Sacramento, Seattle prep arena proposals

The March 1 deadline for the City of Sacramento to present a complete new arena proposal for the Kings and the NBA to consider has pushed at least one city to react in anticipation. Last year it was Anaheim, this year it’s Seattle. Seattle has been rumored for the last few weeks to have a big-money white knight getting ready to lure a team to the Emerald City. That white knight’s name is Chris Hansen, a Seattle native and SF hedge fund manager.

Seattle and King County held a joint press conference today to give details on the plan. Mayor Mike McGinn’s website has the presser and some backing info. The arena would cost up to $500 million, with $290 million by Hansen and his team(s). The big key to the plan is that unlike KeyArena on the other side of downtown, the new arena would be designed to house both NBA and NHL franchises. While there aren’t specifics about the financing, it’s clear that the arena deal would only work if teams from both leagues relocated there so that revenues would be high enough to cover debt service. Naturally, ensuring 82 regular season games, 3-4 preseason games, plus a good likelihood of at least one playoff series every year, would go a long way towards covering the loans that will be necessary. KeyArena would serve as a temporary home while the new arena was under construction.

Seattle and King County would partner up for $200 million in public financing, which would be backed by ticket and sales taxes. While they didn’t get specific, both City/County and Hansen and public financing as it relates to I-91, the 2006 ballot initiative that only allowed for such financing if the City could get a reasonable ROI (3.1% currently).

Hansen and associates have bought a three acre property south of Safeco Field in the city’s SoDo district. Three acres isn’t large enough for a new arena, so additional land will have to be acquired. The unacquired land includes Showbox SoDo, a warehouse concert venue. It would appear that Showbox SoDo, which was purchased by Showbox in 2007, would have to make way for the new arena.

Comparison of Seattle and Sacramento arena proposals

For its part, the City of Sacramento has put out some basics from its new arena term sheet, which is still in the works and to be presented to the City Council on February 28. The upshot from the $387 million proposal is that the Kings owners, Joe and Gavin Maloof, will have to put up $60 million in cash and donate $25 million in land to make the deal work. It’s unclear if the Maloofs, who already have sold off numerous assets and remain in debt to the City, have the resources to pull this off. The total cost of $387 million also feels rather low, at least by California standards. $200 million in public financing would come from the advance sale of downtown parking revenues.

Both plans have major questions attached. Besides the Maloofs’ outlay, there is a question of whether or not the NBA would sign off on such a deal, especially if the Kings’ low revenue position coupled with debt keeps the team at a competitive disadvantage. The Seattle plan’s dependence on having both NBA and NHL teams in-house sounds looks like a major potential stumbling block due to the complexity of catering to both. Both leagues currently have teams up for sale (NBA’s New Orleans Hornets, NHL’s Phoenix Coyotes), but both would prefer to keep them local if at all possible. Seattle’s plan makes the most sense if there’s only a single ownership group for both teams, as that would prevent competition between two ownership groups from derailing negotiations.

Chances are good that among the Hornets, Coyotes, and NBA Kings, at least one of them will move in the next few years, perhaps two or all three. When that happens it’ll be a tragic day for the adversely affected fans. The cycle of heartbreak continues.

39 Responses to Sacramento, Seattle prep arena proposals

  1. A's Fan says:

    Goodbye Kings and Coyotes. Hello Sonics 2.0 and Metropolitans 2.0.

  2. Joel says:

    (A’s Fan)
    Kings will be staying In Sac. The A’s on the other hand….

  3. Dan says:

    If that’s the case, goobye any interest I have in the NBA…

  4. John says:

    In Sacramento pricetag has actually jumped to $406 million (largely for a VIP parking structure).

    The city is talking about $200 million for the parking; however, they have to pay off bond debt on some of the parking structures to the tune of $52 million once they lease the parking (I am not sure if the city is taking that into account when they talk about the $200 million).

    AEG is rumored to be putting up around $50 million. The NBA is rumored to possibly be willing to front the Maloof portion to the city for the Maloofs.

    The $25 million land donation actually is property used as a security to a loan from the city from 1997 so not sure if that money can actually go to the arena bill (still owe $70 million on it).

    Hope this doesn’t confuse you too much.

  5. Sid says:

    The Seattle plan has legs because of Section E under terms: Teams are responsible for cost overruns, debt service shortfalls.

    Seattle saw the deal Santa Clara did with the 49ers around the team and not the actual citizens being liable for the debt service shortfalls year to year.

    I like Seattle’s plan because of that and the fact there is enough of a corporate base to raise revenues for both and NHL and NBA team.

    In the NHL there are actually several teams for sale but few takers, a few iron clad leases, and even fewer cities to relocate to that have NHL ready arenas in good markets.

    As for an NBA team, their best bet is New Orleans if Sacramento stays put and keeps Northern California 2-teams.

    If Sacramento moves to Anaheim (Since the Maloofs do not want to sell), then the NBA would have to decide between a Larry Ellison San Jose team or a Chris Hansen Seattle team.

    Ellison can easily bid far higher than Hansen can and the NBA has to take the best deal for its owners monetarily. This plus Hansen needs an NHL team along with a new arena….too many moving parts in my opinion if he goes head to head with Ellison.

    In a 2-team Nor Cal situation with a Kings new arena, the NBA will try to move the Hornets to Seattle logically. San Jose only gets a chance if the Kings leave Sacramento.

    Stern being the idiot that he is may still move the Hornets to Seattle and leave Nor Cal 1-team and give the Warriors more excuses to suck and make even more $$ hand over fist.

    In any case, this was an interesting development and with some luck I think Seattle maybe able to land a team before San Jose or Anaheim will since they do not share their market with anyone else NBA wise.

  6. jeff-athletic says:

    @Dan
    .
    Me too. The Kings are the only reason I pay any attention at all to the NBA. The league has really declined in quality and interest, and of the big 3 (baseball, football, basketball), basketball is my least favorite, by a long margin. (soccer and baseball are my favs).
    .
    As for whether the Kings will stay here in Sac – it’s “iffy”. It looks like the parking scheme is a go, the ticket surcharges will happen, AEG is evidently interested, the NBA is working behind the scenes. But a major component is the Maloof’s part. They just don’t have the money, and they still owe the city of Sacramento $70 million, and the NBA $100 Million.
    .
    The Maloofs already sold off their beer business, and were forced by creditors to sell off the majority of their Palms ownership, and all they have left are the Kings, and even with that they’re in over their heads. They keep saying they won’t sell. But they can’t go it alone. No matter where the Kings end up, the Maloofs are going to have to either sell entirely, or bring in more investors, either as majority or minority owners.
    Burkle down in LA has expressed interest. He could be a white knight.
    .
    As for Seattle – their scheme requires $200 million from the city of Seattle and King county. Good luck getting that passed by council members and/or voters. It also requires both an NBA franchise and an NHL franchise. So both have to be lined up before either can happen. Again, good luck with that. And their “white knight” is a hedge fund manager. I trust them as far as I can throw them. Plus, his money would most likely be heavily leveraged (does anyone think a hedge fund manager actually has that kind of cash sitting around?). Any ownership group that has to do a leveraged buyout is standing on a financial house of cards. It’d be a McCourt type of situation. Someone who is not nearly as rich as they make themselves out to be.

  7. Dan says:

    Sid, two problems with your analysis. One, the NBA doesn’t want Ellison as an owner. They’ve had the option of adding him twice now and have turned him down both times. Second, there is apparently interest from at least two parties about buying the Hornets already who want to keep them in NOLA. That is why I think the Seattle group has been pushing so hard on the Kings angle. While the Maloofs “won’t sell”. We all know they’re in dire financial straits too (one reason the Sac plan might not even be realistic). If it comes down to it they may just sell the team now to Hansen than wait the two years it’ll take them to go broke and just have to sell to Samueli in Anaheim.

  8. Grady says:

    If basketball leaves Sacramento, would that make it attractive enough for baseball?

  9. Dan says:

    Don’t see how. If they can’t support one pro team what makes you think they could support a bigger pro team?

  10. jeff-athletic says:

    Baseball needs even more population base, corporate base, and larger media market, than Basketball. If the Kings can’t work out in Sac, then most certainly an MLB team couldn’t, as much as I would love to have an MLB team locally. In the meantime, I love having the River Cats, and the A’s within reasonable driving distance.

  11. Joel says:

    @ Jeff-athletic
    Who said Sacramento can’t support the kings? Sacramento can easily support the kings. It has been proven for 25 years. It’s the maloofs that can’t. Sacramento has already done there part.

  12. Brian says:

    I’m a little confused as to how Seattle’s going to get a commitment from an NHL team and then build an arena. Key Arena would be a disaster for hockey ( http://cdn0.sbnation.com/imported_assets/976522/Key-Arena-Hockey.jpg ), so I can’t see a team wanting to play a couple years there before a new arena that won’t be all that lucrative given the arena payments owed by the team is ready. And you wouldn’t keep a moving team in a lame-duck market either.

  13. Jeffrey says:

    Sactown, great place. I hope the Kings stay, but I think anyone should question wether the revenue streams exist to make a new arena feasible. I think it is a stretched market as is.

  14. pjk says:

    So here we are more than a month after the A’s were placed on the “front burner.” We’re talking about NHL hockey in Seattle, the Maloofs going broke, anything but the A’s ballpark situation. Why do I fear Selig is going to let this fester for another year? Because he doesn’t have the courage to stand up to the Giants and tell them to back off?

  15. jeff-athletic says:

    @Joel
    Of course Sacramento has supported the Kings – over the last few decades one of the best attendance records in the league, with some of the loudest fans (it can be deafening), in spite of the team sucking for most of that. But what I was alluding to is the overall revenue streams – media contracts and selling of luxury boxes (corporate support), and the like. With those things, Sacramento is well behind larger cities, and is generally considered one of the “have-nots” of the NBA. It’s a salary cap, plus luxury tax, plus revenue sharing, that keeps the team above water.
    .
    With MLB it’s more drastic – more games, larger venue, and no salary cap. Sac is a smaller media, corporate and population base market than the East Bay, and we all know how difficult it is for the A’s in the East Bay.
    .
    I love the Sacto area, born there, have lived there most of my life. But it’s “iffy” whether we’ll be able to keep the Kings, and “iffy” that the Kings could be as competitive as possible if they do stay. And MLB there is also problematic. However, Sac is a no-brainer for AAA. River Cats have done awesome, both at the gate and at the field.

  16. Joel says:

    But if Sac does keep the Kings and have a state of the art arena. Would MLB or NFL possibly look at Sac as a possible destination? I’m sure Sac would not be last in population for both of those sports? And we’re 20th in media. Out of thirty teams in each sport we would have to be better than at least 10 teams in each sport right?

  17. jeff-athletic says:

    @pjk
    It’s getting incredibly old, isn’t it? Who the f&%$ knows when and if Selig will come to a decision, or makes a deal with the gnats. It’ll happen when it happens, and I think it will happen before the start of the season.
    .
    In the meantime, I’ve decided to not worry about it too much, and just enjoy the A’s for what they have now, and what they’re building for in the future. Overall, I’ve like Beane’s moves this offseason. And as bad as the Coli is, I don’t mind seeing games there – it’s easy to get to, has plenty of parking, and it’s cheap.

  18. jeff-athletic says:

    @Joel
    That would be cool.

  19. DKnight007 says:

    I have been wondering myself for quite sometime why the NBA and NHL are lagging when it comes to brining back teams to the Emerald City. To me it is a no brainer that the Hornets or Grizzlies shoud move to Seattle and share a new Arena with an NHL team like the Coyotes. Seattle would be a far better home for the Coyotes, since Seattle is so close to Canada, compared to the desert territory in Phoenix….for an NHL team?? Oy vey!

  20. DKnight007 says:

    Joel says:
    February 17, 2012 at 11:56 AM Joel(Quote)
    But if Sac does keep the Kings and have a state of the art arena. Would MLB or NFL possibly look at Sac as a possible destination? I’m sure Sac would not be last in population for both of those sports? And we’re 20th in media. Out of thirty teams in each sport we would have to be better than at least 10 teams in each sport right?

    ^^^^^^
    No…Sac would be an armpit for an NFL or MLB team to move there. Sac will be lucky enough to keep the Kings. If they wind up losing the Kings, it would be sad state of affairs for that whole region near Sacramento and if the Kings move, Sac will become even more of an armpit, than it already is.

    If Sac keeps the Kings, then at least a new Arena and Sports and Entertainment Complex, will have a chance at revitalizing that whole region.

  21. Joel says:

    @DKnight007
    What are your facts that it will be an armpit for those sports? Like I said Sac will have better population then some teams and will have better tv market than at least 10.

  22. DKnight007 says:

    Joel says:
    February 17, 2012 at 12:56 PM Joel(Quote)
    @DKnight007
    What are your facts that it will be an armpit for those sports? Like I said Sac will have better population then some teams and will have better tv market than at least 10.

    ^^^^^^
    Facts?

    I’m stating my opinion and if you don’t think Sac would be considered an ARMPIT for an MLB or NFL team to be located, than that is YOUR opinion.

    I will throw you out a quick fact.

    If MLB and the NFL thought Sac was a unknown “goldmine” for the city to host a team, don’t you think they would have had team loacted in Sac by now?

    Yep!

  23. jeff-athletic says:

    @DKnight007
    Just for clarification – in terms of being a location for an MLB or NFL team, Sac is an armpit.
    In terms of being a place to live, it’s actually an awesome place – one of the reasons so many bay area transplants live here! ;-)

  24. Joel says:

    @DKnight007
    Just curious where are u from?

  25. Jeffrey says:

    Sacramento’s Media Market is bigger than 7 MLB teams: St. Louis, Pittsburgh, Baltimore, San Diego, Kansas City, Milwaukee and Cincinnati. It’s the second largest media market without MLB (behind Orlando).
    .
    You could expect a team in Sacramento to have similar revenue streams as Kansas City, Pittsburgh, Milwaukee, basically any of those places mentioned above but St. Louis.
    .
    MLB has enough problems on their hands without moving an existing team into a market that would be amongst the bottom in the league.

  26. Jeffrey says:

    PS- I lived in Sacramento for 7 years. It isn’t an armpit.

  27. bartleby says:

    There are media markets and media markets. I’m not sure how exactly Sacramento’s media market is defined, but I’ll take an educated guess that there is signficant overlap with areas which might otherwise be considered part of the Bay Area.
    .
    Regardless, Sacramento currently has not one but two MLB teams within a short distance away. This puts it in a far worse position from the standpoint of supporting an MLB team than nominally smaller media markets like Pittsburgh, Portland, or Kansas City.
    .
    It’s the same problem Hartford has (which otherwise, on its surface, would look like a solid location for major league sports).

  28. Jeffrey says:

    the media market for Sacramento stretches from Stockton up to almost Chico.

  29. Marine Layer says:

    One of the reasons Sacramento shouldn’t happen is not so much the size of the media market, it’s how it’s treated. Right now all of Northern California and Northern Nevada, and most of Central California are shared equally by the A’s and Giants. The only barrier is the cable systems’ carriage of CSN California. If the A’s were to move to Sacramento because the Giants pushed them out of the Bay Area, the first thing they’d do is force MLB to declare much of NorCal theirs, and gerrymander the Giants into the Greater Bay Area (and maybe North Coast/Central Coast). Doing that would be a TV version of what the Giants are doing to the A’s and would weaken both franchises. Plus it would mean A’s blackouts in the Bay Area, Giants blackouts in the I-80 and I-5/99 corridors.

    Don’t think it could happen? What else could the A’s do to guarantee they’re the lead TV dog?

  30. crister says:

    Greenbay’s probably got the fairest set up. Alas…

  31. Freddy says:

    >What else could the A’s do to guarantee they’re the lead TV dog?
    .
    Be acquired by new ownership. Honest answer. Hey, we indulged Tony with his pipe dream for years, indulge me with mine. Even if I just want to listen in on radio.
    .
    The current regime has displayed zero media savvy since day one, regarding both the team and the real estate. That’s not their game and they aren’t interested. The Schott era wasn’t as bad, Hass was fairly decent.
    .
    With the Warriors, Cohan was the problem. When I moved back to town, I had a couple of ideas, spoke to their PR folks. A few months later they threw their arms up in frustration, took me off speakerphone and confided: “Enjoy the games. He doesn’t listen.”
    .
    The new guys are media dudes and haven’t had a full season to work yet, so the jury’s still out on them. If they came by just to flip some real estate, they’ll package that much better, for sure.
    .
    But if since is an NBA thread and you’re talking lead TV dawg, I want to give it up again for JEREMY LIN! In the BIG-TIME MEDIA! I’m going Lin-SANE!

  32. jon campbell says:

    sacramento is centrally located to lots of A’s fans- reno fans, san jauquin valley fans, sacramento valley fans, bay area fans….I think it is better situated to draw A’s fans to its ballpark than just about anywhere…..the sacramento valley is experiencing unparrelled growth (long term, obviously not in the last 3) with room to expand, while the bay area has a finite amount of space with high real estate prices…..

    I saw an urban plan one time that prdicted that the sacramento valley would grow so fast that there would be virtually one city along tghe freeway corridors from redding to bakersfield…we shall see if that ever comes to fruition… but regardless, we shall see in 15-20 years what kind of cowtown sacramento is

  33. Tony D. says:

    The A’s aren’t moving to Sacramento. (A little dose of reality before things get to out of hand here)..that was easy!

  34. Tony D. says:

    Not sure which “Tony” you’re referring to Freddy, but the idea of the A’s moving south to San Jose left the “pipe” a long time ago. FWIW, I’d like to see the Kings remain in Sac; at least that town is giving a genuine effort to retain their team (unlike another city we know).

  35. Larry E says:

    Does anyone know where I can get a Facepalm emoticon for all this MLB/NFL to SacTown talk?

  36. Marine Layer says:

    @Freddy – Media savvy goes out the window in a purely competitive situation like the one I described. Even if there were new ownership in Sacramento, they’d want the same thing. They’re not going to stand for being second fiddle on TV in their own backyard.

  37. Sid says:

    @Dan- Who says the NBA does not want Larry Ellison as an owner?

    Ellison offered a blank check to ex-Sonics owner Howard Schultz on the condition the team move to San Jose immediately. Schultz being from Seattle would not be able to go outside in his own hometown had he gone that route so he sold the team to Clay Bennett who unlike Ellison played his cards right by “saying” he wanted to keep the team in Seattle.

    As for the Hornets, Ellison never said what he planned he was going to do with the team had he got his hands on it. He learned from the first time around with Seattle and was going to take the Clay Bennett route….People just assumed he would move the team to San Jose.

    The NBA, only moves teams in a last ditch effort. The Hornets are reaching that point and they need to relocate them in 1-2 years or find a new owner in NOLA which is never going to happen.

    San Jose can become a reality if the Kings leave Sacramento. Why do you think the Maloofs were about to move to Anaheim and share SoCal with the Lakers/Clippers and not move to San Jose and share the entire Nor Cal region with one other team….the Warriors?

    The reason is because the NBA knows Ellison can bail them out of a bad situation with a straight cash deal…..No leverage, no bringing in several investors, or going into debt. Ellison can pay 450M straight up and save the NBA of a bad situation in NOLA. The Maloofs were told this and they decided to turn to Samueli in Orange County because it was the next best option.

    This plus San Jose has an arena ready to go unlike Seattle or Sacramento who have nothing even close to modern at this point….just pipe dreams. Especially Sacramento who in my opinion have no chance to keep their team for the points Jeff-Athletic made above.

    In the end, I think the Kings end up in Anaheim and the Hornets end up in San Jose. Seattle has too many moving parts and Ellison has the wallet, modern arena, huge corporate base, and affluent fans in his pocket while Hansen has too many variables.

  38. eb says:

    I think it’s pretty unlikely the greater Bay Area will get any new major sports franchise, especially if all of our current ones remain.

  39. Dude says:

    I agree, eb. I think six is enough for the size of the market, especially since there are two each of the two biggest sports. That’s more than Chicago and the same as LA, which is far larger. And if there is indeed extra spending capacity in the Bay Area right now, you have to keep in mind the A’s are not generating nearly as much revenue as they could be. Plus the Niners are about to start generating a ton more revenue than they do today. There’s already excess capacity that can be filled before adding any new teams. I just don’t see it happening.

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