Sacramento - New Arena Plan

[innov8]

Originally Posted by Ryan@CU

Delay? Yes. Derail? Highly unlikely.

Derailing this is very likely, but I think it depends if the measure needs to be
passed by 50 percent simple majority vote instead of the two-thirds vote
required for tax measures? Measures Q and R were soundly defeated,
so I'm sure the people behind this will use the same playbook to defund this
proposal using city funds.

[ltsmotorsport]

It's just amazing that Sacramento would shoot itself in the foot again (and this time with a MUCH better deal) than realize and take the time to learn about the immense civic benefit an up-to-date venue like this would bring. Instead we get uneducated or misinformed 'citizens' running to the abused initiative process.

[BrianSac]

Originally Posted by ltsmotorsport

It's just amazing that Sacramento would shoot itself in the foot again (and this time with a MUCH better deal) than realize and take the time to learn about the immense civic benefit an up-to-date venue like this would bring. Instead we get uneducated or misinformed 'citizens' running to the abused initiative process.

It would not matter if the Arena were 100% privately financed they would shoot it down. They will find fault to the point of stopping any proposed location: it doesn't matter: railyards, west sac, cal-expo, natomas, mather, downtown plaza they will find a reason to stop it.

These NIMBY types are obstructionists and they do it just because they can. It's their own little power trip. Most are biased, misinformed and down-right ignorant. Sad part is they are really good at misinformation, disinformation and the process is on their side. They control Sacramento. They are like weeds that always come back.

[goldcntry]

Originally Posted by Ryan@CU

Delay? Yes. Derail? Highly unlikely.

Watch what happens when the East Sacto & Land Park Nimbys join forces... *sigh*

[Deno]

How is the 49er stadium being financed in Santa Clara? Los Angeles is builiding a new Stadium also with the help of a bill signed by Governor Brown to reduce the regulations and speed up contruction. Not sure how that one billion project is being paid.

[NME22]

Originally Posted by Deno

How is the 49er stadium being financed in Santa Clara? Los Angeles is builiding a new Stadium also with the help of a bill signed by Governor Brown to reduce the regulations and speed up contruction. Not sure how that one billion project is being paid.

There is always public money in one form or another when you want to bring a major business project to your city. Nothing is free. So yes, both of the projects you mentioned are receiving some form of public financing and/or business subsidies. Infrastructure funding and so forth. New 49ers stadium will have nearly $450 million in loans by the city of Santa Clara. In all, the whole stadium will be funded by loans in one form or another.

But BrianSac is right. It's not about the financing. It's about a small group of people who talk amongst themselves and believe they somehow represent 2 million people in the metro area. I mean Sacramento can't even get a new zoo built for the last 40 years. Tell me the percentage of people that a new zoo in Sac benefits vs the amount of people that it might effect negatively because there is an extra car driving down their street. Why does that small percentage get to decide to make me drive 2 hours to the bay area just to see a decent zoo with my kids? But that's Sacramento.

[wburg]

Originally Posted by Deno

How is the 49er stadium being financed in Santa Clara? Los Angeles is builiding a new Stadium also with the help of a bill signed by Governor Brown to reduce the regulations and speed up contruction. Not sure how that one billion project is being paid.

The Santa Clara arena is being financed by bonds from Goldman, Sachs & Co., Bank of America/Merrill Lynch, and U.S. Bank.

From http://santaclaraca.gov/index.aspx?page=2204 :

The Stadium will be owned by the Stadium Authority. StadCo, a 49ers affiliate, will pay a Facility Rent to the Stadium Authority, most likely in the range of $30 million per year, up from $5 million estimated Facility Rent at the time of the Term Sheet. The Stadium Authority will pay fixed rent and performance-based rent to the City of Santa Clara for use of this City owned land, which is projected to provide a fair market rent to the City’s General Fund.

Total cost of the Stadium is now estimated at $1.02 billion, with the Stadium Authority incurring construction finance debt in the range of $850 million through a combination of loans from the construction lenders and from StadCo. Currently, the approximate amounts of the loans are projected to be a $450 million loan from the construction lenders to the Stadium Authority and a $400 million subordinated loan from StadCo to the Stadium Authority.

And from http://www.footballphds.com/2011/12/...s-and-answers/ :

Is this a good deal for the City of Santa Clara?

No, this is not a good deal for Santa Clara. Stadiums built by municipalities are rarely good transactions for cities. Profitability for a stadium depends on securing a multitude of events to return a decent return on investment. In general, private developers seek a 15-20% rate of return for stadiums. But publically owned stadiums rarely approach these returns. Accordingly, municipalities turn to halo effects of stadiums, such as the effect of stadiums on local business, hotels, and associated tax revenues to justify them. But these benefits are sketchy at best and difficult to quantify.

Furthermore, Santa Clara Stadium will be managed by the 49ers through their affiliate, 49ers Stadium Management Company, LLC. The management company lacks expertise in securing non-football events. Specifically, the management company lacks associations with the music industry to land a regular stream of concerts. It is important to note that the music industry is dominated by Live Nation Entertainment and AEG Live, both of whom have competing interests in nearby O.co Coliseum (Oakland Coliseum) and both of whom we covered in our recent AEG in China article. Live Nation Entertainment has a longstanding relationship through its Ticketmaster division with SMG, who manages O.co Coliseum. AEG, meanwhile, is bidding on the management contract for O.co Coliseum. Santa Clara Stadium has its work cut out for itself in securing non-football events.

So even though Santa Clara should be able to cover debt payments through its lease with the 49ers and ancillary revenues from Naming Rights and sponsorships, Santa Clara will not achieve the 15-20% return on its investment that private developers demand for stadiums. And such is the difference between privately and publically owned stadiums.

Even though this is not a good deal for Santa Clara, will Santa Clara go broke over Santa Clara Stadium?

No, Santa Clara will not go broke over the stadium. Even though building publically owned stadiums is rarely a good idea, Santa Clara did an excellent job of safeguarding itself against several potential pitfalls. Specifically, the City of Santa Clara has separated itself from the Stadium Authority. General city funds will not be available to repay debt. This will be worked into the debt contracts. Only the Stadium Authority has the responsibility for debt repayment and not the city at large.

Furthermore, the Stadium Authority did an excellent job of limiting its exposure to losses stemming from managing the stadium. Specifically, the Stadium Authority will have a $25 million line of credit with StadCo, which the Stadium Authority can draw on for operations or debt payments. Furthermore, the Stadium Authority has the ability to force StadCo to assume operational expenses--which do not include debt payments--if the Stadium Authority has certain sustained financial losses.

The Stadium Authority also did an excellent job of securing 100% of Naming Rights and Personal Seat License fees for the stadium. None of these revenues go to the 49ers. As a comparison, the City of Arlington will get only 5% of Naming Rights for Cowboys Stadium, even though the City of Arlington issued almost $500 million in bonds for the stadium and parking facilities.

Is this a good deal for the San Francisco 49ers?

No, this is not a good transaction for the 49ers. On the positive side, the 49ers get a Brand Spanking New Stadium and the corresponding unshared revenues associated with a new stadium, but on the flip side, the 49ers are taking a huge financial risk. This is the riskiest stadium development deal for an NFL franchise yet. StadCo is taking out a $400 million loan, which it will in turn loan to the Stadium Authority. So right off the bat, there is huge financial exposure for StadCo. Add the line of credit and possible assumption of operating expenses year-round, and this is a potential nightmare for StadCo.

The total burden of cost is about 53% 49ers, 47% City. But clearly still not a very good deal. It is, however, a much better deal than ours--more than two-thirds from the city, 15% or so from the Kings, city doesn't get naming rights, and so far we haven't seen how much rent the Kings will pay.

The AEG vs. LiveNation issue is also something folks aren't talking about here in Sacramento--the acts that skip Sacramento generally do so because they are LiveNation acts (Sleep Train Ampitheatre is a LiveNation venue.)

[NME22]

Originally Posted by wburg

The total burden of cost is about 53% 49ers, 47% City. But clearly still not a very good deal. It is, however, a much better deal than ours--more than two-thirds from the city, 15% or so from the Kings, city doesn't get naming rights, and so far we haven't seen how much rent the Kings will pay.

The AEG vs. LiveNation issue is also something folks aren't talking about here in Sacramento--the acts that skip Sacramento generally do so because they are LiveNation acts (Sleep Train Ampitheatre is a LiveNation venue.)

$59 mil from AEG, $75 mil upfront and $75 mil over 30 years from Kings = $209 mil private funding. Cost of Sacramento Arena = $391 mil. 53% private, 47% public when 30 years is up. Sacramento arena being managed by one of the top two music management companies in the world. AEG to cover any operating losses. Icon to cover all cost overruns for arena construction.

Sac arena deal > Santa Clara stadium deal.

[wburg]

Originally Posted by NME22

$59 mil from AEG, $75 mil upfront and $75 mil over 30 years from Kings = $209 mil private funding. Cost of Sacramento Arena = $391 mil. 53% private, 47% public when 30 years is up. Sacramento arena being managed by one of the top two music management companies in the world. AEG to cover any operating losses. Icon to cover all cost overruns for arena construction.

Sac arena deal > Santa Clara stadium deal.

Santa Clara deal =$400 mil up front and $900 mil over 30 years from 49ers rent=$1.3 billion, Santa Clara investment $450 million minus value of naming rights. I think your < is facing the wrong way.

[NME22]

Originally Posted by wburg

Santa Clara deal =$400 mil up front and $900 mil over 30 years from 49ers rent=$1.3 billion, Santa Clara investment $450 million minus value of naming rights. I think your < is facing the wrong way.

Except that $30mil a year doesn't even completely cover the debt service on the $450 mil loan the city of Santa Clara is taking out. Sac is attempting to do this without traditional debt service. Advantage Sacramento.

If people feel the Santa Clara way of doing this is better, then why not fight to get the arena built that way, instead of fighting to kill the whole arena plan? The city held public meetings. They let citizens voice their opinions and concerns. Listened to all sides during city council meetings. This thing has been front and center for debate for a year. The people have been heard.

[BrianSac]

Sacramento's committment = $255 million
Santa Clara's committment = $850 million

Sacramento Arena = $391 million
Santa Clara stadium = 1.02 Billion

[BrianSac]

Originally Posted by NME22

Except that $30mil a year doesn't even completely cover the debt service on the $450 mil loan the city of Santa Clara is taking out. Sac is attempting to do this without traditional debt service. Advantage Sacramento.

If people feel the Santa Clara way of doing this is better, then why not fight to get the arena built that way, instead of fighting to kill the whole arena plan? The city held public meetings. They let citizens voice their opinions and concerns. Listened to all sides during city council meetings. This thing has been front and center for debate for a year. The people have been heard.

These obstructionists don't want it period, no matter what. They really didn't think the Kings would come through with 150 million, and they were shocked that AEG would pick Sacramento over other cities. The obstructionists were wrong and now they are back to using their old, slimy ways. They need to be exposed for their true duplicitous motives.

If the majority of Sacramentans knew the power trips this folks hold in their duplicitous minds they would vote against them. The media needs to show this side of the obstructionists. It's time the DOERS out do the naysayers.

[BrianSac]

• AEG owns, operates or is affiliated with many of the world's largest sports complexes, including Staples Center (Los Angeles), Amway Center (Orlando, Fla.), Sprint Center (Kansas City, Mo.), Rose Garden (Portland, Ore.), Home Depot (Carson), O2 Arena (London), O2 World Berlin and the Barclay Center, home to the New Jersey Nets next season. It also is handling the massive renovation of Madison Square Garden.

• Leiweke is one of three brothers in the sports industry. Coincidentally, he was an executive with the Kansas City Comets soccer franchise when the Kings relocated to Sacramento in 1985.

"The (relocation) hurt that city immensely," said Leiweke, "because in the eyes of the business community and the media, it was no longer a first-class city. It took a long time for them to come out of that. And, ironically, I think Sprint Center had more of an impact bringing that city back to a point of excitement, enthusiasm and pride of any project since the Kings left. It's almost amazing that we're sitting here almost 30 years … having a conversation about trying to help save the Kings in Sacramento."

• The yet-to-be-named, yet-to-be-built downtown arena is expected to most closely resemble the Sprint and Amway centers, though without the glamorous touches that separate the Amway, which opened in 2010, from every other arena in the United States.

Read more here: http://www.sacbee.com/2012/03/24/436...#storylink=cpy

[wburg]

Originally Posted by NME22

Except that $30mil a year doesn't even completely cover the debt service on the $450 mil loan the city of Santa Clara is taking out. Sac is attempting to do this without traditional debt service. Advantage Sacramento.

That's right, we're going to hock our jewelry at the pawn shop (the parking lease plan) instead of taking out a loan. That looks increasingly unlikely, for reasons I mentioned before and mentioned again--the amount needed is about the same as the city's highest estimates for the value of city parking assets--including the parts that are illegal to license (street parking), not including the debt the city would have to pay off first, assuming that the parking contractor would get the revenue from arena events (they won't under the current deal), that they wouldn't have significant competition (they will be competing with the planned VIP lot and the county lot) and a 50 year term (the city is now talking about a 30 year term.) All of those changes since the original estimate slash the potential value of the parking contract to a fraction of what would be needed.

Which means that we, like Santa Clara, would have to float bonds--and, like Santa Clara, the annual payments on those bonds is far more than the revenue stream. Thanks for pointing out the most disastrous element of Santa Clara's plan--and the same thing is in store for us.

If people feel the Santa Clara way of doing this is better, then why not fight to get the arena built that way, instead of fighting to kill the whole arena plan? The city held public meetings. They let citizens voice their opinions and concerns. Listened to all sides during city council meetings. This thing has been front and center for debate for a year. The people have been heard.

I don't think Santa Clara's plan is necessarily "better" except maybe in the sense that being smashed in the kneecap with a sledgehammer is "better" than having your leg chopped off with a chainsaw. They're just slightly less screwed than we will be, that's all.

The arena group's meetings were generally held on workday mornings with one day of notice, primarily to media outlets rather than the general public, making them nearly impossible to attend. The city's meetings were stacked against opponents by packing the room with pre-arranged supporters, shoving opponents into viewing rooms in other buildings instead of in front of the eyes of the council. The only thing that has been heard here is the sound of private money seeking public subsidy.

[NME22]

Originally Posted by wburg

That's right, we're going to hock our jewelry at the pawn shop (the parking lease plan) instead of taking out a loan. That looks increasingly unlikely, for reasons I mentioned before and mentioned again--the amount needed is about the same as the city's highest estimates for the value of city parking assets--including the parts that are illegal to license (street parking), not including the debt the city would have to pay off first, assuming that the parking contractor would get the revenue from arena events (they won't under the current deal), that they wouldn't have significant competition (they will be competing with the planned VIP lot and the county lot) and a 50 year term (the city is now talking about a 30 year term.) All of those changes since the original estimate slash the potential value of the parking contract to a fraction of what would be needed.

Which means that we, like Santa Clara, would have to float bonds--and, like Santa Clara, the annual payments on those bonds is far more than the revenue stream. Thanks for pointing out the most disastrous element of Santa Clara's plan--and the same thing is in store for us.



I don't think Santa Clara's plan is necessarily "better" except maybe in the sense that being smashed in the kneecap with a sledgehammer is "better" than having your leg chopped off with a chainsaw. They're just slightly less screwed than we will be, that's all.

The arena group's meetings were generally held on workday mornings with one day of notice, primarily to media outlets rather than the general public, making them nearly impossible to attend. The city's meetings were stacked against opponents by packing the room with pre-arranged supporters, shoving opponents into viewing rooms in other buildings instead of in front of the eyes of the council. The only thing that has been heard here is the sound of private money seeking public subsidy.

I knew exactly what you would point out in my argument, and you fulfilled my expectations. The Santa Clara deal went from being "much better" than Sacramento, to being disastrous. Bonds were "better" in the case of Santa Clara, but terrible in the case of Sacramento. Meaning two things. You're duplicitous in your talk and you absolutely wouldn't support an arena under any financing terms. You and I both know that a completely privately financed arena is not going to happen.

I could continue to go tit for tat on numbers with you, like pointing out that should Sac go the bond route, then they would no longer have the back fill issue with the parking, thus increasing the revenue back to the city by $9 mil. Since the debt would be backed by a municipal asset AND on a smaller amount, the debt service would be significantly less than Santa Clara's. But facts don't matter to obstructionist. More effective to instill fear.

Your hyperbole is in full effect with talk of pawning and disasters and everyone being screwed. Take a second to look at the big picture.

1. Name one city that's been so screwed by an arena that the local government has fallen apart and the city fell into anarchy and chaos? Marshall law had to be declared. None? Ok, so we don't have to fear that. Cities hurt when business leave. Not when invest to keep them.

2. Think about how many total arenas, stadium and fields for professional and college sports there are around the world and tell me how many of those venues are absolutely flopping. You don't have to research it. Just use some common sense and it will tell you the vast majority do not fail. So the odds are in the favor of success.

3. Why are these professional sports teams so coveted? How come when a city loses a pro sports team, they are desperate to get one back. Seattle, Los Angeles, Kansas City currently trying. New Orleans and Charlotte both fought to get franchises back. Cities like Anaheim and San Jose are fighting to get NBA franchises. Are all these cities and business men desperate to lose their shirts by investing in something that is detrimental to them? Makes no sense. Find me one city that is so upset by how much damage their professional team has done to them that they are trying their hardest to pawn them off on some city. Explain this without a conspiracy theory.

4. Suppose the obstructionist get what they want and the Kings leave. Now what? Tax dollar lost. City has to take over an arena that they will sell to cover the bond to the Kings. Who or what is ready to take the place of an arena? How does this help our budget deficit. How does this save the railyards or Natomas? What have we accomplished that benefits the city as a whole? Nothing. We just take two steps backwards as a city.

[wburg]

I'm not sure if you have been in suspended animation for the past five years, NME22, but you may recall a teensy little problem with economic unpleasantness we just had with loans to people who couldn't afford to pay them back? That's the kind of consequences I'm concerned about. Not a zombie outbreak, but further fiscal instability, city declaring bankruptcy, that sort of relatively mundane but still disastrous consequence.

I mentioned Santa Clara in response to someone who wanted to know how their funding worked--and in that same post I included an assessment that started with "No, this is not a good deal for Santa Clara." I'm not sure how you can possibly interpret what I posted as endorsement or support for Santa Clara's project, other than the fact that at least their project represents majority investment by the private sector vs. public.

Every other arena on the face of the planet since the dawn of human history isn't what we are discussing here, and your desire to talk about every other arena rather than this one only indicates how little you actually want to talk about the details of this plan. The fact that other arenas exist does not serve as proof to support this particular arena financing plan.

I personally have no idea why people get so ridiculous over sports teams or why they are so coveted. It just seems like a racket to me.

It sounds like you're already changing the story to push the bond route, which is the riskier proposition. The amount borrowed would result in an annual payment much larger than the expected arena revenue--putting us into exactly the bad situation you mentioned for Santa Clara.

The bond idea is a bad idea. The main difference between the bond idea and the "parking lease" idea is that it's a bad idea that could possibly happen, instead of a bad idea that is now impossible. That's why the bond route is the bigger threat.

[NME22]

Originally Posted by wburg

I'm not sure if you have been in suspended animation for the past five years, NME22, but you may recall a teensy little problem with economic unpleasantness we just had with loans to people who couldn't afford to pay them back? That's the kind of consequences I'm concerned about. Not a zombie outbreak, but further fiscal instability, city declaring bankruptcy, that sort of relatively mundane but still disastrous consequence.

Trying to follow the logic here. Since some people had a hard time paying for their mortgage, the most prudent thing to do in the future is that nobody ever use a mortgage to buy a home. Say that out loud and see how it sounds. Does it sound practical? What would that do to the economy?

I mentioned Santa Clara in response to someone who wanted to know how their funding worked--and in that same post I included an assessment that started with "No, this is not a good deal for Santa Clara." I'm not sure how you can possibly interpret what I posted as endorsement or support for Santa Clara's project, other than the fact that at least their project represents majority investment by the private sector vs. public.

You said the Santa Clara deal was "much better"

Every other arena on the face of the planet since the dawn of human history isn't what we are discussing here, and your desire to talk about every other arena rather than this one only indicates how little you actually want to talk about the details of this plan. The fact that other arenas exist does not serve as proof to support this particular arena financing plan.

We've laid out the details of the Sacramento plan. I can talk about why this arena is good for Sacramento until I'm blue in the face, but you keep bringing up Stockton and bonds. So, if you would like to bring up an arena that is having problems, I'll give you ten that aren't. But I guess that's not fair. If you want to say why public financing is bad for an arena or sports venue, I'll give you examples of how it turned out good. Again, explain out loud to someone about how it would be unfair for me to bring up success stories about arenas when you're bringing up failures and see how it sounds.

I personally have no idea why people get so ridiculous over sports teams or why they are so coveted. It just seems like a racket to me.

We know you don't understand. But, just because you don't understand something, doesn't make it automatically bad.

It sounds like you're already changing the story to push the bond route, which is the riskier proposition. The amount borrowed would result in an annual payment much larger than the expected arena revenue--putting us into exactly the bad situation you mentioned for Santa Clara.

Not changing any story. You wanted to talk bonds, so I did. I explained to you the difference as I see it between the potential Sacramento bond situation and the Santa Clara bond situation. You're just refusing to acknowledge it because it doesn't fit with your argument.

The bond idea is a bad idea. The main difference between the bond idea and the "parking lease" idea is that it's a bad idea that could possibly happen, instead of a bad idea that is now impossible. That's why the bond route is the bigger threat.

Got it. Financing is scary.

[BrianSac]

Originally Posted by NME22

We know you don't understand. But, just because you don't understand something, doesn't make it automatically bad.

He refuses to understand the cultural and historical impact major league sports brings to cities. From European soccer and basketball to American baseball, football, and basketball; cities across the world take pride, and celebrate their teams.

He refuses to accept how major league sports brings people to together.
Sacramento has never been more united than during the "glory" years of the Kings 10yrs ago.

I never saw SF more alive and jubilant when they celebrated their 2010 World Series win. And I've attended a lot parades in SF over the years. Spontaneous street parties erupted all over the city from soma, the castro, the mission, haight, tenderloin, not to mention the celebration at city hall.

When we attended the 49er Divisional round playoff game against New Orleans and a week later when we attended the 49ers NFC Championship game we met people who came from all over the world. We met people from Boise, Denver, San Antonio, Mexico City, London, Baniff, Canada, Toronto, Miami, Costa Rica, New Orleans and New York. These dedicated 49er fans spent thousands of dollars in SF just to see a football game.

[doriankage]

Originally Posted by BrianSac

When we attended the 49er Divisional round playoff game against New Orleans and a week later when we attended the 49ers NFC Championship game we met people who came from all over the world. We met people from Boise, Denver, San Antonio, Mexico City, London, Baniff, Canada, Toronto, Miami, Costa Rica, New Orleans and New York. These dedicated 49er fans spent thousands of dollars in SF just to see a football game.

I have lived the past four years outside the US. You would be surprised at how many Kings jerseys I have seen, in Spain, Australia, even in East Africa.

For some reason, people like them. And we as the city should embrace them and hope that when Sacramento wins a championship, these people from around the world come to our city and celebrate with you.

[Pistola916]

Update: Maloofs balk, but NBA will advance arena planning costs
tbizjak@sacbee.com
Published Thursday, Mar. 29, 2012

The NBA today came to the rescue of Sacramento's arena deal, agreeing to chip in $3.26 million in pre-development costs after the Kings' owners balked at paying the money.

NBA Commissioner David Stern, in a statement to The Bee, said those pre-development expenses must be paid quickly. "Those discussions have stalled, but I have advised Mayor Johnson that the NBA will advance pre-development expenses on behalf of the Kings pending our report to the NBA Board of Governors at its meeting on April 12-13."

A Maloof family spokesman in Los Angeles told the Bee today the team does not feel that it should share in predevelopment costs because the team is only a tenant in the building, which would be owned by the city.

"The team should not be responsible for the predevelopment expenses," team spokesman Eric Rose said. "That has been the position of the Kings from the start."

Yet the Kings owners agreed in principle to pay $73.25 million "toward development and construction of the (arena)," according to a term sheet negotiated three weeks ago by the city, the team, the NBA and other private partners. That document states, "such amount shall include pre-development expenses paid by the Kings ..."

City officials had not commented as of late this afternoon. A staff report issued today, however, indicates the city has not yet gotten signatures from the Kigns on a predevelopment agreement it has hoped to deliver to the City Council on Tuesday for its approval.

Rose and Kings co-owner George Maloof both told the Bee today they are not dropping out of the deal, but they have numerous questions.

Maloof downplayed any notion that the deal may be collapsing.

"We had some general feasibility questions for the city," he told The Bee. "It's a major deal and that's how it works," he added.

He said "there's nothing that's happened" to make the Maloofs doubt that the arena project will be completed. "We're still negotiating with the city and AEG."