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I'll move the discussion back here for snfenoc's sanity.

I think it would be a good idea still to include more counties not only for the obvious reason of getting those counties to chip in, but also to allow more time for a PR blitz that will be needed, even if those other counties aren't in the vote.
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  #864  
Old Posted Jul 22, 2006, 4:53 AM
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Don't worry, I lost my sanity years ago.

Quote:
Originally Posted by ltsmotorsport
I think it would be a good idea still to include more counties not only for the obvious reason of getting those counties to chip in, but also to allow more time for a PR blitz that will be needed, even if those other counties aren't in the vote.
Then the tax would not be on the 2006 ballot. The next opportunity would be in 2008. Too late - Anaheim Kings.
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  #865  
Old Posted Jul 22, 2006, 5:31 AM
doriankage doriankage is offline
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I agree with ltsmotorsport.
I think it should be spread across the metro counties.
however, If Sac County wants to take it on by itslef than so be it.
No matter what, the arena needs to be built and it will be built
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  #866  
Old Posted Jul 22, 2006, 6:35 AM
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They deemed the multi county tax to be too convoluted so they opted not to do it.
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  #867  
Old Posted Jul 22, 2006, 4:10 PM
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The arena numbers crunch
Public, not Maloofs, will foot most of bill, critics say.
By Mary Lynne Vellinga -- Bee Staff Writer
Published 12:01 am PDT Saturday, July 22, 2006
Story appeared on Page A1 of The Bee

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Local politicians and members of the Maloof family gathered under a hot sun in the downtown railyard Friday, beaming about an arena financing deal they say requires the Kings owners to pay for at least 26 percent of the new building.
They said the size of this private contribution stacks up favorably with those made by owners in comparable NBA markets, such as Memphis, Tenn., Indianapolis, Charlotte, N.C., and San Antonio.

But even as they smiled for the TV cameras in the dusty patch of weeds they hope will soon become a sports and entertainment district, their numbers were already getting torn apart by critics. Arena deals are maddeningly complex, and there are many ways to slice the one proposed for Sacramento.


By a widely accepted method of accounting -- one that discounts the Kings' lease payments to reflect their present value -- the team's contribution is more like 12 percent to 14 percent of the arena's projected price tag, said Andrew Zimbalist, a sports economist at Smith College in Northampton, Mass.
Either way, the bottom line is this: The public will be asked to foot the lion's share of the projected $470 million to $542 million for an arena in the form of a new, quarter-cent sales tax that will last for 15 years.

"The Maloofs can say what they want, but this is not a terrific deal," said Zimbalist, who has been critical of public subsidies for sports.

"It's worse than an average deal. The typical financing package these days in the NBA is somewhere in the neighborhood of 70 percent public, 30 percent private."

Zimbalist also criticized the idea of using sales taxes to finance an arena -- even if it is only a quarter-cent for every retail dollar spent in the county.

"Sales taxes tend to be regressive, so they fall more heavily on lower income groups," he said. "You get the reverse Robin Hood effect."

Still, negotiators on both sides maintain it's a good deal for Sacramento, particularly when compared with recent arenas built in same-size NBA markets.

"We did the best we could," said Dan Barrett, the sports financing consultant hired by the city and county to negotiate with the Maloofs.

"In smaller markets, the trend has been public financing of these facilities," Barrett added. "I would say this is a deal that is comparable to other markets of similar size. In fact, in our opinion, it's better than three out of four of them."

The Maloofs' contribution includes $20 million upfront for a capital repair fund and another $4 million a year over the term of the team's 30-year lease.

In addition, the Kings owners agreed to pay off their existing loan from the city, which they inherited from the prior owners and which now stands at about $71 million. That won't be counted as part of the deal.

They will shoulder the operating costs of the arena, but will also receive the money from all events, food and beverage sales and parking.

According to a 2003 study prepared for the city, the team can expect to earn an annual profit of at least $1 million from arena operations.

Add this to the lucrative naming rights, which one consultant said would likely fetch $2 million to $3 million a year, and the Maloofs will likely have enough to cover their lease payment to the public joint powers authority that will own the building.

All told, the Maloofs will pay $141.7 million toward the arena over the 30-year term of their lease, including the $20 million upfront payment.

Their contribution would look significantly larger in percentage terms if construction costs hadn't risen so dramatically in the past few years.

The Memphis Grizzlies' FedExForum, an arena the Maloofs admire, cost $250 million to build just two years ago.

The city and county of Sacramento say it will cost at least $470 million to erect a comparable arena here.

In bigger cities, such as Chicago and Los Angeles, basketball arenas have been privately funded.

In San Francisco, the Giants' waterfront stadium, AT&T Park, was built almost entirely with private money.

The 49ers recently unveiled preliminary plans for a new, privately funded stadium.

Barrett said these are not fair comparisons.

Football facilities, for instance, can't be compared with basketball arenas, because football franchises are much more lucrative, bringing in much more money from television, for instance.

Team owners in larger markets with a bigger corporate presence can also create and sell far more luxury suites -- major revenue producers, he said.

"If you look at Los Angeles or Chicago, you're looking at 160 to 200 suites," Barrett said.

"The Kings could probably have 50 or 60."

Whatever its flaws, the deal unveiled this week was not easy for local politicians to achieve.

For six years, despite a lot of talk and the preparation of some thick consultants' reports, the arena issue went nowhere.

In May, City Councilman Rob Fong and Sacramento County Supervisor Roger Dickinson took up the charge, backed by several key staff members from the city and county governments.

They negotiated with the Maloofs for 40 intense days, but then announced that they had been unable to come to terms.

Two weeks went by.

Fearing that nothing would be done, and that the team eventually would move, Fong and Dickinson enlisted the NBA's help to get talks started again.

Initially, the Maloofs resisted making an upfront contribution, said John Dangberg, assistant city manager for economic development.

"We spent 60 days pushing on that as well as other issues," he said.

In the end, the family agreed to contribute $20 million to the arena repair fund upfront.

"We felt the (upfront contribution) was important in order to have something that was acceptable to the City Council, the Board of Supervisors and the general public," Dangberg said.

Former state Assemblyman Darrell Steinberg, who represented the Kings in the negotiations, said he thinks the deal represents a realistic "intersection" between the Maloofs' business interests and the public interest.

He noted that the family gave up control over the design and construction of the arena, something it didn't want to do, so the city and county could better control costs.

The public entities remain responsible for cost overruns, however.

"The Maloofs gave, and the city and county gave," he said.

=============================================
If we're going to enter the time value of money into the equation (which is fair) then the author and her nutjob "sports economist" are missing two very critical pieces to the deal:
1. From what I understand, the Maloofs have agreed to repay the balance of the $80M loan from the city they inherited when the purchased the club. The balance currently is about $73M. They repay the loan by selling their Natomas land holdings. I'm not positive about the terms of their loan, but I don't think they are legally obligated to repay the entire loan in the next few years. What I'm getting at is that I believe that not only will they be repaying the loan, which is one thing, but that they will be PREPAYING the loan, which is another thing all together. This is important because the net present value of $73M in 2010 is quite a bit more than the net present value of $73M paid back in equal installments over the next 20 years or how ever many years remained on the term of the loan.

2. Similarly, the Maloofs have agreed to sink $20M up front into an arena "maintenance" fund. Again, the $20M they are spending now is worth more than it will be in, say, 10, 20 or 30 years from now when major systems of the arena need to be replaced or modernized. The opportunuty cost to the Maloofs to tie up $20M of their money now for repairs that won't be needed for years to come is huge. Invested conservatively, that same $20M could easily become $120M 30 years from now (Assuming 6% annual return on investment; 30 years is a conservative estimate for the life-span of the arena).
In short, you can't have it both ways. You can't bitch about the Maloofs making their $4M lease payments over 30 years rather than an up-front payment, but then not acknowledge they are prepaying other obligations.
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  #868  
Old Posted Jul 22, 2006, 4:53 PM
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I love how the Bee finds some anonymous economist at some anonymous college on the east coast to make it's anti-arena pitch for them. This genius from back east states that the average NBA arena deal is 70% public/30% private, then the Bee shows a graphic comparing 5 arena deals and only one is 70%public/30% private. Kudos to the Bee for contradicting itself in a matter of a couple of paragraphs.

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  #869  
Old Posted Jul 22, 2006, 5:11 PM
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I wanted to slap that guy... Zimbalist. Exactly how much do poor people buy each year? I guess he didn't ask himself that question.
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  #870  
Old Posted Jul 22, 2006, 5:18 PM
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^ I noticed that too. Without ever having met this guy, I am virtually certain he's the prototypical elitist, East Coast academic. Probably never had a real job in his life, insulated from the real world in his ivory towers of academia. The basic premise that the economic impact of an arena is to be measured by the per capita income of the residents is short-sighted and designed to result in the desired outcome of the study: that public subsidies for arenas are a bad idea. There's more to it that per capita income, even speaking exclusively from an economic standpoint. If an arena in the railyards spurs other development in the railyards even one or two years before it would otherwise take place, that's sales and property tax revenue to the city that otherwise wouldn't exist. Just placing the arena where it is will make the land surrounding it for 10 blocks in either direction more valuable. That in itself means higher property tax revenue than if the railyards were developed sans arena. What about the millions of dollars the Maloofs and the Kings donate to local causes every year? Let's not forget about that. It's a no brainer.
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  #871  
Old Posted Jul 22, 2006, 5:37 PM
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Maybe I'm just an eternal optimist. But, I thought the article was FOR the tax. I thought it was making the argument that the arena deal was fair for Sacramento and even better than the deal that other comparably sized cities got. Perhaps I missed something.
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  #872  
Old Posted Jul 22, 2006, 5:45 PM
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^Sorry for the rants, but a few other things:

If an arena is positioned within walking distance of 20 bars and restaurants, taxable sales as a direct result of Kings games will DEFINITELY go up. Currently, 95% of people drive from their home or work directly to the game and then home again afterward. With the arena in the railyards, people will be much more inclined to get there early for dinner at a restaurant a few blocks away and then after the game, linger at one of the cool bars down the street. I know I would!

Also, the games will result in huge ridership gains for light rail (and possibly even capitol corridor). The same people who bitch about misplaced priorities and how we need to invest instead in public transportation and the like forget that upwards of 5,000 Kings fans may use light rail on game nights. And remember, these are PAYING customers of light rail. Not the low-income or otherwise subsidized tickets or the "customers" that just simply board the train without ever having bougt a ticket.

Another thing: the city/county owns lots of parking garages in the downtown area, right? Well, many opponents of the arena are stating that the Maloofs get all the parking revenues. Well, that's true in a sense- they do get all the revenues generated from the garage adjacent to the arena. But I gaurantee you that garage won't be large enought to hold 10,000 cars. City and county lots/garages in the near proximity will also benefit from over-flow parking.
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  #873  
Old Posted Jul 22, 2006, 7:01 PM
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With the whole arena project and the railyards, mass transit will be used much more... I live about two blocks from the lightrail and I do not have any reason to use it now... however, with the arena being built, I can leave my house around 5 PM and get on the lightrail towards downtown.. get off in downtown near the arena, go to a restaurant and walk to the arena around 6:30 for a great 7 o'clock Kings game.
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  #874  
Old Posted Jul 22, 2006, 7:29 PM
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Quote:
Originally Posted by Trojan
With the whole arena project and the railyards, mass transit will be used much more... I live about two blocks from the lightrail and I do not have any reason to use it now... however, with the arena being built, I can leave my house around 5 PM and get on the lightrail towards downtown.. get off in downtown near the arena, go to a restaurant and walk to the arena around 6:30 for a great 7 o'clock Kings game.
Remember, people from as far as Folsom could come to the Kings game without having to worry about traffic or parking!!! They thought the Gold Line was a success before?....wait 'til they see it with riders going to the Kings games! The effects of having the arena so close to downtown and lightrail are going to be seen IMMEDIATELY! HUGE!!! What other cities have downtown arenas that also have light rail/heavy rail nearby? I'd be very interested to know how much those cities fit our criteria for what a dense, urban city should be!

Last edited by creamcityleo79; Jul 22, 2006 at 7:38 PM.
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  #875  
Old Posted Jul 22, 2006, 7:43 PM
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Folsom would have to extend its evening/night hours. Currently the last light rail line leaves at 6:30 pm from downtown and 7 pm from Folsom. There was an article in the Bee a week or two about that.
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  #876  
Old Posted Jul 22, 2006, 8:19 PM
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What other cities have downtown arenas that also have light rail/heavy rail nearby?


New York, Chicago, San Fransisco, Oakland, Minneapolis, denver, seattle, st louis,,,,,,,
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  #877  
Old Posted Jul 22, 2006, 8:23 PM
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The cities I find with a precedence for rail-oriented transit near arenas are:
Portland, OR
San Francisco, CA
San Diego, CA
Salt Lake City, UT
Denver, CO
Dallas, TX
Atlanta, GA
Cleveland, OH
Washington, DC
New York City, NY
Boston, MA

I think this puts us in pretty good company!!!!
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  #878  
Old Posted Jul 23, 2006, 3:25 AM
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from news 10:
Quote:
City Leaders, Kings Begin Push For New Downtown Arena

A day after closing negotiations on one of the most anticipated deals in Sacramento history, city leaders and Sacramento Kings ownership joined forces Friday, kicking off their bid for public support behind a new arena for the Kings.

Key players on both sides of the high-stakes talks officially announced their plans Friday morning in Sacramento's downtown railyard, projected site for a new multi-million-dollar, 18,000-seat arena as the centerpiece in revitalizing the city's 243-acre downtown waterfront area.

Sacramento County supervisor Roger Dickinson cited similar efforts in cities like Baltimore, Denver and San Diego which rehabilitated parts of those communities around new sports and entertainment facilities.

"It's brought an economic boom and a sense of pride to their entire region," Dickinson said. "We have the opportunity before us now here in Sacramento County and we are bound and determined not to miss this great opportunity."

"The question really is what do we want for Sacramento's future," Sacramento vice mayor Rob Fong said. "We have the opportunity to shape the skyline not only of this downtown, but of all our partner cities."

Now that the city and Kings organization have reached an agreement, both sides will turn their attention toward selling the $470 to $542 million construction plan to Sacramento voters. A majority of voters will be asked to support a new quarter-cent sales tax on the November ballot to raise nearly $1.2 billion dollars. Half the money would go toward the arena project with the rest earmarked for various city and county governments to fund other public service programs.

"This is going to be an interesting process over the next couple of months to really have a public discussion about the future of the city and the future of this part of our city," Mayor Heather Fargo said.

"We're going to generate with this proposition the money that will allow us to provide libraries, public centers, community centers, road improvements, parks, those kind of things that make so much of a difference in the quality of life for all of us here in Sacramento," Dickinson said.
Sacramento supervisors will evaluate the arena plan with a tentative vote set for Aug. 2. If passed, the measure will head to the ballot.

"We finally have an opportunity to let the people vote, to let the fans make a decision over whether or not they want an arena here in Sacramento," Kings owner Joe Maloof said.
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  #879  
Old Posted Jul 23, 2006, 3:48 AM
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Timeline for the arena from news 10:
1. July 25 - Introduction at Sac County Board of Supervisors Meeting
4/5 Sups must vote yes
2. Aug 2(my birthday) - 2nd Supervisors Meeting
4/5 Sups must vote yes
If passed at both meetings it will be on the November ballot.
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  #880  
Old Posted Jul 23, 2006, 6:03 AM
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Quote:
Originally Posted by neuhickman79
Timeline for the arena from news 10:
1. July 25 - Introduction at Sac County Board of Supervisors Meeting
4/5 Sups must vote yes
2. Aug 2(my birthday) - 2nd Supervisors Meeting
4/5 Sups must vote yes
If passed at both meetings it will be on the November ballot.
I thought it was 3/5 sups must vote yes which makes more sense
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