Mercifully, the dozens of public speakers at tonight’s Sacramento City Council meeting were done by 9. That left an hour for the City Council to discuss last Saturday’s term sheet on its merits. The evening culminated with an expected 7-2 vote to approve the term sheet, which the City and the ownership bidding group will present to the NBA in New York next Wednesday, April 3.
The two dissenters were Council Members Kevin McCarty (District 6) and Darrell Fong (District 7). McCarty was concerned about the lack of detail about the economic impact of the plan, and wanted to see a real report to that effect. Fong was harsher, asking for the same and also questioning some of the revenue backfill assumptions. Both wanted to see a deal more along the lines of what Seattle was offering, which is a roughly 40% public share. The Sacramento deal rates at 58% public, though if the $70 million in outstanding loans being repaid can be counted as a private contribution, it’s closer to a 50/50 split. Fong also cited San Diego as an example where as part of the deal, Padres owner John Moores was committed to developing much of the surrounding area in the Gaslamp Quarter. The whales have promised to make some further investments downtown and in Natomas if the construction moratorium is lifted. It’s up to the City to hold ownership to that promise.
The vote was almost upstaged by news from Monday that Qualcomm CEO Paul Jacobs is joining the ownership group, making him the fourth “whale”. I figure that Qualcomm will get first dibs on a naming rights deal, which makes some sense if the Chargers eventually move into a newer stadium in San Diego or some other market. New head whale Vivek Ranadive brought Jacobs in. So if you’re tracking it, the white knights coming to save Sacramento come from Silicon Valley, LA, San Diego, and the East Bay (which Mayor Kevin Johnson was quick to point out). When including the local minority shares, practically every part of the state is “represented” within the group.
Sacramento City Treasurer Russ Fehr came out strongly in support of the deal terms, repeatedly saying that backfill revenue estimates were conservative and weren’t based on radical changes such as huge parking rate increases. While some parts of the plan such as the 5% ticket surcharge can be achieved comfortably, there was still a very vague explanation on the parking revenue passthrough that should net $3 million. CM Fong also pointed out that no one had consulted the county on the possessory income tax part of the backfill, only saying that the projected $898,000 comes from an estimate tied to last year’s Railyards proposal. Detailed financial terms will undergo much greater scrutiny when the time comes, and the term sheet is nonbinding (as opposed to Seattle’s binding proposal), so things can and will change just as they did for the 49ers stadium project in Santa Clara.
Opponents to the term sheet were all grouped to speak first and were severely outnumbered by supporters, most of whom wore white “Crown Downtown” T-shirts. They all raised their arms in the air, which – no, was not some Nazi deal – was the group mimicking KJ when he got the phone call that the deal was done.
What’s next? The Seattle and Sacramento groups will make presentations a week from today, followed by the NBA’s Board of Governors meetings two weeks later. All along, I’ve said that NBA commissioner David Stern played this to perfection. He may have even played it too well, getting two cities to pony up at least $200 million for arenas in states where only a few years ago, this was considered impossible. Now the other team owners have the tough task of determining which bid is the most sound and beneficial to the league as a whole. That won’t be easy.
The more I look at this, the more I think that the real wildcard in this debate is something that isn’t even being discussed: local TV deals. Seattle’s a larger market, but a NBA team will be the fifth pro franchise in the area which could limit TV money. Seattle’s predominant RSN is ROOT Sports Northwest, run by DirecTV/Liberty Media. Sacramento is technically a mid-market (#20) based on size, but historically has lagged in terms of local TV revenue from Comcast SportsNet California. It wouldn’t surprise me if both bidders had already established talks with their respective RSNs to figure out how much more revenue they can get. If Seattle can get $10-20 million more per year or Sacramento can keep it competitive, that might be the deciding factor. All these histrionics, and it could come down to a factor that isn’t much in their control. Sounds about right.
P.S. Readers who are following my articles about the Kings here or my tweets covering the news may think I’m needlessly slagging the Sacramento plan. I suppose it comes from a relative place of security. The A’s are not in danger of moving out of the Bay Area anytime soon, and if Bud Selig intended to create the kind of bidding war situation now on display in Seattle and Sacramento, he’s failed miserably so far. I’d like to see more cities hold fast to the idea of minimal public contributions and let more teams pay for the majority of new stadia. It seems like with the Kings arena and the 49ers stadium we’re regressing from earlier progress with AT&T Park and Staples Center. I certainly don’t want to see Sacramento lose the Kings, but I also think they should be able to secure the best deal possible, whatever that is. There have been plenty of privately funded arenas built over the last several years (Staples, Nationwide Arena in Columbus), yet time and time again it’s the leagues that have the leverage.