Arena clash's asphalt rumble
Parking fees play a crucial, if little-known, role in the Sacramento Kings' bottom line.
By Jon Ortiz - Bee Staff Writer
Published 12:00 am PDT Sunday, September 17, 2006
Story appeared in MAIN NEWS section, Page A1
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In the ultracompetitive, multimillion-dollar National Basketball Association, asphalt has become as important as acquiring a key big man to putting a team over the top.
That's why, after weeks of intense talks and what they said was an agreement to build a downtown arena to suit their business needs, Sacramento Kings owners Joe and Gavin Maloof last week shut down dialogue with local officials and the potential developer of the Union Pacific railyards.
The stalled negotiations and ensuing sharp-elbowed public talk highlight the difficulty in harmonizing the complicated workings of a small-market pro sports operation with the equally complex task of revitalizing one of the biggest chunks of developable metropolitan land in the nation.
Parking is particularly vexing: The Maloofs, whose Maloof Sports and Entertainment owns the Kings, the WNBA Monarchs and Arco Arena, charge $10 a vehicle and earn an estimated $4 million a year in parking fees from Kings games.
Sports financing experts say it's easier to tap into parking revenue than to raise ticket prices, especially for the Kings, whose average ticket price is among the league's highest.
"The question for the Kings isn't how many people you get through the door, because they've been selling out games for years," said Rod Fort, a Washington State University sports economist.
"The question is, 'How can we get more spending per game per person?' Parking helps get you there."
The Maloofs say parking money is vital to the financial patchwork they must weave to stay competitive with other teams, especially those in bigger markets with more lucrative TV deals and bigger corporate sponsors.
"Parking could be the difference between making money and losing money for a year," Gavin Maloof said in an interview last week.
But that can sharply clash with the priorities of the railyards' potential developer, Thomas Enterprises. The Atlanta-based firm wants to keep parking spaces from unnecessarily chewing up land inside the 240-acre infill zone where buildings could stand.
And vast oceans of parking also dampen what Sacramento County's economic development chief, Paul Hahn, called the "social goals" of local government -- a railyards zone where visitors take light rail, a train or a bus to ease traffic pressures and improve air quality.
The Maloofs said last week that they were "blindsided" by the developer's proposal to chop the footprint of the arena from 8.5 acres to 4.5 acres and reduce the parking the team would control from 8,000 spaces to between 2,000 and 3,000 in a single multistory garage.
The Maloofs said they believed they had an agreement for 3,000 covered parking spaces adjacent to the arena and 5,000 spaces of surface parking.
Sacramento Assistant City Manager John Dangberg has denied the parties agreed on the number of parking spaces.
Last week, Thomas Enterprises agreed the "plan did not reflect the deal" and said it would redesign it to address the Maloofs' concerns.
Still, negotiators shouldn't have been surprised the scaled-back deal sent the Maloofs into a tizzy. Nearly every major league sports team uses parking to pad the bottom line, earning millions each year.
The average parking fee in the NBA last year was $11.67. The most costly: The Miami Heat's $25 vehicle charge for each of its 1,147 on-site spots, according to the Team Marketing Report, which tracks team-by-team fan costs to attend games.
The New York Knicks and the Houston Rockets tied for second, charging $20 per car.
Parking at 12 of the NBA's 30 venues cost more than at Arco Arena. Ten cost less.
In Memphis, FedEx Forum visitors pay what Kings fans pay -- $10 for one of 1,800 spaces in an on-site parking garage.
Parking fees for the NBA's Grizzlies total about $2.8 million a year, but the team, which controls the revenues from the arena and the garage, makes an additional $700,000 a year by selling the garage's corporate naming rights to Ford Motor Co.
John Thomas, president of Maloof Sports and Entertainment, wouldn't divulge total Arco Arena parking revenues.
He did say, however, that Kings games account for a little less than a third of the events Arco Arena hosts in a year but draw about 40 percent of the traffic to the building's 11,000-space parking lot.
At $10 per car for the roughly 8,000 cars the Kings say use the lot each game, Maloof Sports earned roughly $4 million in parking fees spread over roughly 50 Kings games, Thomas said.
That means parking fares from other events equaled about $6 million, or $10 million for all events combined.
Parking is "a major revenue stream, one of the top five or six for us," Thomas said.
Forbes magazine estimates the Kings earned about $10 million during the 2005-06 season on revenues of $119 million before deductions for things such as taxes, wear and tear on equipment, and debt payments.
Thomas called the Forbes figures "a joke," but declined to provide specific numbers.
Parking also is part of a larger package of amenities that teams offer their prized premium ticket holders, the customers who purchase high-priced suites, club seats and courtside spots.
They are usually affluent and more likely to spend freely on food, drinks and memorabilia -- and want extras like parking that is close to the building and VIP access.
"You know how you get Jack Nicholson to your game? With the extra stuff," Fort, the sports economist, said.
"And those are the people who get your team financially over the top."
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