Stakeholders step up
The City of Sacramento and Mayor Kevin Johnson have two big problems. And they’re both named Maloof.
Sacramento’s City Council approved a $200,000 expenditure for pre-development (EIR/Study) work last night, thanks to the money being fronted by the NBA, not Kings owners Joe and Gavin Maloof. Even though the Maloofs agreed to splitting the projected $13 million in pre-dev work weeks ago, they are now balking because they consider themselves tenants and not true stakeholders in the project.
That’s not a good start, whether the Maloofs truly feel that way or are merely exhibiting brinksmanship. The Bee’s Marcos Breton lays out the case for not trusting the Maloofs. All of that goodwill from the February negotiations is quickly ebbing now that the various stakeholders have to commit, and the Maloofs have to actually put up some money. You can’t blame the City, who is doing what they can even if the financing piece is suspect. AEG has their role carved out. Speaking of AEG, they are due to have the EIR for the LA Convention Center project (which may or may not have a football stadium attached) released tomorrow. The document(s) will run 10,000 pages. The cost to complete it and other pre-dev work: $27 million. Now that’s commitment. If the Maloofs wanted to run the arena themselves and not have a third party like AEG involved, they should’ve negotiated that in the first place. We know that their problem is that they don’t have the cash to make such an investment ($138 million when including both their piece and AEG’s). Now it appears that Commissioner David Stern dragged them to the table, kicking and screaming.
Stern doesn’t have the power of an antitrust exemption at his disposal, so he can’t exactly keep the Maloofs from being uncooperative, and if the Kings wanted to move it’s merely a matter of procedure and cash. When news of the arena deal broke, I characterized the plan as fragile, and this is a big reason why. The Maloofs think that the City can’t get the arena built in time for the 2015 NBA season, and they’re already backing away as they’ve done before. The City and its backers are accusing ownership of sabotaging the process. There is a movement to subject the arena plan to a referendum. Financing remains a huge question mark. The various parties haven’t even started the grind of the environmental study, and this is the state of affairs? Forgive me for not having a lot of confidence in the project.